BLACKROCK
SMALLER COMPANIES TRUST plc
(LEI:
549300MS535KC2WH4082)
Half
yearly financial announcement of results in respect of the six
months ended 31 August
2024
Performance Record
|
As at
31 August
2024
|
As at
29 February
2024
|
|
|
|
|
|
Net asset value per ordinary share (debt at par value)
(pence)1
|
1,634.26
|
1,450.15
|
|
Net asset value per ordinary share (debt at fair value)
(pence)1
|
1,684.43
|
1,502.25
|
|
Ordinary share price (mid-market) (pence)1
|
1,524.00
|
1,326.00
|
|
Deutsche Numis Smaller Companies plus AIM (excluding Investment
Companies) Index2
|
17,183.46
|
15,173.40
|
|
|
---------------
|
---------------
|
|
Assets
|
|
|
|
Total assets less current liabilities (£’000)
|
839,263
|
755,721
|
|
Equity shareholders’ funds (£’000)3
|
769,734
|
686,206
|
|
Ongoing charges ratio4,5
|
0.8%
|
0.8%
|
|
Dividend yield4
|
2.8%
|
3.2%
|
|
Gearing4
|
10.6%
|
11.5%
|
|
|
=========
|
=========
|
|
|
For the six
months ended
31 August
2024
|
For the six
months ended
31 August
2023
|
|
Performance (with dividends reinvested)
|
|
|
|
Net asset value per ordinary share (debt at par
value)2,4
|
14.6%
|
-7.8%
|
|
Net asset value per ordinary share (debt at fair
value)2,4
|
13.9%
|
-7.3%
|
|
Ordinary share price (mid-market)2,4
|
17.0%
|
-6.3%
|
|
Deutsche Numis Smaller Companies plus AIM (excluding Investment
Companies) Index2,4
|
13.2%
|
-6.9%
|
|
|
=========
|
=========
|
|
|
For the six
months ended
31 August
2024
|
For the six
months ended
31 August
2023
|
Change %
|
Revenue and dividends
|
|
|
|
Revenue return per ordinary share
|
27.54p
|
25.11p
|
+9.7
|
Interim dividend per ordinary share
|
15.50p
|
15.00p
|
+3.3
|
|
=========
|
=========
|
=========
|
1 Without
dividends reinvested.
2 Total
return basis with dividends reinvested.
3 The
change in equity shareholders’ funds represents the portfolio
movements during the period and dividends paid.
4 Alternative
Performance Measures, see Glossary contained
within the Half Yearly Financial Report.
Full details setting out how calculations with dividends reinvested
are performed are set out in the Glossary contained within the Half
Yearly Financial Report.
5 Ongoing
charges ratio calculated as a percentage of average daily net
assets and using the management fee and all other operating
expenses, excluding finance costs, direct transaction costs,
custody transaction charges, VAT recovered, taxation, prior year
expenses written back and certain non-recurring items in accordance
with AIC guidelines.
Chairman’s Statement for the six months ended 31 August 2024
Dear Shareholder
I am pleased to present to shareholders the half yearly financial
report for the six months ended 31 August
2024.
Performance
Investor sentiment and risk appetite, appear to have improved
during the six month period ended 31 August
2024 and UK equity markets continued their upward trend.
Market performance has been supported by a more benign economic
backdrop of falling inflation, lower cost of borrowing, rising
consumer confidence, high employment and strong wage growth. These
factors have been positive for our asset class and this momentum
has been reflected in the performance of our portfolio in the first
six months of our financial year.
The Company’s net asset value (NAV) rose by
13.9%1,2,3
over the period under review, to 1,684.43p per share, outperforming
the Company’s benchmark, the Deutsche Numis Smaller Companies plus
AIM (excluding Investment Companies) Index, which rose by
13.2%1,3
over the same period. The Company’s share price rose by
17.0%1,3
to 1,524.00p per share over the same period. Looking at the broader
market environment, the FTSE 100 Index rose by
12.5%1
over the period, the FTSE 250 Index rose by
12.6%1
and the FTSE All Share Index rose by 12.6%1.
The performance of both the NAV and share price over the longer
term are illustrated in the table below.
Performance to 31 August 2024
|
6 Months
change
%
|
1 Year
change
%
|
3 Years
change
%
|
5 Years
change
%
|
10 Years
change
%
|
|
|
|
|
|
|
Net asset value per share (with dividends
reinvested)1,2
|
13.9
|
18.5
|
-20.1
|
28.6
|
123.9
|
Share price (with dividends reinvested)1
|
17.0
|
23.9
|
-23.0
|
22.5
|
137.7
|
Benchmark (with dividends reinvested)1
|
13.2
|
14.6
|
-14.1
|
26.4
|
61.6
|
|
|
|
|
|
|
1 Percentages
in Sterling terms with dividends reinvested.
2 Debt
at fair value.
3 Alternative
Performance Measure, see Glossary contained within the Half Yearly
Financial Report.
Returns and dividends
Dividend revenue from portfolio companies increased this period,
with the Company’s revenue return per share for the six months
ended 31 August 2024 up by 9.7% to
27.54p per share (compared to 25.11p revenue return per share for
the six months to 31 August 2023).
After adjusting for the impact of special dividends received, which
amounted to 1.45p per share (31 August
2023: 2.02p per share), regular dividend income from
portfolio companies increased by 11.4% compared to 2023
levels.
The Board is mindful of the importance of our dividend to
shareholders. The Board is also cognisant of the benefits of the
Company’s investment trust structure which enables it to retain up
to 15% of total revenue each year to build up reserves which may be
carried forward and used to pay dividends during leaner times. The
Company has substantial distributable reserves (£703.3 million as
at 31 August 2024, including revenue
reserves of £18.9 million). To put this into context, the current
level of annual dividend distribution based on dividends declared
in respect of the year ended 29 February
2024 amounted to £19.9 million. Accordingly, the Board is
pleased to declare an interim dividend of 15.50p per share (2023:
15.00p per share) representing an increase of 3.3% over the
previous interim dividend. The interim dividend will be paid on
4 December 2024 to shareholders on
the Company’s register on 1 November
2024. The Board continues to monitor the Company’s income
levels and projected future dividend income streams closely as the
year proceeds and will make an assessment in respect of the final
dividend in due course, noting that it has the ability to utilise
revenue reserves should it deem this appropriate.
Gearing
The Company had the following borrowing facilities in place:
long-term fixed rate funding in the form of a £25 million senior
unsecured fixed rate private placement notes issued in May 2017 at a coupon of 2.74% with a 20 year
maturity, £20 million senior unsecured fixed rate private placement
notes issued in December 2019 at a
coupon of 2.41% with a 25 year maturity and £25 million senior
unsecured fixed rate private placement notes issued in September 2021 at a coupon of 2.47% with a 25
year maturity. Shorter-term variable rate funding consisted of an
uncommitted overdraft facility of £60 million with The Bank of New
York Mellon (International) Limited with interest charged at SONIA
plus 100 basis points.
It continues to be the Board’s intention that net gearing will not
exceed 15% of the net assets of the Company at the time of the
drawdown of the relevant borrowings. Under normal operating
conditions it is envisaged that gearing will be within a range of
0%-15% of net assets. During the period net gearing ranged between
10.5% to 12.8%. The Company’s net gearing stands at 10.9% of net
assets as at 22 October 2024, well
within our target range.
Management of share rating
During the period, the Company’s shares traded at an average
discount to NAV (with debt at fair value) of 10.5%. The discount
ranged between 5.7% and 14.1% and ended the period at 9.5%. The
Company’s shares were trading at a discount of 12.7% to NAV (with
debt at fair value) as at close of business on 22 October 2024. During the period the Company
bought back a total of 220,000 ordinary shares for a total
consideration of £2,968,000 to be held in treasury.
