BlackRock Income and Growth Investment Trust Plc - Half-year Report
LEI: 5493003YBY59H9EJLJ16
Half Yearly Financial Report for the Six Months Ended
Performance record
As at As at 30 April 31 October 2024 2023 Net assets (£’000)1 43,809 40,156 Net asset value per ordinary share (pence) 217.79 194.90 Ordinary share price (mid-market) (pence) 186.50 178.00 Discount to net asset value2 14.4% 8.7% FTSE All-Share Index 9611.01 8413.70 ========= =========
For the six For the months ended year ended 30 April 2024 31 October 2023 Performance (with dividends reinvested) Net asset value per share2 14.4% 5.2% Ordinary share price2 7.6% 8.1% FTSE All-Share Index 14.2% 5.9% --------------- --------------- Performance since 1April 20123 (with dividends reinvested) Net asset value per share2 130.0% 101.1% Ordinary share price2 118.9% 103.5% FTSE All-Share Index 128.2% 99.8% ========= =========
For the six For the six months ended months ended Change 30 April 2024 30 April 2023 % Revenue Net profit on ordinary activities after taxation 806 722 11.6 (£’000) Revenue earnings per ordinary 3.94 3.44 14.5 share(pence)4 --------------- --------------- --------------- Dividends (pence) Interim 2.70 2.60 3.8 ========= ========= =========
1 The change in net assets reflects portfolio movements, the purchase of the Company’s own shares and dividends paid.
2 Alternative Performance Measures, see Glossary within the Half Yearly Financial Report.
3
Since BlackRock's appointment as Investment Manager on
4 Further details are given in the Glossary within the Half Yearly Financial Report.
Chairman’s statement
Overview
I am pleased to report that our portfolio has performed well during the six months to
Overall market sentiment was once again heavily influenced by the path of inflation and interest rates. In the US, the anticipated easing of monetary policy at the start of 2024 did not materialise as the
Demand for
Performance
The Company’s net asset value per share (NAV) returned 14.4%, compared with the Company’s Benchmark Index, the FTSE All-Share Index (total return), which returned 14.2%. The Company’s share price returned 7.6% as the discount widened from 8.7% at the start of the period to 14.4% as at
Subsequent to the period end and as at
Further information on the significant components of overall performance and the changes to portfolio composition are set out in the Investment Manager’s report below.
Revenue profit and dividends
Revenue profit for the period was
Share capital
The Directors recognise the importance to investors that the Company’s share price should not trade at a significant discount to NAV, and therefore, in normal market conditions, looks to use the Company’s share buy back, sale of shares from treasury and share issuance powers to seek to ensure that the share price does not differ excessively from the underlying NAV. We used our powers to buy back almost half a million shares during the period, despite which the discount proved stubborn, having traded at an average level of 12.7% throughout and ending the period at 14.4%. Following the end of the period, at the close of business on
A total of 488,228 ordinary shares were bought back and cancelled during the period at an average price of
Fees and charges
The Board is mindful of the need to ensure that shareholders receive good value from the Company and regularly reviews its costs and charges. Following the discussion below, effective from
Gearing
The Company operates a flexible gearing policy which depends on prevailing conditions and the outlook for the market. Gearing is subject to a maximum level of 20% of net assets at the time of investment. As at
Shareholder communication
The Board appreciates how important access to regular information is to our shareholders. To supplement our Company website, we now offer shareholders the ability to sign up to the Trust Matters newsletter which includes information on the Company as well as news, views and insights.
Further information on how to sign up is included on the inside cover of the Half Yearly Financial Report
Outlook
Following the period end, the Government’s announcement of an early General Election took many by surprise. There has since been a great deal written on the potential economic ramifications of an incumbent or opposition victory, analysis of the respective monetary and fiscal policies, and the potential impact on various sectors of the
As you will read in their report which follows below, your portfolio managers believe the
Your Board remains fully supportive of our portfolio managers’ investment philosophy. Their consistent investment approach focuses on identifying high-quality, well-capitalised, cash generative companies that can compound returns over time. We trust they will continue to generate long term capital growth and an attractive level of income for the Company’s shareholders.
Chairman
Investment Manager’s report
Performance
For the six months to
Investment approach
In assembling the Company’s portfolio, we adopt a concentrated investment approach to ensure that our best ideas contribute significantly to returns. We believe that it is the role of the portfolio overall to generate an attractive and growing yield alongside capital growth rather than every individual company within the portfolio. This gives the Company increased flexibility to invest where returns are most attractive. This approach results in a portfolio which differs substantially from the index and in any individual year the returns will vary, sometimes significantly from those of the index. Our objective is to achieve returns greater than the index through time. The foundation of the portfolio, approximately 70%, is in ’income generators’ that we believe will sustain strong cash generation and pay an attractive and growing dividend whilst aiming to deliver a double-digit total return. Additionally, we look to identify and invest 20% of the portfolio in ‘growth’ companies that have significant barriers to entry and scalable business models that enable them to grow consistently. We also look for turnaround companies, accounting for up to 10% of portfolio value, which represent those companies that are out of favour with the market, facing temporary challenges yet offer significant recovery potential.
