TIDMBRIG
BLACKROCK INCOME AND GROWTH INVESTMENT TRUST PLC
LEI: 5493003YBY59H9EJLJ16
HALF YEARLY FINANCIAL REPORT FOR THE SIX MONTHSED 30 APRIL 2022
PERFORMANCE RECORD
As at As at
30 April 31 October Change
2022 2021 %
Net assets (£'000)1 44,028 43,468 +1.3
Net asset value per ordinary share (pence) 207.67 203.13 +2.2
Ordinary share price (mid-market) (pence) 187.00 191.00 -2.1
Discount to net asset value2 10.0% 6.0%
FTSE All-Share Index 8430.58 8173.30 +3.1
--------------- --------------- ---------------
Performance (with dividends reinvested)
Net asset value per share2 4.5% 30.4%
Ordinary share price2 0.3% 22.2%
FTSE All-Share Index 3.1% 35.4%
========= =========
For the six For the six
months ended months ended
30 April 2022 30 April 2021
Change
%
Revenue
Net profit after taxation (£'000) 752 699 +7.6
Revenue earnings per ordinary share (pence)3 3.53 3.15 +12.1
--------------- --------------- ---------------
Dividends (pence)
Interim 2.60 2.60 -
========= ========= =========
1 The change in net assets reflects the market movements during the period,
the purchase of the Company's own shares and dividends paid.
2 Alternative Performance Measures, see Glossary in the Half Yearly
Financial Report.
3 Further details are given in the Glossary in the Half Yearly Financial
Report.
Sources: BlackRock and Datastream.
CHAIRMAN'S STATEMENT
Dear Shareholder
OVERVIEW
Recent reports to shareholders were, inevitably, dominated by the COVID-19
pandemic and its inpacts on markets and economies. Direct impacts, lockdowns
and the like have reduced over the recent months, although the receding
pandemic has left behind it a number of related supply constraints, causing
inflation to rise sharply as demand for goods outstripped supply as economic
activity restarted. These effects were then compounded by Russia's invasion of
Ukraine and the resulting humanitarian crisis. Market volatility spiked and
sentiment has been firmly orientated towards fear not greed, with market
participants reducing exposure and seeking safe havens. The West's response to
Russia's invasion has been decisive, applying unprecedented sanctions on
Russian companies and financial institutions, freezing assets and even the
announcement by the UK and the US of a total ban on the import of Russian oil
and gas.
Although many would argue these severe actions have been entirely appropriate,
they have not been without significant cost to Western economies. The resulting
energy supply shock has seen energy prices skyrocket and this, coupled with the
existing post-COVID-19 supply constraints mentioned above, has pushed inflation
to levels not seen in decades in the UK, hitting a 40 year high of 9.1% in May
2022. This has left central banks walking a delicate tightrope act between
intervening to address soaring inflation, while running the risk of curtailing
economic growth. The Bank of England raised interest rates by 0.25 percentage
points to 1% in May 2022 and by a further 0.25 percentage points in June 2022,
with further rate hikes likely later this year, which along with other policy
tightening, points to a likely drop in the rate of inflation over the next half
year or so. Looking into the future though, equity markets have given back much
of the gains made from the economic restart, reflecting the anticipation of
further interest rate hikes, the rapidly rising cost of living and lower
consumer spending, higher operational costs for companies as the price of
commodities and energy rise and, ultimately, lower overall levels of growth for
UK public companies.
Against the turmoil described above, I am pleased to report that our portfolio
has been resilient, outperforming many of its sector peers and the benchmark
return during the period. In addition, it is also positive to see that the
revenue generated by our investment portfolio has risen versus the prior year,
despite the challenges during the period. As you will read in the Investment
Manager's report which follows, our portfolio saw strong performance from our
exposure to commodities and energy. Our financial holdings also performed well
as interest rates rose, and our portfolio managers have added several new
holdings which are well placed to benefit from rising energy prices and the UK
Government's focus on energy security.
PERFORMANCE
During the period, the Company's net asset value per share (NAV) returned 4.5%,
compared with the Company's benchmark, the FTSE All-Share Index (total return),
which returned 3.1%. The Company's share price returned 0.3% (all percentages
in Sterling with dividends reinvested).
Subsequent to the period end and as at 20 June 2022, the net asset value per
share of the Company has decreased by 6.5% from 207.67 pence per share to
194.27 pence per share and the Company's share price has fallen by 5.3% from
187.00 pence to 177.00 pence per share. The Company's Benchmark Index has
decreased by 5.6% over the same period.
Further information on the significant components of overall performance and
the changes to portfolio composition are set out in the Investment Manager's
Report below.
REVENUE PROFIT AND DIVIDS
Revenue profit for the period was 3.53 pence per share (six months to 30 April
2021: 3.15 pence per share), an increase of 12.1% year-on-year. The Board is
pleased to declare an interim dividend of 2.60 pence per share (2021: 2.60
pence per share). This dividend will be paid on 1 September 2022 to
shareholders on the Company's register at the close of business on 22 July 2022
(the ex-dividend date is 21 July 2022).
I am pleased to report that our interim dividend is fully covered by the
revenue generated during the period. After the payment of this year's interim
dividend, the Company will have approximately one year's dividend cover in
revenue reserves.
SHARE CAPITAL
The Directors recognise the importance to investors that the Company's share
price should not trade at a significant discount to NAV, and therefore, in
normal market conditions, may use the Company's share buy back, sale of shares
from treasury and share issuance powers to seek to ensure that the share price
does not differ excessively from the underlying NAV.
Buying back shares at a discount is accretive to NAV and can help narrow the
discount to NAV at which the Company's shares trade. It can also help to
provide additional liquidity. During the period the Company's shares traded at
an average discount of 8.9% and ended the period at 10.0%. At the close of
business on 20 June 2022 the discount had narrowed to 8.9%.
A total of 198,206 ordinary shares were bought back and cancelled during the
period at an average price of 183.65 pence and for a total consideration of £
364,000. No shares were issued or sold from treasury during the period under
review. As at 20 June 2022, 32.3% of the Company's issued ordinary share
capital is held in treasury and may be issued to satisfy any demand for the
Company's shares that may arise.
GEARING
The Company operates a flexible gearing policy which depends on prevailing
conditions and the outlook for the market. Gearing is subject to a maximum
level of 20% of net assets at the time of investment. The Company reduced
levels of gearing during the period under review and at 30 April 2022 the
Company had net gearing of 1.4%. Gearing levels and sources of funding are
reviewed regularly to ensure that the Company has access to the most
competitive borrowing rates available to it. The Company currently has a
two-year unsecured Sterling revolving credit facility of £4,000,000 with ING
Bank (Luxembourg) S.A., which is fully drawn down and is scheduled to mature in
November 2023.