The Board believes that the share buyback activity undertaken has
helped reduce the volatility in our share rating, which currently
stands at 12.7% compared to an AIC UK Smaller Companies sector
average of 12.2%. As we navigate these more volatile and uncertain
markets, your Board will continue to monitor the Company’s share
rating and may deploy its powers to buyback the Company’s shares
where it believes that it is in shareholders’ long-term best
interests to do so. Shares are only bought back at a discount to
NAV which ensures that these transactions are accretive to the NAV
per share and enhance NAV returns for shareholders.
Since the period end and as at the date of this report, the Company
has not bought back any shares. The share buyback activity
undertaken from 1 March 2024
contributed 0.1% to the NAV per share return over this
period.
Outlook
Since the period end, and up until the close of business on
22 October 2024, the Company’s NAV
per share fell by -4.4%1,2
and the share price decreased by -7.7%, whilst the benchmark fell
by -2.6%1.
The smaller company landscape in the UK is truly diverse, with a
wide range of sectors represented and a large number of companies
within our target universe. Given our bottom-up investment
approach, this is a fertile environment for active stockpickers
investing for long-term growth.
There are clearly a range of uncertainties impacting the current
business outlook, economic, political and geopolitical. While these
uncertainties make portfolio decisions more challenging, they also
give our managers opportunities to identify and select portfolio
companies they see as strong performers for the future. Lower
interest rates are already helping an improvement in business
confidence while better economic policy clarity will be important
for short-term market sentiment.
Unemployment remains low, balance sheets remain strong, inflation
is falling (slower than we would like) and consumer confidence is
improving. This backdrop gives us more confidence that the earnings
outlook for our portfolio of companies is broadly positive although
not with the level of robustness we had originally hoped. The new
government’s policies are unfortunately proving to be less clear
than expected and all eyes are on the upcoming budget and the
associated tax changes that may emerge. In the short term at least,
this is limiting the rate of improvement we had hoped in sectors
that have been important to our portfolio. Investor flows into the
UK had markedly improved after the July election but those flows
have since fallen away as investor confidence has receded, at least
temporarily. Despite the hopes of many investors, the new
government has committed too many “own goals” and markets will need
more substantive information on developing policies before they
again show signs of real confidence.
Our Portfolio Manager’s focus on financially strong companies with
innovative and disruptive business models and market leading
offerings should, over time, see a return of the strong and
consistent investment performance to which our shareholders have
become accustomed. But the current environment is unsettled and
there have been some earnings disappointments as well. Your Board
remains supportive of our current approach but the near-term road
ahead, like the real world, will have some tricky
potholes.
If shareholders would like to contact me, please write to BlackRock
Smaller Companies Trust plc, Exchange Place One, 1 Semple Street,
Edinburgh EH3 8BL marked for the
attention of the Chairman.
RONALD
GOULD
Chairman
24 October 2024
Investment Manager’s Report for the six months ended
31 August 2024
Market Review
I always find the start of these reports difficult to write; where
should the emphasis be, what are the important events that have
shaped markets, are there one or two key facts that should be
discussed before all others in order to set the scene? The first
six months of this financial year have offered so much that it is
even more challenging than normal to find a pithy introduction.
Focusing solely on markets we have seen the oscillation in
expectations between a hard and soft landing scenario, often
pivoting on the back of one single data point. We have seen
interest rates start to reduce in major economies, resulting in an
enormous amount of intellectual capital spent on whether it will be
two or three cuts before the end of the year (newsflash it doesn’t
really matter as long as rates are heading down). The geopolitical
situation continues to worsen, with no end in sight to the conflict
in Ukraine, and new fronts opening
up in the Middle East. The oil
price has fallen and risen in the face of changing demands
expectations, to then fall again on news the Saudis will pump all
they can, and then rise again on further Middle East tension. We have seen Biden’s
campaign fall apart in 90 minutes of painful debate, Trump survives
not one but two assassination attempts, and the Labour party sweep
to power with an overwhelming majority, only to then have their
first 100 days of power dominated by the £22 billion black hole and
plummeting popularity largely on the back of some sartorial
questions. In bond markets the initial decline in UK gilt yields,
itself a reflection of inflation being under control and interest
rates beginning their downward path, has now been scuppered over
fears the new government will bend fiscal rules and raise more debt
than the market had expected. Whilst all of these events are
shaping daily news flow, the underlying themes of artificial
intelligence (“AI”) and climate change continue to spark debate
globally, and at points having a significant impact on market
moves.
Performance Review
The Company has modestly outperformed its benchmark, producing an
overall return of 13.9% vs an index return of 13.2%.
On the positive side a number of the core holdings performed well.
Investment platform provider
IntegraFin
rallied in the period as positive sentiment returned to financial
markets, and the company reassured the market the issues with their
cost base were consigned to history. Publisher
Bloomsbury Publishing
continued the recent run of upgrades, this time augmenting their
operating momentum with an accretive acquisition.
Funding Circle,
who provide loans to Small and Medium-sized Enterprises (SMEs) in
the UK announced the disposal of their loss making US operations,
and a significant return of capital. The volatility within
financial markets has been a boon to pension consultant
XPS Pensions,
who have seen significant demand for their services from pension
trustees looking to understand the impact shifting yields are
having on their fund assets and liabilities.
In terms of the shares that have negatively impacted on
performance, there are three clear groups; the ones where trading
has disappointed, the stocks we didn’t own, and the stocks that are
significant benchmark positions that have performed well. With
regard to stocks that suffered trading issues, the main
disappointment was media firm
YouGov,
which has seen competition in one division leading to pricing
pressure. Veterinary services provider
CVS Group
has been impacted not by demand weakness, but by the announcement
of a Competition and Markets Authority (CMA) investigation into the
industry. The second group, stocks that we didn’t own that were
beneficiaries of the spike in M&A activity for UK listed
companies and therefore hurt relative performance, including video
game service provider
Keywords,
and media business
Ascential.
The final group, the large index constituents we didn’t own that
have done well, include the likes of ground services firm
Keller,
spread betting provider
Plus500,
gaming software provider
Playtech,
and
Bank of Cyprus.
Transaction Activity
The UK consumer continues to see an improvement in disposable
income, as wage growth is running ahead of inflation. The Asda
income tracker is currently showing double digit year-on-year
increases to household income, although currently this is resulting
in a higher savings ratio. As consumers become more confident in
the economic outlook we should see this manifest in increased
spending. In anticipation of this we have added to a number of
names within the leisure sector, including
Dominos Pizza,
Wetherspoons
and
Loungers.
The latter two of these have recently given positive updates on
trading.
The new Labour government has a clear policy to build one and a
half million houses over five years. Whilst there has to be
considerable risk with regards to this number given the repeated
failure of government policy to reach these levels, to get anywhere
close there will have to be significant improvements in planning,
and substantial investment in the supply chain. In conjunction with
lower interest rates spurring banks to become more competitive with
regard to mortgage pricing, we see a positive multi year backdrop
for the housebuilding and building product sectors. We have added
to our position in housebuilder
MJ Gleeson,
brick manufacturer
Ibstock,
paving supplier
Marshalls,
and plumbing supplier
Genuit.
The IPO (initial public offering) market has been frustratingly
quiet in the period, with the Company only taking part in
Raspberry Pi,
the designer and manufacturer of Single Board Computers, and
Rosebank,
the new venture from the former management team of Melrose. Given
the timing of the budget it feels unlikely we will see much
issuance in the period to the end of this calendar year, but are
hopeful the New Year will see a more conducive environment for
capital market activity.
Whilst this year has seen an increase in takeover activity, the
Company has only benefitted from self-storage provider
Lok’n Store Group,
telecom equipment supplier
Spirent,
and financial services firm
Mattioli Woods.
