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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Blackrock Greater Europe Investment Trust Plc | LSE:BRGE | London | Ordinary Share | GB00B01RDH75 | ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 4.00 | 0.66% | 614.00 | 611.00 | 613.00 | 614.00 | 609.00 | 610.00 | 113,568 | 16:35:18 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Mgmt Invt Offices, Open-end | 99.68M | 91.59M | 0.9076 | 6.75 | 618.58M |
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TIDMBRGE
BLACKROCK GREATER EUROPE INVESTMENT TRUST PLC
LEI: 5493003R8FJ6I76ZUW55
Annual Report and Financial Statements 31 August 2020
PERFORMANCE RECORD
As at As at
31 31
August August
2020 2019
Net assets (GBP'000)1 387,861 338,442
Net asset value per ordinary share (pence) 459.97 399.52
Ordinary share price (mid-market) (pence) 447.00 385.00
Discount to cum income net asset value2 2.8% 3.6%
FTSE World Europe ex UK Index 1467.97 1457.46
======== ========
For the For the
year year
ended ended
31 31
August August
2020 2019
Performance (with dividends reinvested)
Net asset value per share2 16.9% 6.3%
Ordinary share price2 18.0% 7.9%
FTSE World Europe ex UK Index 0.7% 4.8%
======== ========
For the year For the year
ended ended
31 August 31 August Change
2020 2019 %
Revenue
Net profit after taxation (GBP'000) 5,776 4,160 +38.8
Revenue profit per ordinary share (pence) 6.85 4.87 +40.7
Dividends (pence)
Interim dividend 1.75 1.75 0.0
Final dividend 4.40 4.10 +7.3
-------------- -------------- --------------
Total dividends paid/payable 6.15 5.85 +5.1
======== ======== ========
Source: BlackRock.
1 The change in net assets reflects the buyback of shares into treasury,
market movements and dividends paid.
2 Alternative Performance Measures, see Glossary on pages 104 to 106 of the
Annual Report and Financial Statements.
CHAIRMAN'S STATEMENT
COVID-19
The past few months have been quite extraordinary as COVID-19 has affected
markets around the world and how we as a Board have adjusted our mode of
operation, just as people in all walks of life have been forced to do. I refer
below to the challenges posed by the current pandemic and to the arrangements
for this year's Annual General Meeting. Since March your Board has met
regularly but all meetings have been held by video conference. It is very
important in these difficult times that the Board remains closely in touch with
your Manager and this we have done. Your Portfolio Managers should be commended
on the truly excellent performance that has been delivered in such difficult
circumstances.
PERFORMANCE OVERVIEW
It is pleasing to report that during the year to 31 August 2020 the Company's
net asset value per share (NAV) returned 16.9%, outperforming its reference
index, the FTSE World Europe ex UK Index, which returned 0.7%. The Company's
share price returned 18.0% over the same period. (All percentages calculated in
sterling terms with dividends reinvested.) This is a remarkable achievement
given that for part of the financial year our Portfolio Managers have had to
navigate unprecedented global economic and social upheaval following the
outbreak of the COVID-19 pandemic.
Despite a promising start to the year, with all-time highs in global equities
in February 2020, the COVID-19 pandemic, compounded by a slump in the oil
price, sent stock markets plummeting. The pandemic led to countries adopting
varying degrees of social distancing, self-quarantine and lockdown measures
which severely curtailed economic activity in most countries. However, the
unprecedented policy response, with significant fiscal and monetary stimulus,
has played an important part in markets rebounding from their March lows.
Central banks have committed to keeping rates low, enabling fiscal expansion,
and economies are slowly restarting, albeit at different paces.
Since the financial year end and up to close of business on 21 October 2020,
the Company's NAV has increased by 6.1% compared with a rise in the FTSE World
Europe ex UK Index of 0.3% over the same period.
REVENUE EARNINGS AND DIVIDS
The Company's revenue return per share for the year ended 31 August 2020
amounted to 6.85p per share, which compares with 4.87p per share for the
previous year, an increase of 40.7%. A fall in dividend income, reflecting the
challenges faced by many portfolio companies struggling to pay dividends during
the COVID-19 crisis, has been offset by the positive outcome on a tax ruling in
relation to overseas dividends, which is explained below.
In April the Board declared an interim dividend of 1.75p per share (2019:
1.75p). The Board is proposing the payment of a final dividend of 4.40p per
share for the year (2019: 4.10p). This, together with the interim dividend,
makes a total dividend for the year of 6.15p per share (2019: 5.85p), an
increase of 5.1%.
Subject to shareholder approval, the dividend will be paid on 9 December 2020
to shareholders on the Company's register on 30 October 2020, the ex-dividend
date being 29 October 2020.