SHAREHOLDER COMMUNICATION
The Board appreciates how important access to regular information is to our
shareholders. To supplement our Company website, we now offer shareholders the
ability to sign up to the Trust Matters newsletter which includes information
on the Company as well as news, views and insights. Further information on how
to sign up is included on the inside cover of the Half Yearly Financial Report.
OUTLOOK
As you will read in their report which follows below, your investment managers
continue to seek out companies that can generate strong, consistent cash flow,
from robust business models which have favourable industry characteristics or
scope for management driven self-help. They are focused on bottom-up stock
selection and are emboldened by the attractive stock-specific opportunities on
offer.
Given the ongoing market volatility our portfolio managers continue to apply
prudent balance to the portfolio which has resulted in resilience and the
protection of shareholder capital during these most challenging times. However,
they also continue to seek exposure to macro trends and growth through those
companies best placed to thrive in the current environment, whilst applying a
degree of caution as the powerful macroeconomic drivers described above play
out through the remainder of the year and beyond.
As we move into an economic and policy environment which is more than usually
changeable, your Board remains fully supportive of our portfolio managers'
approach and to their aim of positioning the portfolio to deliver on the
Company's investment objective.
GRAEME PROUDFOOT
Chairman
22 June 2022
INVESTMENT MANAGER'S REPORT
PERFORMANCE
For the six month period since 31 October 2021, the Company's NAV returned
4.5%, outperforming its benchmark, the FTSE All-Share Index (the Benchmark
Index), which returned 3.1% over the same period (all percentages in Sterling
with dividends reinvested).
INVESTMENT APPROACH
In assembling the Company's portfolio, we adopt a concentrated investment
approach to ensure that our best ideas contribute significantly to returns. We
believe that it is the role of the portfolio overall to generate an attractive
and growing yield alongside capital growth rather than every individual company
within the portfolio. This gives the Company increased flexibility to invest
where returns are most attractive. This approach results in a portfolio which
differs substantially from the index and in any individual year the returns
will vary, sometimes significantly from those of the index. The foundation of
the portfolio, approximately 70%, is in high free cash flow companies that can
sustain cash generation and pay a growing dividend whilst aiming to deliver a
double-digit total return. Additionally, we look to identify and invest 20% of
the portfolio in 'growth' companies that have significant barriers to entry and
scalable business models that enable them to grow consistently. We also look
for turnaround companies, at around 10% of portfolio value, which represent
those companies that are out of favour with the market offering attractive
recovery potential.
MARKET REVIEW
The Benchmark Index rose 3.1% over the six months to 30 April 2022 with Oil &
Gas, Utilities and Basic Materials as top outperformers. The Benchmark Index
was a notable outperformer versus other developed markets indices where a
number of emerging and strengthening headwinds served to put pressure on risk
assets globally. These headwinds include the Omicron COVID-19 variant, Russia's
invasion of Ukraine as well as a general increase in geopolitical tensions,
rising inflation, weakening consumer sentiment and record high energy prices.
The Omicron variant created a ripple effect in developed markets early in the
period and although its impact faded as 2022 has progressed, it continues to
disrupt economic activity, most notably in China where stringent lockdowns are
still enforced affecting global supply chains.
Prior to Russia's invasion of Ukraine, markets had been impacted by the steep
rise in bond yields as investors rapidly repriced the scale and speed of
interest rate rises in response to high and persistent inflation. Supply
constraints have been widespread with the shortage of semiconductors perhaps
the highest profile.
The war has only served to exacerbate those inflationary concerns with key
commodities across energy and agricultural markets rising sharply in price;
security of energy supply becoming a key focus as countries seek to reduce
their dependence on Russia. Market performance was dominated by the strength in
commodities prices which benefitted the Mining and Oil & Gas sectors. These are
relatively large weights in the Benchmark Index contributing to its relative
resilience over this period. Defensive sectors, such as Tobacco and
Pharmaceuticals, also benefitted from greater economic uncertainty. Meanwhile,
long-duration assets were negatively impacted by rising interest rates which
reduce the present value of their growth.
CONTRIBUTORS TO AND DETRACTORS FROM PERFORMANCE
Positive contributors to performance included stock selection in the Consumer
Services, Basic Materials and Consumer Goods sectors and the overweight
positioning to the Health Care sector.
The mining sector performed strongly during the period reflecting strength in
commodity markets and continued capital discipline from the miners as
demonstrated by further large shareholder returns. As a result, the holdings in
Rio Tinto and BHP were significant contributors to the returns of the Company
during the period.
Standard Chartered was also a top contributor to performance benefitting from
increases in interest rates and a return to revenue growth. Mastercard also
contributed to performance after the company reported solid results with strong
payment volumes and an encouraging acceleration in cross-border volume linked
to increased travel. This supports our thesis that growth will accelerate as
the continued structural shift towards digital payments is boosted by a
normalisation in consumer activity post COVID-19.
As economic uncertainty boosted defensive holdings, British American Tobacco
and nutrition ingredients business, Tate & Lyle rose and performed well during
the period. Other positive contributors to performance during the period
included education business, Pearson which received a takeover approach even
though the bid has subsequently fallen away, and Drax Group, the power
generator, benefitting from the disruption in oil and gas markets. Both Tate &
Lyle and Drax Group were recent additions to the Company having been purchased
during the second half of 2021.
Detractors from performance included the underweight positioning to Oil & Gas
given the strength in the oil price and the sector. Holdings in the Industrials
sector also detracted, impacted by the rotation away from growth stocks,
concerns regarding the risk of supply chain shocks and as recessionary fears
emerged. We remain confident that we have invested in franchises that have
built durable competitive advantages, are cash generative and boast strong
balance sheets that are well placed to navigate this challenging operating
environment.
Notable detractors included Hays and Moonpig Group which reflected concerns of
a deterioration in the economic backdrop and consumer weakness given rising
inflationary pressures. Taylor Wimpey was impacted by fears of further costs
associated with the cladding removal bill as well as the impact of rising
inflation and interest rates on their customers and their profitability. Adobe
Systems also fell despite robust operational performance given the increase in
the interest rates which has reduced the premium at which high growth,
technology companies are valued.
TRANSACTIONS
We purchased a new holding in BT Group which is building out the UK's national
fibre network, targeting more than 25 million homes, providing consumers and
businesses with access to high-speed internet. We believe that the regulatory
landscape for the UK telecom industry is improving and that the market
participants are behaving more rationally. We are seeing price rises of
Consumer Prices Index (CPI) +4%, with limited backlash so far and all operators
are following suit. The company has the ability to put through in-contract
price rises in their contract wording, limiting any sticker shock. The average
telecoms bill represents 0.4% of UK household's bills such that the currently
expected 9% price rise equates to a c.£50 increase in the annual bill. There is
a high drop through from these price rises to the company's profits and cash
flow, while the capex investment phase around fibre slows in around 4 years, at
which point we expect a meaningful uplift in free cash flow generation. We also
purchased a new holding in Centrica, the British gas company, as we view it as
a beneficiary of rising energy costs and of the increased focus on security of
supply.
