BlackRock Energy and Resources Income Trust
plc
LEI: 54930040ALEAVPMMDC31
Half Yearly Financial Report 31 May
2024
Performance record
|
|
As at
31 May
2024
|
As at
30 November
2023
|
|
|
Net assets (£’000)1
|
172,233
|
162,362
|
|
|
Net asset value per ordinary share (pence)
|
138.24
|
123.58
|
|
|
Ordinary share price (mid-market) (pence)
|
121.50
|
110.40
|
|
|
Discount to net asset value2
|
12.1%
|
10.7%
|
|
|
|
=========
|
=========
|
|
|
|
For the
six months
ended
31 May
2024
|
For the
year
ended
30 November
2023
|
|
|
Performance (with dividends reinvested)
|
|
|
|
|
Net asset value per share2
|
13.8%
|
(11.8)%
|
|
|
Ordinary share price2
|
12.3%
|
(15.2)%
|
|
|
|
---------------
|
---------------
|
|
|
Performance since inception (with dividends
reinvested)
|
|
|
|
|
Net asset value per share2
|
255.3%
|
212.2%
|
|
|
Ordinary share price2
|
213.7%
|
179.4%
|
|
|
|
=========
|
=========
|
|
|
|
For the
six months
ended
31 May
2024
|
For the
six months
ended
31 May
2023
|
Change
%
|
|
Revenue
|
|
|
|
|
Net profit on ordinary activities after taxation (£’000)
|
2,334
|
3,209
|
-27.3
|
|
Revenue earnings per ordinary share (pence)3
|
1.83
|
2.37
|
-22.7
|
|
|
---------------
|
---------------
|
---------------
|
|
Interim dividends (pence)
|
|
|
|
|
1st interim
|
1.125
|
1.10
|
2.3
|
|
2nd interim4
|
1.125
|
1.10
|
2.3
|
|
|
---------------
|
---------------
|
---------------
|
|
Total dividends payable/paid
|
2.250
|
2.20
|
2.3
|
|
|
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|
=========
|
=========
|
1 The
change in net assets reflects portfolio movements, the buyback of
shares and dividends paid during the period.
2 Alternative
Performance Measures, see Glossary within the Half Yearly Financial
Report.
3 Further
details are given in the Glossary within the Half Yearly Financial
Report.
4 Paid
on 15 July 2024.
Chairman’s Statement
Dear Shareholder
I am pleased to report that our portfolio has performed well during
the six months to 31 May 2024,
delivering strong absolute NAV returns. My fellow Board members and
I believe that the Company remains well positioned to exercise
flexibility to take advantage of the energy transition to a lower
carbon global economy.
Market overview
At the start of the Company’s financial year on 1 December 2023 and through into the first half
of 2024, markets as a whole showed resilience driven initially by
signs of easing inflation and expectations of interest rate cuts in
the US and UK. Generally strong corporate earnings and labour
markets, as well as enthusiasm for AI, helped markets subsequently
look through stubbornly high core services inflation (and
consequently higher for longer interest rates) and political
uncertainty, although some cracks are starting to show as of the
time or writing. Given the mix of opportunity and risks, the Board
is confident in your Company’s 3-pronged investment strategy
(Mining, Traditional Energy and Energy Transition), giving the
portfolio managers the flexibility to be able to manoeuvre the
portfolio around volatile markets to invest in stocks where they
think the best investment opportunities can be found. The portfolio
managers decreased Traditional Energy exposure through 2023 and
into 2024, to stand at 28.3% at the end of the period, and
increased the weighting in the Energy Transition sector to 26.3% at
31 May 2024.
Performance
During the six months ended 31 May
2024, the Company’s net asset value (NAV) per share rose by
13.8% and its share price rose by 12.3% (both percentages in Pound
Sterling terms with dividends reinvested). Although the Company
does not have a formal benchmark, to set this in the context of the
market backdrop, the MSCI ACWI Metals and Mining Index rose by
10.6%, S&P Clean Energy Index rose by 5.5% and the MSCI World
Energy Index rose by 9.7% over the same period (all percentages in
Pound Sterling terms with dividends reinvested).
As noted above, the Board does not formally benchmark the Company’s
performance against Mining and Energy sector indices because
meeting a specific dividend target is not within the scope of these
indices and also because no index appropriately reflects the
Company’s blended exposure to the Energy (including the Energy
Transition) and Mining sectors. For internal monitoring purposes,
however, the Board compares the performance of the portfolio
against a bespoke internal Mining and Energy composite index. The
neutral sector weightings of this bespoke index are 40% Mining, 30%
Traditional Energy and 30% Energy Transition.
Further information on investment performance is given in the
Investment Managers’ Report.
Revenue return and dividends
The Company’s revenue return per share for the six-month period was
1.83 pence per share, a decrease of
22.7% over the same period last year (the revenue return for the
six months to 31 May 2023 was
2.37 pence per share). The Board’s
current target is to declare quarterly dividends of at least
1.125 pence per share in the year to
30 November 2024, making a total of
at least 4.50 pence per share for the
year as a whole. This target represents a yield of 3.7% based on
the share price of 121.50 pence per
share as at 31 May 2024, and 3.8%
based on the share price of 117.00
pence per share at the close of business on 29 July 2024. When the Company’s net revenue is
insufficient to meet the dividend payments, the Board’s policy is
to utilise the considerable distributable reserves, including group
revenue reserves of 3.46p per share as at 31
May 2024 (after adjusting for the second interim dividend
for 2024) to meet any shortfall. This enables the portfolio
managers to focus on total return from their investment
selections.
The first quarterly interim dividend of 1.125 pence per share was paid on 26 April 2024 and the second quarterly interim
dividend of 1.125 pence per share was
paid on 15 July 2024 (four quarterly
interim dividends each of 1.10 pence
per share were paid in the twelve months ended 30 November 2023).
The Company may write options to generate revenue return, although
the portfolio managers’ focus is on investing the portfolio to
generate an optimal level of total return without striving to meet
an annual income target from option writing. Consequently, they
will only enter into option transactions with the intention that
the overall contribution is beneficial to total return.
Gearing
The Company operates a flexible gearing policy which depends on
prevailing market conditions. It is not intended that gearing will
exceed 20% of the gross assets of the Company. The maximum gearing
used during the period was 14.8%, and the level of gearing at
31 May 2024 was 9.6%. For
calculations, see the Glossary within the Half Yearly Financial
Report
Management of share rating
The Directors recognise the importance to investors that the
Company’s share price should not trade at a significant premium or
discount to NAV, and therefore, in normal market conditions, may
use the Company’s share buyback, sale of shares from treasury and
share issuance powers to ensure that the share price is broadly in
line with the underlying NAV.
The Board seeks to balance this aim, and to control discount
volatility, against its desire to avoid excessive buybacks which
impact the size of the Company and hence the liquidity of its
shares and the Ongoing Charges Ratio.
During the period under review, the discounts on Investment Trusts
in general have remained at close to historically high levels- the
average discount for the Investment Trusts sector (ex 3i Group) has
been 15.5% - and in this context, your Company’s
shares have been trading at a discount between 8.0% and 14.1% over
the period under review with an average discount of 11.2%. The
Company has therefore actively intervened to control the discount
and has bought back 6,800,000 shares for costs of £7,684,000,
representing an average discount of 12.6%. All shares were bought
back at a discount to NAV, delivering an uplift to the NAV per
share of 0.5% for continuing shareholders for the period under
review. Since 31 May 2024 and as at
29 July 2024, the Company has bought
back 1,841.697 shares for costs of £1,527,000 and at an average
discount of 10.7%. As at 29 July 2024
the Company’s
shares are trading at a discount of 10.0%.
Market outlook & portfolio
positioning
Despite the current political uncertainty, the ongoing drive by
governments to address climate change and decarbonise the energy
supply chain remains an important backdrop for the Company’s three
pillars, of Traditional Energy, Mining and Metals and Energy
Transition. The Board considers that all three sectors have an
important role to play as the energy system transitions to a lower
carbon economy. Traditional energy is needed to support base load
energy to continue to power economies during the transition. The
Metals and Mining sector provides the material supply chain for low
carbon technologies from steel for wind turbines to lithium for
electric cars. The path to a lower carbon economy is also expected
to disrupt many industries and business models with scope for the
Company to invest directly in opportunities in the Energy
Transition space. Against this backdrop, the flexibility of the
Company’s investment mandate with the ability to shift exposure
between Traditional Energy, Energy Transition and Mining sectors,
means that it is uniquely positioned to serve investors as these
sectors evolve.
The Board is confident that the Company remains well-placed to
benefit from these key investment trends over the long
term.
ADRIAN
BROWN
Chairman
31 July 2024
Investment Managers’ Report
Market overview
The first six months of 2024 saw strong momentum in the broader
equity markets carry over from 2023. Whilst the Company’s net asset
value per share (NAV) saw a positive return, it again lagged the
overall equity market as all three sectors the Company invests in
lagged broader markets, which were once again driven in a narrow
fashion by the spectacular performance of a small group of
technology and artificial intelligence (AI) related companies. See
Figure 1 within the Half Yearly Financial Report.
Whilst the market excitement about AI has naturally focused on the
relevant technology companies and associated industrial companies
that will benefit from the step change in demand for cooling etc.,
there has been less attention paid to the energy and materials side
of the equation. Just like the energy transition, the growth in AI
is going to be materials and energy intensive as well as
compounding some of the bottlenecks faced by the energy transition.
We see some exciting opportunities associated with grid spending
that is required to cope with the electricity demand growth as well
as the upgrades to the grids. These investments are critical to
cope with the rising complexity of grid management resulting from
the higher proportion of intermittent generation from sources such
as solar and wind.
