BlackRock Smaller Companies Trust Plc - Final Results
(Legal Entity Identifier: 549300MS535KC2WH4082)
Information disclosed in accordance with Article 5 Transparency Directive and DTR 4.1
Annual Report and Financial Statements
Performance record
As at As at
28 February 29 February
2025 2024
Net asset value per ordinary share (debt at par value) 1,403.45 1,450.15
(pence)1
Net asset value per ordinary share (debt at fair value) 1,463.44 1,502.25
(pence)1
Ordinary share price (mid-market) (pence)1 1,270.00 1,326.00
Deutsche Numis Smaller Companies plus AIM (excluding 16,108.27 15,173.40
Investment Companies) Index2
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Assets
Total assets less current liabilities (£’000) 684,322 755,721
Equity shareholders’ funds (£’000)3 614,779 686,206
Ongoing charges ratio4,5 0.8% 0.8%
Dividend yield4 3.5% 3.2%
Gearing4 13.3% 11.5%
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For the For the
year ended year ended
28 February 29 February
2025 2024
Performance (with dividends reinvested)
Net asset value per ordinary share (debt at par -0.6% -4.0%
value)2,4
Net asset value per ordinary share (debt at fair 0.0% -3.6%
value)2,4
Ordinary share price (mid-market)2,4 -1.4% -0.8%
Deutsche Numis Smaller Companies plus AIM (excluding 6.2% -5.8%
Investment Companies) Index2,4
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For the For the
year ended year ended
28 February 29 February Change
2025 2024 %
Revenue and dividends
Revenue return per ordinary share 42.53p 40.70p +4.5
Interim dividend per ordinary share 15.50p 15.00p +3.3
Final dividend per ordinary share 28.50p 27.00p +5.6
Total dividends payable and paid 44.00p 42.00p +4.8
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1 Without dividends reinvested.
2 Total return basis with dividends reinvested.
3 The change in equity shareholders’ funds represents the portfolio movements, shares repurchased into treasury and dividends paid during the year.
4 Alternative Performance Measure, see Glossary contained within the Annual Report and Financial Statements. Full details setting out how calculations with dividends reinvested are performed are set out in the Glossary contained within the Annual Report and Financial Statements.
5 Ongoing charges ratio calculated as a percentage of average daily net assets and using the management fee and all other operating expenses, excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation, prior year expenses written back and certain non-recurring items in accordance with AIC guidelines.
Chairman’s Statement
This Annual Report to shareholders to for the year ended
Since the start of the
Performance
In the year under review, your Company’s net asset value (NAV) per share fell by 0.6% on a total return basis with dividends re-invested compared with the FTSE AIM All-Share Index which fell by 2.6%1, the
More detail on the significant contributors to and detractors from performance during the year are given in the Investment Manager’s Report below.
The Company’s longer-term performance is set out in the table below. In addition, the chart on page 7 of
the Annual Report and Financial Statements illustrates how long-term investors have had an opportunity to build up an attractive annual income from an investment in the Company. Even if the initial dividend yield at the point of purchase has been unremarkable, the strong underlying growth in dividends over the years has resulted in a competitive yield on cost when compared with equity income funds in general. To illustrate this investment and income success, the chart shows that £1,000 invested in the Company on
Returns and dividends
Your Company’s earnings per share have increased by 4.5% year on year to
The annualised increase in dividends paid since this date equates to 10.6% and your Company has received the AIC accolade of ‘Dividend Hero’ for its’ consistent growth in dividends for a period in excess of 20 years.
1 Year 3 Years 5 Years 10 Years 15 Years
change change change change change
Performance to 28 February 2025 % % % %
%
NAV per share1,2,3 0.0 -16.2 5.5 108.8 411.5
Benchmark1,3,4 6.2 -7.5 17.2 51.3 171.2
Share price1,3 -1.4 -17.7 -2.7 96.0 487.9
1 Percentages in Sterling terms with dividends reinvested.
2 NAV with debt at fair value.
3 Alternative Performance Measure, see Glossary contained within the Annual Report and Financial Statements.
4 Benchmark Index (the Deutsche Numis Smaller Companies plus AIM (excluding Investment Companies) Index).
Gearing and sources of finance
Gearing can play an important role in portfolio performance over time although your Company continues to maintain a very conservative capital structure. The Company has current borrowing facilities of long-term fixed rate funding in the form of a £25 million senior unsecured fixed rate private placement notes issued in
It is the Board’s intention that net gearing will not exceed 15% of the net assets of the Company at the time of the drawdown of the relevant borrowings. Under normal operating conditions it is envisaged that gearing will be within a range of 0%-15% of net assets. At the year end, the Company’s net gearing was 13.3%3 of net assets (2024: 11.5%), well within our target range.
Management of share rating
The Board monitors the Company’s share rating closely, and recognises the importance to shareholders that the price of the Company’s shares do not trade at either a significant premium or discount to the underlying NAV. Therefore, where deemed to be in shareholders’ long-term interests, it may exercise its powers to issue shares or buy back shares with the objective of ensuring that an excessive premium or discount does not arise. As market volatility persisted through the year, discounts across the closed end funds sector remained persistently wide and the Company’s shares traded at a discount to NAV ranging from 5.7% to 14.1% over the year.
During the year, the Company bought back a total of 3,515,000 ordinary shares at a total cost of £47.1 million to be held in treasury. All shares were bought back at a discount to NAV, delivering an uplift to the NAV per share of 0.7% for continuing shareholders for the year under review. The Board believes that the action it has taken has helped to minimise discount volatility, with the Company’s shares trading at an average discount to NAV (with debt at fair value) over the full year of 11.0%, compared to an average discount of 12.4% for the year to
Since the year end, and up to the date of this report, the Company has bought back a further 700,000 shares at a total cost of £8,803,000 (at an average discount to NAV of 12.2%). The Company’s discount currently stands at 12.2% compared to a sector average of 12.1% as at
Board composition, implementation of policy on tenure and diversity
In previous Chairman’s Statements, I have noted that the Board has adopted a policy of limiting directors’ tenure to nine years (or twelve years in the case of the Chairman in certain circumstances). The Board remains focused on high standards of governance and is cognisant that the Parker Review in respect of board diversity and the recent changes to the FCA’s Listing Rules set new diversity targets and associated disclosure requirements for
Having served on the Board since 2016, including over four years as our Senior Independent Director,
Agreement with Saba
On
Annual General Meeting
The Company’s AGM will be held in person at the offices of BlackRock at
Outlook
Since the financial year end, the Company’s NAV (as at
Even for those of us who have watched markets for a very long time, the current environment represents something new. The post World War II order with all its safeguards and institutional structures is in the process of change at an uncomfortably rapid pace and markets, understandably, are moving erratically in response to successive waves of new information. Against this turbulent backdrop, the Company’s portfolio is weighted towards companies with well capitalised balance sheets and entrepreneurial management teams that are able to rapidly adapt their businesses to the shifting market dynamics. As such we believe your Company is well-positioned and prepared to take advantage of the investment opportunities that lie ahead despite the uncertain market conditions. If shareholders would like to contact me, please write to
Chairman
1 Percentages in Sterling terms with dividends reinvested.
2 NAV with debt at fair value.
Investment Manager’s Report
Market Review
The world has been so volatile in the last number of years that what appears a reasoned and thought-out summary of the current market can quickly seem dated and redundant. In recent years as I have sat at this desk the world has been grappling with lockdowns, Russian invasions, the end of zero rate interest policies, and the risky spectre of stagflation. We have seen fundamental and profound changes, and for some reason history has picked the period around the Company’s year end as a focal point.
In theory this year is no different. Since
And so, to the year under review. Writing six months ago I expressed a hope the new
The market is prone to sentiment shifts, everything is black or white, very little sits in the grey. But there is some grey here. One could argue it was politically naïve to head into an election and pledge not to make any changes to the biggest three tax levers a government has (income tax, national insurance and VAT). One can wonder why the new Labour Government didn’t copy the playbook of the previous
By nature I’m an optimist, a natural disposition made difficult by markets like these. Our positive view on the
Outside of the
And so what of the UK’s position? Some will point to Trump imposing a lower tariff on the
Performance Review
And so to last year. At the interim the Company had performed in line with the benchmark. Sadly, the same cannot be said for the second half of the year. Having positioned the Company for a more successful
It has been a long time since I have seen such a frustrating performance period, with stock specific issues only explaining a fraction of the underperformance. The rest has come from a series of positions where earnings have been in line with expectations, or indeed in some cases ahead, but share prices have reacted in the other direction.
Starting with the main stock specific drivers. TT Electronics surprised the market with a significant earnings downgrade only a few weeks after reporting numbers and reassuring the city about its outlook. Specific issues at a plant in
The Company has had some successes during the year, although in many cases we feel share prices have not adequately reflected the underlying earnings performance. Top of the leaderboard this year is pension consultancy XPS Pensions (XPS). Earnings have been upgraded a number of times this year partly reflecting the supportive background for the industry, which in the case of XPS has been amplified by a string of impressive client wins.
Activity
With the
In the main disposals this year reflected the continued and prolonged uncertainty the markets are facing. The long-awaited industrial recovery is now even more lengthy, leading to Vesuvius, XP Power and RHI Magnesita all leaving the portfolio. Trainline left the benchmark at the end of 2024, and with uncertainty over Labour’s approach to a
Outlook
It seems fitting to lead into my conclusion via a discussion of mergers and acquisitions (M&A). It is my belief the
Ten largest investments as at
Together, the Company’s ten largest investments represented 22.8% of the Company’s portfolio as at
1 Breedon
Construction & Materials
Portfolio value £18,477,000
Percentage of portfolio 2.6%
A leading construction materials group in
2 IntegraFin
Financial Services
Portfolio value £18,362,000
Percentage of portfolio 2.6%
3 XPS Pensions
Financial Services
Portfolio value £18,208,000
Percentage of portfolio 2.6%
A
4 Hill & Smith
Portfolio value £17,824,000
Percentage of portfolio 2.6%
Hill & Smith is a leading
5 Alpha Group International
Financial Services
Portfolio value £15,452,000
Percentage of portfolio 2.2%
A foreign exchange risk management and banking solutions provider.
6 Bloomsbury Publishing
Media
Portfolio value £15,328,000
Percentage of portfolio 2.2%
The company is a leading independent publisher which aims to inform, educate, entertain and inspire readers of all ages. The company is focused on investing in high value intellectual property, with a focus on publishing quality content. The company has been diversifying the portfolio across consumer and non-consumer, and geographically has expanded it’s digital offering through mergers and acquisitions, further increasing the quality of its revenues and earnings.