During the period we continued to reduce our Consumer exposure by selling Next
and Tesco and reduced the US exposure with the sale of Analog Devices. We sold
our holding in Oxford Nanopore following the strong share price performance
post Initial Public Offering. We also sold the position in Smiths Group. After
the successful sale of the company's medical division and recent strength in
the share price, the investment case required an acceleration in organic growth
which we believe may prove more challenging given the difficult economic
backdrop. We also materially reduced our position in BP Group given its large
stake in Rosneft, continuing to favour a larger position in Shell.
Ferguson's strong logistics enabled the company to thrive during this period of
disrupted supply chains while high commodity prices boosted revenues and
margins. The strong share price combined with our concern over the
sustainability of this performance prompted us to sell the holding. We used
some of the proceeds of the Ferguson sale to purchase a new holding in Ashtead
Group, the US focused equipment rental company offering attractive structural
growth from continued outsourcing trends in this fragmented industry following
recent share price weakness.
GEARING
Our general approach to gearing is that we aim to run the Company with a modest
and consistent level of gearing to enhance income generation and capital
growth; accordingly, the Company is typically 5-10% geared, however, at 30
April 2022, the Company had employed net gearing of 1.4% to reflect our more
cautious views on markets.
OUTLOOK
We are conscious that, at the time of writing, there is a significant conflict
and human suffering. Whilst we continue to reference the investment
implications of this, we recognise there are also tremendous implications for
humanity. The Russian invasion of Ukraine has contributed not just to the
volatility of 2022, but also to the range of outcomes. The backdrop for global
equities therefore, in our view, is mixed. Although demand remains strong, the
outlook for corporate revenue and earnings growth is likely to worsen over the
course of 2022 as the potential negative jaws of rising oil prices and rates
raise the spectre once again of stagflation. It is still likely that despite
the emerging cost of living crisis, government stimulus continues to be
retracted, and monetary policy is tightened in the face of more persistent
inflationary pressures. It will be incredibly important to focus on companies
with strong, competitive positions that can deliver in this environment and
that trade at attractive valuations.
Central banks, universally across the developed world, have entered 2022 in a
far more hawkish manner and as a result, market expectations for higher rates
and faster quantitative tightening have risen considerably. Time will tell
whether the conflict impacts the growth outlook and therefore the hawkishness
of central banks. It is also more likely we will see increasingly divergent
regional monetary approaches with the US being somewhat more insulated from the
impact of the conflict, than for example, Europe. We still do not know whether
the current inflationary trends are temporary or structural. Within this
calculation one must consider the impact from the significant COVID-19
stimulus, the unwinding of extreme COVID-19 behaviours, a more structural shift
in the cost of labour and the impact on costs from the decarbonisation agenda
or, indeed, a combination of the above. It is difficult to have a high degree
of confidence in the outcome, but we would note, given the uncertainty, there
is a rising risk of a policy mistake; either being too late to tighten and/or
tightening too hard. We expect this, and the geopolitical ramifications of the
Ukraine war, to be the prevailing debate of 2022 and beyond.
The strain on supply chains, caused by strong economic activity overwhelming
COVID-19 afflicted capacity and restricted labour availability, will continue
to provide inflationary pressures which can squeeze companies' margins. As a
reminder, we continue to concentrate the portfolio on businesses with pricing
power and durable, competitive advantages as we see these as best placed to
protect margins and returns over the medium and long term. However, a notable
feature of our conversations with a wide range of corporates in 2021 was the
ease with which they were able to pass on cost increases and protect or expand
margins. Management teams have pointed to robust demand, prioritisation of
security of supply as well as well-publicised supply chain disruption and cost
pressures. However, we believe that as some of the transitory inflationary
pressures start to fade (e.g., commodity prices, supply chain disruption) then
pricing conversations will become more challenging. We are also increasingly
focused on wage inflation which may be more structural and yet, in our
experience, harder to pass on. Corporates have already pointed to wages picking
up, the introduction of bonuses and growing pressure on employee retention
rates as competition for labour intensifies. We therefore believe that employee
retention will be an important differentiator in 2022 given the productivity
benefits of a stable workforce as labour markets tighten further.
The UK stock market has started the year far better than any other developed
market indices, benefitting from a far lower, and thus more attractive,
starting valuation. The Benchmark Index has benefitted from the lack of a
widespread re-rating seen in many other markets as well as its relatively high
exposure to commodities. We continue to see appetite to acquire great market
positions, real assets and/or unlevered free cash flow as highlighted by
takeover approaches for two portfolio holdings - Oxford Instruments and
Pearson. While most companies are paying dividends once more, we note the large
contribution from special dividends that may not persist. That said, as the
highest dividend yielding market in the developed world, we see the fundamental
valuation of the UK as attractive. We also view the outlook for ordinary
dividends for the UK market with optimism as most companies have emerged from
the COVID-19 crisis with appropriate dividend policies.
We continue to have conviction in cash generative companies with durable
competitive advantages, exceptional management teams and underappreciated
growth potential. At present, whilst we are excited by the attractive
stock-specific opportunities on offer, we continue to approach the year with
balance in the portfolio.
ADAM AVIGDORI AND DAVID GOLDMAN
BLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED
22 June 2022
Ten largest investments*
1 = AstraZeneca (2021: 1st)
Sector: Pharmaceuticals & Biotechnology
Market value: £3,637,000
Percentage of portfolio: 8.2% (2021: 7.2%)
AstraZeneca is an Anglo-Swedish multinational pharmaceutical group with its
headquarters in the UK. It is a science-led biopharmaceutical business with a
portfolio of products for major disease areas including cancer, cardiovascular
infection, neuroscience and respiration.
2 + Shell (2021: 3rd)
Sector: Oil & Gas Producers
Market value: £3,161,000
Percentage of portfolio: 7.1% (2021: 4.7%)
Shell is a global oil and gas group. The group operates in both Upstream and
Downstream industries. The Upstream division is engaged in searching for and
recovering crude oil and natural gas, the liquefaction and transportation of
gas. The Downstream division is engaged in manufacturing, distribution and
marketing activities for oil products and chemicals.
3 + Rio Tinto (2021: 7th)
Sector: Mining
Market value: £2,408,000
Percentage of portfolio: 5.4% (2021: 3.7%)
Rio Tinto is a metals and mining group operating in about 36 countries around
the world, producing iron ore, copper, diamonds, gold and uranium.