Although the market has been pre-occupied with the timing and pace
of interest rate cuts in the major economies, we have not viewed
delays in rate cut expectations as a concern. The higher for longer
scenario that now faces the market is a result of stronger than
expected economic data in the US, which we view as positive for
many of the companies held or potential investment opportunities
for the portfolio. The resurgent US manufacturing industry, fuelled
by the triple forces of reshoring driven geopolitics, the
investments funded by the Inflation Reduction Act of 2022 and the
AI/datacentre boom, are all energy and materials intensive forms of
growth, that more than offset the costs of higher interest rates
for many of the companies in the portfolio.
|
Commodity
|
31 May
2024
|
30 November
2023
|
% change
|
H1 2024 on
H1 2023
Average Price %
Change1
|
|
Base Metals (US$/tonne)
|
|
|
|
|
|
Aluminium
|
2,607
|
2,156
|
20.9
|
-2.3
|
|
Copper
|
9,913
|
8,388
|
18.2
|
2.4
|
|
Lead
|
2,216
|
2,092
|
5.9
|
-2.1
|
|
Nickel
|
19,456
|
16,438
|
18.4
|
-32.0
|
|
Tin
|
32,775
|
22,984
|
42.6
|
9.1
|
|
Zinc
|
2,915
|
2,467
|
18.2
|
-12.4
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
|
Precious Metals (US$/ounce)
|
|
|
|
|
|
Gold
|
2,330.7
|
2,037.8
|
14.4
|
13.2
|
|
Silver
|
30.3
|
25.3
|
20.0
|
8.0
|
|
Platinum
|
1,048.0
|
937.0
|
11.8
|
-7.5
|
|
Palladium
|
949.0
|
1,025.0
|
-7.4
|
-36.8
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
|
Energy
|
|
|
|
|
|
Oil (WTI) (US$/barrel)
|
78.0
|
75.6
|
3.1
|
3.2
|
|
Oil (Brent) (US$/barrel)
|
79.4
|
81.7
|
-2.8
|
2.8
|
|
Natural Gas (US$/Metric Million British Thermal Unit
(mmbtu))
|
1.8
|
2.8
|
-35.3
|
-27.5
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
|
Bulk Commodities (US$/tonne)
|
|
|
|
|
|
Iron ore
|
117.0
|
132.5
|
-11.7
|
4.7
|
|
Coking coal
|
220.5
|
285.0
|
-22.6
|
-4.2
|
|
Thermal coal
|
142.4
|
129.0
|
10.4
|
-47.9
|
|
|
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|
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|
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|
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|
|
Equity Indices
|
|
|
|
|
|
MSCI ACWI2
Metals & Mining Index (US$)
|
643.7
|
578.7
|
11.2
|
1.4
|
|
MSCI ACWI Metals & Mining Index (£)
|
505.6
|
457.2
|
10.6
|
-1.7
|
|
MSCI3
World Energy Index (US$)
|
507.6
|
459.9
|
10.4
|
8.5
|
|
MSCI World Energy Index (£)
|
398.7
|
363.3
|
9.7
|
1.8
|
|
S&P Clean Energy Index (US$)
|
1,279.0
|
1,205.7
|
6.1
|
-27.0
|
|
S&P Clean Energy Index (£)
|
822.3
|
779.7
|
5.5
|
-29.3
|
|
|
=========
|
=========
|
=========
|
=========
|
Source: LSEG Datastream, June
2024.
1 Average
of 1/12/2022-31/05/2023 to
1/12/2023-31/05/2024.
2 Morgan
Stanley Capital International All Country Weighted
Index.
3 Morgan
Stanley Capital International.
Portfolio activity & investment
performance
The Company’s portfolio delivered a total NAV return of 13.8%
during the period driven by positive performance within all three
sectors of the Company.
The most notable top down change in the portfolio during the first
half was to add to our Energy Transition exposure (see Figure 2
within the Half Yearly Financial Report) as the valuations continue
to move lower compared to broader equity markets, a trend we noted
in the 2023 annual report too. This change was still relatively
modest in size as whilst valuations have become more attractive, we
do not think that broad based positive earnings momentum is
imminent, given that areas like electric vehicles are still seeing
shorter term sales estimates being revised downwards.
Within the three sectors we made some notable changes both to the
industry/sub-sector exposures and the stock specific exposures (see
Figure 3 within the Half Yeary Financial Report). While we think
that nuclear has a strong role to play in the energy transition, we
exited our only uranium holding because both the spot price of
uranium and the valuation of this particular company had got well
ahead of fundamentals.
On the Traditional Energy side we added several new positions
across the infrastructure, services and production segments. The
infrastructure companies we now own are focused on natural gas so
should see good volume growth to drive earnings and also benefit if
there are unexpected reduction in rates. These purchases were
funded by exiting a refining company (Valero) and an Exploration
and Production (E&P) company (EOG Resources).
On the Energy Transition side we added a new holding in a US wind
turbine manufacturer that looks to be a beneficiary from the
ongoing fiscal support provided by the Inflation Reduction Act of
2022 and we initiated a position in a leading cable manufacturer,
Prysmian. It should see its order books well supported by the array
of investments needed in transmission and the grid.
Income
The Company paid a total of 2.250p in dividends for the first half
of the year, split between the two quarterly payments.
The underlying dividend trends in the portfolio over the first six
months of the year were a mixed picture. This is less as a result
of companies deciding to make reductions to their dividend payments
but more as a function of the changes we have made to the stock
selection in the portfolio. The decisions to reduce Vale,
TotalEnergies and BHP had negative implications for the ongoing
income generation in the portfolio. However, we have conviction
that the investments made with the proceeds offer a more attractive
total return prospect to offset the income foregone.
We did make an investment in a new convertible bond issue that came
with an attractive coupon as well as an equity upside. This was in
a leading lithium producer where despite the near-term headwinds,
the convertible bond offers a better risk-adjusted return with the
added benefit of enhancing the portfolio’s income.
We also note that Pound Sterling has strengthened over 7% from its
October 2023 lows against the US
Dollar (as at 16 July 2024). If this
trend continues then it will be a headwind for the Company’s income
in Pound Sterling as most of the dividends in the underlying
portfolio companies are paid in US Dollars.
Traditional Energy
Oil prices remained relatively range-bound (see Figure 4 within the
Half Yearly Financial Report) in the period consistent with our
view that Oil and Petroleum Exporting Countries (OPEC) plus
countries continue to act in a disciplined fashion in balancing
supply and demand. Our thesis remains supported by oil futures
firmly in backwardation despite market concerns of oversupply
following OPEC’s June announcement to gradually phase out cuts to
production.
Excluding COVID-19, US natural gas prices (Henry Hub, see Figure 5
within the Half Yearly Financial Report) hit a 32-year low in
February 2024 forcing gas drillers to
reduce production. Lower activity levels helped to rebalance
markets and prices have since recovered through June.
Although the Company’s Traditional Energy holdings contributed
positively to overall performance in the period, the underlying
sub-sector performance was more mixed. Underweight positions in
Chevron and Total Energies drove an overall negative contribution
from Integrated Oil Companies (IOCs). Elsewhere, the Biden
Administration announced a moratorium on US Liquified Natural Gas
export licenses at the end of January which impacted shares in
Cheniere Energy. Subsequent to the period end, a federal district
judge in Louisiana ordered the
Biden Administration to lift the suspension.
On a more positive note, we made several changes within our
Traditional Energy holdings during the period. We exited our
position in EOG Resources to help fund new holdings in Targa
Resources, Permian Resources and Saipem. The first two holdings
reflect an overall positive view on the long-term growth outlook
for the world-class Permian Basin in West
Texas. Targa Resources provides compelling low-risk
throughput growth in its midstream business with an attractive
yield whilst Permian Resources has continued to demonstrate
best-in-class execution with a highly motivated management
team.
Our holding in Saipem reflects an overall pivot within the
Traditional Energy value-chain towards international oilfield
services where we see a strong pipeline of new projects and
improving margins. This follows new holdings initiated last year in
TechnipFMC and Weatherford.
Energy Transition
Over the trailing 12-month period (see Figure 6 within the Half
Yearly Financial Report), Energy Transition-related stocks (S&P
Clean Energy Index) have generally struggled against the Mining and
Traditional Energy sectors, albeit with a strong step-up,
particularly in the month of May (see Figure 7 within the Half
Yearly Financial Report). This was partly driven by strong
performance from a handful of renewable development companies that
were subject to premium acquisitions including Encavis AG and Neoen
SA. This precipitated a broader re-rating of renewables-focused
stocks in the period which underpinned strong active return
contributions from key holdings in NextEra Energy and First
Solar.
Elsewhere, manufacturing spend continued to broaden in the United States as a follow through from
subsidies encapsulated in the Inflation Reduction Act of 2022 and
the CHIPS and Science Act of 2022. This benefited stocks such as
Trane Technologies and Ingersoll
Rand with strong backlog expansion in CHVAC (Cooling,
Heating, Ventilation and Air Conditioning) and industrial equipment
demand, respectively.
Excitement around AI/datacentre build-outs in the United States led to a sharp upwards
revision in long-term electricity demand forecasts (see Figure 8
within the Half Yearly Financial Report) which for much of the last
two decades has been largely flat. Given the competing forces
around rapid data centre build-out and dramatic improvements in the
energy efficiency of leading-edge chips from the likes of Nvidia
the range of growth estimates remains necessarily wide at this
stage. Nevertheless, the outlook for baseload power demand growth
in the region is likely to hit mid-single digits in the coming
years. This helped drive positive stock performance from the likes
of Schneider Electric. The Company also benefitted from a new
position in GE Vernova, a spin-off from General Electric which has
a leading position in electric power systems and gas turbine
manufacturing. Building on the rising electrification theme, we
also initiated new positions in global cabling systems supplier,
Prsymian, and UK grid-operator, National Grid.
The Company’s investments in renewables-focused utility companies
in Europe were amongst the largest
detractors for the period including German-utility RWE AG and
Portuguese-based EDP Renovaveis SA. Both companies faced earnings
headwinds from a combination of lower trading earnings for the
former and impairment charges for the latter.
Mining
The mining sector saw a fairly strong first half performance for
both mining companies and commodities. However there was
significant dispersion in performance which was more pronounced for
commodities than related equities explained further
below.
The main differences came between steel related commodities (iron
ore and coking coal), which both saw heavy price falls in the six
months, and base metals (such a copper and aluminium) that posted
strong double digit price gains. The real estate sector in
China remains under significant
pressure and this weighed heavily on the steel sentiment in
China.
As shown in Figure 9 in the Half Yearly Financial Report, steel
margins were negative in China
early in the period and, with demand subdued given the real estate
woes, steel producers held back on iron ore purchases causing the
price to fall back from $130/tonne to
$100/tonne from the start of January
to the end of March (SGX
Iron Ore 62%).
As margins improved in the second quarter steel production was able
to pick up, with much of this destined for export given the
depressed local demand. The chart below shows how much steel
exports have picked up from China
in 2024 (and 2023) – it is likely that this can’t be sustained as
trade barriers will be erected to protect steel industries in other
countries (see Figure 10 within the Half Yearly Financial
Report).
Despite the challenging iron ore market, the major producers of
iron ore, such as BHP and Rio Tinto, held up quite well (Rio Tinto
total return 5.6%, BHP 0.0%; GBP). This performance relative to the
underlying commodity implies a noticeable increase in valuation
multiple associated with the companies – in many ways we think this
is deserved given the greater resilience and discipline of these
businesses compared to previous cycles. However, despite this
re-rating, they did lag their peers that have a more diversified
commodity mix with another one of our portfolio companies, Teck
Resources delivering substantially better returns for the six month
period.
A key thematic to surface in the period was a “buy or build”
question in the copper space. This is something that we have
described in the past when talking about the incentive price to
bring new projects online being substantially higher than current
prices and that existing copper production capacity used to trade
at lower implied copper prices than that incentive price. We saw
significant corporate activity to emphasise this point with BHP
making several approaches to Anglo
American to try to get a deal agreed. The prize that BHP
were seeking was clearly the South American copper portfolio of
Anglo, which has several long life and high quality assets. In the
end, they could not agree a deal due to the complexities of Anglo’s
South African assets but other copper orientated companies saw
strong share price appreciation as a result of the approach, with
portfolio holdings such as Ivanhoe
Mines notable performers.