7 Tatton Asset Management
Financial Services
Portfolio value £15,024,000
Percentage of portfolio 2.2%
Tatton Asset Management is a leading
8 Gamma Communications
Mobile Telecommunications
Portfolio value £14,380,000
Percentage of portfolio 2.1%
A leading provider of
9 Boku
Portfolio value £13,405,000
Percentage of portfolio 1.9%
Digital payments platform.
10 Workspace Group
Real Estate Investment Trusts
Portfolio value £12,679,000
Percentage of portfolio 1.8%
Workspace Group is a leading
Fifty largest investments as at
Market % of
value total
Company Business activity £’000 portfolio
Breedon UK construction 18,477 2.6
materials
IntegraFin Investment platform for 18,362 2.6
financial advisers
Leading independent
XPS Pensions pensions consultancy and 18,208 2.6
administration firm
Production of
Hill & Smith infrastructure products 17,824 2.6
and supply of
galvanizing services
Alpha Group Foreign exchange risk
International management and banking 15,452 2.2
solutions provider
Bloomsbury Publishing Publisher of fiction and 15,328 2.2
non-fiction
Provider of
Tatton Asset Management discretionary fund 15,024 2.2
management services to
financial advisors
Provider of
Gamma Communications communication services 14,380 2.1
to UK businesses
Boku Digital payments company 13,405 1.9
Supply of flexible
Workspace Group workspace to businesses 12,679 1.8
in London
Advanced technology
products and services
Chemring Group for the aerospace, 12,575 1.8
defence and security
markets
Provider of software for
Alfa Financial Software customers working in the 12,493 1.8
asset finance industry
A business advisory firm
providing services in
FRP Advisory corporate restructuring, 12,072 1.7
insolvency, debt
advisory and financial
solutions to businesses
Provides products,
including apparel,
accessory and footwear
Coats Group threads, structural 12,012 1.7
components for footwear
and accessories,
fabrics, yarns, and
software applications
British property
Great Portland Estates development and 11,643 1.7
investment company
A UK group specialising
Just Group Plc in retirement products 10,651 1.5
and services
UK-based specialist
Porvair filtration, laboratory 10,408 1.5
and environmental
technology group
Office fit-out,
Morgan Sindall construction and urban 10,388 1.5
regeneration services
Development and
manufacture of
Treatt ingredients for the 10,355 1.5
flavour and fragrance
industry
Baltic Classifieds Operator of online
Group classified businesses in 10,182 1.5
the Baltics
PayPoint Digital payments 10,015 1.4
business
Manufacture of clay
Ibstock bricks and concrete 9,760 1.4
products
Young & Co's Brewery – UK-based pub and hotel 9,572 1.4
A Shares operator
Elementis Speciality chemicals 9,570 1.4
company
Designer, supplier and
manufacturer of
high-quality and
Luceco efficient LED lighting 9,386 1.3
products, as well as
electrical wiring
accessories
Genuit Manufacturer of plastic 8,963 1.3
piping systems
Retailer of books,
WH Smith stationary, magazines, 8,917 1.3
newspapers and
confectionary
A UK-based oil and gas
Ithaca Energy company operating in the 8,864 1.3
North Sea
UK-based low-cost house
MJ Gleeson builder and strategic 8,317 1.2
land promoter
Premier Foods UK food manufacturer 8,169 1.2
Developer and supplier
GB Group of identity verification 8,101 1.2
solutions
4imprint Group Promotional merchandise 8,090 1.2
in the US
Central Asia Metals Mining operations in 8,064 1.2
Kazakhstan and Macedonia
GlobalData Data analytics and 8,043 1.1
consulting company
Savills Provision of property 7,693 1.1
services
Multi-platform media
business covering
Future technology, 7,692 1.1
entertainment, creative
arts, home interest and
education
Moonpig Group is a
leading eCommerce
company specializing in
personalized greeting
cards, gifts, flowers,
Moonpig Group and gift experiences. It 7,444 1.1
operates under several
brands, including
Moonpig, Buyagift, Red
Letter Days in the UK,
and Greetz in the
Netherlands
Designer and
Oxford Instruments manufacturer of tools 7,065 1.0
and systems for industry
and scientific research
Polar Capital Holdings Specialist asset 6,882 1.0
management
An international subsea
equipment rental and
Ashtead Technology solutions provider for 6,800 1.0
the global offshore
energy sector
A British food packaging
Hilton Food Group business that focuses on 6,776 1.0
meat and other proteins
Global provider of data,
information, education
Wilmington and training services in 6,433 0.9
the global Governance,
Risk and Compliance
(GRC) markets
Specialist components
DiscoverIE for electronics 6,371 0.9
applications
Ashmore Group Emerging market focused 6,114 0.9
investment manager
Watches of Switzerland Retailer of luxury 5,946 0.8
watches
Oxford Biomedica Gene cell therapy 5,825 0.8
Johnson Service Group Provider of textile 5,734 0.8
services
A leading manufacturer
of convenience food in
the UK. It supplies
major supermarkets and
Greencore Group other retailers with 5,694 0.8
products like
sandwiches, salads,
sushi, chilled ready
meals, and sauces
A Hungarian
Wizz Air Holdings ultra-low-cost carrier 5,683 0.8
group headquartered in
Budapest
Clarkson Provision of shipping 5,467 0.8
services
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50 largest investments 499,368 71.7
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Remaining investments 197,205 28.3
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Total 696,573 100.0
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Details of the full portfolio are available on the Company’s website at www.blackrock.com/uk/brsc.
Portfolio holdings in excess of 3% of issued share capital
At
Company % of issued share capital heldThe Pebble Group 4.8 Treatt 4.2 Luceco 4.1 Tatton Asset Management 3.9 Ultimate Products 3.8 Sylvania Platinum 3.7 Distribution Finance Capital Holdings 3.6 Animalcare Group 3.4FRP Advisory 3.4 Porvair 3.1 Bloomsbury Publishing 3.1 Diaceutics 3.1 MJ Gleeson 3.1Robert Walters 3.0 =========
Distribution of investments as at
Sector % of portfolio
Oil Equipment, Services & Distribution 2.2
Oil-Field Services 0.3
---------------
Energy 2.5
=========
Chemicals 3.6
Industrial Metals & Mining 0.4
Mining 2.9
---------------
Basic Materials 6.9
=========
Aerospace & Defence 3.1
Construction & Materials 9.0
Electronic & Electrical Equipment 3.6
General Industrials 2.1
Industrial Engineering 4.9
Industrial Support Services 8.4
Industrial Transportation 0.8
---------------
Industrials 31.9
=========
General Retailers 2.3
Leisure Goods 0.5
Media 7.0
Personal Goods 1.3
Specialty Retailers 2.1
Travel & Leisure 3.1
---------------
Consumer Discretionary 16.3
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Health Care Equipment & Services 0.5
Health Care Providers 0.8
Pharmaceuticals & Biotechnology 1.6
---------------
Health Care 2.9
=========
Beverages 0.7
Food Producers 3.0
Household Goods & Home Construction 1.6
---------------
Consumer Staples 5.3
=========
Mobile Telecommunications 2.1
---------------
Telecommunications 2.1
=========
Banks 0.6
Financial Services 15.4
Investment Banking and Brokerage Services 0.8
Non-life Insurance 1.1
---------------
Financials 17.9
=========
Real Estate Investment & Services 2.3
Real Estate Investment Trusts 5.0
---------------
Real Estate 7.3
=========
Software & Computer Services 6.9
---------------
Technology 6.9
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Total 100.0
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Portfolio analysis as at
Analysis of portfolio value by sector
Company Benchmark (Deutsche Numis Smaller Companies, plus
AIM (ex Investment Companies) Index)
Energy 2.5 4.6
Basic Materials 6.9 7.2
Industrials 31.9 25.0
Consumer Discretionary 16.3 16.8
Health Care 2.9 5.0
Consumer Staples 5.3 5.3
Telecommunications 2.1 2.0
Financials 17.9 14.4
Real Estate 7.3 7.7
Technology 6.9 8.9
Utilities 0.0 2.3
Other 0.0 0.8
Sources: BlackRock and LSEG Datastream.
Investment size
Number of investments Market value of investments as % of portfolio
£0m to £1m 2 0.2
£1m to £2m 6 1.4
£2m to £3m 8 2.7
£3m to £4m 16 8
£4m to £5m 12 7.7
£5m to £6m 17 13.2
£6m to £7m 6 5.6
£7m to £8m 4 4.3
£8m to £9m 9 10.8
£9m to £10m 4 5.5
£10m to £11m 6 8.9
£11m to £12m 1 1.7
£12m to £13m 5 8.9
£13m to £14m 1 1.9
£14m to £15m 1 2.1
£15m to £16m 3 6.6
£17m to £18m 1 2.6
£18m to £19m 3 7.9
Source: BlackRock.
Market capitalisation of our portfolio companies
Market capitalisation % of portfolio £0m to £200m 6.8 £200m to £600m 30.1 £600m to £1.5bn 43.3 £1.5bn+ 19.8
Source: BlackRock.
Strategic Report
The Directors present the Strategic Report of the Company for the year ended
The Chairman’s Statement together with the Investment Manager’s Report above and the Directors’ Statement setting out how they promote the success of the Company (contained within the Annual Report and Financial Statements) form part of the Strategic Report. The Strategic Report was approved by the Board at its meeting on
Principal activities
The Company is a public company limited by shares and carries on business as an investment trust and its principal activity is portfolio investment. Investment trusts, like unit trusts and OEICs, are pooled investment vehicles which allow exposure to a diversified range of assets through a single investment, thus spreading, although not eliminating investment risk. The closed-ended capital structure of an investment trust permits the company to invest in stocks with less liquidity and to gear its investments within a risk framework governed by the Board.
Investment objective
The Company’s prime objective is to seek to achieve long
-
term capital growth for shareholders through investment mainly in smaller
No material change will be made to the Company’s investment objective without shareholder approval.
To achieve its investment objective the Company invests predominantly in
Benchmark
Performance is measured against an appropriate benchmark, the Deutsche Numis Smaller Companies plus AIM (excluding Investment Companies) Index.
Gearing policy
It is intended that net gearing will not exceed 15% of the net assets of the Company at the time of the drawdown of the relevant borrowings. Under normal operating conditions it is envisaged that gearing will be within a range of 0%-15% of net assets.