We also sold positions in shipping broker
Clarkson,
where we felt near-term operating momentum has possibly peaked,
media business
YouGov,
which is seeing increased competition leading to pricing pressure,
and defence business
QinetiQ,
where we had become concerned about the cash flow.
Outlook
It is almost impossible to address the outlook without addressing
the change of government in the UK. The Labour party swept to power
with an overwhelming majority, a mandate for change, and an ability
to set long-term economic policy. With the Labour party claiming to
offer a more business-friendly outlook this should have been a
perfect set up for a market friendly environment. Sadly, their
early statements have instead generated increased uncertainty as
the market tries to understand how the government will shape policy
to fill the “£22 billion black hole”. With potential changes to
inheritance tax, pensions, and capital gains tax, investors are
doing what they traditionally do in the face of an information
vacuum, selling. We, like everyone else with exposure to the UK
stock market, await budget day with keen interest, and hope that
once everyone has the certainty the budget will bring, they will be
able to position for the long term. And this long term is where we
have more conviction. As a consequence of the current uncertainty,
consumer confidence has recently weakened. However, in the
background real wages are rising, unemployment remains low, and
household disposable income is increasing, all suggesting that as
confidence returns the consumer maintains an ability to spend.
Survey data suggests UK corporations are still positive and are
themselves awaiting clarity before deciding to invest. And that
clarity could (and should) come from the Labour Party, as they move
away from the budget and start to enact their agenda; developing
the framework to build one and a half million homes, investing in
infrastructure and public services whilst at the same time reducing
waste, lifting the skills and education of the workforce, and
fostering innovation. On a global basis the more recent economic
data suggests a soft landing is still the likely outcome. Finally,
and importantly, the valuation of UK small and mid-cap companies is
attractive on an historic basis. As we move through this near-term
noise, the opportunity presented by the UK small and mid-cap market
should be revealed, and maybe we will finally see investors looking
to allocate back to an asset class that has historically been a
profitable one.
ROLAND
ARNOLD
BLACKROCK INVESTMENT MANAGEMENT (UK)
LIMITED
24 October 2024
Twenty Largest Investments as at 31
August 2024
Company
|
Business activity
|
Market
value
£’000
|
% of
total
portfolio
|
|
|
|
|
IntegraFin
|
Investment platform for financial advisers
|
22,312
|
2.6
|
Workspace Group
|
Supply of flexible workspace to businesses in London
|
22,081
|
2.6
|
Hill & Smith
|
Production of infrastructure products and supply of galvanizing
services
|
21,671
|
2.5
|
Gamma Communications
|
Provider of communication services to UK businesses
|
19,861
|
2.3
|
Breedon
|
UK construction materials
|
19,727
|
2.3
|
Chemring Group
|
Advanced technology products and services for the aerospace,
defence and security markets
|
19,054
|
2.2
|
Bloomsbury Publishing
|
Publisher of fiction and non-fiction
|
17,652
|
2.1
|
Tatton Asset Management
|
Provider of discretionary fund management services to financial
advisors
|
16,620
|
2.0
|
Baltic Classifieds Group
|
Operator of online classified businesses in the Baltics
|
15,790
|
1.9
|
XPS Pensions
|
Leading independent pensions consultancy and administration
firm
|
14,669
|
1.7
|
4imprint Group
|
Promotional merchandise in the US
|
14,306
|
1.6
|
Great Portland Estates
|
British property development and investment company
|
13,366
|
1.6
|
GlobalData
|
Data analytics and consulting company
|
12,866
|
1.5
|
Boku
|
Digital payments company
|
12,838
|
1.5
|
Oxford Instruments
|
Designer and manufacturer of tools and systems for industry and
scientific research
|
12,622
|
1.5
|
TT Electronics
|
Global manufacturer of electronic components
|
12,377
|
1.5
|
FRP Advisory
|
A business advisory firm providing services in corporate
restructuring, insolvency, debt advisory, and financial solutions
to businesses
|
12,347
|
1.5
|
Ibstock
|
Manufacture of clay bricks and concrete products
|
11,898
|
1.4
|
Johnson Service Group
|
Provider of textile services
|
11,818
|
1.4
|
MJ Gleeson
|
UK-based low-cost house builder and strategic land
promoter
|
11,519
|
1.4
|
|
|
---------------
|
---------------
|
Twenty largest investments
|
|
315,394
|
37.1
|
|
|
---------------
|
---------------
|
Remaining investments
|
|
535,803
|
62.9
|
|
|
=========
|
=========
|
Total
|
|
851,197
|
100.0
|
|
|
=========
|
=========
|
Details of the full portfolio are available on the Company’s
website at www.blackrock.com/uk/brsc.
Portfolio holdings in excess of 3% of issued share
capital
At 31 August 2024, the Company did
not hold any equity investments comprising more than 3% of any
company’s share capital other than as disclosed in the table
below:
Security
|
% of share capital held
|
|
|
Distribution Finance Capital Holdings
|
5.1
|
The Pebble Group
|
4.8
|
TT Electronics
|
4.3
|
Secure Trust Bank
|
3.9
|
Tatton Asset Management
|
3.9
|
Mercia Asset Management
|
3.5
|
Treatt
|
3.4
|
Luceco
|
3.4
|
MJ Gleeson
|
3.4
|
FRP Advisory
|
3.3
|
Robert Walters
|
3.2
|
Diaceutics
|
3.2
|
Central Asia Metals
|
3.1
|
Ultimate Products
|
3.1
|
Sylvania Platinum
|
3.1
|
Porvair
|
3.1
|
Bloomsbury Publishing
|
3.0
|
Fuller Smith and Turner – A Shares
|
3.0
|
Investment exposure as at 31 August
2024
Investment size
|
Number of investments
|
Market value of investments as % of portfolio
|
£0m to £1m
|
2
|
0.1
|
£2m to £3m
|
3
|
0.9
|
£3m to £4m
|
12
|
5.0
|
£4m to £5m
|
13
|
6.9
|
£5m to £6m
|
13
|
8.5
|
£6m to £7m
|
7
|
5.2
|
£7m to £8m
|
9
|
8.1
|
£8m to £9m
|
14
|
13.9
|
£9m to £10m
|
4
|
4.5
|
£10m to £11m
|
6
|
7.3
|
£11m to £12m
|
5
|
6.7
|
£12m to £13m
|
5
|
7.4
|
£13m to £14m
|
1
|
1.6
|
£14m to £15m
|
2
|
3.4
|
£15m to £16m
|
1
|
1.9
|
£16m to £17m
|
1
|
2.0
|
£17m to £18m
|
1
|
2.1
|
£19m to £20m
|
3
|
6.9
|
£21m to £22m
|
1
|
2.5
|
£22m to £23m
|
2
|
5.1
|
Source: BlackRock.
Analysis of portfolio value by sector
|
Company
|
Benchmark
(Deutsche Numis Smaller Companies, plus AIM
(ex Investment Companies) Index)
|
Other
|
0.0
|
0.8
|
Energy
|
1.4
|
4.4
|
Basic Materials
|
13.2
|
7.5
|
Industrials
|
30.5
|
21.7
|
Consumer Discretionary
|
15.4
|
18.0
|
Health Care
|
2.6
|
4.6
|
Consumer Staples
|
3.1
|
5.2
|
Telecommunications
|
4.2
|
3.8
|
Financials
|
20.6
|
18.2
|
Real Estate
|
3.0
|
5.9
|
Technology
|
6.0
|
9.1
|
Utilities
|
0.0
|
0.8
|
Sources: BlackRock and LSEG Datastream.
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;
· Market;
· Income/dividend;
· Legal
and compliance;
· Operational;
· Financial;
and
· Marketing.