Whilst our enthusiasm for copper longer-term remains, it should be
noted that in the short-term there are some clouds on the horizon.
Inventories, although low in terms of numbers of days of use at
around 7 weeks, have been rising steadily during the first half of
the year, as shown in Figure 11 within the Half Yearly Financial
Report. Investor sentiment towards copper though has remained very
positive, as shown by the long positions and overall net length in
copper futures in Figure 12 within the Half Yearly Financial
Report. If physical markets do not see near-term improvements,
there is every chance the “hot money” in futures will look to
deploy elsewhere and cause a copper price pullback. Given our
longer-term structural positive view, it is likely we would use
such an opportunity to increase the portfolio’s
exposure.
Market outlook and portfolio
positioning
Looking back at the 2023 annual report we flagged “an abnormally
high level of uncertainty for the year ahead”. Part of this
reflected a record spate of elections in 2024 as well as persistent
tensions between the United States
and China “where tariffs continue
to be the tool of choice in tackling the competitive threat of
cheaper manufactured goods in the Energy Transition value chain”.
Since then, the European Union has announced tariffs against
Chinese Electric Vehicles. Against this backdrop, we believe there
is likely to be higher and stickier inflation than we have seen in
the last two decades and reinforces our view of a higher interest
rate environment. Whilst risks remain elevated, we believe the
flexibility that the Company offers remains key to achieving our
twin objectives of growth and income as these uncertainties drive
persistent dispersion.
AI and datacentre demand will be additive to prior estimates of
baseload power demand which we see as supportive not just for
renewables, but critically for natural gas and nuclear. Further, as
technology companies seek to drive rapid build out of these energy
intensive assets the demand for traditional investments will drive
further bottlenecks on the supply side.
As we look into the second half of the year we are also closely
monitoring the outcome of Federal-level elections and their
potential impact on energy and climate policy. The UK (22 May) and
France (10 June) both announced
snap elections during the period. Subsequent to the period end, a
Labour majority has been confirmed in the UK that will likely see
an acceleration of decarbonisation efforts and should provide a
positive tailwind for grid expansion and permitting. Finally, as we
head towards the November US Presidential election it is not
unreasonable to surmise that, under either a Republican or
Democratic victory, it will do little to derail the underlying pace
of capital investment into the Energy Transition space. The
Inflation Reduction Act of 2022, for instance, has been a very
positive force in job creation and capital formation in
the United States - an outcome
most politicians will tend to favour.
TOM HOLL AND MARK HUME
BlackRock Investment Management (UK)
Limited
31 July 2024
Distribution of investments as at 31
May 2024
Asset
allocation
–
Geography
|
Global
|
52.2%
|
|
United States
|
20.6%
|
|
Canada
|
9.4%
|
|
Africa
|
2.7%
|
|
Germany
|
2.6%
|
|
United
Kingdom
|
2.5%
|
|
Latin
America1
|
2.5%
|
|
Australia
|
2.3%
|
|
France
|
1.8%
|
|
Brazil
|
1.5%
|
|
Italy
|
1.3%
|
|
Ireland
|
0.6%
|
1
Latin
America
represents
Argentina.
Source:
BlackRock.
Asset
allocation
–
Commodity/sub-sectors
|
Mining
|
45.4%
|
|
Traditional Energy
|
28.3%
|
|
Energy Transition
|
26.3%
|
Energy Transition (26.3%)
|
Energy Efficiency
|
9.4%
|
|
Electrification
|
7.1%
|
|
Renewables
|
5.5%
|
|
Transport
|
3.0%
|
|
Storage
|
1.3%
|
Traditional Energy (28.3%)
|
Exploration & Production
|
12.2%
|
|
Integrated
|
8.4%
|
|
Distribution
|
3.3%
|
|
Oil Services
|
2.2%
|
|
Oil, Gas & Consumable Fuels
|
1.4%
|
|
Refining & Marketing
|
0.8%
|
Mining
(45.4%)
|
Diversified
|
23.4%
|
|
Copper
|
7.9%
|
|
Steel
|
3.7%
|
|
Industrial Minerals
|
2.9%
|
|
Gold
|
2.5%
|
|
Aluminium
|
1.8%
|
|
Metals & Mining
|
1.8%
|
|
Nickel
|
1.4%
|
Source:
BlackRock.
Ten largest investments
Together, the ten largest investments represent 31.7% of
the Company’s portfolio as at 31 May
2024 (30 November 2023:
36.3%).
1
+
Anglo
American
(2023: 65th)
Diversified mining group
Market value: £8,817,000
Share of investments: 4.7%1
(2023: 0.4%)
A global mining group. The group’s mining portfolio includes bulk
commodities including iron ore, manganese, metallurgical coal, base
metals including copper and nickel and precious metals and minerals
including platinum and diamonds. Anglo
American has mining operations globally, with significant
assets in Africa and South America.
2
+
Rio Tinto
(2023: 4th)
Diversified mining group
Market value: £8,757,000
Share of investments: 4.6%
(2023: 4.4%)
One of the world’s leading mining companies. The group’s primary
product is iron ore, but it also produces aluminium, copper,
diamonds, gold, industrial minerals and energy products.
3
+
Teck Resources
(2023: 14th)
Diversified mining group
Market value: £7,951,000
Share of investments: 4.2%
(2023: 2.1%)
A diversified mining group headquartered in Canada. Teck Resources is engaged in mining
and mineral development with operations and projects in
Canada, the US, Chile and Peru. The group has exposure to copper, zinc,
steelmaking coal and energy.
4
-
Glencore
(2023: 1st)
Diversified mining group
Market value: £6,450,000
Share of investments: 3.4%
(2023: 4.8%)
One of the world’s largest globally diversified natural resources
groups. The group’s operations include approximately 150 mining and
metallurgical sites and oil production assets. Glencore’s mined
commodity exposure includes copper, cobalt, nickel, zinc, lead,
ferroalloys, aluminium, iron ore gold and silver.
5
=
Shell
(2023: 5th)
Integrated oil group
Market value: £6,147,000
Share of investments: 3.3%
(2023: 3.8%)
Shell is one of the largest integrated energy companies globally
with five main operating segments: Integrated Gas, Upstream,
Marketing, Chemicals and Products, and Renewables and Energy
Solutions. The company has a high quality, gas/liquified natural
gas (LNG)-weighted portfolio.
6
+
Filo Corp.
(2023: 13th)
Copper mining group
Market value: £4,802,000
Share of investments: 2.5%
(2023: 2.2%)
Filo Corp., part of the Lundin Group of companies, is a Canadian
mineral exploration company focused on exploring their
copper-gold-silver deposit in Filo del
Sol near the borders of Argentina and Chile.
7
=
NextEra Energy
(2023: 7th)
Electrification
Market value: £4,610,000
Share of investments: 2.4%
(2023: 2.7%)
NextEra Energy is America’s premier clean energy leader and the
world’s largest producer of wind and solar energy. The company has
a dominant market share in a structurally growing renewables
market.
8
-
BHP
(2023: 2nd)
Diversified mining group
Market value: £4,291,000
Share of investments: 2.3%
(2023: 4.7%)
The world’s largest diversified mining group by market
capitalisation. The group is an important global player in a number
of commodities including iron ore, copper, thermal and
metallurgical coal, manganese, nickel, silver and diamonds. BHP
also has significant interests in oil, gas and liquefied natural
gas.
9
+
Schneider Electric
(2023: 21st)
Energy efficiency
Market value: £4,137,000
Share of investments: 2.2%
(2023: 1.8%)
Schneider Electric is a French multinational company specialising
in digital automation and energy management and addresses homes,
buildings, data centres, infrastructure and industries, by
combining energy technologies,real-time automation, software and
services
10
=
Hess
(2023: 10th)
Exploration & Production
Market value: £3,995,000
Share of investments: 2.1%
(2023: 2.4%)
An American global independent energy company, involved in the
exploration and production of crude oil and natural gas.
All percentages reflect the value of the holding as a percentage of
total investments.
The symbols indicate the change in relative ranking of the position
in the portfolio compared to its ranking as at 30 November 2023.
Percentages in brackets represent the value of the holding as at
30 November 2023.
Investment
|
|
Main
geographic
exposure
|
Market
value
£’000
|
|
% of
investments
|
|
Mining
|
|
|
|
|
|
Diversified
|
|
|
|
|
|
Anglo American
|
Global
|
8,822
|
}
|
4.7
|
|
Anglo American Put Option 21/06/24
|
Global
|
(5)
|
|
Rio Tinto
|
Global
|
8,757
|
|
4.6
|
|
Teck Resources
|
Global
|
7,951
|
|
4.2
|
|
Glencore
|
Global
|
6,449
|
|
3.4
|
|
BHP
|
Global
|
4,291
|
|
2.3
|
|
Abaxx Technologies
|
Global
|
3,334
|
|
1.8
|
|
Vale Debentures*
|
Brazil
|
2,162
|
}
|
1.5
|
|
Vale
|
Brazil
|
750
|
|
Trident
|
Global
|
1,629
|
|
0.9
|
|
|
|
---------------
|
|
---------------
|
|
|
|
44,140
|
|
23.4
|
|
|
|
=========
|
|
=========
|
|
Copper
|
|
|
|
|
|
Filo Corp.