Business model
The Company’s business model follows that of an externally managed investment trust. Therefore, the Company does not have any employees and outsources its activities to third-party service providers including the Manager, who is the principal service provider. The management of the investment portfolio and the administration of the Company have been contractually delegated to the Manager who in turn (with the permission of the Company) has delegated certain investment management and other ancillary services to the Investment Manager. The Manager, operating under guidelines determined by the Board, has direct responsibility for the decisions relating to the day-to-day running of the Company and is accountable to the
Other service providers include the Depositary (also BNY) and the Registrar,
Investment philosophy
The Investment Manager seeks to identify companies which it believes have superior long-term growth prospects and the management in place to take advantage of these prospects. This is done through internal investment research, company visits and the careful monitoring of market newsflow and external broker analysis. Initially, if the Investment Manager is sufficiently impressed with a company’s prospects, it will look to take a small position, usually 0.25% to 0.50% of the Company’s net assets, in a new holding. These holdings will be closely monitored, and members of the portfolio management team will meet with management on a regular basis. If these companies continue to prosper and make the most of opportunities, the Investment Manager will gradually add to the portfolio holding. Where initial expectations are disappointing, the holding will be sold. The anticipation is that each holding will develop into a core holding over time; one that meets the Investment Manager’s criteria for high quality growth companies.
Valuation is a key consideration; it is important not to overpay for new holdings. However, investment fundamentals are also important, and the Investment Manager may be prepared to pay what seems like a high price if it believes that long-term growth prospects are very strong. Generally, a company will be held within the portfolio if it meets the criteria for core holdings; in respect of recent investments, the Investment Manager will consider whether they have the potential to meet these criteria. Holdings will be sold if there are concerns that the investment case has changed in a negative way. Holdings will be reduced where the position size becomes too large and raises concerns about risk and diversification. The general aim is for portfolio holdings not to exceed 3% of the Company’s net assets (excluding cash fund investments held for cash management purposes). As the investments within the portfolio become larger over time, the Portfolio Manager will continue to assess growth prospects in comparison to smaller businesses operating within similar markets. New holdings will typically have a market cap beneath £2 billion (although the Portfolio Manager may from time to time invest in larger market cap companies if these fit the investment thesis with the prior permission of the Board). Holdings that move above that level will be maintained providing the investment adheres to the original thesis and remains the most attractive opportunity that can be found amongst a comparable peer group. In accordance with the guidelines, the Portfolio Manager will sell any stock that enters the
The Investment Manager believes that consistent outperformance can be achieved by employing a combination of bottom-up and top-down analysis, based upon strong fundamental research as outlined above.
In building a robust portfolio the Investment Manager will also consider the macro - economic background, working with strategists, economists and other teams internally and externally to understand the broad environment. It also works closely with BlackRock’s risk team to assess the risks in the structure of the portfolio. Any necessary adjustments will be made to the portfolio to ensure that it is structured in an appropriate way from a macro and risk point of view.
Portfolio analysis
A detailed analysis of the portfolio has been provided within the Annual Report and Financial Statements.
Performance
Details of the Company’s performance including the dividend are set out in the Chairman’s Statement above. The Chairman’s Statement and the Investment Manager’s Report form part of this Strategic Report and includes a review of the main developments during the year, together with information on investment activity within the Company’s portfolio.
Results and dividends
The results for the Company are set out in the Income Statement in the Financial Statements. The total net loss for the year, after taxation, was £4,268,000 (2024: loss of £32,701,000) of which the revenue return amounted to a profit of £19,918,000 (2024: profit of £19,691,000) and the capital loss amounted to £24,186,000 (2024: loss of £52,392,000).
The Company’s revenue return amounted to 42.53p per share (2024: 40.70p). The Directors have declared a final dividend of 28.50p per share as set out in the Chairman’s Statement above.
Future prospects
The Board’s main focus is to achieve long-term capital growth. The future performance of the Company is dependent upon the success of the investment strategy and, to a large extent, on the performance of financial markets. The outlook for the Company in the next twelve months is discussed in the Chairman’s Statement and the Investment Manager’s Report above.
Social, community and human rights issues
As an investment trust, the Company has no direct social or community responsibilities or impact on the environment, and the Company has not adopted an ESG investment strategy or exclusionary screens. However, the Directors believe that it is in shareholders’ interests to consider human rights issues, environmental, social and governance matters when selecting and retaining investments. Details of the Board’s approach to ESG and socially responsible investment is set out within the Annual Report and Financial Statements. Details of the Manager’s approach to ESG integration are set out within the Annual Report and Financial Statements.
Modern Slavery Act
As an investment vehicle the Company does not provide goods or services in the normal course of business and does not have customers. Accordingly, the Directors consider that the Company is not required to make any slavery or human trafficking statement under the Modern Slavery Act 2015. In any event, the Board considers the Company’s supply chain, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter.
Directors, gender representation and employees
The Directors of the Company on
Key performance indicators
At each Board meeting, the Directors consider a number of performance measures to assess the Company’s success in achieving its objectives. The key performance indicators (KPIs) used to measure the progress and performance of the Company over time, and which are comparable to those reported by other investment trusts are set out below. As indicated in footnote 2 to the table, some of these KPIs fall within the definition of ‘Alternative Performance Measures’ (APMs) under guidance issued by the
Year ended Year ended
28 February 29 February
Key Performance Indicators
2025 2024
% change NAV per share (debt at par value)1,2 -0.6% -4.0%
% change NAV per share (debt at fair value)1,2 0.0% -3.6%
% change Share price total return1,2 -1.4% -0.8%
% change Benchmark return1 6.2% -5.8%
Average discount to NAV with debt at fair value2 11.0% 12.4%
Revenue return per share 42.53p 40.70p
Ongoing charges ratio2,3 0.8% 0.8%
Retail ownership 69.8% 66.5%
1 Total return basis with dividends reinvested.
2 Alternative Performance Measure, see Glossary contained within the Annual Report and Financial Statements.
3 Calculated as a percentage of average daily net assets and using the management fee and all other operating expenses, excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation, prior year expenses written back and certain non-recurring items in accordance with AIC guidelines.
Sources: BlackRock and LSEG Datastream.
Additionally, the Board regularly reviews many indices and ratios to understand the impact on the Company’s relative performance of the various components such as asset allocation and stock selection. The Board also reviews the performance and ongoing charges of the Company against a peer group of
Principal risks
The Company is exposed to a variety of risks and uncertainties. As required by the
The risk register, its method of preparation and the operation of key controls in BlackRock’s and third-party service providers’ systems of internal control are reviewed on a regular basis by the Audit Committee. In order to gain a more comprehensive understanding of BlackRock’s and other third-party service providers’ risk management processes and how these apply to the Company’s business, BlackRock’s internal audit department provides an annual presentation to the Audit Committee Chairman setting out the results of testing performed in relation to BlackRock’s internal control processes. The Audit Committee also periodically receives presentations from BlackRock’s Risk and Quantitative Analysis team and reviews Service Organisation Control (SOC 1) reports from the Company’s service providers. The current risk register categorises the Company’s main areas of risk as follows:
-- Investment performance risk;
-- Market risk;
-- Income/dividend risk;
-- Legal & compliance risk;
-- Operational risk;
-- Financial risk; and
-- Marketing risk.
The Board has undertaken a robust assessment of both the principal and emerging risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. The risk that unforeseen or unprecedented events including (but not limited to) heightened geo-political tensions such as the war in
Additionally, the Manager considers emerging risks in numerous forums and the Risk and Quantitative Analysis team produces an annual risk survey. Any material risks of relevance to the Company identified through the annual risk survey will be communicated to the Board.
Emerging risks that have been considered by the Board over the year include the impact of climate change, escalating geo - political conflict and technological advances.
The key emerging risks identified are as follows:
Geo-political risk: Escalating geo-political tensions (including, but not limited to the potential for a prolonged global trade war over tariffs, tensions in the
Artificial Intelligence (‘AI’): Advances in computing power means that AI has become a powerful tool that will impact a huge range of areas and with a wide range of applications that have the potential to dislocate established business models and disrupt labour markets, creating uncertainty in corporate valuations. The significant energy required to power this technological revolution will create further pressure on environmental resources and carbon emissions.
The Board will continue to assess all identified risks on an ongoing basis. In relation to the
The principal risks and uncertainties faced by the Company during the financial year, together with the potential effects, controls and mitigating factors are set out in the following table.
Investment performance
Principal risk
The returns achieved are reliant primarily upon the performance of the portfolio.
The Board is responsible for:
-- deciding the investment strategy to fulfil the Company’s objective; and
-- monitoring the performance of the Investment Manager and the
implementation of the investment strategy.
An inappropriate investment strategy may lead to:
-- poor performance compared to the Benchmark Index and the Company’s peer
group;
-- a loss of capital; and
-- dissatisfied shareholders.
The Board is also cognisant of the long-term risk to performance from inadequate attention to ESG issues, and in particular the impact of climate change. More detail in respect of these risks can be found in the AIFMD Fund Disclosures document available on the Company’s website at www.blackrock.com/uk/individual/literature/policies/itc-disclosure-blackrock-smaller-companies-trust-plc.pdf.
Mitigation/Control
To manage this risk the Board:
-- regularly reviews the Company’s investment mandate and long-term
strategy;
-- has set investment restrictions and guidelines which the Investment
Manager monitors and regularly reports on;
-- receives from the Investment Manager a regular explanation of stock
selection decisions, portfolio exposure, gearing and any changes in
gearing and the rationale for the composition of the investment
portfolio;
-- monitors the maintenance of an adequate spread of investments in order
to minimise the risks associated with factors specific to particular
sectors, based on the diversification requirements inherent in the
investment policy; and
-- receives reports showing the Company’s performance against the
benchmark.
ESG analysis is integrated into the Manager’s investment process, as set out within the Annual Report and Financial Statements. This is monitored by the Board.
Market risk
Principal risk
Market risk arises from volatility in the prices of the Company’s investments influenced by currency, interest rate or other price movements. It represents the potential loss the Company might suffer through holding market positions in financial instruments in the face of market movements.
Market risk includes the potential impact of events which are outside the Company’s control, including (but not limited to) heightened geo-political tensions and military conflict, increased tariffs, a global pandemic and high inflation or stagflation (in particular through increased commodity price volatility driving inflation and impacting trade).
The impact of climate change and new legislation governing climate change and environmental issues have the potential to adversely impact markets and the valuation of companies within the portfolio.
There is the potential for the Company to suffer loss through holding investments in the face of negative market movements.
Mitigation/Control
The Board considers asset allocation, stock selection and levels of gearing on a regular basis and has set investment restrictions and guidelines which are monitored and reported on by the Investment Manager.
The Board monitors the implementation and results of the investment process with the Investment Manager.
The Board also recognises the benefits of a closed-end fund structure in extremely volatile markets such as those experienced during the
The Manager takes into account climate risk within the investment process along with other ESG considerations as set out within the Annual Report and Financial Statements.