PRUDENTIAL ASSURANCE COMPANY LIMITED VS HMRC
In 2003 The Prudential Assurance Company Limited filed a case against HM
Revenue & Customs (HMRC) on the treatment of foreign sourced dividends. The
litigation concerned the tax treatment of UK-resident companies (including
investment funds) that received dividends from portfolio shareholdings in
non-UK companies. It had previously been settled that the UK dividend tax
regime that applied to portfolio dividends prior to 2009 was contrary to EU
law, as UK dividends were not subject to tax whereas non-UK dividends were
taxable.
On 25 July 2018 the UK Supreme Court handed down its judgement in the
Prudential case, ruling (inter alia) that non-UK dividends remained taxable,
but that credit should be given for the underlying foreign tax at the foreign
nominal corporate income tax rate of the source country. In June 2020 the
Company received correspondence from HMRC accepting that the Company was
entitled to claim double tax relief in relation to underlying tax suffered on
dividends received from non-UK companies in a number of past accounting
periods. As the Board was advised that the receipt of a repayment in respect of
these amounts was sufficiently probable to merit recognition in the Company's
NAV, it was announced on 11 June 2020 that an asset had been reflected in the
Company's NAV in respect of these claims. The cumulative impact of the FII GLO
reclaim (reflecting both the expected tax refund and release of a related
provision in the accounts), including interest received, is GBP2,713,683. As the
original tax expense was debited to the revenue column of the income statement,
the benefit of this recovery has been credited to the revenue column of the
income statement and has resulted in an uplift of 3.22p per share to the
Company's revenue earnings per share for the year ended 31 August 2020.
Subsequently, on 29 June 2020, the Company received the corporation tax refund
including interest. More information is given in note 7 on page 81 of the
Annual Report and Financial Statements.
DISCOUNT CONTROL
The Board recognises the importance to investors that the market price of the
Company's shares should not trade at a significant discount to the underlying
NAV. Accordingly, the Board monitors the Company's discount to NAV and will
look to buyback shares and/or operate six monthly tender offers in normal
market conditions if it is deemed to be in the interests of shareholders as a
whole.
As reported in the Half Yearly Financial Report, the Directors exercised their
discretion not to operate the half yearly tender offers in November 2019 and
May 2020, and it was announced on 15 September 2020 that the Board had decided
not to implement a semi-annual tender offer in November 2020. Over the
six-month period to 31 August 2020, the average discount to NAV (cum income)
was 4.6%. The Board therefore concluded that it was not in the interests of
shareholders as a whole to implement the latest semi-annual tender offer.
During the year the Company bought back 390,000 ordinary shares in the market
at a total cost of GBP1,506,000. As the COVID-19 pandemic took hold and market
conditions deteriorated during March, the Company's share price fell sharply
and the discount briefly widened to 13.2% before rapidly narrowing again. No
further shares have been purchased since the year end, up to and including the
date of this report. All repurchased shares have been placed in treasury.
Resolutions to renew the Company's semi-annual tender offers and share buyback
authorities will be put to shareholders at the forthcoming Annual General Meeting. OUTLOOK The impact of COVID-19 is unpredictable and we are now contemplating an economic downturn of unknown scale and duration. The market falls in March and April were indiscriminate, only to be followed by a dramatic rally, and we anticipate continued volatility for European equities and the broader market. The EUR750 billion European Recovery Fund agreed by EU leaders in July is a step towards a more resilient European Union and an exceptional response to temporary but extreme circumstances. The European Recovery Fund should be supportive of a more robust economy and monetary union and is a significant step in the right direction. The Board has maintained a regular dialogue with our Portfolio Managers to monitor the resilience of the Company's portfolio in these extraordinary times. The investment team is very experienced and has a wide range of resources dedicated to the European universe. Our Portfolio Managers will continue to focus on well-capitalised companies with strong balance sheets and quality growth investment opportunities which have served us well during the year under review. ANNUAL GENERAL MEETING (AGM) The AGM of the Company will be held at the offices of BlackRock at 12 Throgmorton Avenue, London EC2N 2DL on Tuesday, 1 December 2020 at 12 noon. Shareholders will not be able to attend the AGM whilst current restrictions in relation to the COVID-19 pandemic are in force and they are therefore advised to submit their votes by proxy. If the current restrictions remain in force, the only attendees who will be permitted entry to the meeting will be those who will need to be present to form the quorum to allow the business to be conducted. Shareholders are encouraged to check the Company's website at www.blackrock.com/uk/brge for updates to the AGM arrangements as changes may well be required to comply with new guidance and/or Government measures. ERIC SANDERSON Chairman 22 October 2020 INVESTMENT MANAGER'S REPORT OVERVIEW The Company enjoyed positive performance over the period with a share price increase of 18.0% and underlying NAV increase of 16.9% in the year ended 31 August 2020. By way of comparison, the FTSE World Europe ex UK Index gained 0.7% over the same period. All performance returns are in sterling terms with dividends reinvested. The year ended 31 August 2020 saw unprecedented levels of uncertainty, dominated by a trade war between the world's two largest economies, the US and China, as well as a global pandemic which led to a shutdown of many economies across the world. While news flow around the US-China trade war quietened down with the signing of a Phase I trade agreement between both countries in January, renewed optimism was sadly met by the COVID-19 crisis which posed a significant challenge for global risk assets. As we now