BlackRock Smaller Companies Trust Plc - Half-year Report
(LEI: 549300MS535KC2WH4082)
Half yearly financial announcement of results in respect of the six months ended
Performance Record
As at As at
31 August 29 February
2024 2024
Net asset value per ordinary share (debt at par 1,634.26 1,450.15
value) (pence)1
Net asset value per ordinary share (debt at 1,684.43 1,502.25
fair value) (pence)1
Ordinary share price (mid-market) (pence)1 1,524.00 1,326.00
Deutsche Numis Smaller Companies plus AIM 17,183.46 15,173.40
(excluding Investment Companies) Index2
--------------- ---------------
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 For the six
months ended months ended
31 August 31 August
2024 2023
Performance (with dividends reinvested)
Net asset value per ordinary share (debt at par 14.6% -7.8%
value)2,4
Net asset value per ordinary share (debt at fair 13.9% -7.3%
value)2,4
Ordinary share price (mid-market)2,4 17.0% -6.3%
Deutsche Numis Smaller Companies plus AIM (excluding 13.2% -6.9%
Investment Companies) Index2,4
========= =========
For the six For the six
months ended months ended
31 August 31 August Change %
2024 2023
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
Dear Shareholder
I am pleased to present to shareholders the half yearly financial report for the six months ended
Performance
Investor sentiment and risk appetite, appear to have improved during the six month period ended
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
6 Months 1 Year 3 Years 5 Years 10 Years
change change change change change
Performance to 31 August 2024 % % % %
%
Net asset value per share (with 13.9 18.5 -20.1 28.6 123.9
dividends reinvested)1,2
Share price (with dividends 17.0 23.9 -23.0 22.5 137.7
reinvested)1
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
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
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
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
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
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
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
Outlook
Since the period end, and up until the close of business on
The smaller company landscape in the
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
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
Chairman
Investment Manager’s Report for the six months ended
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
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
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
Transaction Activity
The
The new
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
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
Twenty Largest Investments as at
Market % of
value total
Company Business activity £’000 portfolio
IntegraFin Investment platform for 22,312 2.6
financial advisers
Supply of flexible
Workspace Group workspace to businesses 22,081 2.6
in London
Production of
Hill & Smith infrastructure products 21,671 2.5
and supply of
galvanizing services
Provider of
Gamma Communications communication services 19,861 2.3
to UK businesses
Breedon UK construction 19,727 2.3
materials
Advanced technology
products and services
Chemring Group for the aerospace, 19,054 2.2
defence and security
markets
Bloomsbury Publishing Publisher of fiction and 17,652 2.1
non-fiction
Provider of
Tatton Asset Management discretionary fund 16,620 2.0
management services to
financial advisors
Baltic Classifieds Operator of online
Group classified businesses in 15,790 1.9
the Baltics
Leading independent
XPS Pensions pensions consultancy and 14,669 1.7
administration firm
4imprint Group Promotional merchandise 14,306 1.6
in the US
British property
Great Portland Estates development and 13,366 1.6
investment company
GlobalData Data analytics and 12,866 1.5
consulting company
Boku Digital payments company 12,838 1.5
Designer and
Oxford Instruments manufacturer of tools 12,622 1.5
and systems for industry
and scientific research
TT Electronics Global manufacturer of 12,377 1.5
electronic components
A business advisory firm
providing services in
FRP Advisory corporate restructuring, 12,347 1.5
insolvency, debt
advisory, and financial
solutions to businesses
Manufacture of clay
Ibstock bricks and concrete 11,898 1.4
products
Johnson Service Group Provider of textile 11,818 1.4
services
UK-based low-cost house
MJ Gleeson builder and strategic 11,519 1.4
land promoter
--------------- ---------------
Twenty largest 315,394 37.1
investments
--------------- ---------------
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
% of share capital held
Security
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
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
Benchmark
Company (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
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
Related party disclosure and transactions with the AIFM and Investment Manager
Directors’ Responsibility Statement
The Disclosure Guidance and Transparency Rules (DTR) of the