4 - RELX (2021: 2nd)
Sector: Media
Market value: £2,394,000
Percentage of portfolio: 5.4% (2021: 5.2%)
RELX is a global provider of professional information solutions that includes
publication of scientific, medical, technical and legal journals. It also has
the world's leading exhibitions, conference and events business.
5 - Reckitt Benckiser (2021: 4th)
Sector: Household Goods & Home Construction
Market value: £2,085,000
Percentage of portfolio: 4.7% (2021: 4.5%)
Reckitt Benckiser is a global leader in consumer health, hygiene and home
products. Its products are sold in 200 countries and its 19 most profitable
brands are responsible for 70% of net revenues.
6 + British American Tobacco (2021: 8th)
Sector: Tobacco
Market value: £1,653,000
Percentage of portfolio: 3.7% (2021: 3.7%)
British American Tobacco is one of the world's leading tobacco groups, with
more than 200 brands in the portfolio selling in approximately 180 markets
worldwide.
7 - 3i Group (2021: 6th)
Sector: Financial Services
Market value: £1,534,000
Percentage of portfolio: 3.4% (2021: 3.8%)
3i Group is a leading international investor focused on mid-market Private
Equity and Infrastructure. 3i Group invests in mid-market buyouts, growth
capital and infrastructure. Sectors invested in are business and financial
services, consumer, industrials and energy and health care.
8 + Phoenix Group (2021: 21st)
Sector: Life Insurance
Market value: £1,504,000
Percentage of portfolio: 3.4% (2021: 2.1%)
Phoenix Group is one of the largest providers of insurance services in the
United Kingdom. The group offers a broad range of pensions and savings products
to support people across all stages of the savings life cycle.
9 = Electrocomponents (2021: 9th)
Sector: Support Services
Market value: £1,480,000
Percentage of portfolio: 3.3% (2021: 3.4%)
Electrocomponents is a British-based distributor of industrial and electronics
products. Operating in 80 countries, the group is a global omni-channel
provider of product and service solutions for designers, builders and
maintainers of industrial equipment and operations.
10 + Standard Chartered (2021: 12th)
Sector: Banks
Market value: £1,409,000
Percentage of portfolio: 3.2% (2021: 3.1%)
Standard Chartered is a British multinational banking and financial services
group headquartered in London. It operates a network of more than 1,200
branches and outlets across more than 70 countries; working across some of the
world's most dynamic markets including Asia, Africa and the Middle East.
* The following symbols shown after the portfolio ranking number indicate the
change in the relative ranking of the position in the portfolio compared to its
ranking as at 31 October 2021: + indicates an increase, - indicates a decrease
and = indicates no change.
All percentages reflect the value of the holding as a percentage of total
investments as at 30 April 2022.
Together, the ten largest investments represent 47.8% of total investments (31
October 2021: 43.5%).
Distribution of investments as at 30 April 2022
Analysis of portfolio by sector
% of Benchmark
investments by Index
market value
Support Services 13.8 4.3
Pharmaceuticals & 9.7 10.9
Biotechnology
Household Goods & Home 8.1 1.2
Construction
Oil & Gas Producers 8.0 10.3
Media 7.7 3.2
Mining 7.2 7.6
Life Insurance 6.4 2.6
Financial Services 5.4 4.1
Banks 4.9 7.9
Non-Life Insurance 4.0 0.8
Tobacco 3.7 3.8
Health Care Equipment & 2.8 0.7
Services
Food Producers 2.7 0.6
Electronic & Electrical 2.7 0.9
Equipment
Travel & Leisure 2.6 2.8
General Retailers 1.7 2.8
Personal Goods 1.7 0.4
Fixed Line Telecommunications 1.5 2.0
Electricity 1.4 1.0
Gas, Water & Multiutilities 1.3 2.7
Software & Computer Services 1.0 0.0
Industrial Engineering 0.9 0.6
Real Estate Investment Trusts 0.8 2.7
Sources: BlackRock and Datastream.
Investment size
Number of % of
investments investments by
market value
<£1m 25 30.7
£1m to £2m 13 38.5
£2m to £3m 3 15.5
£3m to £4m 2 15.3
Source: BlackRock.
Investments as at 30 April 2022
Market
value % of
£'000 investments
Support Services
Electrocomponents 1,480 3.3
Rentokil Initial 1,287 2.9
Hays 1,220 2.8
Mastercard1 1,158 2.6
Ashtead Group 593 1.3
Grafton Group 409 0.9
--------------- ---------------
6,147 13.8
========= =========
Pharmaceuticals & Biotechnology
AstraZeneca 3,637 8.2
Sanofi1 680 1.5
--------------- ---------------
4,317 9.7
========= =========
Household Goods & Home Construction
Reckitt Benckiser 2,085 4.7
Taylor Wimpey 959 2.1
Berkeley Group 578 1.3
--------------- ---------------
3,622 8.1
========= =========
Oil & Gas Producers
Shell 3,161 7.1
BP Group 404 0.9
--------------- ---------------
3,565 8.0
========= =========
Media
RELX 2,394 5.4
Pearson 1,041 2.3
--------------- ---------------
3,435 7.7
========= =========
Mining
Rio Tinto 2,408 5.4
BHP 809 1.8
--------------- ---------------
3,217 7.2
========= =========
Life Insurance
Phoenix Group 1,504 3.4
Legal & General Group 1,340 3.0
--------------- ---------------
2,844 6.4
========= =========
Financial Services
3i Group 1,534 3.4
Premier Asset Management Group 526 1.2
IntegraFin 353 0.8
--------------- ---------------
2,413 5.4
========= =========
Banks
Standard Chartered 1,409 3.2
Lloyds Banking Group 778 1.7
--------------- ---------------
2,187 4.9
========= =========
Non-Life Insurance
Direct Line Group 1,088 2.4
Hiscox 728 1.6
--------------- ---------------
1,816 4.0
========= =========
Tobacco
British American Tobacco 1,653 3.7
--------------- ---------------
1,653 3.7
========= =========
Health Care Equipment & Services
Smith & Nephew 1,268 2.8
--------------- ---------------
1,268 2.8
========= =========
Food Producers
Tate & Lyle 1,231 2.7
--------------- ---------------
1,231 2.7
========= =========
Electronic & Electrical Equipment
Schneider Electric1 613 1.4
Oxford Instruments 585 1.3
--------------- ---------------
1,198 2.7
========= =========
Travel & Leisure
Whitbread 806 1.8
Fuller Smith & Turner - A Shares 355 0.8
Patisserie Holdings2 - -
--------------- ---------------
1,161 2.6
========= =========
General Retailers
Moonpig Group 388 0.9
WH Smith 363 0.8
--------------- ---------------
751 1.7
========= =========
Personal Goods
Unilever 745 1.7
--------------- ---------------
745 1.7
========= =========
Fixed Line Telecommunications
BT Group 656 1.5
--------------- ---------------
656 1.5
========= =========
Electricity
Drax Group 619 1.4
--------------- ---------------
619 1.4
========= =========
Gas, Water & Multiutilities
Centrica 558 1.3
--------------- ---------------
558 1.3
========= =========
Software & Computer Services
Adobe Systems1 431 1.0
--------------- ---------------
431 1.0
========= =========
Industrial Engineering
Chart Industries1 425 0.9
--------------- ---------------
425 0.9
========= =========
Real Estate Investment Trusts
Big Yellow Group 365 0.8
--------------- ---------------
365 0.8
========= =========
Total investments 44,624 100.0
========= =========
1 Non-UK listed investments.
2 Company under liquidation.
All investments are in ordinary shares unless otherwise stated. The total
number of investments held at 30 April 2022 was 43 (31 October 2021: 48).