|
Latin America
|
4,802
|
|
2.5
|
|
First Quantum Minerals 6.875% 15/10/27
|
Global
|
1,616
|
}
|
|
|
First Quantum Minerals
|
Global
|
1,200
|
1.6
|
|
Foran Mining
|
Canada
|
2,018
|
|
1.1
|
|
Metals Acquisition
|
Australia
|
1,981
|
|
1.0
|
|
Freeport-McMoRan
|
United States
|
1,619
|
|
0.9
|
|
Ivanhoe Electric
|
United States
|
1,219
|
|
0.6
|
|
Develop Global
|
Australia
|
414
|
|
0.2
|
|
|
|
---------------
|
|
---------------
|
|
|
|
14,869
|
|
7.9
|
|
|
|
=========
|
|
=========
|
|
Steel
|
|
|
|
|
|
Steel Dynamics
|
United States
|
2,424
|
|
1.3
|
|
ArcelorMittal
|
Global
|
2,354
|
|
1.2
|
|
Stelco
|
Canada
|
2,291
|
|
1.2
|
|
|
|
---------------
|
|
---------------
|
|
|
|
7,069
|
|
3.7
|
|
|
|
=========
|
|
=========
|
|
Industrial Minerals
|
|
|
|
|
|
Albemarle
|
Global
|
2,431
|
|
1.3
|
|
Bunge
|
Global
|
1,061
|
|
0.6
|
|
Nutrien
|
United States
|
988
|
|
0.5
|
|
Lynas Corporation
|
Australia
|
919
|
|
0.5
|
|
CF Industries
|
United States
|
47
|
|
–
|
|
|
|
---------------
|
|
---------------
|
|
|
|
5,446
|
|
2.9
|
|
|
|
=========
|
|
=========
|
|
Gold
|
|
|
|
|
|
Allied Gold Corporation 8.75% 07/09/2028
|
Africa
|
1,728
|
|
0.9
|
|
Wheaton Precious Metals
|
Global
|
1,603
|
|
0.8
|
|
Barrick Gold
|
Global
|
1,419
|
|
0.8
|
|
|
|
---------------
|
|
---------------
|
|
|
|
4,750
|
|
2.5
|
|
|
|
=========
|
|
=========
|
|
Metals & Mining
|
|
|
|
|
|
Ivanhoe Mines
|
Africa
|
3,441
|
|
1.8
|
|
|
|
---------------
|
|
---------------
|
|
|
|
3,441
|
|
1.8
|
|
|
|
=========
|
|
=========
|
|
Aluminium
|
|
|
|
|
|
Norsk Hydro
|
Global
|
3,310
|
|
1.8
|
|
|
|
---------------
|
|
---------------
|
|
|
|
3,310
|
|
1.8
|
|
|
|
=========
|
|
=========
|
|
Nickel
|
|
|
|
|
|
Nickel Mines
|
Australia
|
1,138
|
|
0.6
|
|
Lifezone Metals
|
Global
|
1,590
|
|
0.8
|
|
|
|
---------------
|
|
---------------
|
|
|
|
2,728
|
|
1.4
|
|
|
|
=========
|
|
=========
|
|
Total Mining
|
|
85,753
|
|
45.4
|
|
|
|
=========
|
|
=========
|
|
Traditional Energy
|
|
|
|
|
|
Exploration & Production
|
|
|
|
|
|
Hess
|
Global
|
3,995
|
|
2.1
|
|
Canadian Natural Resources
|
Canada
|
3,889
|
|
2.1
|
|
ConocoPhillips
|
Global
|
3,540
|
|
1.9
|
|
Permian Resources
|
United States
|
2,920
|
|
1.5
|
|
Tourmaline Oil
|
Canada
|
2,417
|
|
1.3
|
|
Arc Resources
|
Canada
|
2,284
|
|
1.2
|
|
Diamondback Energy
|
United States
|
2,231
|
|
1.2
|
|
Kosmos Energy
|
United States
|
1,688
|
|
0.9
|
|
|
|
---------------
|
|
---------------
|
|
|
|
22,964
|
|
12.2
|
|
|
|
=========
|
|
=========
|
|
Integrated
|
|
|
|
|
|
Shell
|
Global
|
6,147
|
|
3.3
|
|
ExxonMobil
|
Global
|
3,985
|
|
2.1
|
|
BP
|
Global
|
3,564
|
|
1.9
|
|
Cenovus Energy
|
Canada
|
2,188
|
|
1.1
|
|
Gazprom**
|
Russian Federation
|
–
|
|
–
|
|
|
|
---------------
|
|
---------------
|
|
|
|
15,884
|
|
8.4
|
|
|
|
=========
|
|
=========
|
|
Distribution
|
|
|
|
|
|
Targa Resources
|
United States
|
3,887
|
|
2.1
|
|
Cheniere Energy
|
United States
|
2,334
|
|
1.2
|
|
|
|
---------------
|
|
---------------
|
|
|
|
6,221
|
|
3.3
|
|
|
|
=========
|
|
=========
|
|
Oil Services
|
|
|
|
|
|
TechnipFMC
|
Global
|
2,072
|
|
1.1
|
|
Weatherford International
|
Global
|
1,228
|
|
0.6
|
|
Saipem
|
Global
|
898
|
|
0.5
|
|
|
|
---------------
|
|
---------------
|
|
|
|
4,198
|
|
2.2
|
|
|
|
=========
|
|
=========
|
|
Oil, Gas & Consumable Fuels
|
|
|
|
|
|
Pembina Pipeline
|
Canada
|
2,703
|
|
1.4
|
|
|
|
---------------
|
|
---------------
|
|
|
|
2,703
|
|
1.4
|
|
|
|
=========
|
|
=========
|
|
Refining & Marketing
|
|
|
|
|
|
Marathon Petroleum Corporation
|
United States
|
1,519
|
|
0.8
|
|
|
|
---------------
|
|
---------------
|
|
|
|
1,519
|
|
0.8
|
|
|
|
=========
|
|
=========
|
|
Total Traditional Energy
|
|
53,489
|
|
28.3
|
|
|
|
=========
|
|
=========
|
|
Energy Transition
|
|
|
|
|
|
Energy Efficiency
|
|
|
|
|
|
Schneider Electric
|
Global
|
4,137
|
|
2.2
|
|
Ingersoll-Rand
|
United States
|
3,610
|
|
1.9
|
|
Analog Devices
|
Global
|
3,422
|
|
1.8
|
|
Trane Technologies
|
United States
|
2,964
|
|
1.6
|
|
Regal Rexnord
|
United States
|
1,683
|
|
0.9
|
|
Kingspan Group
|
Ireland
|
1,087
|
|
0.6
|
|
Nidec Corp
|
Global
|
809
|
|
0.4
|
|
|
|
---------------
|
|
---------------
|
|
|
|
17,712
|
|
9.4
|
|
|
|
=========
|
|
=========
|
|
Electrification
|
|
|
|
|
|
NextEra Energy
|
United States
|
4,610
|
|
2.4
|
|
RWE
|
Germany
|
3,607
|
|
1.9
|
|
National Grid
|
United Kingdom
|
2,916
|
}
|
1.7
|
|
National Grid Rights 11/06/2024
|
United Kingdom
|
161
|
|
Sempra Energy
|
United States
|
1,975
|
|
1.1
|
|
EDP Renováveis
|
Global
|
42
|
|
–
|
|
|
|
---------------
|
|
---------------
|
|
|
|
13,311
|
|
7.1
|
|
|
|
=========
|
|
=========
|
|
Renewables
|
|
|
|
|
|
First Solar
|
Global
|
3,721
|
|
2.0
|
|
GE Vernova
|
United States
|
3,106
|
|
1.6
|
|
Vestas Wind
|
Global
|
1,852
|
|
1.0
|
|
SSE
|
United Kingdom
|
1,660
|
|
0.9
|
|
|
|
---------------
|
|
---------------
|
|
|
|
10,339
|
|
5.5
|
|
|
|
=========
|
|
=========
|
|
Transport
|
|
|
|
|
|
STMicroelectronics
|
France
|
3,365
|
|
1.8
|
|
Infineon Technologies
|
Germany
|
1,333
|
|
0.7
|
|
Samsung SDI
|
Global
|
967
|
|
0.5
|
|
|
|
---------------
|
|
---------------
|
|
|
|
5,665
|
|
3.0
|
|
|
|
=========
|
|
=========
|
|
Storage
|
|
|
|
|
|
Prysmian Spa
|
Italy
|
2,420
|
|
1.3
|
|
|
|
---------------
|
|
---------------
|
|
|
|
2,420
|
|
1.3
|
|
|
|
=========
|
|
=========
|
|
Total Energy Transition
|
|
49,447
|
|
26.3
|
|
|
|
=========
|
|
=========
|
|
Total Portfolio
|
|
188,689
|
|
100.0
|
|
|
|
=========
|
|
=========
|
|
Comprising
|
|
|
|
|
|
Equity and debt investments
|
|
188,694
|
|
100.0
|
|
Derivative financial instruments – futures
|
|
(5)
|
|
–
|
|
|
|
---------------
|
|
---------------
|
|
|
|
188,689
|
|
100.0
|
|
|
|
=========
|
|
=========
|
* The
investment in the Vale debentures is illiquid and has been valued
using secondary market pricing information provided by the
Brazilian Financial and Capital Markets Association
(ANBIMA).
** The
investment in Gazprom has been valued at a nominal value of
RUB0.01 as secondary listings of the
depositary receipts on Russian companies have been suspended from
trading.
All investments are ordinary shares unless otherwise stated. The
total number of holdings (including options) at 31 May 2024 was 74 (30
November 2023: 78).
There was one open option as at 31 May
2024 (30 November 2023:
one).
The equity and fixed income investment total of £188,694,000
(30 November 2023: £175,540,000)
above before the deduction of the negative valuation of commodity
futures contracts of £5,000 (30 November
2023: negative option valuation of £110,000 and negative
futures contract valuation of £780,000) represents the Group’s
total investments held at fair value as reflected in the
Consolidated Statement of Financial Position. The table above
excludes cash and gearing; the level of the Group’s gearing may be
determined with reference to the bank overdraft of £15,213,000
(30 November 2023: £17,862,000) and
cash and cash equivalents of £73,000 (30
November 2023: £5,276,000) that are also disclosed in the
Consolidated Statement of Financial Position. Details of the AIC
methodology for calculating gearing are given in the Glossary
within the Half Yearly Financial Report.
As at 31 May 2024, the Company did
not hold any equity interests comprising more than 3% of any
company’s share capital.
Interim Management Report and Responsibility
Statement
The Chairman’s Statement and the Investment Managers’ 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
and regulatory compliance;
· Operational;
· 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 30 November 2023. A
detailed explanation can be found in the Strategic Report on pages
38 to 42 and in note 18 on pages 110 to 122 of the Annual Report
and Financial Statements which are available on the Company’s
website at
www.blackrock.com/uk/beri.
The Board and the Investment Manager continue to monitor investment
performance in line with the Company’s investment objectives, and
the operations of the Company and the publication of net asset
values are continuing.
In the view of the Board, there have not been any changes to the
fundamental nature of the principal risks and uncertainties since
the previous report and these are equally applicable to the
remaining six months of the financial year as they were to the six
months under review.
Going concern
The Board is mindful of the risk that unforeseen or unprecedented
events including (but not limited to) heightened geopolitical
tensions such as the wars in Ukraine and Middle
East, their longer-term effects on the global economy, high
inflation and the current cost of living crisis could have a
significant impact on global markets. Notwithstanding this
significant degree of uncertainty, the Directors, having considered
the nature and liquidity of the portfolio, the Company’s investment
objective, the Company’s projected income and expenditure and the
Company’s substantial distributable reserves, are satisfied that
the Company has adequate resources to continue in operational
existence for the foreseeable future and is financially
sound.
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. Borrowings
under the overdraft facility shall be lower of £40.0 million or 20%
of the Company’s net assets (calculated at the time of draw down)
and this covenant was complied with during the period. Ongoing
charges (excluding finance costs, direct transaction costs, custody
transaction charges, VAT recovered, taxation, prior year expenses
written back and certain non recurring charges) have been capped by
the Manager at 1.25% of average daily net assets with effect from
17 March 2020 and were 1.20% of net
assets for the year ended 30 November
2023.
Based on the above, the Board is satisfied that it is appropriate
to continue to adopt the going concern basis in preparing the
financial statements.