The Board reported on the principal risks and uncertainties faced
by the Company in the Annual Report and Financial Statements for
the year ended 29 February 2024. A
detailed explanation can be found in the Strategic Report on pages
33 to 37 and note 17 on pages 99 to 106 of the Annual Report and
Financial Statements which is available on the website maintained
by BlackRock at www.blackrock.com/uk/brsc.
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, are
satisfied that the Company has adequate resources to continue in
operational existence for the foreseeable future and is financially
sound.
Related party disclosure and transactions with the AIFM and
Investment 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 and marketing fees payable are set out in notes 4 and 5
respectively and note 14 below. The related party transactions with
the Directors are set out in note 15 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 and belief
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 Financial Conduct
Authority’s (FCA) Disclosure Guidance and Transparency
Rules.
The 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
24 October 2024 and the above
Responsibility Statement was signed on its behalf by the
Chairman.
RONALD
GOULD
FOR AND ON BEHALF OF THE BOARD
24 October 2024
Income Statement for the six months ended 31 August 2024
|
|
|
Six months ended
31 August 2024
(unaudited)
|
Six months ended
31 August 2023
(unaudited)
|
Year ended
29 February 2024
(audited)
|
|
Notes
|
Revenue
£’000
|
Capital
£’000
|
Total
£’000
|
Revenue
£’000
|
Capital
£’000
|
Total
£’000
|
Revenue
£’000
|
Capital
£’000
|
Total
£’000
|
|
|
|
|
|
|
|
|
|
|
|
Gains/(losses) on investments held at fair value through profit or
loss
|
|
–
|
88,199
|
88,199
|
–
|
(69,846)
|
(69,846)
|
–
|
(48,408)
|
(48,408)
|
Losses on foreign exchange
|
|
–
|
(7)
|
(7)
|
–
|
–
|
–
|
–
|
(9)
|
(9)
|
Income from investments held at fair value through profit or
loss
|
3
|
14,494
|
798
|
15,292
|
13,385
|
782
|
14,167
|
21,884
|
782
|
22,666
|
Other income
|
3
|
–
|
–
|
–
|
155
|
–
|
155
|
379
|
–
|
379
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
Total income/(loss)
|
|
14,494
|
88,990
|
103,484
|
13,540
|
(69,064)
|
(55,524)
|
22,263
|
(47,635)
|
(25,372)
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
Investment management fee
|
4
|
(615)
|
(1,845)
|
(2,460)
|
(564)
|
(1,692)
|
(2,256)
|
(1,109)
|
(3,328)
|
(4,437)
|
Other operating expenses
|
5
|
(510)
|
(14)
|
(524)
|
(439)
|
(14)
|
(453)
|
(869)
|
(21)
|
(890)
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
Total operating expenses
|
|
(1,125)
|
(1,859)
|
(2,984)
|
(1,003)
|
(1,706)
|
(2,709)
|
(1,978)
|
(3,349)
|
(5,327)
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
Net profit/(loss) on ordinary activities before finance
costs and taxation
|
|
13,369
|
87,131
|
100,500
|
12,537
|
(70,770)
|
(58,233)
|
20,285
|
(50,984)
|
(30,699)
|
Finance costs
|
6
|
(332)
|
(900)
|
(1,232)
|
(237)
|
(708)
|
(945)
|
(471)
|
(1,408)
|
(1,879)
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
Net profit/(loss) on ordinary activities before
taxation
|
|
13,037
|
86,231
|
99,268
|
12,300
|
(71,478)
|
(59,178)
|
19,814
|
(52,392)
|
(32,578)
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
Taxation
|
|
(55)
|
–
|
(55)
|
(88)
|
–
|
(88)
|
(123)
|
–
|
(123)
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
Net profit/(loss) on ordinary activities after
taxation
|
|
12,982
|
86,231
|
99,213
|
12,212
|
(71,478)
|
(59,266)
|
19,691
|
(52,392)
|
(32,701)
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
Earnings/(loss) per ordinary share (pence) – basic and
diluted
|
8
|
27.54
|
182.93
|
210.47
|
25.11
|
(146.99)
|
(121.88)
|
40.70
|
(108.29)
|
(67.59)
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
The total columns of this statement represent the Company’s profit
and loss account. The supplementary revenue and capital accounts
are both prepared under guidance published by the 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/(loss) for the period disclosed above represents the
Company’s total comprehensive income/(loss).
Statement of Changes in Equity for the six months ended
31 August 2024
|
Notes
|
Called
up share
capital
£’000
|
Share
premium
account
£’000
|
Capital
redemption
reserve
£’000
|
Capital
reserves
£’000
|
Revenue
reserve
£’000
|
Total
£’000
|
For the six months ended 31 August 2024
(unaudited)
|
|
|
|
|
|
|
|
At 29 February 2024
|
|
12,498
|
51,980
|
1,982
|
601,098
|
18,648
|
686,206
|
Total comprehensive income:
|
|
|
|
|
|
|
|
Net profit for the period
|
|
–
|
–
|
–
|
86,231
|
12,982
|
99,213
|
Transactions with owners, recorded directly to equity:
|
|
|
|
|
|
|
|
Ordinary shares repurchased into treasury
|
|
–
|
–
|
–
|
(2,940)
|
–
|
(2,940)
|
Share buyback costs
|
|
–
|
–
|
–
|
(28)
|
–
|
(28)
|
Dividends paid1
|
7
|
–
|
–
|
–
|
–
|
(12,717)
|
(12,717)
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
At 31 August 2024
|
|
12,498
|
51,980
|
1,982
|
684,361
|
18,913
|
769,734
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
For the six months ended 31 August 2023
(unaudited)
|
|
|
|
|
|
|
|
At 28 February 2023
|
|
12,498
|
51,980
|
1,982
|
673,479
|
18,590
|
758,529
|
Total comprehensive (loss)/income:
|
|
|
|
|
|
|
|
Net (loss)/profit for the period
|
|
–
|
–
|
–
|
(71,478)
|
12,212
|
(59,266)
|
Transactions with owners, recorded directly to equity:
|
|
|
|
|
|
|
|
Ordinary shares repurchased into treasury
|
|
–
|
–
|
–
|
(3,272)
|
–
|
(3,272)
|
Share buyback costs
|
|
–
|
–
|
–
|
(23)
|
–
|
(23)
|
Dividends paid2
|
7
|
–
|
–
|
–
|
–
|
(12,395)
|
(12,395)
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
At 31 August 2023
|
|
12,498
|
51,980
|
1,982
|
598,706
|
18,407
|
683,573
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
For the year ended 29 February 2024
(audited)
|
|
|
|
|
|
|
|
At 28 February 2023
|
|
12,498
|
51,980
|
1,982
|
673,479
|
18,590
|
758,529
|
Total comprehensive (loss)/income:
|
|
|
|
|
|
|
|
Net (loss)/profit for the year
|
|
–
|
–
|
–
|
(52,392)
|
19,691
|
(32,701)
|
Transactions with owners, recorded directly to equity:
|
|
|
|
|
|
|
|
Ordinary shares repurchased into treasury
|
|
–
|
–
|
–
|
(19,859)
|
–
|
(19,859)
|
Share buyback costs
|
|
–
|
–
|
–
|
(130)
|
–
|
(130)
|
Dividends paid3
|
7
|
–
|
–
|
–
|
–
|
(19,633)
|
(19,633)
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
At 29 February 2024
|
|
12,498
|
51,980
|
1,982
|
601,098
|
18,648
|
686,206
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
1 Final
dividend paid in respect of the year ended 29 February 2024 of 27.00p per share was declared
on 14 May 2024 and paid on
27 June 2024.
2 Final
dividend paid in respect of the year ended 28 February 2023 of 25.50p was declared on
9 May 2023 and paid on 27 June 2023.
3 Interim
dividend paid in respect of the year ended 29 February 2024 of 15.00p was declared on
26 October 2023 and paid on
4 December 2023. Final dividend paid
in respect of the year ended 28 February
2023 of 25.50p was declared on 9 May
2023 and paid on 27 June
2023.