know, the nature and scale of the disruption has been unprecedented. That being said, from relatively early in the crisis our analysis led us to feel optimistic about the recovery potential of the global economy given the absence of the underlying economic imbalances that typically accompany longer lasting recessions and bear markets. In our view the 2020 downturn was politically induced, driven by the mostly popular decisions by governments to prioritise public health over the economy. The scale of the fiscal response also reassured us that economies would not suffer large scale or permanent demand destruction outside of a few specific industries. Estimates from McKinsey suggest that European governments have allocated circa US$4 trillion to mitigate the impacts of the economic shutdowns and, as a percentage of Gross Domestic Product, Germany, France and the UK are spending roughly 10 times more than they did during the 2008 global financial crisis (Source: McKinsey & Company, based on IMF data, June 2020). PORTFOLIO Despite this extraordinary level of fiscal and monetary support it is also clear that this volatile financial market episode posed a severe test to any investment philosophy. For us it required a heightened focus on maintaining our long-term approach to investing, thinking like business owners and long-term stewards of our clients' capital. While there was an atmosphere of panic amongst some market commentators, we were able to lean on our investment process: focusing on well-run businesses with a clearly articulated strategy, high returns on capital, strong free cash-flow generation and options to deploy capital into growth projects at attractive returns. Whilst this process leads us to businesses which are fundamentally durable and resilient, we had to endure a certain degree of loss tolerance in the short term: maintaining positions in many of our world leading more cyclical businesses and avoiding the temptation of reacting to short-term market gyrations by positioning the portfolio more defensively. Ultimately, we believe this approach creates the greatest amount of value for our clients over the long term, which is why we made few changes to the general composition of the portfolio during the period aside from opportunistically adding to some of our highest conviction ideas at compelling valuations. Large market sell-offs like the one experienced in March also affords patient investors opportunities to initiate positions in world-class businesses such as Atlas Copco, which we see as one of the most attractive industrial businesses in our investment universe. The company sells mission critical components such as compressors used in petrochemical and processing plants and vacuum pumps used in the production of semi-conductor chips and equipment. Its expanding base of installed equipment supports the company's aftermarket and services business which gives a high level of growing recurring revenues. Overall, the company generates high returns on capital, is extremely cash generative and has a net cash balance sheet, which means it is a perfect fit for this portfolio. Reflecting upon how our portfolio companies performed during the last twelve months, we would categorise our holdings in three broad clusters: those most directly impacted by lockdowns and travel restrictions; those which proved their resilience through the skilful stewardship of their management teams; and finally those which have become direct beneficiaries of the pandemic. The first category includes some of the Company's largest detractors over the past year. These include aerospace holding Safran and travel technology company Amadeus IT Group, which both suffered due to widespread travel bans. We thoroughly examined these companies' balance sheets and cashflows and engaged extensively with their management teams. Even with the postponement of engine deliveries and a reduction in scope within the maintenance business we believed that Safran had sufficient balance sheet headroom and cost levers to pull to get through this difficult period and beyond, particularly since the heavy investment phase in their new LEAP engine is behind them. Management have also proven extraordinarily proactive in reducing costs. In the long term we expect air travel to remain a growing industry supplied by an oligopoly of engine-makers, which should allow for durable value creation when traffic patterns start to normalise. Amadeus IT Group, which provides IT infrastructure solutions for airlines, travel agents and hotels, was severely impacted by the sudden stop in economic activity. The company took swift action to right size its cost base and to secure a strong balance sheet position. Given its technology leadership, the company has taken market share in this downturn, winning new airlines as well as expanding the product offering to existing clients. Its unique capabilities in air traffic disruption management and ticket changing have proven particularly popular in this context. Overall, we consider both Safran and Amadeus IT Group as good examples of businesses that should come out of this crisis with stronger market positions by capitalising on the weaker competitive position of their main peers. Two of our emerging European holdings, Bank Pekao and Alpha Bank, saw share prices directly impacted by the crisis as yield curves flattened and investors priced in a credit loss cycle equivalent in scale to the global financial crisis in 2008/09. In our mind, this thesis will likely prove too pessimistic given government support schemes for small and medium sized businesses across Europe. Further, regulation following 2008/09 ensured that banks now have stronger capital positions to survive these challenging market conditions. These detractors to portfolio returns were more than offset by companies which were able to prove their resilience, many as a result of strong execution by company management teams. Evaluating management capabilities has long been a core pillar of our stock selection process. While one can assess management quality in various ways, we would suggest that scrutinising an executive's ability to operate effectively during the largest economic contraction since World War II proves a formidable test in itself. In our mind, DSV Panalpina, one of the global leaders in freight forwarding and logistics, constitutes a prime example of strong operational execution. We believe DSV Panalpina has one of the best management teams in any industry across Europe, with an exceptional track record in creating value by successfully deploying capital through acquisitions. This was evidenced further in a recent meeting with management which revealed that newly integrated Panalpina increased volumes in DSV's German operations by 50% with no net additions in costs. Overall, DSV Panalpina managed to increase operating profits during the second quarter by 63% versus the same period last year by over-delivering on deal related cost synergies and via capturing higher air