As at 30 April 2022, 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 Manager's Report above give details
of the important events which have occurred during the period and their impact
on the financial statements.
Principal risks and uncertainties
The principal risks faced by the Company can be divided into various areas as
follows:
· Investment performance;
· Income/dividend;
· Gearing;
· Legal & regulatory compliance;
· Operational;
· Political;
· Market; and
· Financial.
The Board reported on the principal risks and uncertainties faced by the
Company in the Annual Report and Financial Statements for the year ended 31
October 2021. A detailed explanation can be found in the Strategic Report on
pages 32 to 35 and in note 16 on pages 85 to 91 of the Annual Report and
Financial Statements which are available on the website maintained by BlackRock
at: www.blackrock.com/uk/brig.
The ongoing COVID-19 pandemic has had a profound impact on all aspects of
society in recent years. The impact of this significant event on the Company's
financial risk exposure is disclosed in note 9.
The Directors have assessed the impact of market conditions arising from the
COVID-19 outbreak on the Company's ability to meet its investment objective.
Based on the latest available information, the Company continues to be managed
in line with its investment objective, with no disruption to its operations.
Certain financial markets have fallen towards the end of the financial period
due primarily to geo-political tensions arising from Russia's invasion of
Ukraine and the impact of the subsequent range of sanctions, regulations and
other measures which impaired normal trading in Russian securities. 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, other than those matters noted above, there have not
been any material changes to the fundamental nature of these risks since the
previous report and these principal risks and uncertainties, as summarised, are
as applicable to the remaining six months of the financial year as they were to
the six months under review.
Going concern
The Board remains mindful of the ongoing uncertainty surrounding the potential
duration of the COVID-19 pandemic and its longer term effects on the global
economy and the current heightened geo-political risk. Nevertheless, the
Directors, having considered the nature and liquidity of the portfolio, the
Company's investment objective and the Company's projected income and
expenditure, are satisfied that the Company has adequate resources to continue
in operational existence for the foreseeable future and is financially sound.
For this reason, they continue to adopt the going concern basis in preparing
the financial statements. The Company has a portfolio of investments which are
considered to be readily realisable and is able to meet all of its liabilities
from its assets and income generated from these assets. Ongoing charges
(calculated as a percentage of average daily net assets and using the
management fee and all other operating expenses, excluding finance costs,
direct transaction costs, custody transaction charges, VAT recovered, taxation
and certain non-recurring items) for the year ended 31 October 2021 were
approximately 1.21%.
Related party disclosure and transactions with the Manager
BlackRock Fund Managers Limited (BFM) was appointed as the Company's
Alternative Investment Fund Manager (AIFM) with effect from 2 July 2014. BFM
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 3 and note 11 below. The related party transactions with
the Directors are set out in note 10 below.
Directors' responsibility statement
The Disclosure Guidance and Transparency Rules 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 the applicable UK
Accounting Standard FRS 104 'Interim Financial Reporting'; and
· the Interim Management Report, together with the Chairman's Statement
and Investment Manager's Report, include a fair review of the information
required by 4.2.7R and 4.2.8R of the FCA's Disclosure Guidance and Transparency
Rules.
The Half Yearly Financial Report has not been audited or reviewed by the
Company's Auditors.
The Half Yearly Financial Report was approved by the Board on 22 June 2022 and
the above responsibility statement was signed on its behalf by the Chairman.
Graeme Proudfoot
For and on behalf of the Board
22 June 2022
Income statement for the six months ended 30 April 2022
Six months ended Six months ended Year ended
30 April 2022 30 April 2021 31 October 2021
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains on investments held - 1,259 1,259 - 8,714 8,714 - 8,980 8,980
at fair value through
profit or loss
(Losses)/gains on foreign - (1) (1) - 4 4 - (3) (3)
exchange
Income from investments 2 902 - 902 877 303 1,180 1,919 303 2,222
held at fair value through
profit or loss
Other income 2 4 - 4 5 - 5 8 - 8
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total income 906 1,258 2,164 882 9,021 9,903 1,927 9,280 11,207
========= ========= ========= ========= ========= ========= ========= ========= =========
Expenses
Investment management fee 3 (30) (89) (119) (29) (87) (116) (60) (180) (240)
Other operating expenses 4 (129) (3) (132) (146) (3) (149) (284) (6) (290)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total operating expenses (159) (92) (251) (175) (90) (265) (344) (186) (530)
========= ========= ========= ========= ========= ========= ========= ========= =========
Net profit on ordinary 747 1,166 1,913 707 8,931 9,638 1,583 9,094 10,677
activities before finance
costs and taxation
Finance costs (4) (13) (17) (5) (15) (20) (10) (30) (40)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net profit on ordinary 743 1,153 1,896 702 8,916 9,618 1,573 9,064 10,637
activities before taxation
Taxation credit/(charge) 9 - 9 (3) - (3) (16) - (16)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net profit on ordinary 6 752 1,153 1,905 699 8,916 9,615 1,557 9,064 10,621
activities after taxation
========= ========= ========= ========= ========= ========= ========= ========= =========
Earnings per ordinary 6 3.53 5.41 8.94 3.15 40.15 43.30 7.10 41.35 48.45
share (pence)
========= ========= ========= ========= ========= ========= ========= ========= =========
The total column of this statement represents the Company's profit and loss
account. 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 Company.
The net profit on ordinary activities for the period disclosed above represents
the Company's total comprehensive income.