Income/dividend risk
Principal risk
The amount of dividends and future dividend growth will depend on the performance of the Company’s underlying portfolio and may be impacted by events which are outside the Company’s control, such as the
Mitigation/Control
The Board monitors this risk through the receipt of detailed income forecasts and considers the level of income at each Board meeting.
The Company has substantial revenue reserves which can be utilised and also has the ability to make distributions by way of dividends from capital reserves if required.
Legal & Compliance risk
Principal risk
The Company has been approved by
Any breach of the relevant eligibility conditions could lead to the Company losing investment trust status and being subject to corporation tax on capital gains realised within the Company’s portfolio. In such event the investment returns of the Company may be adversely affected.
Any serious breach could result in the Company and/or the Directors being fined or the subject of criminal proceedings or the suspension of the Company’s shares which would in turn lead to a breach of the Corporation Tax Act 2010.
Amongst other relevant laws and regulations, the Company is required to comply with the provisions of the Companies Act 2006, the Alternative Investment Fund Managers’ Directive, the
Mitigation/Control
The Investment Manager monitors investment movements and the amount of proposed dividends to ensure that the provisions of Chapter 4 of Part 24 of the Corporation Tax Act 2010 are not breached. The results are reported to the Board at each meeting.
Compliance with the accounting rules affecting investment trusts is also carefully and regularly monitored.
The Company Secretary and the Company’s professional advisers provide regular reports to the Board in respect of compliance with all applicable rules and regulations.
The Company’s Investment Manager, BlackRock, at all times complies with sanctions administered by the
Operational risk
Principal risk
In common with most other investment trust companies, the Company has no employees. The Company therefore relies on the services provided by third parties. Accordingly, it is dependent on the control systems of the Manager, the Depositary and the Fund Accountant who maintain the Company’s assets, dealing procedures and accounting records.
The security of the Company’s assets, dealing procedures, accounting records and adherence to regulatory and legal requirements and the prevention of fraud depend on the effective operation of the systems of these other third-party service providers. There is a risk that a major disaster, such as floods, fire, a global pandemic, or terrorist activity, renders the Company’s service providers unable to conduct business at normal operating capacity and effectiveness.
Failure by any service provider to carry out its obligations to the Company could have a material adverse effect on the Company’s performance. Disruption to the accounting, payment systems or custody records could prevent the accurate reporting and monitoring of the Company’s financial position.
Inadequate succession planning arrangements, particularly of the Manager, could disrupt the level of service provided.
Mitigation/Control
Due diligence is undertaken before contracts are entered into with third-party service providers. Thereafter, the performance of the provider is subject to regular review and reported to the Board.
The Board reviews on a regular basis an assessment of the fraud risks that the Company could potentially be exposed to, and also a summary of the controls put in place by the Manager, the Depositary, the Custodian, the Fund Accountant and the Registrar designed specifically to mitigate these risks.
Most third-party service providers produce Service Organisation Control (SOC 1) reports to provide assurance regarding the effective operation of internal controls as reported on by their reporting accountants. These reports are provided to the Audit Committee.
The Company’s financial instruments held in custody are subject to a strict liability regime and in the event of a loss of such financial instruments held in custody, the Depositary must return assets of an identical type or the corresponding amount, unless able to demonstrate the loss was a result of an event beyond its reasonable control.
The Board reviews the overall performance of the Manager, Investment Manager and all other third-party service providers and compliance with the Investment Management Agreement on a regular basis.
The Board also considers the business continuity arrangements of the Company’s key service providers on an ongoing basis and reviews these as part of their review of the Company’s risk register. The Board considers the Manager’s succession plans in so far as they affect the services provided to the Company.
Financial risk
Principal risk
The Company’s investment activities expose it to a variety of financial risks that include interest rate, credit and liquidity risk.
Mitigation/Control
Details of these risks are disclosed in note 17 to the financial statements contained within the Annual Report and Financial Statements, together with a summary of the policies for managing these risks.
Marketing risk
Principal risk
Marketing efforts are inadequate, do not comply with relevant regulatory requirements, and fail to communicate adequately with shareholders or reach out to potential new shareholders resulting in reduced demand for the Company’s shares and a widening discount.
Mitigation/Control
The Board focuses significant time on communications with shareholders and reviewing marketing strategy and initiatives. All investment trust marketing documents are subject to appropriate review and authorisation.
Viability statement
In accordance with provision 31 of the 2018 UK Corporate Governance Code, the Directors have assessed the prospects of the Company over a longer period than the 12 months referred to by the ‘Going Concern’ guidelines.
The Board is cognisant of the uncertainty surrounding the potential duration of the conflicts in
In making this assessment the Board has considered the following factors:
-- The Company’s principal risks as set out below;
-- The risk that the challenging geo-political backdrop, rising inflation
and a sustained high interest rate environment will impact on the
ability of portfolio companies to pay dividends, and consequently impact
the Company’s portfolio yield and ability to pay dividends;
-- The ongoing relevance of the Company’s investment objective in the
current environment; and
-- The level of demand for the Company’s ordinary shares.
The Board has also considered a number of financial metrics and other factors, including:
-- The Board has reviewed portfolio liquidity as at 28 February 2025 ;
-- The Board has reviewed the Company’s revenue and expense forecasts in
light of the current economic back drop both in the UK and globally and
the anticipated impact on dividend income and market valuations. The
Board is confident that the Company’s business model remains viable and
that the Company has sufficient resources to meet all liabilities as
they fall due for the period under review;
-- The Board has reviewed the Company’s borrowing and debt facilities and
considers that the Company continues to meet its financial covenants in
respect of these facilities and has a wide margin before any relevant
thresholds are reached;
-- The Board keeps the Company’s principal risks and uncertainties as set
out above under review, and is confident that the Company has
appropriate controls and processes in place to manage these and to
maintain its operating model, even given the global economic challenges
posed by the impact of climate change on portfolio companies and the
current climate of heightened geo-political risk (notably the invasion
of Ukraine and the conflict in the Middle East );
-- The operational resilience of the Company and its key service providers
(the Manager, Depositary, Custodian, Fund Administrator, Registrar and
Broker) and their ability to continue to provide a good level of service
for the foreseeable future;
-- The level of current and historic ongoing charges incurred by the
Company;
-- The discount to NAV;
-- The level of income generated by the Company; and
-- Future income forecasts.
The Company is an investment company with a relatively liquid portfolio. As at
Based on the results of their analysis, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment.
Section 172 Statement: promoting the success of the Company
The Companies (Miscellaneous Reporting) Regulations 2018 require directors to explain in greater detail how they have discharged their duties under Section 172(1) of the Companies Act 2006 in promoting the success of their companies for the benefit of members as a whole. This enhanced disclosure is required under the Companies Act 2006 and the AIC Code of Corporate Governance and covers how the Board has engaged with and understands the views of stakeholders and how stakeholders’ needs have been taken into account, the outcome of this engagement and the impact that it has had on the Board’s decisions.
As the Company is an externally managed investment company and does not have any employees or customers, the Board considers the main stakeholders in the Company to be the shareholders, key service providers (being the Manager and Investment Manager, the Custodian, Depositary, Registrar and Broker) and investee companies. The reasons for this determination, and the Board’s overarching approach to engagement, are set out below.
Stakeholders
Shareholders
Continued shareholder support and engagement are critical to the continued existence of the Company and the successful delivery of its long-term strategy. The Board is focused on fostering good working relationships with shareholders and on understanding the views of shareholders in order to incorporate them into the Board’s strategy and objectives in delivering long-term growth and income. The Board makes a regular effort to discuss ongoing Company developments with shareholders.
Manager and Investment Manager
The Board’s main working relationship is with the Manager, who is responsible for the Company’s portfolio management (including asset allocation, stock and sector selection) and risk management, as well as ancillary functions such as administration, secretarial, accounting and marketing services. The Manager has sub-delegated portfolio management to the Investment Manager. Successful management of shareholders’ assets by the Investment Manager is critical for the Company to successfully deliver its investment strategy and meet its objective. The Company is also reliant on the Manager as AIFM to provide support in meeting relevant regulatory obligations under the AIFMD and other relevant legislation.
Other key service providers
In order for the Company to function as an investment trust with a listing on the premium segment of the official list of the
Investee companies
Portfolio holdings are ultimately shareholders’ assets, and the Board recognises the importance of good stewardship and communication with investee companies in meeting the Company’s investment objective and strategy. The Board monitors the Manager’s stewardship activities and receives regular feedback from the Manager in respect of meetings with the management of portfolio companies.
Management of share rating
Issue
The Board recognises that it is in the long-term interests of shareholders that shares do not trade at a significant discount or premium to their prevailing net asset value. Therefore, where deemed to be in shareholders’ long-term interests, it may exercise its powers to issue shares or buy back shares with the objective of ensuring that an excessive premium or discount does not arise.
Engagement
The Board monitors the Company’s share rating on an ongoing basis and receives regular updates from the Company’s Broker and Manager regarding the level of discount and the drivers behind this. The Manager provides regular performance updates and detailed performance attribution.
The Board believes that the best way of maintaining the share rating at an optimal level over the long term is to create demand for the shares in the secondary market. To this end the Investment Manager is devoting considerable effort to broadening the awareness of the Company, particularly to wealth managers and to the wider retail shareholder market.
The Company contributes to a focused investment trust sales and marketing initiative operated by BlackRock on behalf of the investment trusts under its management. The Company’s contribution to the consortium element of the initiative, which enables the trusts to achieve efficiencies by combining certain sales and marketing activities was a fixed amount of £67,000 and this contribution is matched by the Investment Manager for the year ended
During the year ended
Since the year end and as at the date of this report, the Company has repurchased 700,000 shares for costs of £8,803,000 at an average discount of 12.2%.
Impact
Over the last five years, the Company’s discount has widened steadily, from an average discount of 2.9% for the year to
Over the last twelve years, the number of shares held by retail shareholders has increased from 39.4% (as at
Investment mandate and objective
Issue
The Board has the responsibility to shareholders to ensure that the Company’s portfolio of assets is invested in line with the stated investment objective and in a way that ensures an appropriate balance between spread of risk and portfolio returns.
Engagement
The Board works closely with the Investment Manager throughout the year in further developing our investment strategy and underlying policies, not simply for the purpose of achieving the Company’s investment objective but in the interests of shareholders and future investors.
Impact
The portfolio activities undertaken by the Investment Manager can be found in the Investment Manager’s Report above.
Details regarding the Company’s NAV and share price performance can be found in the Chairman’s Statement and in the Strategic Report above.
Responsible investing
Issue
More than ever, good governance and consideration of sustainable investment is a key factor in making investment decisions. Climate change is becoming a defining factor in companies’ long-term prospects across the investment spectrum, with significant and lasting implications for economic growth and prosperity.