Market overview
Despite the late euphoria of 2023, US interest rates have remained higher than initially forecasted with policy makers faced with a challenging situation of having to balance the risk of an impending recession with persistent high levels of inflation. In the US, the
The
Contributors to and detractors from performance
The Company benefitted from its large position in
3i Group
whose annual results provided welcome news on both current trading and the future prospects of its largest asset, Action, the European discount retailer. Like-for-like growth continues to exceed expectations as customers benefit from reinvestment in prices and as the group continues to open stores in existing and new countries. With 2,566 stores in existence at the end of 2023 and potential to open a further 4,000+ stores in
The Company's holding in
Reckitt
performed poorly over the period. The company’s results for 2023 were worse than expected: volume weakness was compounded by a product recall and an understatement of trade spend in the
Transactions
The Company purchased a new holding in
Weir Group
. This is a mining equipment supplier with a well-established installed base which generates significant aftermarket revenue and profit. The outlook for mining capex looks reasonable, especially in their key commodities (copper, gold, iron ore) which should allow original equipment orders to improve from a low base. Offering attractive free-cash-flow generation with a robust balance sheet and modest valuation, we perceive a very attractive risk reward.
We also started a new position in SGS . This is a global testing business with a new and well-regarded CEO. We would expect the new CEO to reinvigorate the organic and inorganic prospects of the organisation and to improve operational effectiveness. We view this as an attractive industry and company which have both struggled, with the new CEO as a potential catalyst for a turnaround.
The Company increased its positions in both NatWest and HSBC as we expect the outlook for earnings and returns to continue to positively surprise. We also took part in the placing at Segro to enable it to execute on its exciting growth prospects.
To fund these purchases the Company sold its positions in Schneider Electric and Centrica. Schneider Electric has been a hugely successful holding for the portfolio since purchase. With the shares up 35% in 2023 and with recent expectations raised again, we felt the risk-reward was now more balanced with better opportunities elsewhere. Centrica has performed strongly since its purchase in 2021 and again we have higher conviction elsewhere following its +c. 80% move.
Our investment case for
Watches of
Reckitt was reduced following the emergence of potential litigation: Unfortunately, this development is an overhang that is likely to persist for some time and we moderated our position to manage this expected dynamic. We also reduced our position in 3i Group and Shell , following the strong run in the shares.
Gearing
Historically, we have managed the Company with a modest and consistent level of gearing, typically between 5-8% to enhance income generation and capital growth. However, as market volatility has picked up, we have been more active over the last 2 years, varying both the level of gearing and using a broader range (0-10%) depending on the opportunities or risks presenting themselves at the time. As at
Outlook
Equity markets entered 2024 in a buoyant mood following a strong and broad rally in the latter part of 2023. The outlook, and optimism, is a far cry from 12 months ago, when supply chains were hugely disrupted, and inflation was in double digits and well ahead of central banks’ targets prompting rapid and substantial interest rates hikes despite an uncertain demand environment. Despite this, equities had one of their best years on record outperforming bonds with double digit increases, in US Dollar terms, across most of the developed world and some emerging markets. In the US, the Nasdaq was the standout rising 54% driven by the largest seven companies that rebounded strongly (+c. 70%) after a poor 2022, when they had fallen 39% as a group. The FTSE All-Share Index returned 7.9% in 2023. Whilst
As we pass the first quarter of 2024, we believe markets have shifted into ‘goldilocks’ territory whereby slowing inflation has signalled the peak for interest rates while broad macroeconomic indicators that have been weak are not expected to deteriorate further. This is also helpful for the cost and availability of credit which has recently improved having been deteriorating through most of 2023. During December, bond markets had begun to price in 130bps of easing in the US and a not dissimilar amount in the
Notably in 2024, geopolitics will play a more significant role in asset markets. This year will see the biggest election year in history with more than 60 countries representing over half of the world’s population going to the polls. While most, such as the UK’s are unlikely to have globally significant economic or geopolitical ramifications, others, such as the US elections in November, could have a material impact. We believe political certainty may be helpful for the
The
We continue to focus the portfolio on cash generative businesses with durable, competitive advantages as we believe these companies are best placed to drive returns over the long-term. Whilst we anticipate economic and market volatility will persist throughout the year, we are excited by the opportunities this will likely create; by identifying the companies that strengthen their long-term prospects as well as attractive turnaround situations.