yields from freight planes that came with their Swiss acquiree. These results not only significantly surpassed market expectations but they are all the more impressive when held against the backdrop of one of the worst periods for global trade volumes we are likely to experience in our careers. Royal Unibrew, a company which operates in very different end markets to DSV Panalpina, also benefited from its management team's excellent stewardship during the period. The brewing and beverage company's decentralised organisational structure brings them closer to their end customers and allows local management to identify trends for products, brands, packaging and consumption and to react quickly to newly emerging opportunities. This is crucial in an industry shaped by changing consumer preferences and we believe played a significant role in Royal Unibrew being able to reinstate full year 2020 guidance in June 2020, the first beverage company to do so. A relentless focus on meeting and exceeding customer requirements has also benefited Sika, one of the global leaders in the development and production of specialty chemicals used in large construction and infrastructure projects. The company's focus on research and development (R&D) and product innovation make them an indispensable partner to their customers, which in turn allows for a healthy degree of pricing power, crucial in an environment where many investors expected a sharp contraction in demand for its products. As we have learnt since, global construction spend has been one of the few income streams that has shown great resilience and is considered an end market poised to benefit from future stimulus programmes, a trend which has already started to materialise in Sika's numbers. Not for the first time, ASML was among the Company's top performance contributors for the year. This company dominates its market segment through R& D leadership and unmatched product innovation. ASML is the global leader in cutting edge photolithography systems used in the semiconductor industry. Their Extreme Ultra-Violet machine tools business has amassed a US$10.5 billion order backlog, which means these machines are now sold out until the middle of 2021. At times we like to refer to businesses like ASML as 'order book' companies, as its tools play such an integral part in the technology roadmap of clients like TSMC and Samsung that a decision to delay or cancel an order potentially has multi-year strategic implications. This is why ASML has managed to weather this crisis well and why we continue to see a long runway of growth, benefiting from structural tailwinds such as data centre investments, artificial intelligence and cloud computing. Another beneficiary of this trend towards digitalisation is Netcompany Group, a provider of information technology solutions and consultancy services. Founder run, we believe this is an exceptionally well-managed company with a strong value creating culture. Rather impressively, customer demand during the crisis remained virtually unchanged with the company maintaining its target of 18-20% organic sales growth for 2020. For us this was the result of many customers continuing to prioritise digitalisation investments and the company executing strongly by servicing clients from remote locations. Netcompany Group benefited further from its diverse client base across the financial, telecommunication, retail, energy and industrial sectors, as well as governments and municipalities. Overall, we see the group's end markets offering attractive growth opportunities for many years to come. The final grouping of companies that warrant comment are those which directly benefited from the pandemic. Our long-standing position in contract drug manufacturer Lonza Group was amongst the top performers over the past year. Its unrivalled market position was highlighted yet again during a recent conversation with the chairman where we learnt that practically all of Lonza Group's global manufacturing capacity is sold out. This reflects the strong demand it enjoys in the production of biological drugs, as well as in the development of gene therapy and vaccines. The operational performance of the business remains strong, as impressive cost control coupled with the potential disposal of non-core special ingredients assets leaves investors with a highly attractive investment proposition of long duration growth in earnings and cashflows. Within the same sector, a position in in vitro diagnostics company DiaSorin contributed equally strongly as it benefited from the crisis due to its role in developing antibody tests for COVID-19. The Italian company develops and manufactures reagents for in vitro diagnostics and creates products for a variety of tests in fields including infectious disease, hepatitis, endocrinology, therapeutic drug monitoring and autoimmunity. The last few months have helped the group raise its profile among US hospital groups since both speed of development as well as accuracy of its COVID-19 tests compare favourably to its much larger US peers, which in itself bodes well for future opportunities to generate new business in a large and attractive market. For this Company, portfolio construction remains purposefully designed to tap into a diverse range of end markets and income streams, from consumer goods to the construction industry, to trade related companies, and technology capex. Overall, we follow a high conviction approach that seeks to deliver a diversified stream of alpha for our shareholders, which makes it pleasing to see those diverse sources of performance in portfolio returns for the year. OUTLOOK As active investors, we have never believed a positive view on the European economy to be a prerequisite for attractive equity returns in the region. In our mind, the