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
· 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
FOR AND ON BEHALF OF THE BOARD
Income Statement for the six months ended
Six months ended Six months ended Year ended
31 August 2024 31 August 2023 29 February 2024
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Notes £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Gains/
(losses) on
investments
held at – 88,199 88,199 – (69,846) (69,846) – (48,408) (48,408)
fair value
through
profit or
loss
Losses on
foreign – (7) (7) – – – – (9) (9)
exchange
Income from
investments
held at
fair value 3 14,494 798 15,292 13,385 782 14,167 21,884 782 22,666
through
profit or
loss
Other 3 – – – 155 – 155 379 – 379
income
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total
income/ 14,494 88,990 103,484 13,540 (69,064) (55,524) 22,263 (47,635) (25,372)
(loss)
========= ========= ========= ========= ========= ========= ========= ========= =========
Expenses
Investment
management 4 (615) (1,845) (2,460) (564) (1,692) (2,256) (1,109) (3,328) (4,437)
fee
Other
operating 5 (510) (14) (524) (439) (14) (453) (869) (21) (890)
expenses
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total
operating (1,125) (1,859) (2,984) (1,003) (1,706) (2,709) (1,978) (3,349) (5,327)
expenses
========= ========= ========= ========= ========= ========= ========= ========= =========
Net profit/
(loss) on
ordinary
activities 13,369 87,131 100,500 12,537 (70,770) (58,233) 20,285 (50,984) (30,699)
before
finance
costs and
taxation
Finance 6 (332) (900) (1,232) (237) (708) (945) (471) (1,408) (1,879)
costs
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net profit/
(loss) on
ordinary 13,037 86,231 99,268 12,300 (71,478) (59,178) 19,814 (52,392) (32,578)
activities
before
taxation
========= ========= ========= ========= ========= ========= ========= ========= =========
Taxation (55) – (55) (88) – (88) (123) – (123)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net profit/
(loss) on
ordinary 12,982 86,231 99,213 12,212 (71,478) (59,266) 19,691 (52,392) (32,701)
activities
after
taxation
========= ========= ========= ========= ========= ========= ========= ========= =========
Earnings/
(loss) per
ordinary
share 8 27.54 182.93 210.47 25.11 (146.99) (121.88) 40.70 (108.29) (67.59)
(pence ) –
basic and
diluted
========= ========= ========= ========= ========= ========= ========= ========= =========
The total columns of this statement represent the Company’s profit and loss account. The supplementary revenue and capital accounts are both prepared under guidance published by the
The net profit/(loss) for the period disclosed above represents the Company’s total comprehensive income/(loss).
Statement of Changes in Equity for the six months ended
Called Share Capital
up share premium redemption Capital Revenue
capital account reserve reserves reserve Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
For the six
months ended
31 August 2024
(unaudited)
At 29 February 12,498 51,980 1,982 601,098 18,648 686,206
2024
Total
comprehensive
income:
Net profit for – – – 86,231 12,982 99,213
the period
Transactions
with owners,
recorded
directly to
equity:
Ordinary
shares – – – (2,940) – (2,940)
repurchased
into treasury
Share buyback – – – (28) – (28)
costs
Dividends 7 – – – – (12,717) (12,717)
paid1
--------------- --------------- --------------- --------------- --------------- ---------------
At 31 August 12,498 51,980 1,982 684,361 18,913 769,734
2024
========= ========= ========= ========= ========= =========
For the six
months ended
31 August 2023
(unaudited)
At 28 February 12,498 51,980 1,982 673,479 18,590 758,529
2023
Total
comprehensive
(loss)/income:
Net
(loss)/profit – – – (71,478) 12,212 (59,266)
for the period
Transactions
with owners,
recorded
directly to
equity:
Ordinary
shares – – – (3,272) – (3,272)
repurchased
into treasury
Share buyback – – – (23) – (23)
costs
Dividends 7 – – – – (12,395) (12,395)
paid2
--------------- --------------- --------------- --------------- --------------- ---------------
At 31 August 12,498 51,980 1,982 598,706 18,407 683,573
2023
========= ========= ========= ========= ========= =========
For the year
ended 29
February 2024
(audited)
At 28 February 12,498 51,980 1,982 673,479 18,590 758,529
2023
Total
comprehensive
(loss)/income:
Net
(loss)/profit – – – (52,392) 19,691 (32,701)
for the year
Transactions
with owners,
recorded
directly to
equity:
Ordinary
shares – – – (19,859) – (19,859)
repurchased
into treasury
Share buyback – – – (130) – (130)
costs
Dividends 7 – – – – (19,633) (19,633)
paid3
--------------- --------------- --------------- --------------- --------------- ---------------
At 29 February 12,498 51,980 1,982 601,098 18,648 686,206
2024
========= ========= ========= ========= ========= =========
1
Final dividend paid in respect of the year ended
2
Final dividend paid in respect of the year ended
3
Interim dividend paid in respect of the year ended
For information on the Company’s distributable reserves, please refer to note 12.