Adam Avigdori
and
Ten largest investments
Together, the Company’s ten largest investments represented 46.6% of the Company’s portfolio as at
1
▲
AstraZeneca
(2023: 2nd)
Sector: Pharmaceuticals & Biotechnology
Market value: £3,670,000
Share of investments: 7.9% (2023: 7.2%)
AstraZeneca is an Anglo-Swedish multinational pharmaceutical group with its headquarters in the
2 ▼
Shell
(2023: 1st)
Sector: Oil & Gas Producers
Market value: £3,566,000
Share of investments: 7.7% (2023: 8.9%)
Shell is a global oil and gas company. The company operates in both upstream and downstream industries. The upstream division is engaged in searching for and recovering crude oil and natural gas, the liquefaction and transportation of gas. The downstream division is engaged in manufacturing, distribution and marketing activities for oil products and chemicals.
3 ▲ RELX
(2023: 4th)
Sector: Media
Market value: £2,470,000
Share of investments: 5.3% (2023: 5.5%)
RELX is a global provider of professional information solutions that includes publication of scientific, medical, technical and legal journals. It also has the world’s leading exhibitions, conference and events business.
4 ▼
Rio Tinto
(2023: 3rd)
Sector: Mining
Market value: £2,281,000
Share of investments: 4.9% (2023: 5.9%)
Rio Tinto is a metals and mining group operating in approximately 36 countries around the world, producing iron ore, copper, diamonds, gold and uranium.
5
▲
3i Group
(2023: 6th)
Sector: Financial Services
Market value: £2,222,000
Share of investments: 4.8% (2023: 4.2%)
3i Group is a leading international investor focused on mid-market private equity and infrastructure.
6 ▲
HSBC
(2023: 15th)
Sector: Banks
Market value: £2,010,000
Share of investments: 4.3% (2023: 2.2%)
HSBC, a bank and financial services institution, has a multinational footprint with a meaningful presence in
7 ► Unilever
(2023: 7th)
Sector: Personal Goods
Market value: £1,475,000
Share of investments: 3.2% (2023: 3.5%)
Unilever is a consumer staples business operating in food, home and personal care and has strong positions in emerging markets, where long-term growth trends in various countries that currently generate the majority of revenues.
8
▲
Tate & Lyle
(2023: 11th)
Sector: Food Producers
Market value: £1,393,000
Share of investments: 3.0% (2023: 2.5%)
Tate & Lyle is a British-headquartered, global supplier of food and beverage products to food and industrial markets.
9
▲
Segro
(2023: 21st)
Sector: Real Estate Investment Trusts
Market value: £1,282,000
Share of investments: 2.8% (2023: 1.8%)
Segro is an industrial real estate investment trust with a high-quality portfolio of assets.
10 ▼
Reckitt
(2023: 5th)
Sector:
Market value: £1,271,000
Share of investments: 2.7% (2023: 4.7%)
Reckitt is a global leader in consumer health, hygiene and household products. Its products are sold in 200 countries and its 19 most profitable brands are responsible for the majority of net revenues.
All percentages reflect the value of the holding as a percentage of total investments.
Percentages in brackets represent the value of the holding as at
Distribution of investments as at
Analysis of portfolio by sector
______________________________________________________________________________ | |% of investments by market value|Benchmark| | | |Index | |___________________________________|________________________________|_________| |Financial Services |10.6 |4.8 | |___________________________________|________________________________|_________| |Banks |10.6 |9.9 | |___________________________________|________________________________|_________| |Pharmaceuticals & Biotechnology |9.4 |11.4 | |___________________________________|________________________________|_________| |Oil & Gas Producers |9.3 |11.6 | |___________________________________|________________________________|_________| |Support Services |8.5 |3.4 | |___________________________________|________________________________|_________| |Media |6.8 |3.9 | |___________________________________|________________________________|_________| |Mining |6.3 |0.3 | |___________________________________|________________________________|_________| |Household Goods & Home Construction|6.0 |1.2 | |___________________________________|________________________________|_________| |General Retailers |4.4 |3.1 | |___________________________________|________________________________|_________| |Real Estate Investment Trusts |4.0 |2.5 | |___________________________________|________________________________|_________| |Non-Life Insurance |3.5 |0.9 | |___________________________________|________________________________|_________| |Travel & Leisure |3.4 |3.2 | |___________________________________|________________________________|_________| |Personal Goods |3.2 |0.2 | |___________________________________|________________________________|_________| |Food Producers |3.0 |0.7 | |___________________________________|________________________________|_________| |Industrial Engineering |2.7 |0.6 | |___________________________________|________________________________|_________| |Life Insurance |2.4 |2.1 | |___________________________________|________________________________|_________| |Tobacco |1.7 |2.6 | |___________________________________|________________________________|_________| |Electronic & Electrical Equipment |1.6 |1.0 | |___________________________________|________________________________|_________| |Health Care Equipment & Services |1.4 |0.5 | |___________________________________|________________________________|_________| |Leisure Goods |1.1 |0.2 | |___________________________________|________________________________|_________| |General Industrials |0.1 |1.6 | |___________________________________|________________________________|_________|
Sources: BlackRock and Datastream.