For information on the Company’s distributable reserves, please
refer to note 12.
Balance Sheet as at 31 August
2024
|
Notes
|
31 August
2024
(unaudited)
£’000
|
31 August
2023
(unaudited)
£’000
|
29 February
2024
(audited)
£’000
|
Non current assets
|
|
|
|
|
Investments held at fair value through profit or loss
|
13
|
851,197
|
753,759
|
765,178
|
Current assets
|
|
|
|
|
Current tax assets
|
|
132
|
177
|
210
|
Debtors
|
|
4,958
|
2,092
|
4,667
|
Cash and cash equivalents
|
|
–
|
644
|
28
|
|
|
---------------
|
---------------
|
---------------
|
Total current assets
|
|
5,090
|
2,913
|
4,905
|
|
|
=========
|
=========
|
=========
|
Current liabilities
|
|
|
|
|
Bank overdraft
|
|
(10,102)
|
–
|
(7,899)
|
Other creditors
|
|
(6,922)
|
(3,580)
|
(6,463)
|
|
|
---------------
|
---------------
|
---------------
|
Net current liabilities
|
|
(11,934)
|
(667)
|
(9,457)
|
|
|
=========
|
=========
|
=========
|
Total assets less current liabilities
|
|
839,263
|
753,092
|
755,721
|
|
|
=========
|
=========
|
=========
|
Non current liabilities
|
9, 10
|
(69,529)
|
(69,519)
|
(69,515)
|
|
|
---------------
|
---------------
|
---------------
|
Net assets
|
|
769,734
|
683,573
|
686,206
|
|
|
=========
|
=========
|
=========
|
Total equity
|
|
|
|
|
Called up share capital
|
11
|
12,498
|
12,498
|
12,498
|
Share premium account
|
|
51,980
|
51,980
|
51,980
|
Capital redemption reserve
|
|
1,982
|
1,982
|
1,982
|
Capital reserves
|
|
684,361
|
598,706
|
601,098
|
Revenue reserve
|
|
18,913
|
18,407
|
18,648
|
|
|
---------------
|
---------------
|
---------------
|
Total shareholders’ funds
|
8
|
769,734
|
683,573
|
686,206
|
|
|
=========
|
=========
|
=========
|
Net asset value per ordinary share (debt at par value)
(pence)
|
8
|
1,634.26
|
1,407.04
|
1,450.15
|
|
|
=========
|
=========
|
=========
|
Net asset value per ordinary share (debt at fair value)
(pence)
|
8
|
1,684.43
|
1,460.02
|
1,502.25
|
|
|
=========
|
=========
|
=========
|
Statement of Cash Flows for the six months ended
31 August 2024
|
Six months
ended
31 August
2024
(unaudited)
£’000
|
Six months
ended
31 August
2023
(unaudited)
£’000
|
Year
ended
29 February
2024
(audited)
£’000
|
Operating activities
|
|
|
|
Net profit/(loss) on ordinary activities before taxation
|
99,268
|
(59,178)
|
(32,578)
|
Add back finance costs
|
1,232
|
945
|
1,879
|
(Gains)/losses on investments held at fair value through profit or
loss
|
(88,199)
|
69,846
|
48,408
|
Net movement in foreign exchange
|
7
|
–
|
9
|
Sale of investments held at fair value through profit or
loss
|
211,755
|
149,604
|
322,366
|
Purchase of investments held at fair value through profit or
loss
|
(207,606)
|
(163,539)
|
(327,895)
|
Net amount for capital special dividends received
|
(798)
|
(782)
|
(782)
|
(Increase)/decrease in debtors
|
(1,273)
|
(771)
|
7
|
Increase/(decrease) in other creditors
|
409
|
(2,315)
|
(1,280)
|
Taxation on investment income
|
(55)
|
(88)
|
(123)
|
|
---------------
|
---------------
|
---------------
|
Net cash generated from/(used in) operating
activities
|
14,740
|
(6,278)
|
10,011
|
|
=========
|
=========
|
=========
|
Financing activities
|
|
|
|
Ordinary shares repurchased into treasury
|
(3,006)
|
(3,295)
|
(19,792)
|
Share buyback costs
|
(28)
|
–
|
(130)
|
Interest paid
|
(1,213)
|
(924)
|
(1,854)
|
Dividends paid
|
(12,717)
|
(12,395)
|
(19,633)
|
|
---------------
|
---------------
|
---------------
|
Net cash used in financing activities
|
(16,964)
|
(16,614)
|
(41,409)
|
|
=========
|
=========
|
=========
|
Decrease in cash and cash equivalents
|
(2,224)
|
(22,892)
|
(31,398)
|
Cash and cash equivalents at beginning of the
period/year
|
(7,871)
|
23,536
|
23,536
|
Effect of foreign exchange rate changes
|
(7)
|
–
|
(9)
|
|
---------------
|
---------------
|
---------------
|
Cash and cash equivalents at end of
period/year
|
(10,102)
|
644
|
(7,871)
|
|
=========
|
=========
|
=========
|
Comprised of:
|
|
|
|
Cash at bank
|
–
|
644
|
–
|
Cash Fund1
|
–
|
–
|
28
|
Bank overdraft
|
(10,102)
|
–
|
(7,899)
|
|
---------------
|
---------------
|
---------------
|
|
(10,102)
|
644
|
(7,871)
|
|
=========
|
=========
|
=========
|
1 Cash
Fund represents funds held on deposit with the BlackRock
Institutional Cash Series plc – Sterling Liquid Environmentally
Aware Fund.
Notes to the Financial Statements for the six months ended
31 August 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.
2. Basis of preparation
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 July 2022, 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
29 February 2024.
3. Income
|
Six months
ended
31 August
2024
(unaudited)
£’000
|
Six months
ended
31 August
2023
(unaudited)
£’000
|
Year
ended
29 February
2024
(audited)
£’000
|
Investment income1:
|
|
|
|
UK dividends
|
11,921
|
9,686
|
16,538
|
UK special dividends
|
605
|
984
|
1,230
|
Property income dividends
|
841
|
558
|
1,058
|
Overseas dividends
|
1,049
|
2,157
|
3,058
|
Overseas special dividends
|
78
|
–
|
–
|
|
---------------
|
---------------
|
---------------
|
Total investment income
|
14,494
|
13,385
|
21,884
|
|
=========
|
=========
|
=========
|
Other income:
|
|
|
|
Bank interest
|
–
|
3
|
8
|
Interest from Cash Fund
|
–
|
152
|
371
|
|
---------------
|
---------------
|
---------------
|
|
–
|
155
|
379
|
|
---------------
|
---------------
|
---------------
|
Total income
|
14,494
|
13,540
|
22,263
|
|
=========
|
=========
|
=========
|
1 UK
and overseas dividends are disclosed based on the country of
domicile of the underlying portfolio company.
Special dividends of £798,000 have been recognised in capital
during the period ended 31 August
2024 (six months ended 31 August
2023: £782,000; year ended 29
February 2024: £782,000).
Dividends and interest received in cash during the period amounted
to £13,289,000 and £nil (six months ended 31
August 2023: £12,413,000 and £231,000; year ended
29 February 2024: £21,699,000 and
£447,000).