Balance Sheet as at
31 August 31 August 29 February
2024 2023 2024
(unaudited) (unaudited) (audited)
Notes £’000 £’000 £’000
Non current assets
Investments held at fair
value through profit or 13 851,197 753,759 765,178
loss
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 839,263 753,092 755,721
liabilities
========= ========= =========
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 8 1,634.26 1,407.04 1,450.15
par value) (pence)
========= ========= =========
Net asset value per
ordinary share (debt at 8 1,684.43 1,460.02 1,502.25
fair value) (pence)
========= ========= =========
Statement of Cash Flows for the six months ended
Six months Six months Year
ended ended ended
31 August 31 August 29 February
2024 2023 2024
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Operating activities
Net profit/(loss) on ordinary 99,268 (59,178) (32,578)
activities before taxation
Add back finance costs 1,232 945 1,879
(Gains)/losses on investments
held at fair value through (88,199) 69,846 48,408
profit or loss
Net movement in foreign exchange 7 – 9
Sale of investments held at fair 211,755 149,604 322,366
value through profit or loss
Purchase of investments held at
fair value through profit or (207,606) (163,539) (327,895)
loss
Net amount for capital special (798) (782) (782)
dividends received
(Increase)/decrease in debtors (1,273) (771) 7
Increase/(decrease) in other 409 (2,315) (1,280)
creditors
Taxation on investment income (55) (88) (123)
--------------- --------------- ---------------
Net cash generated from/(used 14,740 (6,278) 10,011
in) operating activities
========= ========= =========
Financing activities
Ordinary shares repurchased into (3,006) (3,295) (19,792)
treasury
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 (16,964) (16,614) (41,409)
activities
========= ========= =========
Decrease in cash and cash (2,224) (22,892) (31,398)
equivalents
Cash and cash equivalents at (7,871) 23,536 23,536
beginning of the period/year
Effect of foreign exchange rate (7) – (9)
changes
--------------- --------------- ---------------
Cash and cash equivalents at end (10,102) 644 (7,871)
of period/year
========= ========= =========
Comprised of:
Cash at bank – 644 –
Cash Fund1 – – 28
Bank overdraft (10,102) – (7,899)
--------------- --------------- ---------------
(10,102) 644 (7,871)
========= ========= =========
1
Notes to the Financial Statements for the six months ended
1. Principal activity
The principal activity of the Company is that of an investment trust company within the meaning of Section 1158 of the Corporation Tax Act 2010.
2. 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
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
3. Income
Six months Six months Year
ended ended ended
31 August 31 August 29 February
2024 2023 2024
(unaudited) (unaudited) (audited)
£’000 £’000 £’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
Special dividends of £798,000 have been recognised in capital during the period ended
Dividends and interest received in cash during the period amounted to £13,289,000 and £nil (six months ended
4. Investment management fee
Six months ended Six months ended Year ended
31 August 2024 31 August 2023 29 February 2024
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Investment
management 615 1,845 2,460 564 1,692 2,256 1,109 3,328 4,437
fee
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
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 Six months Year
ended ended ended
31 August 31 August 29 February
2024 2023 2024
(unaudited) (unaudited) (audited)
£’000 £’000 £’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 – (7) (1)
back1
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
2
For the six month period ended
The direct transaction costs incurred on the acquisition of investments amounted to £887,000 for the six months ended
6. Finance costs
Six months ended Six months ended Year ended
31 August 2024 31 August 2023 29 February 2024
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Interest
on 2.74% 87 260 347 87 260 347 173 518 691
loan note
2037
Interest
on 2.41% 60 182 242 60 182 242 121 362 483
loan note
2044
Interest
on 2.47% 76 228 304 76 228 304 152 456 608
loan note
2046
Interest
on bank 105 220 325 10 28 38 17 52 69
overdraft
2.74%
Amortised
loan note 2 5 7 2 5 7 4 10 14
issue
expenses
2.41%
Amortised
loan note 1 2 3 1 2 3 2 5 7
issue
expenses
2.47%
Amortised
loan note 1 3 4 1 3 4 2 5 7
issue
expenses
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
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 (
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 Six months Year
ended ended ended
31 August 31 August 29 February
2024 2023 2024
(unaudited) (unaudited) (audited)
Revenue return attributable to 12,982 12,212 19,691
ordinary shareholders (£’000)
Capital profit/(loss)
attributable to ordinary 86,231 (71,478) (52,392)
shareholders (£’000)
--------------- --------------- ---------------
Total profit/(loss) attributable 99,213 (59,266) (32,701)
to ordinary shareholders (£’000)
========= ========= =========
Total shareholders’ funds 769,734 683,573 686,206
(£’000)
========= ========= =========
The weighted average number of
ordinary shares in issue during
the period on which the earnings 47,138,725 48,625,566 48,381,588
per ordinary share was
calculated was:
The actual number of ordinary
shares in issue at the end of
each period on which the 47,099,792 48,582,292 47,319,792
undiluted net asset value was
calculated was:
Earnings per share
Revenue earnings per share 27.54 25.11 40.70
(pence) – basic and diluted
Capital earnings/(loss) per
share (pence) – basic and 182.93 (146.99) (108.29)
diluted
--------------- --------------- ---------------
Total earnings/(loss) per share 210.47 (121.88) (67.59)
(pence ) – basic and diluted
========= ========= =========
As at As at As at
31 August 31 August 29 February
2024 2023
(unaudited) (unaudited) 2024
(audited)