Investment size
_________________________________________________________________ | |Number of investments|% of investments by market value| |__________|_____________________|________________________________| |<£1m |29 |40.7 | |__________|_____________________|________________________________| |£1m to £2m|9 |24.4 | |__________|_____________________|________________________________| |£2m to £3m|4 |19.3 | |__________|_____________________|________________________________| |£3m to £4m|2 |15.6 | |__________|_____________________|________________________________|
Source: BlackRock.
Investments as at
Market value % of £’000 investments Financial Services 3i Group 2,222 4.8 London Stock Exchange Group 941 2.0 Intermediate Capital Group 820 1.8 Ashmore Group 567 1.2 Premier Asset Management Group 383 0.8 --------------- --------------- 4,933 10.6 ========= ========= Banks HSBC 2,010 4.3 Standard Chartered 1,147 2.5 NatWest 959 2.1 Lloyds Banking Group 791 1.7 --------------- --------------- 4,907 10.6 ========= ========= Pharmaceuticals & Biotechnology AstraZeneca 3,670 7.9 GSK 712 1.5 --------------- --------------- 4,382 9.4 ========= ========= Oil & Gas Producers Shell 3,566 7.7BP Group 747 1.6 --------------- --------------- 4,313 9.3 ========= ========= Support Services Mastercard1 1,261 2.7 Hays 1,138 2.5 Rentokil Initial 844 1.8 SGS1 671 1.5 --------------- --------------- 3,914 8.5 ========= ========= Media RELX 2,470 5.3 Pearson 718 1.5 --------------- --------------- 3,188 6.8 ========= ========= Mining Rio Tinto 2,281 4.9 Anglo American 627 1.4 --------------- --------------- 2,908 6.3 ========= =========Household Goods & Home Construction Reckitt 1,271 2.7 Taylor Wimpey 803 1.7 Berkeley Group 758 1.6 --------------- --------------- 2,832 6.0 ========= ========= General Retailers Next 865 1.9 Howden Joinery 587 1.3 WH Smith 576 1.2 --------------- --------------- 2,028 4.4 ========= ========= Real Estate Investment Trusts Segro 1,282 2.8 Big Yellow Group 533 1.2 --------------- --------------- 1,815 4.0 ========= ========= Non-Life Insurance Admiral Group 824 1.8 Hiscox 765 1.7 --------------- --------------- 1,589 3.5 ========= ========= Travel & Leisure Compass Group 1,185 2.6 Fuller Smith & Turner – A Shares 363 0.8 Patisserie Holdings2 – – --------------- --------------- 1,548 3.4 ========= ========= Personal Goods Unilever 1,475 3.2 --------------- --------------- 1,475 3.2 ========= ========= Food Producers Tate & Lyle 1,393 3.0 1,393 3.0 ========= ========= Industrial Engineering Weir Group 771 1.7 Spirax-Sarco Engineering 469 1.0 --------------- --------------- 1,240 2.7 ========= ========= Life Insurance Phoenix Group 1,100 2.4 --------------- --------------- 1,100 2.4 ========= ========= Tobacco British American Tobacco 778 1.7 --------------- --------------- 778 1.7 ========= ========= Electronic & Electrical Equipment Oxford Instruments 721 1.6 --------------- --------------- 721 1.6 ========= ========= Health Care Equipment & Services Smith & Nephew 638 1.4 --------------- --------------- 638 1.4 ========= ========= Leisure Goods Games Workshop 495 1.1 --------------- --------------- 495 1.1 ========= ========= General Industrials Coats Group 29 0.1 --------------- --------------- 29 0.1 ========= ========= Total investments 46,226 100.0 ========= =========
1
Non-
2 Company under liquidation.
All investments are in ordinary shares unless otherwise stated. The total number of investments held at
As at
Interim Management Report and Responsibility Statement
The Chairman’s Statement and the Investment Manager’s Report above give details of the important events which have occurred during the period and their impact on the financial statements.