European market remains home to many exceptional businesses that have and will continue to provide compelling investment opportunities regardless of the wider economic outlook. That being said, we find ourselves today feeling more optimistic about the outlook for Europe than we have done in many years. The newly established European Recovery Fund marks a structural change in the outlook for Europe and provides a facility for a cohesive response to all future crises. While the Eurozone does not appear en route towards full fiscal union, it is taking a significant step towards stronger fiscal co-ordination when it matters. In our view, this deal sets a precedent. The EU issues debt in a crisis, which is why we expect some common fiscal response to play a greater role in future crises as well. As far as this EUR750 billion European Recovery Fund is concerned, we expect it to direct spending, focused on the periphery, towards a green and digital transition, which should not only lend support to countries most severely hit by the crisis but it also offers the potential to make the region more competitive in a global context over time. We see interest free grants providing necessary incentives for conducting pro-growth reforms. The overall benefit of such actions should be most acutely felt in smaller countries in Emerging Europe, which is a designated part of the investment universe of this Company. Finally, while a material improvement for the region's economic and political stability and outlook, one should refrain from considering these latest developments as a tide that lifts all boats in European equity markets. Structural challenges are likely to remain in some industries and we believe investors will be best served by staying selective. Consequently, we continue to focus rigorously on taking an active approach to stock selection for this Company by identifying and investing in companies with superior business models, strong management teams and growth prospects that enable them to earn an attractive spread over their cost of capital. We believe these wealth creating businesses are the key to delivering strong shareholder returns over the long term. STEFAN GRIES AND SAM VECHT BLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED 22 October 2020 TEN LARGEST INVESTMENTS 1 + Sika (2019: 5th) Industrial company Market value: GBP24,804,000 Share of investments: 6.0% A speciality chemical company with a leading position in both construction chemicals and in bonding agents for the automotive industry. Sika has proprietary technology within adhesives, which has an increasing array of applications as technology advances. Last year's acquisition of rival Parex allowed Sika to realise cost synergies through optimising its production footprint and through enhanced direct distribution channels. 2 + ASML (2019: 10th) Technology company Market value: GBP24,722,000 Share of investments: 6.0% A Dutch company which specialises in the supply of photolithography systems for the semiconductor industry. The company is at the forefront of technological change and invests in leading research and development to capture the structural growth opportunity supported by growth in mobile devices and microchip components. The high barriers to entry within the industry give ASML a protected position with strong pricing power allowing growth in margins whilst they continue to innovate. The company has strong management who aim to create long-term value for the business whilst returning excess cash to shareholders. 3 = SAP (2019: 3rd) Technology company Market value: GBP23,741,000 Share of investments: 5.8% One of the leading global enterprise software providers. Its S4/Hana software and database solution appears a 'must own' product for a large existing client base in need of enhanced data analytics capabilities. In our view the company is one of Europe's best defensive assets, with an enviable starting position of more than 75% of total worldwide transaction revenue having a touchpoint with an SAP system. Further, customers' transitions to cloud based software improves
the resiliency of the earnings and cash flows and we expect recurring revenue
to amount to 70-75% of group sales by year-end and continue to grow in the next
few years.
4 + Lonza Group (2019: 7th)
Health care company
Market value: GBP21,621,000
Share of investments: 5.3%
A Swiss biotechnology and speciality chemicals group. Lonza Group has
established itself as one of the leading contract-manufacturers of high-end
biological drugs, as well as cell and gene therapy. Overall, we see those end
markets growing at double digit rates well into 2025 and beyond, which leaves
Lonza Group well placed to deliver attractive growth in earnings and cashflows
regardless of the prevailing macro-economic environment.
5 + Kering (2019: 27th)
Consumer services company
Market value: GBP21,256,000
Share of investments: 5.2%
A French luxury group owning brands such as Gucci, Yves Saint Laurent and
Bottega Veneta. We believe Kering is one of the winners in a 'winner takes all'
market given the strength and resilience of its brands. This position is
cemented by its best in class e-commerce offering, which in combination with a
rejuvenated product portfolio, has enabled Kering to capture the imagination of
global millennials. We believe Kering remains an extremely well-positioned
company with a strong balance sheet that offers optionality for both increased
shareholder returns as well as value accretive deals.
6 - Novo Nordisk (2019: 1st)
Health care company
Market value: GBP20,976,000
Share of investments: 5.1%
A Danish multinational pharmaceutical company which is a leader in diabetes
care. We expect growth in earnings and cashflows driven by demand for 'Ozempic'
which treats Diabetes type 2. Overall, we believe Novo Nordisk offers
attractive long-term growth potential at high returns and sector leading cash
flow conversion with any excess in cash being returned to shareholders.
7 - Royal Unibrew (2019: 6th)
Consumer goods company
Market value: GBP20,531,000
Share of investments: 5.0%
A brewing and beverage company based in Denmark. Through a number of well-timed
acquisitions, the group has transformed itself into a multi-beverage company
offering attractive growth in soft drink niches at high returns with
significant potential to export their brands with strong European heritage into
International markets.