Engagement
The Board believes that responsible investment and sustainability are important to the longer-term delivery of the Company’s success. The Board works closely with the Investment Manager to regularly review the Company’s performance, investment strategy and underlying policies to ensure that the Company’s investment objective continues to be met in an effective and responsible way in the interests of shareholders and future investors.
The Investment Manager’s approach to the consideration of Environmental, Social and Governance (ESG) factors in respect of the Company’s portfolio, as well as the Investment Manager’s engagement with investee companies, are kept under review by the Board. The Investment Manager reports to the Board in respect of how consideration of material ESG risks and opportunities is integrated into the investment process; a summary of BlackRock’s approach to ESG integration is set out within the Annual Report and Financial Statements. The Investment Manager’s engagement and voting policy is detailed within the Annual Report and Financial Statements and on the BlackRock website.
Impact
The Board and the Investment Manager believe there is a positive correlation between ESG practices and investment performance. Details of the Company’s performance in the year are given in the Chairman’s Statement above and the Performance Record contained within the Annual Report and Financial Statements.
The Company does not meet the criteria for Article 8 or 9 products under the EU Sustainable Finance Disclosure Regulation (SFDR) and the investments underlying this financial product do not take into account the EU criteria for environmentally sustainable economic activities. The Investment Manager has access to a range of data sources, including principal adverse indicator (PAI) data, when making decisions on the selection of investments. However, whilst BlackRock considers ESG risks for all portfolios and these risks may coincide with environmental or social themes associated with the PAIs, unless stated otherwise in the AIFMD Disclosure Document, the Company does not commit to considering PAIs in driving the selection of its investments.
Gearing and sources of finance
Issue
The Board believes that it is important for the Company to have an appropriate range of borrowings and facilities in place to provide a balance between longer-term and short-term maturities and between fixed and floating rates of interest.
Engagement
Gearing levels and sources of funding are reviewed regularly by the Board with a view to ensuring that the Company has a suitable mix of financing at competitive market rates.
As at
It is the Board’s intention that gearing will not exceed 15% of the net assets of the Company at the time of the drawdown of the relevant borrowings. Under normal operating conditions it is envisaged that gearing will be within a range of 0%-15% of net assets.
Impact
The Board has been proactive over the last few years in putting in place structural fixed gearing with the issue of £70 million of private placement notes issued between
For the year to
At the year end, the Company’s gearing was 13.3% of net assets.
Service levels of third-party providers
Issue
The Board acknowledges the importance of ensuring that the Company’s principal suppliers are providing a suitable level of service: including the Manager in respect of investment performance and delivering on the Company’s investment mandate; the Custodian and Depositary in respect of their duties towards safeguarding the Company’s assets; the Registrar in its maintenance of the Company’s share register and dealing with investor queries and the Company’s Broker in respect of the provision of advice and acting as a market maker for the Company’s shares.
Engagement
The Manager reports to the Board on the Company’s performance on a regular basis. The Board carries out a robust annual evaluation of the Manager’s performance, their commitment and available resources.
The Board performs an annual review of the service levels of all third-party service providers and concludes on their suitability to continue in their role.
The Board receives regular updates from the AIFM, Depositary, Registrar and Broker on an ongoing basis.
The Board works closely with the Manager to gain comfort that relevant business continuity plans are in place and are operating effectively for all of the Company’s service providers.
Impact
All performance evaluations were performed on a timely basis and the Board concluded that all third-party service providers, including the Manager were operating effectively and providing a good level of service.
The Board has received updates in respect of business continuity planning from the Company’s Manager, Custodian, Depositary, Fund Administrator, Broker, Registrar and printers, and is confident that the arrangements in place are appropriate.
Board composition
Issue
The Board is committed to ensuring that its own composition brings an appropriate balance of knowledge, experience and skills, and that it is compliant with best corporate governance practice under the
Engagement
The Board engaged an external firm (Stogdale St James) to carry out an independent external evaluation of the Board in 2022. As part of this process the Board also asked Stogdale St James to compile a skills matrix to enable the Board to identify areas of focus in future succession planning to ensure a diverse Board. The Board maintains this skills matrix as the cornerstone for undertaking all search and selection processes with the aim of further enhancing Board diversity.
All Directors are subject to a formal evaluation process on an annual basis and it was concluded that the Board, its Committees and the Chairman were all performing in an effective manner. More details are given within the Annual Report and Financial Statements.
All Directors stand for re-election/election by shareholders annually.
Shareholders may attend the AGM and raise any queries in respect of Board composition or individual Directors in person or may contact the Company Secretary or the Chairman using the details provided within the Annual Report and Financial Statements with any issues.
The Board has implemented a policy of limiting directors’ tenure to nine years. Subject to the constraints of effective succession planning, it is the Board’s aim that no Director will serve on the
Impact
As at
The Parker Review in respect of board diversity and the recent changes to the FCA’s Listing Rules set new diversity targets and associated disclosure requirements for
Further information on the composition and diversity of the Board can be found in the Corporate Governance Statement contained within the Annual Report and Financial Statements.
At the start of the year under review, no Board Director had tenure in excess of nine years.
Details of each Director’s contribution to the success and promotion of the Company are set out in the Directors’ Report contained within the Annual Report and Financial Statements and details of Directors’ biographies can be found within the Annual Report and Financial Statements.
The Directors are not aware of any issues that have been raised directly by shareholders in respect of Board composition in the year under review. Details for the proxy voting results in favour and against individual Directors’ re-election at the 2024 AGM are given on the Company’s website at www.blackrock.com/uk/brsc.
On
Shareholders
Issue
Continued shareholder support and engagement are critical to the continued existence of the Company and the successful delivery of its long-term strategy.
Engagement
The Board is committed to maintaining open channels of communication and to engage with shareholders and welcomes and encourages attendance and participation from shareholders at its Annual General Meetings. If shareholders wish to raise issues or concerns with the Board outside of the AGM, they are welcome to do so at any time. The Chairman is available to meet directly with shareholders periodically to understand their views on governance and the Company’s performance where they wish to do so. He may be contacted via the Company Secretary whose details are given within the Annual Report and Financial Statements.
The Annual Report and Half Yearly Financial Report are available on the Company’s website and are also circulated to shareholders either in printed copy or via electronic communications. In addition, regular updates on performance, monthly factsheets, the daily NAV and other information are also published on the website at www.blackrock.com/uk/brsc.
The Board also works closely with the Manager to develop the Company’s marketing strategy, with the aim of ensuring effective communication with shareholders in respect of the investment mandate and objective. Unlike trading companies, one-to-one shareholder meetings usually take the form of a meeting with the portfolio manager as opposed to members of the Board. As well as attending regular investor meetings the portfolio managers hold regular discussions with wealth management desks and offices to build on the case for, and understanding of, long-term investment opportunities in the
The Manager also coordinates public relations activity, including meetings between the portfolio managers and shareholders and potential investors to set out their vision for the portfolio strategy and outlook for the region and in the year under review, the Company held a number of webcasts and virtual conferences as well as meeting with investors by videoconference.
The Manager releases monthly portfolio updates to the market to ensure that investors are kept up to date in respect of performance and other portfolio developments and maintains a website on behalf of the Company that contains relevant information in respect of the Company’s investment mandate and objective.
Impact
The Board values any feedback and questions from shareholders ahead of and during Annual General Meetings in order to gain an understanding of their views and will take action when and as appropriate. Feedback and questions will also help the Company evolve its reporting, aiming to make reports more transparent and understandable.
Feedback from all substantive meetings between the Investment Manager and shareholders will be shared with the Board. The Directors will also receive updates from the Company’s broker on any feedback from shareholders, as well as share trading activity, share price performance and an update from the Investment Manager.
The portfolio management team attended a number of professional investor meetings (mainly by videoconference) and held discussions with many different wealth management desks and offices in respect of the Company during the year under review.
The portfolio manager also presented at virtual events hosted by Boring Money, Investor Meet, Kepler and
Investors gave positive feedback in respect of the portfolio manager, the good long-term track record, clear investment strategy and low fee. Some investors commented that they liked the fact that (in common with many closed-ended funds across the sector) the Company’s discount had widened, making the shares excellent value.
Investors expressed concerns over the outlook for
Environmental, Social and Governance Issues and Approach
The Board’s approach
Environmental, social and governance (ESG) issues can present both opportunities and risks to long-term investment performance. Whilst the Company does not exclude investment in stocks purely on ESG criteria, material ESG analytics are integrated into the investment process when weighing up the risk and reward benefits of investment decisions and the Board believes that communication and engagement with portfolio companies is important and can lead to better outcomes for shareholders and the environment than merely excluding investment in certain areas.
More information on BlackRock’s global approach to ESG integration, as well as activity specific to the
BlackRock’s approach to material ESG integration
BlackRock’s clients have a wide range of perspectives on a variety of issues and investment themes, including sustainable and low-carbon transition investing. Given the wide range of unique and varied investment objectives sought by our clients, BlackRock’s investment teams have a range of approaches to considering financially material
BlackRock’s ESG integration framework is built upon our history as a firm founded on the principle of thorough and thoughtful risk management. Aladdin, our core risk management and investment technology platform, allows investors to leverage financially material
BlackRock’s ESG Integration Statement can be found at https://www.blackrock.com/corporate/literature/publication/blk-esg-investment-statement-web.pdf.
BlackRock’s reporting and disclosures
In terms of its own reporting, BlackRock believes that the
The BlackRock portfolio management team has excellent access to company management teams and undertakes about 700 company meetings each year to identify high quality, cash generative businesses with strong management teams that are able to generate growth in a more challenging economic environment.
In addition, BlackRock also has a separate stewardship function. With effect from
The respective investment stewardship teams engage with companies, vote proxies on behalf of clients, contribute to industry dialogue on stewardship, and report on its activities. The teams aim to maintain a globally consistent approach while acknowledging the unique markets and sectors in which companies operate.
For the period from
Engagement
activities
Number of engagements held1 38
Number of companies met1 29
% of equity investments covered2 27
Shareholder meetings voted at3 121
Number of proposals voted on3 1,955
Number of votes against management3 56
% of total votes represented by votes against management3 2.9
1 Source: BlackRock as at
2 Source: BlackRock. As a percentage of total portfolio holdings at
3 Source: BlackRock,
Engagement Topics1 Climate Risk Management 4 Other company impacts on the environment 2 Water and Waste 2 Board Composition and Effectiveness 24 Board Gender Diversity 9 Business Oversight Risk Management 1 Corporate Strategy 12 Executive Management 3 Governance Structure 2 Other 1 Remuneration 20 Sustainability Reporting 1 Business Ethics and Integrity 1 Community relations 1 Diversity and Inclusion 4 Health and Safety 1Human Capital Management 6 Privacy and Data Security 2 Supply Chain Labour Management 1
Engagement Themes1 Environmental Market Capitalisation 5 Governance 38 Social 10
1
The number of meetings held in respect of the Company’s portfolio holdings; at which a particular topic is discussed.