Principal risks and uncertainties
The principal risks faced by the Company can be divided into various areas as follows:
· Investment performance;
· Income/dividend;
· Gearing;
· Legal & regulatory compliance;
· Operational;
· Political;
· Market; and
· Financial.
The Board reported on the principal risks and uncertainties faced by the Company in the Annual Report and Financial Statements for the year ended
Certain financial markets have been negatively impacted by the ongoing geopolitical tensions arising from the hostilities in the
In the view of the Board, other than those matters noted above, there have not been any material changes to the fundamental nature of these risks since the previous report and these principal risks and uncertainties, as summarised, are as applicable to the remaining six months of the financial year as they were to the six months under review.
Going concern
The Board remains mindful of the ongoing uncertainty surrounding the extent of the hostilities in the
For this reason, they continue to adopt the going concern basis in preparing the financial statements. The Company has a portfolio of investments which are considered to be readily realisable and is able to meet all of its liabilities from its assets and income generated from these assets. Ongoing charges (calculated as a percentage of average daily net assets and based on 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) for the year ended
Related party disclosure and transactions with the Manager
Directors’ responsibility statement
The Disclosure Guidance and Transparency Rules of the
The Directors confirm to the best of their knowledge that:
·
the condensed set of financial statements contained within the Half Yearly Financial Report has been prepared in accordance with the applicable
· the Interim Management Report, together with the Chairman’s Statement and Investment Manager’s Report, include a fair review of the information required by 4.2.7R and 4.2.8R of the FCA’s Disclosure Guidance and Transparency Rules.
The Half Yearly Financial Report has not been audited or reviewed by the Company’s Auditors.
The Half Yearly Financial Report was approved by the Board on
For and on behalf of the Board
Income statement for the six months ended
Six months ended Six months ended Year ended 30 April 2024 30 April 2023 31 October 2023 (unaudited) (unaudited) (audited) Revenue Capital Total Revenue Capital Total Revenue Capital Total Notes £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 Gains on investments held at fair – 4,892 4,892 – 5,340 5,340 – 1,119 1,119 value through profit or loss (Losses)/gains on foreign – (3) (3) – 5 5 – 2 2 exchange Income from investments held at fair 2 971 – 971 900 – 900 1,723 7 1,730 value through profit or loss Other income 2 39 – 39 42 – 42 81 – 81 --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- Total income 1,010 4,889 5,899 942 5,345 6,287 1,804 1,128 2,932 ========= ========= ========= ========= ========= ========= ========= ========= ========= Expenses Investment 3 (8) (74) (82) (30) (89) (119) (59) (176) (235) management fee Other operating 4 (160) (3) (163) (161) (2) (163) (317) (6) (323) expenses --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- Total operating (168) (77) (245) (191) (91) (282) (376) (182) (558) expenses ========= ========= ========= ========= ========= ========= ========= ========= ========= Net profit on ordinary activities 842 4,812 5,654 751 5,254 6,005 1,428 946 2,374 before finance costs and taxation Finance costs (31) (94) (125) (23) (70) (93) (54) (163) (217) --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- Net profit on ordinary activities 811 4,718 5,529 728 5,184 5,912 1,374 783 2,157 before taxation Taxation (5) – (5) (6) – (6) (7) – (7) charge --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- Net profit on ordinary 6 806 4,718 5,524 722 5,184 5,906 1,367 783 2,150 activities after taxation Earnings per ordinary share 6 3.94 23.09 27.03 3.44 24.67 28.11 6.54 3.7510.29 (pence) ========= ========= ========= ========= ========= ========= ========= ========= =========
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 on ordinary activities for the period disclosed above represents the Company’s total comprehensive income.