8 + DSV Panalpina (2019: n/a)
Industrial company
Market value: GBP18,798,000
Share of investments: 4.6%
A Danish freight forwarding company with a strong acquisitive history. Their
success in making acquisitions has been facilitated by their strong technology
platform which drives operational efficiencies leading to high conversion
margins. In 2019 DSV took over Swiss peer Panalpina in its largest ever
acquisition which they have been integrating successfully.
9 = RELX (2019: 9th)
Consumer services company
Market value: GBP16,467,000
Share of investments: 4.0%
A multinational information and analytics company which has high barriers to
entry in most of its divisions, including scientific publishing. The capital
light business model allows for a high rate of cash flow conversion with
repeatable revenues built on subscription-based models. The business also
benefits from the structurally increasing usage of data globally, which
supports their data analytics business.
10 + Hexagon (2019: 18th)
Technology company
Market value: GBP14,236,000
Share of investments: 3.5%
An industrial and software conglomerate. The business specialises in the
provision of geo-mapping and monitoring software and sensors, as well as plant
management and automation systems. Its products have applications in diverse
end markets including smart phones, mining automation, construction surveying
and agriculture optimisation.
All percentages reflect the value of the holding as a percentage of total
investments.
Together, the ten largest investments represent 50.5% of the Company's
portfolio (31 August 2019: 52.8%).
INVESTMENTS AS AT 31 AUGUST 2020
Market
Country of value % of
operation GBP'000 investments
Technology
ASML Netherlands 24,722 6.0
SAP Germany 23,741 5.8
Hexagon Sweden 14,236 3.5
Netcompany Group Denmark 10,108 2.5
BE Semiconductor Netherlands 8,697 2.1
Infineon Technologies Germany 7,995 1.9
Dassault Systèmes France 6,467 1.6
Adyen Netherlands 5,986 1.5
Amadeus IT Group Spain 4,420 1.1
-------------- --------------
106,372 26.0
======== ========
Industrials
Sika Switzerland 24,804 6.0
DSV Panalpina Denmark 18,798 4.6
Safran France 13,873 3.4
Kingspan Ireland 9,014 2.2
Atlas Copco Sweden 8,949 2.2
-------------- --------------
75,438 18.4
======== ========
Health Care
Lonza Group Switzerland 21,621 5.3
Novo Nordisk Denmark 20,976 5.1
Straumann Holding Switzerland 9,317 2.3
Chr. Hansen Denmark 7,673 1.9
DiaSorin Italy 6,850 1.7
Grifols Spain 5,595 1.3
-------------- --------------
72,032 17.6
======== ========
Consumer Goods
Royal Unibrew Denmark 20,531 5.0
Adidas Germany 8,945 2.2
Ferrari Italy 8,109 2.0
Hermes International France 8,019 1.9
-------------- --------------
45,604 11.1
======== ========
Consumer Services
Kering France 21,256 5.2
RELX United Kingdom 16,467 4.0
-------------- --------------
37,723 9.2
======== ========
Financials
FinecoBank Italy 9,340 2.3
KBC Groep Belgium 9,223 2.3
Sberbank Russia 7,015 1.7
Partners Group Switzerland 4,805 1.2
Bank Pekao Poland 3,348 0.8
Alpha Bank Greece 1,025 0.2
-------------- --------------
34,756 8.5
======== ========
Oil & Gas
Neste OYJ Finland 9,460 2.3
Lukoil Russia 6,089 1.5
-------------- --------------
15,549 3.8
======== ========
Basic Materials
IMCD Netherlands 10,282 2.5
ICL Group Israel 4,153 1.0
-------------- --------------
14,435 3.5
======== ========
Telecommunications
Bezeq - Israeli Telecommunication Israel 6,893 1.7
Veon Ltd Russia 1,000 0.2
-------------- --------------
7,893 1.9
======== ========
Total investments 409,802 100.0
======== ========
All investments are in ordinary shares unless otherwise stated. The total
number of investments held at 31 August 2020 was 38 (31 August 2019: 33).
Industry classifications in the table above are based on the Industrial
Classification Benchmark standard for categorisation of companies by industry
and sector.
As at 31 August 2020, the Company did not hold any equity interests comprising
more than 3% of any company's share capital.
INVESTMENT EXPOSURE AS AT 31 AUGUST 2020
MARKET CAPITALISATION
% of Portfolio
< EUR1bn 0.2
EUR1bn to EUR10bn 19.8
EUR10bn to EUR20bn 10.0
EUR20bn to EUR50bn 42.1
> EUR50bn 27.9
INVESTMENT SIZE
Number of % of
investments Portfolio
< GBP1m 1 0
GBP1m to GBP3m 1 0
GBP3m to GBP5m 4 4
GBP5m to GBP10m 19 37
> GBP10m 13 59
DISTRIBUTION OF INVESTMENTS
%
Technology 26.0
Industrials 18.4
Health Care 17.6
Consumer Goods 11.1
Consumer Services 9.2
Financials 8.5
Oil & Gas 3.8
Basic Materials 3.5
Telecommunications 1.9
Source: BlackRock
GOVERNANCE
STRATEGIC REPORT
The Directors present the Strategic Report of the Company for the year ended 31
August 2020. The aim of the Strategic Report is to provide shareholders with
the information to assess how the Directors have performed their duty to
promote the success of the Company for the collective benefit of shareholders.