Related party disclosure and transactions with the
Investment Manager
BlackRock Fund Managers Limited (BFM) is the Company’s Alternative
Investment Fund Manager (AIFM) and has, with the Company’s consent,
delegated certain portfolio and risk management services, and other
ancillary services, to BlackRock Investment Management (UK) Limited
(BIM (UK)). Both BFM and
BIM (UK) are regarded as related
parties under the Listing Rules. Details of the management fee
payable are set out in note 4 and note 14 below. The related party
transactions with the Directors are set out in note 13
below.
Directors’ responsibility statement
The Disclosure Guidance and Transparency Rules (DTR) of the UK
Listing Authority require the Directors to confirm their
responsibilities in relation to the preparation and publication of
the Interim Management Report and Financial Statements.
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
International Accounting Standard 34 Interim Financial Reporting;
and
· the
Interim Management Report together with the Chairman’s Statement
and Investment Managers’ 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.
This Half Yearly Financial Report has not been audited or reviewed
by the Company’s Auditor.
The Half Yearly Financial Report was approved by the Board on
31 July 2024 and the above
responsibility statement was signed on its behalf by the
Chairman.
ADRIAN
BROWN
For and on behalf of the Board
31 July 2024
Consolidated Statement of Comprehensive Income for the six
months ended 31 May
2024
|
|
|
Six months ended
31 May 2024
(unaudited)
|
Six months ended
31 May 2023
(unaudited)
|
Year ended
30 November 2023
(audited)
|
|
|
Notes
|
Revenue
£’000
|
Capital
£’000
|
Total
£’000
|
Revenue
£’000
|
Capital
£’000
|
Total
£’000
|
Revenue
£’000
|
Capital
£’000
|
Total
£’000
|
|
Income from investments held at fair value through profit or
loss
|
3
|
2,700
|
–
|
2,700
|
3,411
|
101
|
3,512
|
6,258
|
79
|
6,337
|
|
Other income
|
3
|
428
|
–
|
428
|
652
|
–
|
652
|
1,218
|
–
|
1,218
|
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
|
Total revenue
|
|
3,128
|
–
|
3,128
|
4,063
|
101
|
4,164
|
7,476
|
79
|
7,555
|
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
|
Net profit/(loss) on investments and derivatives held at fair value
through profit or loss
|
|
–
|
19,011
|
19,011
|
–
|
(29,497)
|
(29,497)
|
--
|
(27,606)
|
(27,606)
|
|
Net (loss)/profit on foreign exchange
|
|
–
|
(1)
|
(1)
|
–
|
(35)
|
(35)
|
–
|
6
|
6
|
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
|
Total
|
|
3,128
|
19,010
|
22,138
|
4,063
|
(29,431)
|
(25,368)
|
7,476
|
(27,521)
|
(20,045)
|
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Investment management fee
|
4
|
(181)
|
(543)
|
(724)
|
(202)
|
(606)
|
(808)
|
(387)
|
(1,162)
|
(1,549)
|
|
Other operating expenses
|
5
|
(240)
|
(4)
|
(244)
|
(232)
|
(13)
|
(245)
|
(535)
|
(16)
|
(551)
|
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
|
Total operating expenses
|
|
(421)
|
(547)
|
(968)
|
(434)
|
(619)
|
(1,053)
|
(922)
|
(1,178)
|
(2,100)
|
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
|
Net profit/(loss) on ordinary activities before finance
costs and taxation
|
|
2,707
|
18,463
|
21,170
|
3,629
|
(30,050)
|
(26,421)
|
6,554
|
(28,699)
|
(22,145)
|
|
Finance costs
|
6
|
(128)
|
(385)
|
(513)
|
(93)
|
(279)
|
(372)
|
(196)
|
(588)
|
(784)
|
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
|
Net profit/(loss) on ordinary activities before
taxation
|
|
2,579
|
18,078
|
20,657
|
3,536
|
(30,329)
|
(26,793)
|
6,358
|
(29,287)
|
(22,929)
|
|
Taxation (expense)/credit
|
|
(245)
|
34
|
(211)
|
(327)
|
54
|
(273)
|
(584)
|
117
|
(467)
|
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
|
Net profit/(loss) on ordinary activities after
taxation
|
8
|
2,334
|
18,112
|
20,446
|
3,209
|
(30,275)
|
(27,066)
|
5,774
|
(29,170)
|
(23,396)
|
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
|
Earnings/(loss) per ordinary share
(pence)
|
8
|
1.83
|
14.17
|
16.00
|
2.37
|
(22.40)
|
(20.03)
|
4.39
|
(22.17)
|
(17.78)
|
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
The total columns of this statement represent the Group’s Statement
of Comprehensive Income, prepared in accordance with UK–adopted
International Accounting Standards (IAS). The supplementary revenue
and capital accounts are both prepared under guidance published by
the Association of Investment Companies (AIC). All items in the
above statement derive from continuing operations. No operations
were acquired or discontinued during the period. All income is
attributable to the equity holders of the Group.
The Group does not have any other comprehensive income/(loss)
(31 May 2023: £nil; 30 November 2023: £nil). The net profit/(loss)
for the period disclosed above represents the Group’s total
comprehensive income/(loss).
Consolidated Statement of Changes in Equity for the six
months ended 31 May
2024
|
|
Notes
|
Called
up share
capital
£’000
|
Share
premium
account
£’000
|
Special
reserve
£’000
|
Capital
reserves
£’000
|
Revenue
reserve
£’000
|
Total
£’000
|
|
For the six months ended 31 May 2024
(unaudited)
|
|
|
|
|
|
|
|
|
At 30 November 2023
|
|
1,356
|
69,980
|
66,100
|
18,660
|
6,266
|
162,362
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
Net profit for the period
|
|
–
|
–
|
–
|
18,112
|
2,334
|
20,446
|
|
Transaction with owners, recorded directly to equity:
|
|
|
|
|
|
|
|
|
Ordinary shares bought back into treasury
|
9
|
–
|
–
|
(7,631)
|
–
|
–
|
(7,631)
|
|
Share buyback costs
|
|
–
|
–
|
(53)
|
–
|
–
|
(53)
|
|
Dividends paid1
|
7
|
–
|
–
|
–
|
–
|
(2,891)
|
(2,891)
|
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
|
At 31 May 2024
|
|
1,356
|
69,980
|
58,416
|
36,772
|
5,709
|
172,233
|
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
|
For the six months ended 31 May 2023
(unaudited)
|
|
|
|
|
|
|
|
|
At 30 November 2022
|
|
1,344
|
68,203
|
70,937
|
47,803
|
6,421
|
194,708
|
|
Total comprehensive (loss)/income:
|
|
|
|
|
|
|
|
|
Net (loss)/profit for the period
|
|
–
|
–
|
–
|
(30,275)
|
3,209
|
(27,066)
|
|
Transactions with owners, recorded directly to equity:
|
|
|
|
|
|
|
|
|
Ordinary share issues
|
|
12
|
1,781
|
–
|
–
|
–
|
1,793
|
|
Share issue costs
|
|
–
|
(4)
|
–
|
–
|
–
|
(4)
|
|
Share reissue costs written back
|
|
–
|
–
|
–
|
28
|
–
|
28
|
|
Dividends paid2
|
7
|
–
|
–
|
–
|
–
|
(2,969)
|
(2,969)
|
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
|
At 31 May 2023
|
|
1,356
|
69,980
|
70,937
|
17,556
|
6,661
|
166,490
|
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
|
For the year ended 30 November 2023
(audited)
|
|
|
|
|
|
|
|
|
At 30 November 2022
|
|
1,344
|
68,203
|
70,937
|
47,803
|
6,421
|
194,708
|
|
Total comprehensive (loss)/income:
|
|
|
|
|
|
|
|
|
Net (loss)/profit for the year
|
|
–
|
–
|
–
|
(29,170)
|
5,774
|
(23,396)
|
|
Transactions with owners, recorded directly to equity:
|
|
|
|
|
|
|
|
|
Ordinary share issues
|
|
12
|
1,781
|
–
|
–
|
–
|
1,793
|
|
Share issue costs
|
|
–
|
(4)
|
–
|
–
|
–
|
(4)
|
|
Ordinary shares bought back into treasury
|
|
–
|
–
|
(4,802)
|
–
|
–
|
(4,802)
|
|
Share buyback costs
|
|
–
|
–
|
(35)
|
–
|
–
|
(35)
|
|
Share reissue costs written back
|
|
–
|
–
|
–
|
27
|
–
|
27
|
|
Dividends paid3
|
7
|
–
|
–
|
–
|
–
|
(5,929)
|
(5,929)
|
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
|
At 30 November 2023
|
|
1,356
|
69,980
|
66,100
|
18,660
|
6,266
|
162,362
|
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
1 4th
interim dividend of 1.125p per share for the year ended
30 November 2023, declared on
7 December 2023 and paid on
12 January 2024 and 1st interim
dividend of 1.125p per share for the year ending 30 November 2024, declared on 15 March 2024 and paid on 26 April 2024.
2 4th
interim dividend of 1.100p per share for the year ended
30 November 2022, declared on
7 December 2022 and paid on
13 January 2023 and 1st interim
dividend of 1.100p per share for the year ended 30 November 2023, declared on 13 March 2023 and paid on 19 April 2023.
3 4th
interim dividend of 1.100p per share for the year ended
30 November 2022, declared on
7 December 2022 and paid on
13 January 2023; 1st interim dividend
of 1.100p per share for the year ended 30
November 2023, declared on 13 March
2023 and paid on 19 April
2023; 2nd interim dividend of 1.100p per share for the year
ended 30 November 2023, declared on
7 June 2023 and paid on 14 July 2023 and 3rd interim dividend of 1.100p
per share for the year ended 30 November
2023, declared on 20 September
2023 and paid on 27 October
2023.