Statement of changes in equity for the six months ended 30 April 2022
Called Share Capital
up share premium redemption Capital Special Revenue
capital account reserve reserve reserve reserve Total
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000
For the six
months ended 30
April 2022
(unaudited)
At 31 October 315 14,819 234 11,870 13,843 2,387 43,468
2021
Total
comprehensive
income:
Net profit for - - - 1,153 - 752 1,905
the period
Transactions with
owners, recorded
directly to
equity:
Ordinary shares (2) - 2 - (362) - (362)
purchased for
cancellation
Share purchase - - - - (2) - (2)
costs
Dividends paid1 5 - - - - - (981) (981)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 30 April 2022 313 14,819 236 13,023 13,479 2,158 44,028
========= ========= ========= ========= ========= ========= =========
For the six
months ended 30
April 2021
(unaudited)
At 31 October 326 14,819 223 2,806 15,816 2,411 36,401
2020
Total
comprehensive
income:
Net profit for - - - 8,916 - 699 9,615
the period
Transactions with
owners, recorded
directly to
equity:
Ordinary shares (6) - 6 - (1,071) - (1,071)
purchased for
cancellation
Share purchase - - - - (6) - (6)
costs
Dividends paid2 - - - - - (1,015) (1,015)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 30 April 2021 320 14,819 229 11,722 14,739 2,095 43,924
========= ========= ========= ========= ========= ========= =========
For the year
ended 31 October
2021 (audited)
At 31 October 326 14,819 223 2,806 15,816 2,411 36,401
2020
Total
comprehensive
income:
Net profit for - - - 9,064 - 1,557 10,621
the year
Transactions with
owners, recorded
directly to
equity:
Ordinary shares (11) - 11 - (1,961) - (1,961)
purchased for
cancellation
Share purchase - - - - (12) - (12)
costs
Dividends paid3 - - - - - (1,581) (1,581)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 31 October 315 14,819 234 11,870 13,843 2,387 43,468
2021
========= ========= ========= ========= ========= ========= =========
1 Final dividend paid in respect of the year ended 31 October 2021 of 4.60p
per share, declared on 13 January 2022 and paid on 17 March 2022.
2 Final dividend paid in respect of the year ended 31 October 2020 of 4.60p
per share, declared on 1 February 2021 and paid on 17 March 2021.
3 Interim dividend paid in respect of the six months ended 30 April 2021 of
2.60p per share was declared on 23 June 2021 and paid on 1 September 2021.
Final dividend paid in respect of the year ended 31 October 2020 of 4.60p per
share was declared on 1 February 2021 and paid on 17 March 2021.
For information on the Company's distributable reserves, please refer to note 8
below.
Balance sheet as at 30 April 2022
30 April 30 April 31 October
2022 2021 2021
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
Fixed assets
Investments held at fair value through profit or 9 44,624 47,598 46,080
loss
Current assets
Current tax asset 4 - 11
Debtors 441 380 324
Cash and cash equivalents 3,724 806 1,362
--------------- --------------- ---------------
Total current assets 4,169 1,186 1,697
========= ========= =========
Creditors - amounts falling due within one year
Bank loan (4,000) (4,000) (4,000)
Other creditors (765) (860) (309)
--------------- --------------- ---------------
Total current liabilities (4,765) (4,860) (4,309)
========= ========= =========
Net current liabilities (596) (3,674) (2,612)
--------------- --------------- ---------------
Net assets 44,028 43,924 43,468
========= ========= =========
Capital and reserves
Called up share capital 7 313 320 315
Share premium account 14,819 14,819 14,819
Capital redemption reserve 236 229 234
Capital reserve 13,023 11,722 11,870
Special reserve 13,479 14,739 13,843
Revenue reserve 2,158 2,095 2,387
--------------- --------------- ---------------
Total shareholders' funds 6 44,028 43,924 43,468
========= ========= =========
Net asset value per ordinary share (pence) 6 207.67 200.63 203.13
========= ========= =========
Statement of cash flows for the six months ended 30 April 2022
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2022 2021 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Operating activities
Net profit on ordinary activities before taxation 1,896 9,618 10,637
Add back finance costs 17 20 40
Gains on investments held at fair value through profit or (1,259) (8,714) (8,980)
loss
Losses/(gains) on foreign exchange 1 (4) 3
Sales of investments held at fair value through profit or 10,711 12,841 22,755
loss
Purchases of investments held at fair value through profit or (7,459) (12,212) (21,084)
loss
Increase in other debtors (257) (285) (89)
(Decrease)/increase in other creditors (3) 9 60
Taxation on investment income 16 (3) (27)
--------------- --------------- ---------------
Net cash generated from operating activities 3,663 1,270 3,315
--------------- --------------- ---------------
Financing activities
Ordinary shares purchased for cancellation (300) (1,071) (1,961)
Share purchase costs paid (2) (6) (12)
Interest paid (17) (20) (40)
Dividends paid (981) (1,015) (1,581)
--------------- --------------- ---------------
Net cash used in financing activities (1,300) (2,112) (3,594)
--------------- --------------- ---------------
Increase/(decrease) in cash and cash equivalents 2,363 (842) (279)
Cash and cash equivalents at beginning of period/year 1,362 1,644 1,644
Effect of foreign exchange rate changes (1) 4 (3)
--------------- --------------- ---------------
Cash and cash equivalents at end of period/year 3,724 806 1,362
--------------- --------------- ---------------
Comprised of:
Cash at bank 89 424 63
Cash Fund1 3,635 382 1,299
--------------- --------------- ---------------
3,724 806 1,362
========= ========= =========
1 Cash Fund represents investment in BlackRock Institutional Cash Series
plc - Sterling Liquid Environmentally Aware Fund.
Notes to the financial statements for the six months ended 30 April 2022
1. Principal activity and basis of preparation
The principal activity of the Company is that of an investment trust company
within the meaning of Section 1158 of the Corporation Tax Act 2010.
The financial statements of the Company are prepared on a going concern basis
in accordance with Financial Reporting Standard 104 Interim Financial Reporting
(FRS 104) applicable in the United Kingdom and Republic of Ireland and the
revised Statement of Recommended Practice - 'Financial Statements of Investment
Trust Companies and Venture Capital Trusts' (SORP) issued by the Association of
Investment Companies (AIC) in October 2019 and updated in April 2021 and the
provisions of the Companies Act 2006.
The accounting policies and estimation techniques applied for the condensed set
of financial statements are as set out in the Company's Annual Report and
Financial Statements for the year ended 31 October 2021.
2. Income
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2022 2021 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Investment income:
UK dividends 794 749 1,503
UK scrip dividends - 19 19
UK special dividends 33 45 226
UK REIT dividends 5 4 9
Overseas dividends 70 60 162
--------------- --------------- ---------------
Total investment income 902 877 1,919
========= ========= =========
Other income:
Interest from Cash Fund 4 - 1
Underwriting commission - 5 7
--------------- --------------- ---------------
Total income 906 882 1,927
========= ========= =========
Dividends and interest received in cash during the period amounted to £725,000
and £2,000 respectively (six months ended 30 April 2021: £606,000 and £nil;
year ended 31 October 2021: £1,771,000 and £1,000).
No special dividends have been recognised in capital (six months ended 30 April
2021: £303,000; year ended 31 October 2021: £303,000).