Statement of changes in equity for the six months ended
Called Share Capital up share premium redemption Capital Special Revenue capital account reserve reserve reserve reserve Total Note £’000 £’000 £’000 £’000 £’000 £’000 £’000 For the six months ended 30 April 2024 (unaudited) At 31 October 307 14,819 242 10,266 12,391 2,131 40,156 2023 Total comprehensive income: Net profit for the – – – 4,718 – 806 5,524 period Transactions with owners, recorded directly to equity: Ordinary shares (5) – 5 – (881) – (881) purchased for cancellation Share purchase – – – – (6) – (6) costs Dividends 5 – – – – – (984) (984) paid1 --------------- --------------- --------------- --------------- --------------- --------------- --------------- At 30 April 302 14,819 247 14,984 11,504 1,953 43,809 2024 ========= ========= ========= ========= ========= ========= ========= For the six months ended 30 April 2023 (unaudited) At 31 October 313 14,819 236 9,483 13,427 2,294 40,572 2022 Total comprehensive income: Net profit for the – – – 5,184 – 722 5,906 period Transactions with owners, recorded directly to equity: Ordinary shares (2) – 2 – (401) – (401) purchased for cancellation Share purchase – – – – (2) – (2) costs Dividends – – – – – (986) (986) paid2 --------------- --------------- --------------- --------------- --------------- --------------- --------------- At 30 April 311 14,819 238 14,667 13,024 2,030 45,089 2023 ========= ========= ========= ========= ========= ========= ========= For the year ended 31 October 2023 (audited) At 31 October 313 14,819 236 9,483 13,427 2,294 40,572 2022 Total comprehensive income: Net profit – – – 783 – 1,367 2,150 for the year Transactions with owners, recorded directly to equity: Ordinary shares (6) – 6 – (1,029) – (1,029) purchased for cancellation Share purchase – – – – (7) – (7) costs Dividends – – – – – (1,530) (1,530) paid3 --------------- --------------- --------------- --------------- --------------- --------------- --------------- At 31 October 307 14,819 242 10,266 12,391 2,131 40,156 2023 ========= ========= ========= ========= ========= ========= =========
1
Final dividend paid in respect of the year ended
2
Final dividend paid in respect of the year ended
3
Interim dividend paid in respect of the six months ended
For information on the Company’s distributable reserves, please refer to note 9 below
Balance sheet as at
30 April 30 April 31 October 2024 2023 2023 (unaudited) (unaudited) (audited) Notes £’000 £’000 £’000 Non current assets Investments held at fair value through profit or 10 46,226 47,486 43,267 loss --------------- --------------- --------------- Current assets Current tax asset 35 26 27 Debtors 391 373 133 Cash and cash equivalents 1,708 1,623 1,110 --------------- --------------- --------------- Total current assets 2,134 2,022 1,270 ========= ========= ========= Current liabilities Bank loan (4,000) (4,000) (4,000) Other creditors (551) (419) (381) --------------- --------------- --------------- Total current liabilities (4,551) (4,419) (4,381) ========= ========= ========= Net current liabilities (2,417) (2,397) (3,111) Net assets 43,809 45,089 40,156 --------------- --------------- --------------- Total equity Called up share capital 8 302 311 307 Share premium account 14,819 14,819 14,819 Capital redemption reserve 247 238 242 Capital reserve 14,984 14,667 10,266 Special reserve 11,504 13,024 12,391 Revenue reserve 1,953 2,030 2,131 --------------- --------------- --------------- Total shareholders’ funds 6 43,809 45,089 40,156 ========= ========= ========= Net asset value per 6 217.79 215.22 194.90 ordinary share (pence) ========= ========= =========
Statement of cash flows for the six months ended
Six months Six months Year ended ended ended 30 April 30 April 31 October 2024 2023 2023 (unaudited) (unaudited) (audited) £’000 £’000 £’000 Operating activities Net profit on ordinary 5,529 5,912 2,157 activities before taxation Add back finance costs 125 93 217 Gains on investments held at fair value through profit or (4,892) (5,340) (1,119) loss Losses/(gains) on foreign 3 (5) (2) exchange Special dividends allocated to – – (7) capital Sale of investments held at fair 8,260 7,070 11,482 value through profit or loss Purchase of investments held at fair value through profit or (6,317) (7,124) (11,632) loss (Increase)/decrease in debtors (239) (206) 22 Increase in other creditors 104 59 134 Taxation on investment income (13) (16) (18) --------------- --------------- --------------- Net cash generated from 2,560 443 1,234 operating activities ========= ========= ========= Financing activities Ordinary shares purchased for (844) (401) (1,029) cancellation Share purchase costs paid (6) (2) (7) Interest paid (125) (93) (217) Dividends paid (984) (986) (1,530) --------------- --------------- --------------- Net cash used in financing (1,959) (1,482) (2,783) activities ========= ========= ========= Increase/(decrease) in cash and 601 (1,039) (1,549) cash equivalents Cash and cash equivalents at the 1,110 2,657 2,657 beginning of the year Effect of foreign exchange rate (3) 5 2 changes --------------- --------------- --------------- Cash and cash equivalents at end 1,708 1,623 1,110 of the year ========= ========= ========= Comprised of: Cash at bank 72 59 44 Cash Fund1 1,636 1,564 1,066 --------------- --------------- --------------- 1,708 1,623 1,110 ========= ========= =========
1
Notes to the financial statements for the six months ended
1. Principal activity and basis of preparation
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.