For information on the Company’s distributable reserves, please
refer to note 10 below
Consolidated Statements of Financial Position as at
31 May 2024
|
|
Notes
|
31 May
2024
(unaudited)
£’000
|
31 May
2023
(unaudited)
£’000
|
30 November
2023
(audited)
£’000
|
|
Non current assets
|
|
|
|
|
|
Investments held at fair value through profit or loss
|
12
|
188,694
|
175,627
|
175,540
|
|
|
|
---------------
|
---------------
|
---------------
|
|
Current assets
|
|
|
|
|
|
Other receivables
|
|
484
|
835
|
618
|
|
Current tax asset
|
|
195
|
134
|
130
|
|
Cash collateral pledged with brokers
|
|
343
|
1,086
|
1,538
|
|
Cash and cash equivalents
|
|
73
|
194
|
5,276
|
|
|
|
---------------
|
---------------
|
---------------
|
|
Total current assets
|
|
1,095
|
2,249
|
7,562
|
|
|
|
---------------
|
---------------
|
---------------
|
|
Total assets
|
|
189,789
|
177,876
|
183,102
|
|
|
|
=========
|
=========
|
=========
|
|
Current liabilities
|
|
|
|
|
|
Other payables
|
|
(2,338)
|
(1,463)
|
(1,988)
|
|
Derivative financial liabilities held at fair value through profit
or loss
|
12
|
(5)
|
(559)
|
(890)
|
|
Bank overdraft
|
|
(15,213)
|
(9,364)
|
(17,862)
|
|
|
|
---------------
|
---------------
|
---------------
|
|
Total current liabilities
|
|
(17,556)
|
(11,386)
|
(20,740)
|
|
|
|
---------------
|
---------------
|
---------------
|
|
Net assets
|
|
172,233
|
166,490
|
162,362
|
|
|
|
=========
|
=========
|
=========
|
|
Equity attributable to equity holders
|
|
|
|
|
|
Called up share capital
|
10
|
1,356
|
1,356
|
1,356
|
|
Share premium account
|
|
69,980
|
69,980
|
69,980
|
|
Special reserve
|
|
58,416
|
70,937
|
66,100
|
|
Capital reserves
|
|
36,772
|
17,556
|
18,660
|
|
Revenue reserve
|
|
5,709
|
6,661
|
6,266
|
|
|
|
---------------
|
---------------
|
---------------
|
|
Total shareholders’ funds
|
|
172,233
|
166,490
|
162,362
|
|
|
|
=========
|
=========
|
=========
|
|
Net asset value per ordinary share
(pence)
|
8
|
138.24
|
122.79
|
123.58
|
|
|
|
=========
|
=========
|
=========
|
Consolidated Cash Flow Statement for the six months ended
31 May 2024
|
|
Six months
ended
31 May
2024
(unaudited)
£’000
|
Six months
ended
31 May
2023
(unaudited)
£’000
|
Year
ended
30 November
2023
(audited)
£’000
|
|
Operating activities:
|
|
|
|
|
Net profit/(loss) on ordinary activities before taxation
|
20,657
|
(26,793)
|
(22,929)
|
|
Add back finance costs
|
513
|
372
|
784
|
|
Net (profit)/loss on investments and derivatives held at fair value
through profit or loss (including transaction costs)
|
(19,011)
|
29,497
|
27,606
|
|
Net amount for capital special dividends received
|
–
|
(86)
|
–
|
|
Net loss/(profit) on foreign exchange
|
1
|
35
|
(6)
|
|
Sales of investments held at fair value through profit or
loss
|
61,484
|
53,133
|
97,330
|
|
Purchases of investments held at fair value through profit or
loss
|
(56,512)
|
(51,272)
|
(93,247)
|
|
Decrease/(increase) in other receivables
|
204
|
44
|
(134)
|
|
Increase in other payables
|
253
|
515
|
471
|
|
(Increase)/decrease in amounts due from brokers
|
(70)
|
1,100
|
1,496
|
|
Increase/(decrease) in amounts due to brokers
|
23
|
(4,838)
|
(4,269)
|
|
Net movement in cash collateral held with brokers
|
1,195
|
(801)
|
(1,253)
|
|
|
---------------
|
---------------
|
---------------
|
|
Net cash inflow from operating activities before
taxation
|
8,737
|
906
|
5,849
|
|
Taxation on investment income included within gross
income
|
(276)
|
(304)
|
(494)
|
|
|
---------------
|
---------------
|
---------------
|
|
Net cash inflow from operating
activities
|
8,461
|
602
|
5,355
|
|
|
=========
|
=========
|
=========
|
|
Financing activities
|
|
|
|
|
Interest paid
|
(513)
|
(372)
|
(784)
|
|
Receipts from share issues
|
–
|
1,793
|
1,793
|
|
Share issue costs paid
|
–
|
(58)
|
(59)
|
|
Shares bought back into treasury
|
(7,557)
|
–
|
(4,802)
|
|
Share buyback costs
|
(53)
|
–
|
(35)
|
|
Dividends paid
|
(2,891)
|
(2,969)
|
(5,929)
|
|
|
---------------
|
---------------
|
---------------
|
|
Net cash outflow from financing
activities
|
(11,014)
|
(1,606)
|
(9,816)
|
|
|
=========
|
=========
|
=========
|
|
Decrease in cash and cash equivalents
|
(2,553)
|
(1,004)
|
(4,461)
|
|
Effect of foreign exchange rate changes
|
(1)
|
(35)
|
6
|
|
|
---------------
|
---------------
|
---------------
|
|
Change in cash and cash equivalents
|
(2,554)
|
(1,039)
|
(4,455)
|
|
|
=========
|
=========
|
=========
|
|
Cash and cash equivalents at start of period/year
|
(12,586)
|
(8,131)
|
(8,131)
|
|
|
---------------
|
---------------
|
---------------
|
|
Cash and cash equivalents at end of
period/year
|
(15,140)
|
(9,170)
|
(12,586)
|
|
|
=========
|
=========
|
=========
|
|
Comprised of:
|
|
|
|
|
Cash at bank
|
73
|
194
|
5,276
|
|
Bank overdraft
|
(15,213)
|
(9,364)
|
(17,862)
|
|
|
---------------
|
---------------
|
---------------
|
|
|
(15,140)
|
(9,170)
|
(12,586)
|
|
|
=========
|
=========
|
=========
|
Notes to the financial statements for the six months ended
31 May 2024
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.
The principal activity of the subsidiary, BlackRock Energy and
Resources Securities Income Company Limited, is investment dealing
and options writing.
2. Basis of preparation
The half yearly financial statements for the period ended
31 May 2024 have been prepared in
accordance with the Disclosure Guidance and Transparency Rules
sourcebook of the Financial Conduct Authority and with the
UK-adopted International Accounting Standard 34 (IAS 34), Interim
Financial Reporting. The half yearly financial statements should be
read in conjunction with the Group’s Annual Report and Financial
Statements for the year ended 30 November
2023, which have been prepared in accordance with UK-adopted
International Accounting Standards (IAS) in conformity with the
requirements of the Companies Act 2006.
Insofar as the Statement of Recommended Practice (SORP) for
investment trust companies and venture capital trusts, issued by
the Association of Investment Companies (AIC) in October 2019 and updated in July 2022, is compatible with UK-adopted IAS, the
financial statements have been prepared in accordance with guidance
set out in the SORP.
Adoption of new and amended International Accounting
Standards and interpretations:
IFRS 17 – Insurance contracts
(effective 1 January 2023). This
standard replaced IFRS 4 and applies to all types of
insurance
contracts. IFRS 17 provides a consistent and comprehensive model
for insurance contracts covering all relevant accounting
aspects.
This standard did not have any impact on the Company as it has no
insurance contracts.
IAS 12 - Deferred tax related to assets and liabilities
arising from a single transaction
(effective 1 January 2023). The
IASB
has amended IAS 12 Income Taxes to require companies to recognise
deferred tax on particular transactions that, on initial
recognition, give rise to equal amounts of taxable and deductible
temporary differences. According to the amended guidance, a
temporary difference that arises on initial recognition of an asset
or liability is not subject to the initial recognition exemption if
that transaction gave rise to equal amounts of taxable and
deductible temporary differences. These amendments might have a
significant impact on the preparation of financial statements by
companies that have substantial balances of right-of-use assets,
lease liabilities, decommissioning, restoration and similar
liabilities. The impact for those affected would be the recognition
of additional deferred tax assets and liabilities.
The amendment of this standard did not have any significant impact
on the Company.
IAS 8 – Definition of accounting estimates
(effective 1 January 2023). The IASB
has amended IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors to help distinguish
between accounting policies and accounting estimates, replacing the
definition of accounting estimates.
IAS 1 and IFRS Practice Statement 2 – Disclosure of
accounting policies
(effective 1 January 2023). The IASB
has amended
IAS 1 Presentation of Financial Statements to help preparers in
deciding which accounting policies to disclose in their financial
statements by stating that an entity is now required to disclose
material accounting policies instead of significant accounting
policies.
IAS 12 – International Tax Reform Pillar Two Model
Rules
(effective 1 January 2023). The IASB
has published amendments
to IAS 12 Income Taxes to respond to stakeholders’ concerns about
the potential implications of the imminent implementation of the
OECD pillar two rules on the accounting for income taxes. The
amendment is an exception to the requirements in IAS 12 that an
entity does not recognise and does not disclose information about
deferred tax assets as liabilities related to the OECD pillar two
income taxes and a requirement that current tax expenses must be
disclosed separately to pillar two income taxes.
Relevant International Accounting Standards that have yet
to be adopted:
IAS 1 – Classification of liabilities as current or non
current
(effective 1 January 2024). The IASB
has amended IAS 1
Presentation of Financial Statements to clarify its requirement for
the presentation of liabilities depending on the rights that exist
at the end of the reporting period. The amendment requires
liabilities to be classified as non current if the entity has a
substantive right to defer settlement for at least 12 months at the
end of the reporting period. The amendment no longer refers to
unconditional rights.
IAS 1 - Non current liabilities with
covenants
(effective 1 January 2024). The IASB
has amended IAS 1 Presentation of
Financial Statements to introduce additional disclosures for
liabilities with covenants within 12 months of the reporting
period. The additional disclosures include the nature of covenants,
when the entity is required to comply with covenants, the carrying
amount of related liabilities and circumstances that may indicate
that the entity will have difficulty complying with the
covenants.
None of the standards that have been issued but are not yet
effective are expected to have a material impact on the
Group.
3. Income
|
|
Six months
ended
31 May
2024
(unaudited)
£’000
|
Six months
ended
31 May
2023
(unaudited)
£’000
|
Year
ended
30 November
2023
(audited)
£’000
|
|
Investment income:
|
|
|
|
|
UK dividends
|
654
|
329
|
608
|
|
Fixed income
|
332
|
227
|
453
|
|
Overseas dividends
|
1,560
|
2,055
|
4,578
|
|
Overseas special dividends
|
154
|
800
|
619
|
|
|
---------------
|
---------------
|
---------------
|
|
Total investment income
|
2,700
|
3,411
|
6,258
|
|
|
=========
|
=========
|
=========
|
|
Other income:
|
|
|
|
|
Bank interest
|
2
|
–
|
2
|
|
Interest on collateral received
|
8
|
–
|
7
|
|
Option premium income
|
418
|
652
|
1,209
|
|
|
---------------
|
---------------
|
---------------
|
|
|
428
|
652
|
1,218
|
|
|
=========
|
=========
|
=========
|
|
Total income
|
3,128
|
4,063
|
7,476
|
|
|
=========
|
=========
|
=========
|
During the period, the Group received option premium income in cash
totalling £418,000 (six months ended 31 May
2023: £652,000; year ended 30
November 2023: £1,209,000) for writing covered call and put
options for the purposes of revenue generation.
Option premium income is amortised evenly over the life of the
option contract and accordingly, during the period, option premiums
of £418,000 (six months ended 31 May
2023: £652,000; year ended 30
November 2023: £1,209,000) were amortised to
revenue.