Most engagement conversations cover multiple topics. More detail about BIS’ engagement priorities can be found here: www.blackrock.com/corporate/literature/publication/blk-stewardship-priorities-final.pdf.
Investment Stewardship
For most of the year under review (up to
A copy of the BAIS Global Engagement and Voting Guidelines can be found at the following link: https://www.blackrock.com/corporate/literature/publication/blackrock-active-investment-stewardship-engagement-and-voting-guidelines.pdf.
Investment stewardship policies
The benchmark investment stewardship policies, which include BIS’ Global Principles, regional voting guidelines and Engagement Priorities, and BAIS’ Global Engagement and Voting Guidelines, set out the core elements of corporategovernance that guide the investment stewardship teams’ efforts. Each team takes a globally consistent approach, while recognizing the unique markets and sectors in which companies operate.
These benchmark policies are reviewed annually to reflect changes in market standards, regulations, and feedback from clients and companies.
BlackRock is committed to transparency in terms of disclosure of its stewardship activities on behalf of clients. The investment stewardship teams publish their voting policies to help BlackRock’s clients understand their work to advance clients’ interests as investors in public companies. Additionally, BIS publishes both annual and quarterly reports detailing its stewardship activities. More detail in respect of BIS reporting can be found at www.blackrock.com/corporate/insights/investment-stewardship.
For and on behalf of the Board
Chairman
RELATED PARTY TRANSACTIONS: TRANSACTIONS WITH THE MANAGER AND AIFM
The investment management fee for the year ended
In addition to the above services, BIM (
During the year, the Manager pays the amounts due to the Directors. These fees are then reimbursed by the Company for the amounts paid on its behalf. As at
The ultimate holding company of the Manager and the Investment Manager is BlackRock, Inc., a company incorporated in
RELATED PARTY DISCLOSURE: DIRECTORS’ EMOLUMENTS
At the date of this report, the Board consists of six Non-executive Directors, all of whom are considered to be independent of the Manager by the Board. Disclosures of the Directors’ interests in the ordinary shares of the Company and fees and expenses payable to the Directors are set out in the Directors’ Remuneration Report, contained within the Annual Report and Financial Statements.
None of the Directors has a service contract with the Company. For the year ended
As at
Statement of Directors’ Responsibilities in respect of the Annual Report and Financial Statements
The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company as at the end of each financial year and of the profit or loss of the Company for that year.
In preparing those financial statements, the Directors are required to:
-- present fairly the financial position, financial performance and cash
flows of the Company;
-- select suitable accounting policies and then apply them consistently;
-- present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information;
-- make judgements and estimates that are reasonable and prudent;
-- state whether applicable UK Accounting Standards have been followed,
subject to any material departures disclosed and explained in the
financial statements; and
-- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and that enable them to ensure that the Financial Statements and the Directors’ Remuneration Report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are also responsible for preparing the Strategic Report, Directors’ Report, the Directors’ Remuneration Report, the Corporate Governance Statement and the Report of the Audit Committee in accordance with the Companies Act 2006 and applicable regulations, including the requirements of the Listing Rules and the Disclosure Guidance and Transparency Rules. The Directors have delegated responsibility to the Manager for the maintenance and integrity of the Company’s corporate and financial information included on BlackRock’s website. Legislation in the
Each of the Directors, whose names are listed within the Annual Report and Financial Statements, confirms that, to the best of their knowledge:
-- the Financial Statements, prepared in accordance with applicable
accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company; and
-- the Strategic Report contained in the Annual Report and Financial
Statements includes a fair review of the development and performance of
the business and the position of the Company, together with a
description of the principal risks and uncertainties that it faces.
The
FOR AND ON BEHALF OF THE BOARD
Chairman
Income Statement
for the year ended
2025 2024
Revenue Capital Total Revenue Capital Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
Losses on
investments
held at
fair value – (19,794) (19,794) – (48,408) (48,408)
through
profit or
loss
Losses on
foreign – (3) (3) – (9) (9)
exchange
Income from
investments
held at
fair value 3 22,684 875 23,559 21,884 782 22,666
through
profit or
loss
Other 3 1 – 1 379 – 379
income
--------------- --------------- --------------- --------------- --------------- ---------------
Total
income/ 22,685 (18,922) 3,763 22,263 (47,635) (25,372)
(loss)
========= ========= ========= ========= ========= =========
Expenses
Investment
management 4 (1,153) (3,458) (4,611) (1,109) (3,328) (4,437)
fee
Other
operating 5 (940) (25) (965) (869) (21) (890)
expenses
--------------- --------------- --------------- --------------- --------------- ---------------
Total
operating (2,093) (3,483) (5,576) (1,978) (3,349) (5,327)
expenses
========= ========= ========= ========= ========= =========
Net profit/
(loss) on
ordinary
activities 20,592 (22,405) (1,813) 20,285 (50,984) (30,699)
before
finance
costs and
taxation
Finance (627) (1,781) (2,408) (471) (1,408) (1,879)
costs
--------------- --------------- --------------- --------------- --------------- ---------------
Net profit/
(loss) on
ordinary 19,965 (24,186) (4,221) 19,814 (52,392) (32,578)
activities
before
taxation
Taxation (47) – (47) (123) – (123)
--------------- --------------- --------------- --------------- --------------- ---------------
Net profit/
(loss) on
ordinary 19,918 (24,186) (4,268) 19,691 (52,392) (32,701)
activities
after
taxation
========= ========= ========= ========= ========= =========
Earnings/
(loss) per
ordinary
share 7 42.53 (51.64) (9.11) 40.70 (108.29) (67.59)
(pence ) –
basic and
diluted
========= ========= ========= ========= ========= =========
The total columns of this statement represent the Company’s profit and loss account. The supplementary revenue and capital accounts are both prepared under guidance published by the
The net profit/(loss) for the year disclosed above represents the Company’s total comprehensive income/(loss).
Statement of Changes in Equity
for the year ended
Called Share Capital
up share premium redemption Capital Revenue
capital account reserve reserves reserve Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
For the year
ended 28
February 2025
At 29 February 12,498 51,980 1,982 601,098 18,648 686,206
2024
Total
comprehensive
(loss)/income:
Net
(loss)/profit – – – (24,186) 19,918 (4,268)
for the year
Transactions
with owners,
recorded
directly to
equity:
Ordinary
shares 10, – – – (46,838) – (46,838)
repurchased 11
into treasury
Share 10,
repurchase 11 – – – (303) – (303)
costs
Dividends 6 – – – – (20,018) (20,018)
paid1
--------------- --------------- --------------- --------------- --------------- ---------------
At 28 February 12,498 51,980 1,982 529,771 18,548 614,779
2025
========= ========= ========= ========= ========= =========
For the year
ended 29
February 2024
At 28 February 12,498 51,980 1,982 673,479 18,590 758,529
2023
Total
comprehensive
(loss)/income:
Net
(loss)/profit – – – (52,392) 19,691 (32,701)
for the year
Transactions
with owners,
recorded
directly to
equity:
Ordinary
shares 10, – – – (19,859) – (19,859)
repurchased 11
into treasury
Share 10,
repurchase 11 – – – (130) – (130)
costs
Dividends 6 – – – – (19,633) (19,633)
paid2
--------------- --------------- --------------- --------------- --------------- ---------------
At 29 February 12,498 51,980 1,982 601,098 18,648 686,206
2024
========= ========= ========= ========= ========= =========
1 Interim dividend paid in respect of the year ended
2 Interim dividend paid in respect of the year ended
For information on the Company’s distributable reserves, please refer to note 16 of the Annual Report and Financial Statements.
Balance Sheet
as at
2025 2024
Notes £’000 £’000
Non current assets
Investments held at fair value through 696,573 765,178
profit or loss
Current assets
Current tax assets 84 210
Debtors 7 9,738 4,667
Cash and cash equivalents – cash at bank – 28
--------------- ---------------
Total current assets 9,822 4,905
========= =========
Current liabilities
Cash and cash equivalents – bank overdraft (9,230) (7,899)
Creditors – amounts falling due within one 8 (12,843) (6,463)
year
--------------- ---------------
Net current liabilities (12,251) (9,457)
========= =========
Total assets less current liabilities 684,322 755,721
========= =========
Creditors – amounts falling due after more 9 (69,543) (69,515)
than one year
--------------- ---------------
Net assets 614,779 686,206
========= =========
Total equity
Called up share capital 10 12,498 12,498
Share premium account 11 51,980 51,980
Capital redemption reserve 11 1,982 1,982
Capital reserves 11 529,771 601,098
Revenue reserve 11 18,548 18,648
--------------- ---------------
Total shareholders’ funds 614,779 686,206
========= =========
Net asset value per ordinary share (debt 1,403.45 1,450.15
at par value) (pence)
========= =========
Net asset value per ordinary share (debt 1,463.44 1,502.25
at fair value) (pence)
========= =========
Statement of Cash Flows
for the year ended
2025 2024
£’000 £’000
Operating activities
Net loss on ordinary activities before taxation1 (4,221) (32,578)
Add back finance costs 2,408 1,879
Losses on investments held at fair value through 19,794 48,408
profit or loss
Net movement in foreign exchange 3 9
Sale of investments held at fair value through 541,426 322,366
profit or loss
Purchase of investments held at fair value (493,890) (327,895)
through profit or loss
Net amount for capital special dividends (875) (782)
received
Decrease in debtors 348 7
Increase/(decrease) in creditors 1,065 (1,280)
Taxation on investment income (47) (123)
--------------- ---------------
Net cash generated from operating activities 66,011 10,011
========= =========
Financing activities
Ordinary shares repurchased into treasury (44,663) (19,792)
Share repurchase costs (303) (130)
Interest paid (2,383) (1,854)
Dividends paid (20,018) (19,633)
--------------- ---------------
Net cash used in financing activities (67,367) (41,409)
========= =========
Decrease in cash and cash equivalents (1,356) (31,398)
Effect of foreign exchange rate changes (3) (9)
Cash and cash equivalents at beginning of year (7,871) 23,536
--------------- ---------------
Cash and cash equivalents at end of year (9,230) (7,871)
========= =========
Comprised of:
Cash Fund2 – 28
Bank overdraft (9,230) (7,899)
--------------- ---------------
(9,230) (7,871)
========= =========
1 Dividends and interest received in cash during the year amounted to £22,774,000 and £1,000 (2024: £21,699,000 and £447,000).