The financial statements of the Company are prepared on a going concern basis in accordance with Financial Reporting Standard 104 Interim Financial Reporting (FRS 104) applicable in the
The accounting policies and estimation techniques applied for the condensed set of financial statements are as set out in the Company’s Annual Report and Financial Statements for the year ended
2. Income
Six months Six months Year ended ended ended 30 April 30 April 31 October 2024 2023 2023 (unaudited) (unaudited) (audited) £’000 £’000 £’000 Investment income: UK dividends 870 789 1,494 UK special dividends – – 27 UK property income distributions 40 8 19 Overseas dividends 61 103 183 --------------- --------------- --------------- Total investment income 971 900 1,723 ========= ========= ========= Other income: Interest from Cash Fund 38 41 80 Deposit interest 1 1 1 --------------- --------------- --------------- 39 42 81 ========= ========= ========= Total income 1,010 942 1,804 ========= ========= =========
Dividends and interest received in cash during the year amounted to £777,000 and £37,000 respectively (six months ended
No special dividends have been recognised in capital (six months ended
3. Investment management fee
Six months ended Six months ended Year ended 30 April 2024 30 April 2023 31 October 2023 (unaudited) (unaudited) (audited) Revenue Capital Total Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 Investment management 28 83 111 30 89 119 59 176 235 fee Investment management (20) (9) (29) – – – – – – fee rebate --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- Total 8 74 82 30 89 119 59 176 235 ========= ========= ========= ========= ========= ========= ========= ========= =========
Under the terms of the investment management agreement, BFM is entitled to a fee of 0.6% per annum of the Company’s quarter end market capitalisation. The investment management fee is allocated 25% to the revenue account and 75% to the capital account. There is no additional fee for company secretarial and administration services.
In addition, effective from
4. Other operating expenses
Six months Six months Year ended ended ended 30 April 30 April 31 October 2024 2023 2023 (unaudited) (unaudited) (audited) £’000 £’000 £’000 Allocated to revenue: Custody fees – – 1 Depositary fees 2 2 5 Audit fees1 18 15 29 Registrars’ fee 13 12 26 Directors’ emoluments 50 50 103 Marketing fees 7 7 14 Printing and postage fees 33 17 32 Legal and professional fees 21 34 56 London Stock Exchange fee 6 6 12 FCA fee 4 4 7 Prior year expenses written (10) (1) (3) back2 Other administration costs 16 15 35 --------------- --------------- --------------- 160 161 317 ========= ========= ========= Allocated to capital: Custody transaction costs3 3 2 6 --------------- --------------- --------------- 163 163 323 ========= ========= =========
1
No non-audit services were provided by the Company’s auditors in the six months ended
2
Relates to printing and postage fees and other administration costs written back in the six months ended
3
For the six months ended
The transaction costs incurred on the acquisition of investments amounted to £30,000 for the six months ended
5. Dividend
The Directors have declared an interim dividend of 2.70p per share for the period ended
In accordance with Section 32 of FRS 102, Events After the End of the Reporting Period, the interim dividend payable on the ordinary shares has not been included as a liability in the financial statements, as interim dividends are only recognised when they have been paid.
6. Earnings and net asset value per ordinary share
Revenue, capital earnings and net asset value per ordinary share are shown below and have been calculated using the following:
Six months Six months Year ended ended ended 30 April 30 April 31 October 2024 2023 2023 (unaudited) (unaudited) (audited) Net revenue profit attributable 806 722 1,367 to ordinary shareholders (£’000) Net capital profit attributable 4,718 5,184 783 to ordinary shareholders (£’000) --------------- --------------- --------------- Total profit attributable to 5,524 5,906 2,150 ordinary shareholders (£’000) ========= ========= ========= Total shareholders’ funds 43,809 45,089 40,156 (£’000) ========= ========= ========= Earnings per share The weighted average number of ordinary shares in issue during the period on which the earnings 20,433,281 21,008,269 20,913,124 per ordinary share was calculated was: The actual number of ordinary shares in issue at the period end on which the net asset value 20,115,258 20,949,796 20,603,486 per ordinary share was calculated was: --------------- --------------- --------------- Calculated on weighted average number of ordinary shares: Revenue earnings per share 3.94 3.446.54 (pence) - basic and diluted Capital earnings per share 23.09 24.673.75 (pence) - basic and diluted --------------- --------------- --------------- Total earnings per share (pence) 27.03 28.11 10.29 - basic and diluted ========= ========= =========
As at As at As at 30 April 30 April 31 October 2024 2023 (unaudited) (unaudited) 2023 (audited) Net asset value per ordinary share (pence) 217.79 215.22 194.90 Ordinary share price (mid-market) (pence) 186.50 191.00 178.00 ========= ========= =========
There were no dilutive securities at
7. Reconciliation of liabilities arising from financing activities
Six months Six months Year ended ended 30 April ended 30 April 31 October 2024 2023 (unaudited) (unaudited) 2023 (audited) Debt arising from financing activities Debt arising from financing activities 4,000 4,000 4,000 at beginning and end of the period/year ========= ========= =========