At 31 May 2024, there was one open
position (31 May 2023: nil;
30 November 2023: one) with an
associated liability of £5,000 (31 May
2023: £nil; 30 November 2023:
£110,000).
Dividends and interest received in cash during the period amounted
to £2,374,000 and £287,000 (six months ended 31 May 2023: £2,837,000 and £178,000; year ended
30 November 2023: £5,107,000 and
£482,000).
Special dividends of £nil have been recognised in capital during
the period (six months ended 31 May
2023: £101,000; year ended 30
November 2023: £79,000).
4. Investment management fee
|
|
Six months ended
31 May 2024
(unaudited)
|
Six months ended
31 May 2023
(unaudited)
|
Year ended
30 November 2023
(audited)
|
|
|
Revenue
£’000
|
Capital
£’000
|
Total
£’000
|
Revenue
£’000
|
Capital
£’000
|
Total
£’000
|
Revenue
£’000
|
Capital
£’000
|
Total
£’000
|
|
Investment management fee
|
181
|
543
|
724
|
202
|
606
|
808
|
387
|
1,162
|
1,549
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
|
Total
|
181
|
543
|
724
|
202
|
606
|
808
|
387
|
1,162
|
1,549
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
The investment management fee is levied at 0.80% of gross assets
per annum. Gross assets for the purposes of calculating the
management fee equate to the value of the portfolio’s gross assets
held on the relevant date as valued on the basis of applicable
accounting policies, less the value of any investments in in-house
funds.
The fee is allocated 25% to the revenue account and 75% to the
capital account of the Consolidated Statement of Comprehensive
Income. There is no additional fee for company secretarial and
administration services.
The Company is entitled to a rebate from the investment management
fee charged by the Manager in the event the Company’s ongoing
charges exceed the cap of 1.25% per annum of average daily net
assets. The amount of rebate accrued for the six months ended
31 May 2024 amounted to £nil (six
months ended 31 May 2023: £nil; year
ended 30 November 2023: £nil). The
rebate, if any, is offset against management fees and is allocated
between revenue and capital in the ratio of total ongoing charges
(as defined on page 142 of the Annual Report and Financial
Statements for the year ended 30 November
2023) allocated between revenue and capital during the
period.
5. Other operating expenses
|
|
Six months
ended
31 May
2024
(unaudited)
£’000
|
Six months
ended
31 May
2023
(unaudited)
£’000
|
Year
ended
30 November
2023
(audited)
£’000
|
|
Allocated to revenue:
|
|
|
|
|
Custody fee
|
4
|
5
|
9
|
|
Auditor’s remuneration – audit services1
|
28
|
24
|
48
|
|
Registrar’s fee
|
17
|
18
|
35
|
|
Directors’ emoluments
|
75
|
66
|
133
|
|
Broker fees
|
13
|
12
|
24
|
|
Depositary fees
|
8
|
9
|
17
|
|
Marketing fees
|
15
|
21
|
84
|
|
Printing and postage fees
|
21
|
19
|
39
|
|
Legal and professional fees
|
12
|
13
|
26
|
|
Directors’ search fees
|
–
|
6
|
38
|
|
Bank charges
|
7
|
7
|
14
|
|
Stock exchange listings fees
|
5
|
9
|
14
|
|
Other administration costs
|
35
|
42
|
75
|
|
Write back of prior year expense accruals2
|
–
|
(19)
|
(21)
|
|
|
---------------
|
---------------
|
---------------
|
|
|
240
|
232
|
535
|
|
|
=========
|
=========
|
=========
|
|
Allocated to capital:
|
|
|
|
|
Custody transaction costs3
|
4
|
13
|
16
|
|
|
---------------
|
---------------
|
---------------
|
|
|
244
|
245
|
551
|
|
|
=========
|
=========
|
=========
|
1 No
non-audit services were provided by the Company’s auditors in the
six months ended 31 May 2024 (six
months ended 31 May 2023: none; year
ended 30 November 2023:
none).
2 No
expenses were written back during the period (six months ended
31 May 2023: miscellaneous fees,
external Director evaluation fees, legal and professional fees;
year ended 30 November 2023:
miscellaneous fees, external Director evaluation fees, legal and
professional fees).
3 For
the six months ended 31 May 2024,
expenses of £4,000 (six months ended 31 May
2023: £13,000; year ended 30 November
2023: £16,000) were charged to the capital account of the
Statement of Comprehensive Income.
The transaction costs incurred on the acquisition of investments
amounted to £99,000 for the six months ended 31 May 2024 (six months ended 31 May 2023: £32,000; year ended 30 November 2023: £89,000). Costs relating to the
disposal of investments amounted to £21,000 for the six months
ended 31 May 2024 (six months ended
31 May 2023: £19,000; year ended
30 November 2023: £23,000). All
transaction costs have been included within the capital
reserves.
6. Finance costs
|
|
Six months ended
31 May 2024
(unaudited)
|
Six months ended
31 May 2023
(unaudited)
|
Year ended
30 November 2023
(audited)
|
|
|
Revenue
£’000
|
Capital
£’000
|
Total
£’000
|
Revenue
£’000
|
Capital
£’000
|
Total
£’000
|
Revenue
£’000
|
Capital
£’000
|
Total
£’000
|
|
Interest payable – bank overdraft
|
128
|
385
|
513
|
93
|
279
|
372
|
196
|
588
|
784
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
|
Total
|
128
|
385
|
513
|
93
|
279
|
372
|
196
|
588
|
784
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
Finance costs for the Company are charged 25% to the revenue
account and 75% to the capital account of the Consolidated
Statement of Comprehensive Income. Subsidiary finance costs are
charged 100% to the revenue account of the Consolidated Statement
of Comprehensive Income.
At 31 May 2024, the Group had an
overdraft facility of the lower of £40 million (six months ended
31 May 2023: £40 million; year ended
30 November 2023: £40 million) or 20%
of the Group’s net assets.
7. Dividends
The Board’s current dividend target is to declare quarterly
dividends of 1.125 pence per share in
the year to 30 November 2024, making
a total of at least 4.500 pence per
share for the year as a whole.
A first interim dividend for the year ending 30 November 2024 of £1,423,000 (1.125 pence per share) was paid on 26 April 2024 to shareholders on the register on
29 March 2024.
The Directors have declared a second interim dividend for the year
ending 30 November 2024 of
1.125 pence per share. The total cost
of the dividend was £1,394,000 and was paid on 15 July 2024 to shareholders on the Company’s
register on 14 June 2024. This
dividend has not been accrued in the financial statements for the
six months ended 31 May 2024, as
under IAS, interim dividends are not recognised until paid.
Dividends are debited directly to reserves.
The third and fourth interim dividends will be declared in
September 2024 and December 2024 respectively.
Dividends on equity shares paid during the period were:
|
|
Six months
ended
31 May
2024
(unaudited)
£’000
|
Six months
ended
31 May
2023
(unaudited)
£’000
|
Year
ended
30 November
2023
(audited)
£’000
|
|
2nd interim dividend of 1.100p per share for the year ended 30
November 2023 (2022: 1.100p)
|
–
|
–
|
1,478
|
|
3rd interim dividend of 1.100p per share for the year ended 30
November 2023 (2022: 1.100p)
|
–
|
–
|
1,491
|
|
4th interim dividend of 1.125p per share for the year ended 30
November 2023 (2022: 1.100p)
|
1,468
|
1,478
|
1,491
|
|
1st interim dividend of 1.125p per share for the year ending 30
November 2024 (2023: 1.100p)
|
1,423
|
1,491
|
1,469
|
|
|
---------------
|
---------------
|
---------------
|
|
|
2,891
|
2,969
|
5,929
|
|
|
=========
|
=========
|
=========
|
8. Consolidated earnings and net asset value per ordinary
share
Revenue, capital earnings/(loss) and net asset value per ordinary
share are shown below and have been calculated using the
following:
|
|
Six months
ended
31 May
2024
(unaudited)
|
Six months
ended
31 May
2023
(unaudited)
|
Year
ended
30 November
2023
(audited)
|
|
Net revenue profit attributable to ordinary shareholders
(£’000)
|
2,334
|
3,209
|
5,774
|
|
Net capital profit/(loss) attributable to ordinary shareholders
(£’000)
|
18,112
|
(30,275)
|
(29,170)
|
|
|
---------------
|
---------------
|
---------------
|
|
Total profit/(loss) attributable to ordinary shareholders
(£’000)
|
20,446
|
(27,066)
|
(23,396)
|
|
|
=========
|
=========
|
=========
|
|
Equity shareholders’ funds (£'000)
|
172,233
|
166,490
|
162,362
|
|
The weighted average number of ordinary shares in issue during each
period on which the earnings per ordinary share was calculated
was:
|
127,790,523
|
135,151,964
|
131,610,148
|
|
The actual number of ordinary shares in issue at the period end on
which the net asset value per ordinary share was calculated
was:
|
124,586,194
|
135,586,194
|
131,386,194
|
|
|
---------------
|
---------------
|
---------------
|
|
Earnings per share
|
|
|
|
|
Revenue earnings per share (pence) - basic and diluted
|
1.83
|
2.37
|
4.39
|
|
Capital earnings/(loss) per share (pence) – basic and
diluted
|
14.17
|
(22.40)
|
(22.17)
|
|
|
---------------
|
---------------
|
---------------
|
|
Total earnings/(loss) per share (pence) – basic and
diluted
|
16.00
|
(20.03)
|
(17.78)
|
|
|
=========
|
=========
|
=========
|
|
|
As at
31 May
2024
(unaudited)
|
As at
31 May
2023
(unaudited)
|
As at
30 November
2023
(audited)
|
|
Net asset value per ordinary share (pence)
|
138.24
|
122.79
|
123.58
|
|
Ordinary share price (pence)
|
121.50
|
111.60
|
110.40
|
|
|
=========
|
=========
|
=========
|
There were no dilutive securities at the period end (six months
ended 31 May 2023: nil; year ended
30 November 2023: nil).
9. Reconciliation of liabilities arising from financing
activities
|
|
Six months
ended
31 May
2024
(unaudited)
£’000
|
Six months
ended
31 May
2023
(unaudited)
£’000
|
Year
ended
30 November
2023
(audited)
£’000
|
|
Bank overdraft at beginning of period/year
|
17,862
|
14,345
|
14,345
|
|
Cash flows:
|
|
|
|
|
Movement in overdraft
|
(2,649)
|
4,981
|
3,517
|
|
|
---------------
|
---------------
|
---------------
|
|
Bank overdraft at end of period/year
|
15,213
|
9,364
|
17,862
|
|
|
=========
|
=========
|
=========
|
10. Called up share capital
|
(unaudited)
|
Ordinary
shares
number
|
Treasury
shares
number
|
Total
shares
number
|
Nominal
value
£’000
|
|
Allotted, called up and fully paid share capital
comprised:
|
|
|
|
|
|
Ordinary shares of 1 pence each:
|
|
|
|
|
|
At 30 November 2023
|
131,386,194
|
4,200,000
|
135,586,194
|
1,356
|
|
Ordinary shares repurchased into treasury
|
(6,800,000)
|
6,800,000
|
–
|
–
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
|
At 31 May 2024
|
124,586,194
|
11,000,000
|
135,586,194
|
1,356
|
|
|
=========
|
=========
|
=========
|
=========
|
During the period ended 31 May 2024,
6,800,000 shares were bought back into treasury (six months ended
31 May 2023: nil; year ended
30 November 2023: 4,200,000) for a
net consideration after costs of £7,684,000 (six months ended
31 May 2023: £nil; year ended
30 November 2023:
£4,837,000).