The Chairman's Statement together with the Investment Manager's Report form
part of this Strategic Report. The Strategic Report was approved by the Board
at its meeting on 22 October 2020.
PRINCIPAL ACTIVITY
The Company carries on business as an investment trust and has a premium
listing on the London Stock Exchange. Its principal activity is portfolio
investment. Investment trusts are pooled investment vehicles which allow
exposure to a diversified range of assets through a single investment, thus
spreading investment risk.
OBJECTIVE
The Company's objective is the achievement of capital growth, primarily through
investment in a focused portfolio constructed from a combination of the
securities of large, mid and small capitalisation European companies, together
with some investment in the developing markets of Europe. The Company will also
have the flexibility to invest in any country included in the FTSE World Europe
ex UK Index, as well as the freedom to invest in developing countries not
included in the Index but considered by the Manager and the Directors as part
of greater Europe.
STRATEGY, BUSINESS MODEL AND INVESTMENT POLICY
The Company invests in accordance with the objective given above. The Board is
collectively responsible to shareholders for the long-term success of the
Company and is its governing body. There is a clear division of responsibility
between the Board and BlackRock Fund Managers Limited (the Manager). Matters
reserved for the Board include setting the Company's strategy, including its
investment objective and policy, setting limits on gearing, capital structure,
governance, and appointing and monitoring of performance of service providers,
including the Manager.
Business model
The Company's business model follows that of an externally managed investment
trust. Therefore, the Company does not have any employees and outsources its
activities to third party service providers including the Manager, who is the
principal service provider. In accordance with the Alternative Investment Fund
Managers' Directive (AIFMD) the Company is an Alternative Investment Fund
(AIF). BlackRock Fund Managers Limited is the Company's Alternative Investment
Fund Manager.
The management of the investment portfolio and the administration of the
Company have been contractually delegated to the Manager who in turn (with the
permission of the Company) has delegated certain investment management and
other ancillary services to BlackRock Investment Management (UK) Limited (BIM
(UK) or the Investment Manager). The Manager, operating under guidelines
determined by the Board, has direct responsibility for the decisions relating
to the day-to-day running of the Company and is accountable to the Board for
the investment, financial and operating performance of the Company.
The Company delegates fund accounting services to BIM (UK), which in turn
sub-delegates these services to The Bank of New York Mellon (International)
Limited (BNYM). Other service providers include the Depositary (also BNYM) and
the Registrar, Computershare Investor Services PLC. Details of the contractual
terms with the Manager and the Depositary and more details of sub-delegation
arrangements in place governing custody services are set out in the Directors'
Report.
Investment policy
The Company's policy is that the portfolio should consist of approximately
30-70 securities and the majority of the portfolio will be invested in larger
capitalisation companies, being companies with a market capitalisation of over
EUR5 billion. Up to 25% of the portfolio may be invested in companies in
developing Europe. The Company may also invest up to 5% of the portfolio in
unquoted investments. However, overall exposure to developing European
companies and unquoted investments will not in aggregate exceed 25% of the
Company's portfolio.
As at 31 August 2020, the Company held 38 investments and 4.2% of the portfolio
was invested in developing Europe. The Company had no unquoted investments.
Investment in developing European securities may be either direct or through
other funds, including those managed by BlackRock Fund Managers Limited,
subject to a maximum of 15% of the portfolio. Direct investment in Russia is
limited to 10% of the Company's assets. Investments may also include depositary
receipts or similar instruments representing underlying securities.
The Company also has the flexibility to invest up to 20% of the portfolio in
debt securities, such as convertible bonds and corporate bonds. No bonds were
held at 31 August 2020. The use of any derivative instruments such as financial
futures, options and warrants and the entering into of stock lending
arrangements will only be for the purposes of efficient portfolio management.
While the Company may hold shares in other investment companies (including
investment trusts), the Board has agreed that the Company will not invest more
than 15%, in aggregate, of its gross assets in other listed closed-ended
investment funds (save to the extent that such closed-ended investment funds
have published investment policies to invest no more than 15% of their total
assets in such other listed closed-ended investment funds).
The Company achieves an appropriate spread of risk by investing in a
diversified portfolio of securities.
The Investment Manager believes that appropriate use of gearing can add value
over time. This gearing typically is in the form of an overdraft facility which
can be repaid at any time. The level and benefit of any gearing is discussed
and agreed regularly by the Board. The Investment Manager generally aims to be
fully invested and it is anticipated that gearing will not exceed 15% of net
asset value (NAV) at the time of drawdown of the relevant borrowings. At the
balance sheet date, the Company had net gearing of 5.7% (2019: 0.7%).