4. Investment management fee
|
Six months ended
31 August 2024
(unaudited)
|
Six months ended
31 August 2023
(unaudited)
|
Year ended
29 February 2024
(audited)
|
|
Revenue
£’000
|
Capital
£’000
|
Total
£’000
|
Revenue
£’000
|
Capital
£’000
|
Total
£’000
|
Revenue
£’000
|
Capital
£’000
|
Total
£’000
|
|
|
|
|
|
|
|
|
|
|
Investment management fee
|
615
|
1,845
|
2,460
|
564
|
1,692
|
2,256
|
1,109
|
3,328
|
4,437
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
Total
|
615
|
1,845
|
2,460
|
564
|
1,692
|
2,256
|
1,109
|
3,328
|
4,437
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
The investment management fee is based on a rate of 0.6% of the
first £750 million of total assets (excluding current year income)
less the current liabilities of the Company (the “Fee Asset
Amount”), reducing to 0.5% above this level. The fee is calculated
at the rate of one quarter of 0.6% of the Fee Asset Amount up to
the initial threshold of £750 million, and one quarter of 0.5% of
the Fee Asset Amount in excess thereof, at the end of each quarter.
The investment management fee is allocated 25% to the revenue
account and 75% to the capital account of the Income
Statement.
5. Other operating expenses
|
Six months
ended
31 August
2024
(unaudited)
£’000
|
Six months
ended
31 August
2023
(unaudited)
£’000
|
Year
ended
29 February
2024
(audited)
£’000
|
Allocated to revenue:
|
|
|
|
Custody fees
|
5
|
5
|
10
|
Depositary fees
|
42
|
52
|
78
|
Auditor’s remuneration
|
29
|
34
|
50
|
Registrar’s fee
|
23
|
19
|
42
|
Directors’ emoluments
|
112
|
90
|
201
|
Director search fees
|
–
|
18
|
35
|
Marketing fees
|
136
|
59
|
174
|
AIC fees
|
11
|
11
|
22
|
Bank charges
|
12
|
16
|
28
|
Broker fees
|
18
|
18
|
35
|
Stock exchange listings
|
21
|
17
|
34
|
Printing and postage fees
|
24
|
22
|
37
|
Legal fees
|
9
|
8
|
21
|
Prior year expenses written back1
|
–
|
(7)
|
(1)
|
Other administrative costs
|
68
|
77
|
103
|
|
---------------
|
---------------
|
---------------
|
|
510
|
439
|
869
|
|
=========
|
=========
|
=========
|
Allocated to capital:
|
|
|
|
Custody transaction charges2
|
14
|
14
|
21
|
|
---------------
|
---------------
|
---------------
|
|
524
|
453
|
890
|
|
=========
|
=========
|
=========
|
1 No
expenses have been written back during the six month period ended
31 August 2024 (six months ended
31 August 2023: depositary fees and
miscellaneous fees; year ended 29 February
2024: miscellaneous fees).
2 For
the six month period ended 31 August
2024, expenses of £14,000 (six months ended 31 August 2023: £14,000; year ended 29 February 2024: £21,000) 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 direct transaction costs incurred on the acquisition of
investments amounted to £887,000 for the six months ended
31 August 2024 (six months ended
31 August 2023: £708,000; year ended
29 February 2024: £1,393,000). Costs
relating to the disposal of investments amounted to £159,000 for
the six months ended 31 August 2024
(six months ended 31 August 2023:
£113,000; year ended 29 February
2024: £249,000). All direct transaction costs have been
included within capital reserves.
6. Finance costs
|
Six months ended
31 August 2024
(unaudited)
|
Six months ended
31 August 2023
(unaudited)
|
Year ended
29 February 2024
(audited)
|
|
Revenue
£’000
|
Capital
£’000
|
Total
£’000
|
Revenue
£’000
|
Capital
£’000
|
Total
£’000
|
Revenue
£’000
|
Capital
£’000
|
Total
£’000
|
|
|
|
|
|
|
|
|
|
|
Interest on 2.74% loan note 2037
|
87
|
260
|
347
|
87
|
260
|
347
|
173
|
518
|
691
|
Interest on 2.41% loan note 2044
|
60
|
182
|
242
|
60
|
182
|
242
|
121
|
362
|
483
|
Interest on 2.47% loan note 2046
|
76
|
228
|
304
|
76
|
228
|
304
|
152
|
456
|
608
|
Interest on bank overdraft
|
105
|
220
|
325
|
10
|
28
|
38
|
17
|
52
|
69
|
2.74% Amortised loan note issue expenses
|
2
|
5
|
7
|
2
|
5
|
7
|
4
|
10
|
14
|
2.41% Amortised loan note issue expenses
|
1
|
2
|
3
|
1
|
2
|
3
|
2
|
5
|
7
|
2.47% Amortised loan note issue expenses
|
1
|
3
|
4
|
1
|
3
|
4
|
2
|
5
|
7
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
Total
|
332
|
900
|
1,232
|
237
|
708
|
945
|
471
|
1,408
|
1,879
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
Finance costs have been allocated 25% to the revenue account and
75% to the capital account of the Income Statement.
7. Dividends
In accordance with FRS 102, 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.
The Board has declared an interim dividend of 15.50p per share
(31 August 2023: 15.00p per share),
payable on 4 December 2024 to
shareholders on the Company’s register as at 1 November 2024; the ex dividend date is
31 October 2024. The total cost of
this dividend, based on 47,099,792 shares in issue at 22 October 2024, is £7,300,000 (31 August 2023: £7,238,000).
8. Returns and net asset value per
share
Revenue earnings, capital loss and net asset value per share are
shown below and have been calculated using the
following:
|
Six months
ended
31 August
2024
(unaudited)
|
Six months
ended
31 August
2023
(unaudited)
|
Year
ended
29 February
2024
(audited)
|
|
|
|
|
Revenue return attributable to ordinary shareholders
(£’000)
|
12,982
|
12,212
|
19,691
|
Capital profit/(loss) attributable to ordinary shareholders
(£’000)
|
86,231
|
(71,478)
|
(52,392)
|
|
---------------
|
---------------
|
---------------
|
Total profit/(loss) attributable to ordinary shareholders
(£’000)
|
99,213
|
(59,266)
|
(32,701)
|
|
=========
|
=========
|
=========
|
Total shareholders’ funds (£’000)
|
769,734
|
683,573
|
686,206
|
|
=========
|
=========
|
=========
|
The weighted average number of ordinary shares in issue during the
period on which the earnings per ordinary share was calculated
was:
|
47,138,725
|
48,625,566
|
48,381,588
|
The actual number of ordinary shares in issue at the end of each
period on which the undiluted net asset value was calculated
was:
|
47,099,792
|
48,582,292
|
47,319,792
|
Earnings per share
|
|
|
|
Revenue earnings per share (pence) – basic and diluted
|
27.54
|
25.11
|
40.70
|
Capital earnings/(loss) per share (pence) – basic and
diluted
|
182.93
|
(146.99)
|
(108.29)
|
|
---------------
|
---------------
|
---------------
|
Total earnings/(loss) per share (pence) – basic and
diluted
|
210.47
|
(121.88)
|
(67.59)
|
|
=========
|
=========
|
=========
|
|
As at
31 August
2024
(unaudited)
|
As at
31 August
2023
(unaudited)
|
As at
29 February
2024
(audited)
|
|
|
|
|
Net asset value per ordinary share (debt at par value)
(pence)
|
1,634.26
|
1,407.04
|
1,450.15
|
Net asset value per ordinary share (debt at fair value)
(pence)
|
1,684.43
|
1,460.02
|
1,502.25
|
Ordinary share price (pence)
|
1,524.00
|
1,268.00
|
1,326.00
|
|
=========
|
=========
|
=========
|
9. Borrowings
|
Six months
ended
31 August
2024
(unaudited)
£’000
|
Six months
ended
31 August
2023
(unaudited)
£’000
|
Year
ended
29 February
2024
(audited)
£’000
|
Amounts falling due after more than one
year
|
|
|
|
2.74% loan note 2037
|
25,000
|
25,000
|
25,000
|
Unamortised loan note issue expenses
|
(166)
|
(189)
|
(182)
|
|
---------------
|
---------------
|
---------------
|
|
24,834
|
24,811
|
24,818
|
|
=========
|
=========
|
=========
|
2.41% loan note 2044
|
20,000
|
20,000
|
20,000
|
Unamortised loan note issue expenses
|
(130)
|
(136)
|
(133)
|
|
---------------
|
---------------
|
---------------
|
|
19,870
|
19,864
|
19,867
|
|
=========
|
=========
|
=========
|
2.47% loan note 2046
|
25,000
|
25,000
|
25,000
|
Unamortised loan note issue expenses
|
(175)
|
(156)
|
(170)
|
|
---------------
|
---------------
|
---------------
|
|
24,825
|
24,844
|
24,830
|
|
---------------
|
---------------
|
---------------
|
Total borrowings
|
69,529
|
69,519
|
69,515
|
|
=========
|
=========
|
=========
|
The fair value of the 2.74% loan note has been determined based on
a comparative yield for UK Gilts for similar duration maturity and
spreads, and as at 31 August 2024
equated to a valuation of 76.63p per note (31 August 2023: 72.24p; 29
February 2024: 74.55p), a total of £19,158,000 (31 August 2023: £18,060,000; 29 February 2024: £18,638,000). The fair value of
the 2.41% loan note has been determined based on a comparative
yield for UK Gilts for similar duration maturity and spreads, and
as at 31 August 2024 equated to a
valuation of 61.74p per note (31 August
2023: 59.30p; 29 February
2024: 60.55p), a total of £12,348,000 (31 August 2023: £11,860,000; 29 February 2024: £12,110,000). The fair value of
the 2.47% loan note has been determined based on a comparative
yield for UK Gilts for similar duration maturity and spreads, and
as at 31 August 2024 equated to a
valuation of 57.58p per note (31 August
2023: 55.44p; 29 February
2024: 56.44p), a total of £14,395,000 (31 August 2023: £13,860,000; 29 February 2024: £14,110,000).