During the period ended 31 May 2024,
no shares were issued (six months ended 31
May 2023: 1,230,000; year ended 30
November 2023: 1,230,000) for a net consideration after
costs of £nil (six months ended 31 May
2023: £1,789,000; year ended 30
November 2023: £1,789,000).
Since 31 May 2024, no shares have
been issued.
Since 31 May 2024 and as at
29 July 2024, the Company has bought
back 1,841,697 shares for costs of £2,172,000.
11. Reserves
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 of the Parent Company may be used as
distributable reserves for all purposes and, in particular, the
repurchase by the Parent Company of its ordinary shares and for
payments such as dividends. In accordance with the Company’s
Articles of Association, the special reserve, capital reserves and
revenue reserve may be distributed by way of dividend. The Parent
Company’s gain on the capital reserve arising on the revaluation of
investments of £32,843,000 (31 May
2023: gain of £13,039,000; year ended 30 November 2023: gain of £15,447,000) 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. The reserves of the subsidiary
company are not distributable until distributed as a dividend to
the Parent Company.
12. 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 risks are substantially consistent
with those disclosed in the previous annual financial statements
with the exception of those outlined below.
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 Group 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 Consolidated Statement of Financial Position at their fair
value (investments and derivatives) 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). IFRS 13 requires the Group 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 Group are explained in the
accounting policies note 2(h) as set out on page 100 of the Group’s
Annual Report and Financial Statements for the year ended
30 November 2023.
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 Group 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 than
active, or other valuation techniques where all significant inputs
are directly or indirectly observable from market data.
Valuation techniques used for non-standardised financial
instruments such as options, currency swaps and other
over-the-counter derivatives include the use of comparable recent
arm’s length transactions, reference to other instruments that are
substantially the same, discounted cash flow analysis, option
pricing models and other valuation techniques commonly used by
market participants making the maximum use of market inputs and
relying as little as possible on entity specific inputs.
Over-the-counter derivative option contracts have been classified
as Level 2 investments as their valuation has been based on market
observable inputs represented by the underlying quoted securities
to which these contracts expose the Group.
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 sets out fair value measurements using the IFRS 13
fair value hierarchy.
|
Financial assets/(liabilities) at fair value through profit or loss
at 31 May 2024 (unaudited)
|
Level 1
£’000
|
Level 2
£’000
|
Level 3
£’000
|
Total
£’000
|
|
Assets:
|
|
|
|
|
|
Equity investments
|
186,532
|
–
|
–
|
186,532
|
|
Fixed income investments
|
–
|
2,162
|
–
|
2,162
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
|
Liabilities:
|
|
|
|
|
|
Derivative financial instruments – written options
|
(5)
|
–
|
–
|
(5)
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
|
|
186,527
|
2,162
|
–
|
188,689
|
|
|
=========
|
=========
|
=========
|
=========
|
|
Financial assets/(liabilities) at fair value through profit or loss
at 31 May 2023 (unaudited)
|
Level 1
£’000
|
Level 2
£’000
|
Level 3
£’000
|
Total
£’000
|
|
Assets:
|
|
|
|
|
|
Equity investments
|
170,896
|
–
|
–
|
170,896
|
|
Fixed income investments
|
2,714
|
2,017
|
–
|
4,731
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
|
Liabilities:
|
|
|
|
|
|
Derivative financial instruments – commodity futures
|
(559)
|
–
|
–
|
(559)
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
|
|
173,051
|
2,017
|
–
|
175,068
|
|
|
=========
|
=========
|
=========
|
=========
|
|
Financial assets/(liabilities) at fair value through profit or loss
at 30 November 2023 (audited)
|
Level 1
£’000
|
Level 2
£’000
|
Level 3
£’000
|
Total
£’000
|
|
Assets:
|
|
|
|
|
|
Equity investments
|
169,171
|
–
|
–
|
169,171
|
|
Fixed income investments
|
4,022
|
2,347
|
–
|
6,369
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
|
Liabilities:
|
|
|
|
|
|
Derivative financial instruments – written options
|
(110)
|
–
|
–
|
(110)
|
|
Derivative financial instruments – commodity futures
|
(780)
|
–
|
–
|
(780)
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
|
|
172,303
|
2,347
|
–
|
174,650
|
|
|
=========
|
=========
|
=========
|
=========
|
The investment in Vale debentures has been classified as Level 2 in
the tables above for all periods as these are priced using
secondary market pricing information provided by the Brazilian
Financial and Capital Markets Association (ANBIMA).
As at 31 May 2024, the investment in
Gazprom has been valued at a nominal value of RUB0.01 (31 May
2023: RUB0.01; 30 November 2023: RUB0.01) due to lack of access to the Moscow
Stock Exchange as a result of sanctions against Russia following the invasion of Ukraine. Following the suspension of the
secondary listings of depositary receipts of Russian companies, the
investment in Gazprom ADRs was transferred from Level 1 to Level 3.
Towards the previous year end, the ADRs in Gazprom were converted
into equity shares of Gazprom. As at the period-end, this
investment is considered a Level 3 financial asset.
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 risks, including
climate change risk, in accordance with the fair value related
requirements of the Company’s financial reporting
framework.
The Company may invest no more than 10% of its net asset value in
investments held through Stock Connect as set out on page 122 of
the Group’s Annual Report and Financial Statements for the year
ended 30 November 2023.
13. Related party disclosure
Directors’ emoluments
The Board consists of four 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. The Chairman
receives an annual fee of £42,000, the Chairman of the Audit and
Management Engagement Committee receives an annual fee of £35,000,
the Senior Independent Director receives an annual fee of £31,000
and each of the other Directors receives an annual fee of
£30,000.
As at 31 May 2024, an amount of
£11,000 (31 May 2023: £11,000;
30 November 2023: £11,000) was
outstanding in respect of Directors’ fees.
At the period end, interests of the Directors in the ordinary
shares of the Company are as set out below:
|
|
31 May
2024
|
31 May
2023
|
30 November
2023
|
|
Mr Adrian Brown (Chairman)
|
35,000
|
35,000
|
35,000
|
|
Mr Andrew Robson
|
35,000
|
35,000
|
35,000
|
|
Mrs Anne Marie Cannon1
|
15,000
|
n/a
|
n/a
|
|
Mrs Carole Ferguson
|
14,505
|
10,000
|
14,505
|
|
Dr Carol Bell2
|
n/a
|
44,000
|
50,800
|
|
|
=========
|
=========
|
=========
|
1 Mrs
Cannon joined the Board with effect from 16
January 2024 and held no shares as at that date.
2 Dr
Carol Bell retired from the Board
with effect from 15 March
2024.
Since the period end and up to the date of this report there have
been no changes in Directors’ holdings.
Significant Holdings
The following investors are:
a. funds
managed by the BlackRock Group or are affiliates of BlackRock, Inc.
(Related BlackRock Funds); or
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 (Significant
Investors).
|
|
Total % of shares
held by Related
BlackRock Funds
|
Total % of shares
held by Significant Investors
who are not affiliates of
BlackRock Group or
BlackRock, Inc.
|
Number of
Significant Investors
who are not affiliates of
BlackRock Group or
BlackRock, Inc.
|
|
As at 31 May 2024
|
0.75
|
n/a
|
n/a
|
|
As at 30 November 2023
|
0.70
|
n/a
|
n/a
|
|
As at 31 May 2023
|
0.95
|
n/a
|
n/a
|
|
|
=========
|
=========
|
=========
|
14. Transactions with the Investment Manager and
AIFM
BlackRock Fund Managers Limited (BFM) provides management and
administration services to the Group under a contract which is
terminable on six months’ notice. BFM has (with the Group’s
consent) delegated certain portfolio and risk management services,
and other ancillary services, to BlackRock Investment Management
(UK) Limited (BIM (UK)). Further
details of the investment management contract are disclosed on page
53 of the Directors’ Report in the Company’s Annual Report and
Financial Statements for the year ended 30
November 2023.
The investment management fee due for the six months ended
31 May 2024 amounted to £724,000 (six
months ended 31 May 2023: £808,000;
year ended 30 November 2023:
£1,549,000). At the period end £1,088,000 was outstanding in
respect of these fees (31 May 2023:
£1,187,000; 30 November 2023:
£742,000).
The Company is entitled to a rebate from the investment management
fee charged by the Manager in the event the Company’s ongoing
charges exceed the cap of 1.25% per annum of average daily net
assets. The amount of rebate accrued to 31
May 2024 amounted to £nil (six months ended 31 May 2023: £nil; year ended 30 November 2023: £nil). Any final rebate for the
full year ending 30 November 2024
will not crystallise and fall due until the calculation date of
30 November 2024.
In addition to the above services, BIM
(UK) has provided the Group with marketing services. The
total fees paid or payable for these services for the period ended
31 May 2024 amounted to £15,000
excluding VAT (six months ended 31 May
2023: £21,000; year ended 30 November
2023: £84,000). Marketing fees of £121,000 (31 May 2023: £43,000; 30
November 2023: £106,000) were outstanding at 31 May 2024.
The ultimate holding company of the Manager and the Investment
Manager is BlackRock, Inc., a company incorporated in Delaware, USA.
15. Capital commitments and contingent
liabilities
The Group had no capital commitments at 31
May 2024 (31 May 2023: one
SPAC PIPE commitment for investment in Lifezone Metals; year ended
30 November 2023: none). There were
no contingent liabilities at 31 May
2024 (31 May 2023: none;
30 November 2023: none).
16. 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 31 May 2024 and
31 May 2023 has not been reviewed or
audited by the auditor.
The information for the year ended 30
November 2023 has been extracted from the latest published
audited financial statements, which have been filed with the
Registrar of Companies unless otherwise stated. The report of the
Auditors on those accounts contained no qualification or statement
under Sections 498(2) or 498(3) of the Companies Act
2006.
17. Annual results
The Board expects to announce the annual results for the year
ending 30 November 2024 in
January 2025.
Copies of the annual results announcement can be obtained from the
Secretary on 020 7743 3000 or at
cosec@blackrock.com.
The Annual Report and Financial Statements should be available at
the beginning of February 2025, with
the Annual General Meeting being held in March 2025.