3. Investment management fee
Six months ended Six months ended Year ended
30 April 2022 30 April 2021 31 October 2021
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Investment management 30 89 119 29 87 116 60 180 240
fee
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total 30 89 119 29 87 116 60 180 240
========= ========= ========= ========= ========= ========= ========= ========= =========
Under the terms of the investment management agreement, BFM is entitled to a
fee of 0.6% per annum of the Company's market capitalisation. The investment
management fee is allocated 75% to capital reserves and 25% to the revenue
reserve. There is no additional fee for company secretarial and administration
services.
4. Other operating expenses
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2022 2021 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Allocated to revenue:
Custody fees - 1 1
Depositary fees 2 2 5
Audit fees1 15 15 29
Registrars' fee 12 12 24
Directors' emoluments 49 53 100
Marketing fees 7 7 11
Printing and postage fees 20 20 32
Legal and professional fees 3 4 32
London Stock Exchange fee 5 5 10
FCA fee 3 3 7
Other administration costs 13 24 33
--------------- --------------- ---------------
129 146 284
========= ========= =========
Allocated to capital:
Custody transaction costs2 3 3 6
--------------- --------------- ---------------
132 149 290
========= ========= =========
1 No non-audit services were provided by the auditors.
2 For the six month period ended 30 April 2022, expenses of £3,000 (six
months ended 30 April 2021: £3,000; year ended 31 October 2021: £6,000) were
charged to the capital account of the Income Statement. These relate to
transaction costs charged by the custodian on sale and purchase trades.
The transaction costs incurred on the acquisition of investments amounted to £
42,000 for the six months ended 30 April 2022 (six months ended 30 April 2021:
£48,000; year ended 31 October 2021: £86,000). Costs relating to the disposal
of investments amounted to £6,000 for the six months ended 30 April 2022 (six
months ended 30 April 2021: £7,000; year ended 31 October 2021: £14,000). All
transaction costs have been included within capital reserves.
5. Dividend
The Directors have declared an interim dividend of 2.60p per share for the
period ended 30 April 2022 payable on 1 September 2022 to shareholders on the
register on 22 July 2022. The total cost of the dividend based on
21,175,164 ordinary shares in issue at 15 June 2022 was £551,000 (30 April
2021: £566,000).
In accordance with FRS102, Section 32, Events After the End of the Reporting
Period, the interim dividend payable on the ordinary shares has not been
included as a liability in the financial statements, as interim dividends are
only recognised when they have been paid.
6. Earnings and net asset value per ordinary share
Revenue and capital returns per share and net asset value per share are shown
below and have been calculated using the following:
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2022 2021 2021
(unaudited) (unaudited) (audited)
Net revenue profit attributable to ordinary shareholders (£ 752 699 1,557
'000)
Net capital profit attributable to ordinary shareholders (£ 1,153 8,916 9,064
'000)
--------------- --------------- ---------------
Total profit attributable to ordinary shareholders (£'000) 1,905 9,615 10,621
========= ========= =========
Total shareholders' funds (£'000) 44,028 43,924 43,468
========= ========= =========
Earnings per share
The weighted average number of ordinary shares in issue 21,315,326 22,206,362 21,920,081
during the period, on which the earnings per ordinary share
was calculated was:
The actual number of ordinary shares in issue at the period 21,200,636 21,892,990 21,398,842
end, on which the net asset value per ordinary share was
calculated was:
Calculated on weighted average number of ordinary shares:
Revenue earnings per share (pence) - basic and diluted 3.53 3.15 7.10
Capital earnings per share (pence) - basic and diluted 5.41 40.15 41.35
--------------- --------------- ---------------
Total earnings per share (pence) - basic and diluted 8.94 43.30 48.45
========= ========= =========
As at As at As at
30 April 30 April 31
2022 2021 October
(unaudited) (unaudited) 2021
(audited)
Net asset value per ordinary share (pence) 207.67 200.63 203.13
Ordinary share price (mid-market) (pence) 187.00 184.00 191.00
========= ========= =========
There were no dilutive securities at 30 April 2022 (30 April 2021: nil; 31
October 2021: nil).
7. Called up share capital
Ordinary Treasury Total Nominal
shares shares shares value
number number number £'000
Allotted, called up and fully paid share capital
comprised:
Ordinary shares of 1 pence each:
At 31 October 2021 21,398,842 10,081,532 31,480,374 315
Shares purchased for cancellation (198,206) - (198,206) (2)
At 30 April 2022 21,200,636 10,081,532 31,282,168 313
========= ========= ========= ========
=
During the period to 30 April 2022, 198,206 ordinary shares (six months ended
30 April 2021: 618,635; year ended 31 October 2021: 1,112,783) were purchased
and subsequently cancelled for a total consideration including costs of £
364,000 (six months ended 30 April 2021: £1,077,000; year ended 31 October
2021: £1,973,000).
Since the period end and up to 20 June 2022, a further 25,472 ordinary shares
have been bought back and cancelled for a total consideration of £45,600.
8. 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 may be used as
distributable profits for all purposes and, in particular, the repurchase by
the Company of its ordinary shares and for payments as dividends. In accordance
with the Company's Articles of Association, the special reserve, capital
reserve and the revenue reserve may be distributed by way of dividend. The
capital reserve arising on the revaluation of investments of £4,735,000 (30
April 2021: gain of £6,138,000; 31 October 2021: gain of £4,762,000) 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 the capital reserve (arising on investments sold) and
the revenue reserve may not be entirely distributable if a loss occurred during
the realisation of these investments.
9. Valuation of financial instruments
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 issue, recessions, climate
change or other events could have a significant impact on the Company and its
investments.
The infectious respiratory illness caused by a novel coronavirus known as
COVID-19 has had a profound impact on all aspects of society over the last two
years. While there is a growing consensus in developed economies that the worst
of the impact is now over, there is an expectation that travel restrictions,
enhanced health screenings at ports of entry and elsewhere, disruption of and
delays in healthcare service preparation and delivery, cancellations, supply
chain disruptions, and lower consumer demand will create ongoing challenges.
While widescale vaccination programmes are now in place in many countries and
are having a positive effect, the impact of COVID-19 continues to affect
adversely the economies of many nations across the entire global economy and
this impact may be greater where vaccination rates are lower, such as in
certain emerging markets. While it is difficult to make timing predictions, it
is expected that the economic effects of COVID-19 will continue to be felt for
a period after the virus itself has moved from being pandemic to endemic in
nature and this in turn may continue to impact investments held by the Company.