The £25 million loan note was issued on 24
May 2017. Interest on the note is payable in equal half
yearly instalments on 24 May and 24 November in each year. The loan
note is unsecured and is redeemable at par on 24 May 2037.
The £20 million loan note was issued on 3
December 2019. Interest on the note is payable in equal half
yearly instalments on 3 December and 3 June in each year. The loan
note is unsecured and is redeemable at par on 3 December 2044.
The second £25 million loan note was issued on 16 September 2021. Interest on the note is
payable in equal half yearly instalments on 16 March and 16
September each year. The loan note is unsecured and is redeemable
at par on 16 September
2046.
The Company had in place a £35 million three year multi-currency
revolving loan facility with SMBC Bank International plc. This
facility was terminated on 25 November
2022 and any loan amounts repaid. As at 31 August 2022, the facility was not utilised.
Prior to the termination, interest on the facility was reset every
three months and was charged at the Sterling Overnight Index
Average rate (SONIA) plus a credit adjustment spread of 0.326% for
one month borrowings and 0.1193% for three month
borrowings.
The Company also has available an uncommitted overdraft facility of
£60 million with The Bank of New York Mellon (International)
Limited, of which £nil had been utilised at 31 August 2024 (31 August
2023: £nil; 29 February 2024:
£nil).
The Company has complied with all covenants during the period
related to the loan and borrowings.
10. Reconciliation of liabilities arising from financing
activities
|
Six months
ended
31 August
2024
(unaudited)
£’000
|
Six months
ended
31 August
2023
(unaudited)
£’000
|
Year ended
29 February
2024
(audited)
£’000
|
Debt arising from financing activities:
|
|
|
|
Debt arising from financing activities at beginning of the
period/year
|
69,515
|
69,504
|
69,504
|
|
---------------
|
---------------
|
---------------
|
Cash flows:
|
|
|
|
Non-cash flows:
|
|
|
|
Amortisation of debenture and loan note issue expenses
|
14
|
15
|
11
|
|
---------------
|
---------------
|
---------------
|
Debt arising from financing activities at end of the
period/year
|
69,529
|
69,519
|
69,515
|
|
=========
|
=========
|
=========
|
11. Called up share capital
|
Ordinary shares
in issue
(number)
|
Treasury
shares
(number)
|
Total
shares
(number)
|
Nominal
Value
£’000
|
Allotted, called up and fully paid share capital
comprised:
|
|
|
|
|
Ordinary shares of 25p each
|
|
|
|
|
At 29 February 2024
|
47,319,792
|
2,673,731
|
49,993,523
|
12,497
|
Ordinary shares bought back into treasury
|
(220,000)
|
220,000
|
–
|
–
|
|
---------------
|
---------------
|
---------------
|
---------------
|
At 31 August 2024
|
47,099,792
|
2,893,731
|
49,993,523
|
12,497
|
|
=========
|
=========
|
=========
|
=========
|
During the period ended 31 August
2024, the Company has bought back 220,000 shares into
treasury for a total consideration of £2,968,000 (six months ended
31 August 2023: bought back 247,500
shares for a total consideration of £3,295,000; year ended
29 February 2024: bought back
1,510,000 shares for a total consideration of
£19,989,000.
Since 31 August 2024 and up to the
latest practicable date of 22 October
2024 no further shares have been bought back.
The ordinary shares (excluding any shares held in treasury) carry
the right to receive any dividends and have one voting right per
ordinary share. There are no restrictions on the voting rights of
the ordinary shares or on the transfer of ordinary
shares.
12. 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 capital
reserve may be used as distributable reserves for all purposes and,
in particular, the repurchase by the Company of its ordinary shares
and for payments such as dividends. In accordance with the
Company’s Articles of Association, the capital reserve and the
revenue reserve may be distributed by way of dividend. The gain on
the capital reserve arising on the revaluation of investments of
£109,443,000 (31 August 2023: gain of
£18,222,000; 29 February 2024: gain
of £35,601,000) is subject to fair value movements and may not be
readily realisable at short notice, as such it may not be entirely
distributable. The investments are subject to financial risks, as
such capital reserves (arising on investments sold) and the revenue
reserve may not be entirely distributable if a loss occurred during
the realisation of these investments.
13. 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.
Market risk arising from price risk
Price risk is the risk that the fair value or future cash flows of
a financial instrument will fluctuate because of changes in market
prices (other than those arising from interest rate risk or
currency risk), whether those changes are caused by factors
specific to the individual financial instrument or its issuer, or
factors affecting similar financial instruments traded in the
market. Local, regional or global events such as war, acts of
terrorism, the spread of infectious illness or other public health
issues, recessions, climate change or other events could have a
significant impact on the Company and its investments and could
result in increased premiums or discounts to the Company’s net
asset value.
Valuation of financial instruments
Financial assets and financial liabilities are either carried in
the Balance Sheet at their fair value (investments) or at an amount
which is a reasonable approximation of fair value (due from
brokers, dividends and interest receivable, due to brokers,
accruals, cash and cash equivalents and bank overdrafts). Section
34 of FRS 102 requires the Company to classify fair value
measurements using a fair value hierarchy that reflects the
significance of inputs used in making the measurements. The
valuation techniques used by the Company are explained in the
accounting policies note on page 89 of the Annual Report and
Financial Statements for the year ended 29
February 2024.
Categorisation within the hierarchy has been determined on the
basis of the lowest level input that is significant to the fair
value measurement of the relevant asset.