2
Notes to the Financial Statements for the year ended
1. Principal activity
The principal activity of the Company is that of an investment trust company within the meaning of Section 1158 of the Corporation Tax Act 2010.
2. Accounting policies
The principal accounting policies adopted by the Company are set out below.
(a) Basis of preparation
The financial statements have been prepared on a going concern basis in accordance with The Financial Reporting Standard applicable in the
Substantially, all of the assets of the Company consist of securities that are readily realisable and, accordingly, the Directors are satisfied that the Company has adequate resources to continue in operational existence for the period to
The Directors have considered the impact of climate change on the value of the investments included in the Financial Statements and have concluded that there was no further impact of climate change to be considered as the investments are valued based on market pricing as required by FRS 102.
None of the Company’s other assets and liabilities were considered to be potentially impacted by climate change.
The principal accounting policies adopted by the Company are set out below. Unless specified otherwise, the policies have been applied consistently throughout the year and are consistent with those applied in the preceding year. All of the Company’s operations are of a continuing nature.
The Company’s financial statements are presented in Sterling, which is the functional currency of the Company and the primary economic environment in which the Company operates. All values are rounded to the nearest thousand pounds (£’000) except where otherwise stated.
(b) Presentation of Income Statement
In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Income Statement between items of a revenue and a capital nature has been presented alongside the Income Statement.
(c) Segmental reporting
The Directors are of the opinion that the Company is engaged in a single segment of business being investment business.
(d) Income
Dividends receivable on equity shares are treated as revenue for the year on an ex-dividend basis. Where no ex-dividend date is available, dividends receivable on or before the year end are treated as revenue for the year. Provisions are made for dividends not expected to be received. The return on a debt security is recognised on a time apportionment basis.
Special dividends are recognised on an ex-dividend basis and are treated as capital or revenue depending on the facts or circumstances of each particular dividend.
Dividends are accounted for in accordance with Section 29 of FRS 102 on the basis of income actually receivable, without adjustment for tax credits attaching to the dividend. Dividends from overseas companies continue to be shown gross of withholding tax.
Deposit interest receivable is accounted for using the effective interest rate method in accordance with Section 11 of FRS 102.
Where the Company has elected to receive its dividends in the form of additional shares rather than in cash, the cash equivalent of the dividend foregone is recognised in the revenue account of the Income Statement. Any excess in the value of the shares over the amount of the cash dividend is recognised in capital reserves.
(e) Expenses
All expenses, including finance costs, are accounted for on an accruals basis. Expenses have been charged wholly to the revenue account of the Income Statement, except as follows:
· expenses which are incidental to the acquisition or disposal of an investment are treated as capital. Details of transaction costs on the purchases and sales of investments are shown in note 10 of the Annual Report and Financial Statements;
· expenses are treated as capital where a connection with the maintenance of enhancement of the value of the investments can be demonstrated; and
· the investment management fee and finance costs have been allocated 75% to the capital account and 25% to the revenue account of the Income Statement in line with the Board’s expected long-term split of returns, in the form of capital gains and income respectively, from the investment portfolio.
(f) Taxation
The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the Income Statement because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that were applicable at the balance sheet date.
The current tax effect of different items of expenditure is allocated between capital and revenue on the marginal basis using the Company’s effective rate of corporation tax for the accounting period.
Deferred taxation is recognised in respect of all timing differences at the financial reporting date, where transactions or events that result in an obligation to pay more taxation in the future or right to less taxation in the future have occurred at the balance sheet date. Deferred tax is measured on a non-discounted basis, at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. This is subject to deferred taxation assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the timing differences can be deducted.
(g) Investments held at fair value through profit or loss
The Company’s investments are classified as held at fair value through profit or loss in accordance with Sections 11 and 12 of FRS 102 and are managed and evaluated on a fair value basis in accordance with its investment strategy.
All investments are classified upon initial recognition as held at fair value through profit or loss. Purchases of investments are recognised on a trade date basis. Sales of assets are recognised at the trade date of the disposal and the proceeds will be measured at fair value, which will be regarded as the proceeds of the sale less any transaction costs.
The fair value of the financial investments is based on their quoted bid price at the balance sheet date on the exchange on which the investment is quoted, without deduction for the estimated future selling costs.
Unquoted investments are valued by the Directors at fair value using International Private Equity and Venture Capital Valuation Guidelines. This policy applies to all current and non-current asset investments of the Company.
Changes in the value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Income Statement as ‘Gains or losses on investments held at fair value through profit or loss’. Also included within this heading are transaction costs in relation to the purchase or sale of investments.
The fair value hierarchy consists of the following three levels:
Level 1 – Quoted market price for identical instruments in active markets.
Level 2 – Valuation techniques using observable inputs.
Level 3 – Valuation techniques using significant unobservable inputs.
(h) Dividends payable
Under Section 32 of FRS 102, final dividends should not be accrued in the financial statements unless they have been approved by shareholders before the balance sheet date. Dividends payable to equity shareholders are recognised in the Statement of Changes in Equity when they have been approved by shareholders and have become a liability of the Company. Interim dividends are recognised in the financial statements in the period in which they are paid.
(i) Foreign currency translation
In accordance with Section 30 of FRS 102, the Company is required to nominate a functional currency, being the currency in which the Company predominately operates. The functional and reporting currency is Sterling, reflecting the primary economic environment in which the Company operates. Transactions in foreign currencies are translated into Sterling at the rates of exchange ruling on the date of the transaction. Foreign currency monetary assets and liabilities are translated into Sterling at the rates of exchange ruling at the balance sheet date. Profits and losses thereon are recognised in the capital account of the Income Statement and taken to the capital reserve.
(j) Share repurchases and re-issues
Shares repurchased and subsequently cancelled – share capital is reduced by the nominal value of the shares repurchased, and the capital redemption reserve is correspondingly increased in accordance with Section 733 of the Companies Act 2006. The full cost of the repurchase is charged to the capital reserves.
Shares repurchased and held in treasury – the full cost of the repurchase is charged to the capital reserves.
Where treasury shares are subsequently re-issued:
-- amounts received to the extent of the repurchase price are credited to
the capital reserves; and
-- any surplus received in excess of the repurchase price is taken to the
share premium account.
Where new shares are issued, the par value is taken to called up share capital and amounts received to the extent of any surplus received in excess of the par value are taken to the share premium account.
Share issue costs are charged to the share premium account. Costs on share reissues are charged to the capital reserves.
(k) Debtors
Debtors include sales for future settlement, other debtors and prepayments and accrued income in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.
(l) Creditors
Creditors include purchases for future settlement, interest payable, share buyback costs and accruals in the ordinary course of business. Creditors, loans and debentures are classified as creditors – amounts due within one year if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as creditors – amounts falling due after more than one year.
Debentures are held at par less amortised cost, whilst all other creditors are held at fair value.
(m) Cash and cash equivalents
Cash comprises cash in hand and on demand deposits and bank overdrafts repayable on demand. Cash equivalents include short-term, highly liquid investments, that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value.
(n) Critical accounting estimates and judgements
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates and assumptions will, by definition, seldom equal the related actual results. Estimates and judgements are regularly evaluated and are based on historical experience and other factors, including expectations of future events and that are believed to be reasonable under the circumstances. The Directors do not believe that any accounting judgements or estimates have a significant risk of causing material adjustment to the carrying amount of assets and liabilities within the next financial year.
3. Income
2025 2024
£’000 £’000
Investment income1:
UK dividends 18,567 16,538
UK special dividends 801 1,230
UK property income distributions 1,007 1,058
Dividends from UK REITs2 493 –
Overseas dividends 1,514 3,058
Dividends from overseas REITs2 302 –
--------------- ---------------
Total investment income 22,684 21,884
========= =========
Other income:
Bank interest 1 8
Interest from Cash Fund – 371
--------------- ---------------
Total other income 1 379
========= =========
Total 22,685 22,263
========= =========
1
2 REITs – real estate investment trusts.
Special dividends of £875,000 have been recognised in capital during the year (2024: £782,000).
Dividends and interest received in cash during the year amounted to £22,774,000 and £1,000 (2024: £21,699,000 and £447,000).
4. Investment management fee
2025 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Investment
management 1,153 3,458 4,611 1,109 3,328 4,437
fee
--------------- --------------- --------------- --------------- --------------- ---------------
Total 1,153 3,458 4,611 1,109 3,328 4,437
========= ========= ========= ========= ========= =========
The investment management fee is based on a rate of 0.6% of the first £750 million of total assets (excluding current year income) less the current liabilities of the Company (the “Fee Asset Amount”), reducing to 0.5% above this level. The fee is calculated at the rate of one quarter of 0.6% of the Fee Asset Amount up to the initial threshold of £750 million, and one quarter of 0.5% of the Fee Asset Amount in excess thereof, at the end of each quarter. The investment management fee is allocated 25% to the revenue account and 75% to the capital account of the Income Statement.
5. Other operating expenses
2025 2024
£’000 £’000
Allocated to revenue:
Custody fees 9 10
Depositary fees 83 78
Auditors’ remuneration 52 50
Registrar’s fee 46 42
Directors’ emoluments1 240 201
Director search fees – 35
Marketing fees 195 174
AIC fees 22 22
Bank charges 24 28
Broker fees 23 35
Stock exchange listings 41 34
Printing and postage fees 39 37
Legal fees 43 21
Prior year expenses written back2 (11) (1)
Other administrative costs 134 103
--------------- ---------------
Total revenue expenses 940 869
========= =========
Allocated to capital:
Custody transaction charges3 25 21
--------------- ---------------
Total 965 890
========= =========
2025 2024
The Company’s ongoing charges4, calculated as a percentage
of average daily net assets and using the management fee and
all other operating expenses, excluding finance costs, 0.8% 0.8%
direct transaction costs, custody transaction charges, VAT
recovered, taxation, prior year expenses written back and
certain non-recurring items were:
========= =========
1 Further information on Directors’ emoluments can be found in the Directors’ Remuneration Report contained within the Annual Report and Financial Statements.