Valuation of financial instruments
Financial assets and financial liabilities are either carried in the Balance
Sheet at their fair value (investments) or at an amount which is a reasonable
approximation of fair value (due from brokers, dividends and interest
receivable, due to brokers, accruals, cash and cash equivalents, bank
overdrafts and bank loans). Section 34 of FRS 102 requires the Company to
classify fair value measurements using a fair value hierarchy that reflects the
significance of inputs used in making the measurements. The valuation
techniques used by the Company are explained in the accounting policies note on
page 78 of the Annual Report and Financial Statements for the year ended 31
October 2021.
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 and regularly available from an exchange, dealer, broker,
industry group, pricing service or regulatory agency and those prices represent
actual and regularly occurring market transactions on an arm's length basis.
The Company does not adjust the quoted price for these instruments.
Level 2 - Valuation techniques using observable inputs
This category includes instruments valued using quoted prices for similar
instruments in markets that are considered less active, or other valuation
techniques where all significant inputs are directly or indirectly observable
from market data.
Level 3 - Valuation techniques using significant unobservable inputs
This category includes all instruments where the valuation technique includes
inputs not based on market data and these inputs could have a significant
impact on the instrument's valuation.
This category also includes instruments that are valued based on quoted prices
for similar instruments where significant entity determined adjustments or
assumptions are required to reflect differences between the instruments and
instruments for which there is no active market. The Investment Manager
considers observable data to be that market data that is readily available,
regularly distributed or updated, reliable and verifiable, not proprietary and
provided by independent sources that are actively involved in the relevant
market.
The level in the fair value hierarchy within which the fair value measurement
is categorised in its entirety is determined on the basis of the lowest level
input that is significant to the fair value measurement. If a fair value
measurement uses observable inputs that require significant adjustment based on
unobservable inputs, that measurement is a Level 3 measurement.
Assessing the significance of a particular input to the fair value measurement
in its entirety requires judgement, considering factors specific to the asset
or liability. The determination of what constitutes 'observable' inputs
requires significant judgement by the Investment Manager.
Fair values of financial assets and financial liabilities
For exchange listed equity investments the quoted price is the bid price.
Substantially all investments are valued based on unadjusted quoted market
prices. Where such quoted prices are readily available in an active market,
such prices are not required to be assessed or adjusted for any price related
risks, including climate risk, in accordance with the fair value related
requirements of the Company's Financial Reporting Framework.
The table below sets out fair value measurements using the FRS 102 fair value
hierarchy.
Level 1 Level 2 Level 3 Total
Financial assets at fair value through profit or £'000 £'000 £'000 £'000
loss
Equity investments at 30 April 2022 (unaudited) 44,624 - - 44,624
Equity investments at 30 April 2021 (unaudited) 47,598 - - 47,598
Equity investments at 31 October 2021 (audited) 46,080 - - 46,080
======== ======== ======== ========
= = = =
There were no transfers between levels for financial assets and financial
liabilities during the period/year recorded at fair value as at 30 April 2022,
30 April 2021 and 31 October 2021. The Company held no Level 3 securities
during the period to 30 April 2022 (period to 30 April 2021: nil; year to 31
October 2021: nil).
10. Related party disclosure
The Board consists of four non-executive Directors, all of whom are considered
to be independent by the Board. None of the Directors has a service contract
with the Company. With effect from 1 November 2021, the Chairman receives an
annual fee of £30,750, the Chairman of the Audit Committee receives an annual
fee of £25,000 and each of the other Directors receives an annual fee of £
21,500.
At the period end and as at 21 June 2022 members of the Board held ordinary
shares in the Company as set out below:
Ordinary Ordinary Ordinary
shares shares shares
21 June 30 April 31 October
2022 2022 2021
Graeme Proudfoot (Chairman) 60,000 60,000 60,000
Nicholas Gold 20,000 20,000 20,000
Charles Worsley1 987,539 987,539 987,539
Win Robbins 12,106 12,106 12,106
========= ========= =========
1 Including a non-beneficial interest of 655,500 ordinary shares.
11. Transactions with the manager and the Investment Manager
BlackRock Fund Managers Limited (BFM) provides management and administration
services to the Company under a contract which is terminable on six months'
notice. BFM 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)). Further details of the investment
management contract are disclosed in the Directors' Report on pages 43 to 48 in
the Annual Report and Financial Statements for the year ended 31 October 2021.
The investment management fee due for the six months ended 30 April 2022
amounted to £119,000 (six months ended 30 April 2021: £116,000; year ended 31
October 2021: £240,000). At the period end, £180,000 was outstanding in respect
of the investment management fee (as at 30 April 2021: £116,000; as at 31
October 2021: £180,000).
In addition to the above services, BIM (UK) provided the Company with marketing
services. The total fees paid or payable for these services for the six months
ended 30 April 2022 amounted to £7,000 including VAT (six months ended 30 April
2021: £7,000; year ended 31 October 2021: £11,000). Marketing fees of £17,000
including VAT were outstanding at 30 April 2022 (as at 30 April 2021: £20,000;
as at 31 October 2021: £11,000).
The Company holds an investment in the BlackRock Institutional Cash Series plc
- Sterling Liquid Environmentally Aware Fund of £3,635,000 (30 April 2021: £
382,000; 31 October 2021: £1,299,000) which has been presented in the financial
statements as a cash equivalent.
The ultimate holding company of the Manager and the Investment Manager is
BlackRock, Inc., a company incorporated in Delaware USA.
12. Contingent liabilities
There were no contingent liabilities at 30 April 2022 (30 April 2021: nil; 31
October 2021: nil).
13. 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 30 April 2022 and
30 April 2021 has not been audited.
The information for the year ended 31 October 2021 has been extracted from the
latest published audited financial statements, which have been filed with the
Registrar of Companies. The report of the auditor on those accounts contained
no qualification or statement under Sections 498 (2) or (3) of the Companies
Act 2006.
14. Annual results
The Board expects to announce the annual results for the year ended 31 October
2022, in December 2022. Copies of the results announcement can be obtained from
the Secretary on 020 7743 3000 or by email at cosec@blackrock.com. The Annual
Report and Financial Statements should be available in December 2022, with the
Annual General Meeting being held in March 2023.
BlackRock Investment Management (UK) Limited
12 Throgmorton Avenue
London
EC2N 2DL
22 June 2022
ENDS
The half yearly financial report will also be available on the BlackRock
website at http://www.blackrock.com/uk/brig. Neither the contents of the
Manager's website nor the contents of any website accessible from hyperlinks on
the Manager's website (or any other website) is incorporated into, or forms
part of, this announcement.
For further information please contact:
Melissa Gallagher, Managing Director Closed End Funds - Tel: 020 7743 3893
Emma Phillips, Media & Communications, BlackRock Investment Management (UK)
Limited - Tel: 020 7743 2922
Press enquires:
Ed Hooper, Lansons Communications
Tel: 020 7294 3620
E-mail: BlackRockInvestmentTrusts@lansons.com or EdH@lansons.com
END
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