The fair value hierarchy has the following levels:
Level 1 – Quoted market price for identical instruments in
active markets
A financial instrument is regarded as quoted in an active market if
quoted prices are readily available from an exchange, dealer,
broker, industry group, pricing service or regulatory agency and
those prices represent actual and regularly occurring market
transactions on an arm’s length basis. The Company does not adjust
the quoted price for these instruments.
Level 2 – Valuation techniques using observable
inputs
This category includes instruments valued using quoted prices for
similar instruments in markets that are considered less than
active, or other valuation techniques where significant inputs are
directly or indirectly observable from market data.
Level 3 – Valuation techniques using significant
unobservable inputs
This category includes all instruments where the valuation
technique includes inputs not based on market data and these inputs
could have a significant impact on the instrument’s
valuation.
This category also includes instruments that are valued based on
quoted prices for similar instruments where significant entity
determined adjustments or assumptions are required to reflect
differences between the instruments and instruments for which there
is no active market. The Investment Manager considers observable
data to be that market data that is readily available, regularly
distributed or updated, reliable and verifiable, not proprietary,
and provided by independent sources that are actively involved in
the relevant market.
The level in the fair value hierarchy within which the fair value
measurement is categorised in its entirety is determined on the
basis of the lowest level input that is significant to the fair
value measurement. If a fair value measurement uses observable
inputs that require significant adjustment based on unobservable
inputs, that measurement is a Level 3 measurement.
Assessing the significance of a particular input to the fair value
measurement in its entirety requires judgement, considering factors
specific to the asset or liability, including an assessment of the
relevant risks including but not limited to credit risk, market
risk, liquidity risk, business risk and sustainability risk. The
determination of what constitutes ‘observable’ inputs requires
significant judgement by the Investment Manager and these risks are
adequately captured in the assumptions and inputs used in the
measurement of Level 3 assets or liabilities.
Fair values of financial assets and financial
liabilities
The table below is an analysis of the Company’s financial
instruments measured at fair value at the balance sheet
date.
Financial assets at fair value through profit or loss at
31 August 2024
(unaudited)
|
Level 1
£’000
|
Level 2
£’000
|
Level 3
£’000
|
Total
£’000
|
|
|
|
|
|
Equity investments
|
851,197
|
–
|
–
|
851,197
|
|
---------------
|
---------------
|
---------------
|
---------------
|
Total
|
851,197
|
–
|
–
|
851,197
|
|
=========
|
=========
|
=========
|
=========
|
Financial assets at fair value through profit or loss at
31 August 2023
(unaudited)
|
Level 1
£’000
|
Level 2
£’000
|
Level 3
£’000
|
Total
£’000
|
|
|
|
|
|
Equity investments
|
753,759
|
–
|
–
|
753,759
|
|
---------------
|
---------------
|
---------------
|
---------------
|
Total
|
753,759
|
–
|
–
|
753,759
|
|
=========
|
=========
|
=========
|
=========
|
Financial assets at fair value through profit or loss at
29 February 2024
(audited)
|
Level 1
£’000
|
Level 2
£’000
|
Level 3
£’000
|
Total
£’000
|
|
|
|
|
|
Equity investments
|
765,178
|
–
|
–
|
765,178
|
|
---------------
|
---------------
|
---------------
|
---------------
|
Total
|
765,178
|
–
|
–
|
765,178
|
|
=========
|
=========
|
=========
|
=========
|
There were no transfers between levels for financial assets during
the period recorded at fair value as at 31
August 2024, 31 August 2023
and 29 February 2024. The Company did
not hold any Level 3 securities throughout the six month period or
as at 31 August 2024 (31 August 2023: none; 29
February 2024: none).
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.
14. Transactions with the Investment Manager and
AIFM
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 on page
49 of the Directors’ Report in the Company’s Annual Report and
Financial Statements for the year ended 29
February 2024.
The investment management fee payable for the six months ended
31 August 2024 amounted to £2,460,000
(six months ended 31 August 2023:
£2,256,000; year ended 29 February
2024: £4,437,000). At the period end, £3,569,000 was
outstanding in respect of the management fee (31 August 2023: £2,256,000; 29 February 2024: £3,319,000).
In addition to the above services, BIM
(UK) has provided the Company with marketing services. The
total fees paid or payable for these services for the six months
ended 31 August 2024 amounted to
£136,000 including VAT (six months ended 31
August 2023: £59,000; year ended 29
February 2024: £174,000). At the period end, £273,000 was
outstanding in respect of the marketing fees (31 August 2023: £196,000; 29 February 2024: £137,000).
During the period, the Manager pays the amounts due to the
Directors. These fees are then reimbursed by the Company for the
amounts paid on its behalf. As of 31 August
2024, an amount of £232,000 (31
August 2023: £196,000; 29 February
2024: £210,000) was payable to the Manager in respect of
Directors’ fees.
The Company had an investment in the BlackRock Institutional Cash
Series plc – Sterling Liquid Environmentally Aware Fund of £nil as
at 31 August 2024 (31 August 2023: £nil; 29
February 2024: £28,000).
The ultimate holding company of the Manager and the Investment
Manager is BlackRock, Inc., a company incorporated in Delaware, USA.
15. Related party disclosure
Directors’ emoluments
As at 31 August 2024, the Board
consisted of six 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 £50,000, the Audit Committee Chairman
receives an annual fee of £38,000, the Senior Independent Director
receives a fee of £35,000 and each of the other Directors receives
an annual fee of £33,000.
As at 31 August 2024, an amount of
£19,000 (31 August 2023: £15,000;
29 February 2024: £17,000) was
outstanding in respect of Directors’ fees.
At the period end members of the Board held ordinary shares in the
Company as set out below:
|
As at
31 August
2024
Ordinary
shares
|
As at
31 August
2023
Ordinary
shares
|
As at
29 February
2024
Ordinary
shares
|
|
|
|
|
Ronald Gould (Chairman)
|
3,544
|
3,544
|
3,544
|
Susan Platts-Martin
|
2,800
|
2,800
|
2,800
|
Mark Little
|
491
|
491
|
491
|
James Barnes
|
2,500
|
2,500
|
2,500
|
Helen Sinclair
|
988
|
988
|
988
|
Dunke Afe1
|
–
|
–
|
–
|
1 Ms
Afe was appointed 1 January
2024.
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 August 2024
|
5.92
|
n/a
|
n/a
|
|
---------------
|
---------------
|
---------------
|
As at 31 August 2023
|
9.19
|
n/a
|
n/a
|
|
---------------
|
---------------
|
---------------
|
As at 29 February 2024
|
9.70
|
n/a
|
n/a
|
|
=========
|
=========
|
=========
|
16. Contingent liabilities
There were no contingent liabilities at 31
August 2024, 29 February 2024
or 31 August 2023.
17. 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 August 2024 and
31 August 2023 has not been audited,
or reviewed, by the Company’s auditors.
The information for the year ended 29
February 2024 has been extracted from the latest published
audited financial statements, which have been filed with the
Registrar of Companies. The report of the auditor in those
financial statements contained no qualification or statement under
Sections 498(2) or (3) of the Companies Act 2006.
18. Annual results
The Board expects to announce the annual results for the year
ending 28 February 2025 in early
May 2025.
Copies of the results announcement can be obtained from the
Secretary on 020 7743 3000 or at
cosec@blackrock.com.
The Annual Report should be available by the beginning of
May 2025 with the Annual General
Meeting being held in June
2025.
The Annual Report and Financial Statements will also be available
on the BlackRock Investment Management website at
http://www.blackrock.com/uk/brsc.
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:
Sarah Beynsberger, Director, Closed End Funds, BlackRock Investment
Management (UK) Limited
Tel: 020 7743 3000
Press Enquiries:
Ed Hooper, Lansons
Communications
Tel: 020 7294 3620
E-mail:
BlackRockInvestmentTrusts@lansons.com
or
EdH@lansons.com