Net asset value per ordinary share (debt at 1,634.26 1,407.04 1,450.15
par value) (pence)
Net asset value per ordinary share (debt at 1,684.43 1,460.02 1,502.25
fair value) (pence)
Ordinary share price (pence) 1,524.00 1,268.00 1,326.00
========= ========= =========
9. Borrowings
Six months Six months Year
ended ended ended
31 August 31 August 29 February
2024 2023 2024
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Amounts falling due after more
than one year
2.74% loan note 2037 25,000 25,000 25,000
Unamortised loan note issue (166) (189) (182)
expenses
--------------- --------------- ---------------
24,834 24,811 24,818
========= ========= =========
2.41% loan note 2044 20,000 20,000 20,000
Unamortised loan note issue (130) (136) (133)
expenses
--------------- --------------- ---------------
19,870 19,864 19,867
========= ========= =========
2.47% loan note 2046 25,000 25,000 25,000
Unamortised loan note issue (175) (156) (170)
expenses
--------------- --------------- ---------------
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
The £25 million loan note was issued on
The £20 million loan note was issued on
The second £25 million loan note was issued on
The Company had in place a £35 million three year multi-currency revolving loan facility with
The Company also has available an uncommitted overdraft facility of £60 million with
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 Six months
ended ended Year ended
31 August 31 August 29 February
2024 2023 2024
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Debt arising from financing
activities:
Debt arising from financing
activities at beginning of the 69,515 69,504 69,504
period/year
--------------- --------------- ---------------
Cash flows:
Non-cash flows:
Amortisation of debenture and 14 15 11
loan note issue expenses
--------------- --------------- ---------------
Debt arising from financing
activities at end of the 69,529 69,519 69,515
period/year
========= ========= =========
11. Called up share capital
Ordinary shares Treasury Total Nominal
shares shares Value
in issue (number) (number) £’000
(number)
Allotted, called
up and fully
paid share
capital
comprised:
Ordinary shares
of 25p each
At 29 February 47,319,792 2,673,731 49,993,523 12,497
2024
Ordinary shares
bought back into (220,000) 220,000 – –
treasury
--------------- --------------- --------------- ---------------
At 31 August 47,099,792 2,893,731 49,993,523 12,497
2024
========= ========= ========= =========
During the period ended
Since
The ordinary shares (excluding any shares held in treasury) carry the right to receive any dividends and have one voting right per ordinary share. There are no restrictions on the voting rights of the ordinary shares or on the transfer of ordinary shares.
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 (
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
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
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Equity 851,197 – – 851,197
investments
--------------- --------------- --------------- ---------------
Total 851,197 – – 851,197
========= ========= ========= =========
Financial assets at fair value through profit or loss at
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Equity 753,759 – – 753,759
investments
--------------- --------------- --------------- ---------------
Total 753,759 – – 753,759
========= ========= ========= =========
Financial assets at fair value through profit or loss at
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Equity 765,178 – – 765,178
investments
--------------- --------------- --------------- ---------------
Total 765,178 – – 765,178
========= ========= ========= =========
There were no transfers between levels for financial assets during the period recorded at fair value as at
For exchange listed equity investments, the quoted price is the bid price. Substantially, all investments are valued based on unadjusted quoted market prices. Where such quoted prices are readily available in an active market, such prices are not required to be assessed or adjusted for any 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
The investment management fee payable for the six months ended
In addition to the above services, BIM (
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
The Company had an investment in the
The ultimate holding company of the Manager and the Investment Manager is BlackRock, Inc., a company incorporated in
15. Related party disclosure
Directors’ emoluments
As at
As at
At the period end members of the Board held ordinary shares in the Company as set out below:
As at As at As at
31 August 31 August 29 February
2024 2023 2024
Ordinary Ordinary Ordinary
shares shares 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
Significant holdings
The following investors are:
a.
funds managed by the
b.
investors (other than those listed in (a) above) who held more than 20% of the voting shares in issue in the Company and are, as a result, considered to be related parties to the Company (
Total % of shares
held by Number of Significant
Significant Investors
Total % of shares Investors who are who are not
held by not affiliates of
Related BlackRock affiliates of BlackRock
Funds BlackRock Group or Group or BlackRock,
Inc.
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 9.70 n/a n/a
2024
========= ========= =========
16. Contingent liabilities
There were no contingent liabilities at
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
The information for the year ended
18. Annual results
The Board expects to announce the annual results for the year ending
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
The Annual Report and Financial Statements will also be available on the
For further information, please contact:
Sarah Beynsberger, Director, Closed End Funds,
Tel: 020 7743 3000
Press Enquiries:
Tel: 020 7294 3620
E-mail:
BlackRockInvestmentTrusts@lansons.com
or
EdH@lansons.com