2 Relates to bank charges, printing and postage fees and miscellaneous fees written back during the year ended
3 For the year ended
4 Alternative Performance Measure, see Glossary contained within the Annual Report and Financial Statements.
6. Dividends
Dividends paid 2025 2024
on equity Record date Payment date £’000 £’000
shares:
2023 Final of 19 May 2023 27 June 2023 – 12,395
25.50p
2024 Interim of 3 November 2023 4 December 2023 – 7,238
15.00p
2024 Final of 24 May 2024 27 June 2024 12,717 –
27.00p
2025 Interim of 1 November 2024 4 December 2024 7,301 –
15.50p
--------------- ---------------
Accounted for in
the financial 20,018 19,633
statements
========= =========
The Directors have proposed a final dividend of 28.50p per share in respect of the year ended
The total dividends payable in respect of the year which form the basis of determining retained income for the purposes of Section 1158 of the Corporation Tax Act 2010 and Section 833 of the Companies Act 2006, and the amount proposed for the year ended
2025 2024
Dividends paid or proposed on equity shares: £’000 £’000
Interim dividend paid 15.50p (2024: 15.00p) 7,301 7,238
Final dividend payable of 28.50p per share1 12,285 12,717
(2024: 27.00p)
--------------- ---------------
Total 19,586 19,955
========= =========
1 Based upon 43,104,792 ordinary shares (excluding treasury shares) in issue on
All dividends paid or payable are distributed from the Company’s distributable reserves.
7. Debtors
2025 2024
£’000 £’000
Sales for future settlement 8,870 3,577
Prepayments and accrued income 868 1,090
--------------- ---------------
Total 9,738 4,667
========= =========
8. Creditors – amounts falling due within one year
2025 2024
£’000 £’000
Purchases for future settlement 5,066 1,923
Interest payable 581 584
Share buybacks awaiting settlement 2,241 66
Accruals 4,955 3,890
--------------- ---------------
Total 12,843 6,463
========= =========
9. Creditors – amounts falling due after more than one year
2025 2024
£’000 £’000
2.74% loan note 2037 25,000 25,000
Unamortised loan note issue expenses (168) (182)
--------------- ---------------
24,832 24,818
========= =========
2.41% loan note 2044 20,000 20,000
Unamortised loan note issue expenses (127) (133)
--------------- ---------------
19,873 19,867
========= =========
2.47% loan note 2046 25,000 25,000
Unamortised loan note issue expenses (162) (170)
--------------- ---------------
24,838 24,830
========= =========
Total 69,543 69,515
========= =========
The fair value of the 2.74% loan note has been determined based on a comparative yield for
The first £25 million loan note was issued on
The £20 million loan note was issued on
The second £25 million loan note was issued on
The Company also has available an uncommitted overdraft facility of £60 million with
10. Called up share capital
Ordinary Treasury Total Nominal
shares shares shares value
number number number £’000
Allotted, called
up and fully
paid share
capital
comprised:
Ordinary shares
of 25 pence each
At 28 February 48,829,792 1,163,731 49,993,523 12,498
2023
Ordinary shares
repurchased into (1,510,000) 1,510,000 – –
treasury
At 29 February 47,319,792 2,673,731 49,993,523 12,498
2024
Ordinary shares
repurchased into (3,515,000) 3,515,000 – –
treasury
--------------- --------------- --------------- ---------------
At 28 February 43,804,792 6,188,731 49,993,523 12,498
2025
========= ========= ========= =========
During the year ended
Since
The ordinary shares (excluding any shares held in treasury) carry the right to receive any dividends and have one voting right per ordinary share. There are no restrictions on the voting rights of the ordinary shares or on the transfer of ordinary shares.
11. Reserves
Distributable reserves
Capital
reserve
Capital (arising on
reserve revaluation
Share Capital (arising on of
premium redemption investments investments Revenue
account reserve sold) held) reserve
£’000 £’000 £’000 £’000 £’000
At 29
February 51,980 1,982 565,497 35,601 18,648
2024
Movement
during the
year:
Losses on
realisation – – (2,573) – –
of
investments
Change in
investment – – – (16,346) –
holding
gains
Losses on
foreign – – (3) – –
currency
transactions
Finance
costs and
expenses – – (5,264) – –
charged to
capital
Net profit – – – – 19,918
for the year
Ordinary
shares
repurchased – – (46,838) – –
into
treasury
Share
buyback – – (303) – –
costs
Dividends
paid during – – – – (20,018)
the year
--------------- --------------- --------------- --------------- ---------------
At 28
February 51,980 1,982 510,516 19,255 18,548
2025
========= ========= ========= ========= =========
Distributable reserves
Capital
reserve
Capital (arising on
reserve revaluation
Share Capital (arising on of
premium redemption investments investments Revenue
account reserve sold) held) reserve
£’000 £’000 £’000 £’000 £’000
At 28
February 51,980 1,982 620,667 52,812 18,590
2023
Movement
during the
year:
Losses on
realisation – – (30,417) – –
of
investments
Change in
investment – – – (17,209) –
holding
gains
Losses on
foreign – – (7) (2) –
currency
transactions
Finance
costs and
expenses – – (4,757) – –
charged to
capital
Net profit – – – – 19,691
for the year
Ordinary
shares
repurchased – – (19,859) – –
into
treasury
Share
buyback – – (130) – –
costs
Dividends
paid during – – – – (19,633)
the year
--------------- --------------- --------------- --------------- ---------------
At 29
February 51,980 1,982 565,497 35,601 18,648
2024
========= ========= ========= ========= =========
The share premium account and capital redemption reserve of £51,980,000 and £1,982,000 (2024: £51,980,000 and £1,982,000) are not distributable reserves under the Companies Act 2006. In accordance with ICAEW Technical Release 02/17BL on Guidance on Realised and Distributable Profits under the Companies Act 2006, the capital reserve may be used as distributable reserves for all purposes and, in particular, the repurchase by the Company of its ordinary shares and for payments such as dividends. In accordance with the Company’s Articles of Association, the capital reserve and the revenue reserve may be distributed by way of dividend. The gain on the capital reserve arising on the revaluation of investments of £19,255,000 (2024: gain of £35,601,000) is subject to fair value movements and may not be readily realisable at short notice, as such it may not be entirely distributable. The investments are subject to financial risks, as such capital reserves (arising on investments sold) and the revenue reserve may not be entirely distributable if a loss occurred during the realisation of these investments.
12 Valuation of financial instruments
Financial assets and financial liabilities are either carried in the Balance Sheet at their fair value (investments) or at an amount which is a reasonable approximation of fair value (due from brokers, dividends and interest receivable, due to brokers, accruals, cash at bank and bank overdrafts). Section 34 of FRS 102 requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The valuation techniques used by the Company are explained in the accounting policies note 2 of the Financial Statements.
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset.
The fair value hierarchy has the following levels:
Level 1 – Quoted market price for identical instruments in active markets
A financial instrument is regarded as quoted in an active market if quoted prices are readily available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The Company does not adjust the quoted price for these instruments.
Level 2 – Valuation techniques using observable inputs
This category includes instruments valued using quoted prices for similar instruments in markets that are considered less active; or other valuation techniques where significant inputs are directly or indirectly observable from market data.
Level 3 – Valuation techniques using significant unobservable inputs
This category includes all instruments where the valuation technique includes inputs not based on market data and these inputs could have a significant impact on the instrument’s valuation.
This category also includes instruments that are valued based on quoted prices for similar instruments where significant entity determined adjustments or assumptions are required to reflect differences between the instruments and instruments for which there is no active market. The Investment Manager considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement.
Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability including an assessment of the relevant risks including but not limited to credit risk, market risk, liquidity risk, business risk and sustainability risk. The determination of what constitutes ‘observable’ inputs requires significant judgement by the Investment Manager, and these risks are adequately captured in the assumptions and inputs used in measurement of Level 3 assets or liabilities.
Fair values of financial assets and financial liabilities
The table below is an analysis of the Company’s financial instruments measured at fair value at the balance sheet date.
Financial assets
at fair value Level 1 Level 2 Level 3 Total
through profit £’000 £’000 £’000 £’000
or loss at 28
February 2025
Equity 694,356 – 2,217 696,573
investments
--------------- --------------- --------------- ---------------
Total 694,356 – 2,217 696,573
========= ========= ========= =========
Financial assets
at fair value Level 1 Level 2 Level 3 Total
through profit £’000 £’000 £’000 £’000
or loss at 29
February 2024
Equity 765,178 – – 765,178
investments
--------------- --------------- --------------- ---------------
Total 765,178 – – 765,178
========= ========= ========= =========
The Company held one Level 3 security as at
A reconciliation of fair value measurement of Level 3 is set out below.
Level 3 financial assets at fair value through profit or loss
2025 2024
£’000 £’000
Opening fair value – –
Additions at cost 770 –
Gain on investments included in gains on 1,447 –
investments in the Income Statement
--------------- ---------------
Closing balance 2,217 –
========= =========
As at
For exchange listed equity investments, the quoted price is the bid price. Substantially all investments are valued based on unadjusted quoted market prices. Where such quoted prices are readily available in an active market, such prices are not required to be assessed or adjusted for any price related risks, including climate risk, in accordance with the fair value related requirements of the Company’s Financial Reporting Framework.
13. Transactions with the Investment Manager and AIFM
The investment management fee for the year ended
In addition to the above services, BIM (
During the year, the Manager pays the amounts due to the Directors. These fees are then reimbursed by the Company for the amounts paid on its behalf. As at
The ultimate holding company of the Manager and the Investment Manager is BlackRock, Inc., a company incorporated in
14. Related parties disclosures
Directors’ emoluments
At the date of this report, the Board consists of six Non-executive Directors, all of whom are considered to be independent of the Manager by the Board. Disclosures of the Directors’ interests in the ordinary shares of the Company and fees and expenses payable to the Directors are set out in the Directors’ Remuneration Report. At
Significant holdings
The following investors are:
a. funds managed by the
b. investors (other than those listed in (a) above) who held more than 20% of the voting shares in issue in the Company and are as a result, considered to be related parties to the Company (
Total % of shares Number of Significant
held by Investors
Total % of shares Significant Investors who are not affiliates
held by who are not of
Related BlackRock affiliates of BlackRock Group or
Funds BlackRock Group or BlackRock, Inc.
BlackRock, Inc.
As at 28 February 6.1 n/a n/a
2025
As at 29 February 9.7 n/a n/a
2024
15.
Contingent liabilities
There were no contingent liabilities at
16. Publication of non-statutory accounts
The financial information contained in this announcement does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006.
The figures set out above have been reported upon by the auditors. The comparative figures are extracts from the audited financial statements of
17. Annual report and financial statements
Copies of the Annual Report and Financial Statements will be sent to members shortly and will be available from The Company Secretary,
18. Annual General Meeting
The Annual General Meeting of the Company will be held at
ENDS
The Annual Report and Financial Statements will also be available on the
For further information, please contact:
Sarah Beynsberger, Director, Closed End Funds,
Tel: 020 7743 3000
Press Enquiries:
E-mail: BlackRockInvestmentTrusts@lansons.com or EdH@lansons.com
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