8. 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 of1 pence each: At 31 October 20,603,486 10,081,532 30,685,018 307 2023 Shares purchased (488,228) – (488,228) (5) for cancellation --------------- --------------- --------------- --------------- At 30 April 2024 20,115,258 10,081,532 30,196,790 302 ========= ========= ========= =========
In the six months ended
Since the period end and up to
9. Reserves
The Company’s share premium account was cancelled pursuant to shareholders’ approval of a special resolution at the Company’s Annual General Meeting in 2002 and Court approval on
The share premium account and capital redemption reserve 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 special reserve and 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 special reserve, capital reserve and revenue reserve may be distributed by way of dividend. The gain on the capital reserve arising on the revaluation of investments of £7,035,000 (six months ended
10. Financial risks and valuation of financial instruments
The Company’s investment activities expose it to the various types of risk which are associated with the financial instruments and markets in which it invests. The following information is not intended to be a comprehensive summary of all risks and shareholders should refer to the Alternative Investment Fund Managers’ Directive FUND 3.2.2R Disclosures which can be found at
www.blackrock.com/uk/brig
for a more detailed discussion of the risks inherent in investing in the Company.
Market risk arising from price risk
Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting similar financial instruments traded in the market. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, recessions, climate change or other events could have a significant impact on the Company and the market price of its investments and could result in increased premiums or discounts to the Company’s net asset value.
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 and cash equivalents, bank overdrafts and bank loans). 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 on pages 88 and 89 of the Annual Report and Financial Statements for the year ended
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 all 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 the analysis of the Company’s financial instruments measured at fair value at the balance sheet date.
Level 1 Level 2 Level 3 Total Financial assets at fair value through £’000 £’000 £’000 £’000 profit or loss Equity investments at 30 April 2024 46,226 – – 46,226 (unaudited) Equity investments at 30 April 2023 47,486 – – 47,486 (unaudited) Equity investments at 31 October 2023 43,267 – – 43,267 (audited) ========= ========= ========= =========
The Company held one Level 3 security during the six months ended
The investment in
There were no transfers between levels of financial assets and financial liabilities recorded at fair value during the six months ended
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 business risk, including climate change risk, in accordance with the fair value related requirements of the Company’s financial reporting framework.
11. Related party disclosure
Directors’ emoluments
The Board consists of three non-executive Directors, all of whom are considered to be independent of the Manager by the Board. None of the Directors has a service contract with the Company. With effect from
At the period end and as at
Ordinary shares Ordinary shares Ordinary shares 20 June 2024 30 April 2024 31 October 2023 Graeme Proudfoot (Chairman) 60,000 60,000 60,000 Nicholas Gold 43,175 43,175 43,175 Charles Worsley1 987,539 987,539 987,539 Win Robbins2 N/a N/a 12,106 ========= ========= =========
1 Including a non-beneficial interest of 655,500 ordinary shares.
2
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 held by Significant Significant Investors Total % of shares Investors who are not who are not held by Related affiliates of affiliates of BlackRock Funds BlackRock Group or BlackRock Group or BlackRock, Inc. BlackRock, Inc. As at 30 April 2024 nil n/a n/a As at 31 October nil n/a n/a 2023 As at 30 April 2023 nil n/a n/a ========= ========= =========
12. Transactions with the Investment Manager and AIFM
The investment management fee is levied quarterly, based on 0.6% per annum of the Company’s market capitalisation. The investment management fee due for the six months ended
In addition to the above services, BIM (
The Company holds an investment in the
The ultimate holding company of the Manager and the Investment Manager is BlackRock, Inc., a company incorporated in
13. Contingent liabilities
There were no contingent liabilities at
14. Publication of non statutory accounts
The financial information contained in this Half Yearly Financial Report does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006. The financial information for the six months ended
The information for the year ended
15. Annual results
The Board expects to announce the annual results for the year ended
EC2N 2DL
ENDS
The Half Yearly Financial Report will also be available on the BlackRock website at http://www.blackrock.com/uk/brig . Neither the contents of the Manager’s website nor the contents of any website accessible from hyperlinks on the Manager’s website (or any other website) is incorporated into, or forms part of, this announcement.
For further information please contact:
Press enquires:
Tel:
020 7294 3620
E-mail:
BlackRockInvestmentTrusts@lansons.com
or
EdH@lansons.com
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