INVESTMENT PROCESS
The Investment Manager takes a bottom-up approach to investing, meaning
companies are analysed on an individual basis upon a number of qualitative and
quantitative measures. Research is comprehensive and collaborative, backed by a
team of 19 European Equity analysts and a further seven Emerging European
analysts who conduct over 1,200 company meetings a year.
Idea generation is the first step of the investment process and important in
ensuring that there is a continuous flow of new ideas entering the team's
proprietary research process. There is a structured approach to research, a
dedicated research coordinator, and a formal research pipeline to ensure that
efficient use is made of team resources and to prioritise research to take
advantage of the most promising investment opportunities.
As part of their research, the analyst will conduct a thorough industry and
company analysis using a range of valuation techniques depending on the company
and sector. Time is spent analysing a company's market dynamics, revenue
drivers, financial statements, valuations and risks to the central scenario.
The team also seek to understand the factors that influence a share price, as
well as what the market is anticipating or missing.
As part of the company analysis, the analyst completes a proprietary research
template which has been designed to capture all data relevant to the investment
case in a concise and consistent framework. This consistency drives focus on
debate and discussion and helps to ensure the investment case is robust.
Research on each company belongs to the analyst; however, portfolio
construction and investment decisions within the Company are entirely the
responsibility of the Investment Manager. Primary investment criteria the
Investment Manager looks for includes:
· Quality management
· Strong free cash flow conversion
· Options to invest in growth
· Unique aspects
This focus on sustainable cash returns and unique franchises should help
concentrate the portfolio towards the best ideas delivered by the European and
Emerging European Equity teams and drive positive outcomes for our clients.
PERFORMANCE
In the year to 31 August 2020, the Company's NAV per share returned 16.9%
(compared with a return in the FTSE World Europe ex UK Index of 0.7%) and the
share price returned 18.0% (all percentages calculated in sterling terms with
dividends reinvested). The Investment Manager's Report includes a review of the
main developments during the year, together with information on investment
activity within the Company's portfolio.
RESULTS AND DIVIDS
The results for the Company are set out in the Income Statement in the
Financial Statements. The total profit for the year, after taxation, was GBP
55,862,000 (2019: GBP18,993,000) which is reflected in the increase in the net
asset value of the Company. The revenue return amounted to GBP5,776,000 (2019: GBP
4,160,000) and relates to net revenue earnings from dividends received during
the year after adjusting for expenses, as well as the positive outcome on a tax
ruling relating to overseas dividends.
As explained in the Company's Half Yearly Financial Report, the Directors
declared an interim dividend of 1.75p per share (2019: 1.75p). The Directors
recommend the payment of a final dividend of 4.40p per share, making a total
dividend of 6.15p per share (2019: 5.85p). Subject to approval at the
forthcoming Annual General Meeting, the dividend will be paid on 9 December
2020 to shareholders on the register of members at the close of business on 30
October 2020.
FUTURE PROSPECTS
The Board's main focus is to achieve capital growth. The future performance of
the Company is dependent upon the success of the investment strategy and, to a
large extent, on the performance of financial markets. The outlook for the
Company is discussed in both the Chairman's Statement and Investment Manager's
Report.
SOCIAL, COMMUNITY AND HUMAN RIGHTS ISSUES
As an investment trust with no employees, the Company has no direct social or
community responsibilities or impact on the environment. However, the Directors
believe that it is in shareholders' interests to consider human rights issues
and environmental, social and governance factors when selecting and retaining
investments. Details of the Company's policy on socially responsible investment
are set out on pages 55 and 56 of the Annual Report and Financial Statements.
MODERN SLAVERY ACT
As an investment vehicle, the Company does not provide goods or services in the
normal course of business and does not have customers. Accordingly, the
Directors consider that the Company is not required to make any slavery or
human trafficking statement under the Modern Slavery Act 2015. In any event,
the Board considers the Company's supply chains, dealing predominantly with
professional advisers and service providers in the financial services industry,
to be low risk in relation to this matter.
DIRECTORS, GER REPRESENTATION AND EMPLOYEES
The Directors of the Company on 31 August 2020, all of whom held office
throughout the year, are set out in the Directors' Biographies on pages 25 and
26 of the Annual Report and Financial Statements. The Board consists of two
male Directors and two female Directors. The Company's policy on diversity is
set out on page 53 of the Annual Report and Financial Statements. The Company
does not have any executive employees.
KEY PERFORMANCE INDICATORS
At each Board meeting, the Directors consider a number of performance measures
to assess the Company's success in achieving its objectives. The key
performance indicators (KPIs) used to measure the progress and performance of
the Company over time and which are comparable to other investment trusts are
set out below. As indicated in the footnote to the table, some of these KPIs
fall within the definition of 'Alternative Performance Measures' under guidance
issued by the European Securities and Markets Authority (ESMA) and additional
information explaining how these are calculated is set out in the Glossary on
pages 104 to 106 of the Annual Report and Financial Statements.
Additionally, the Board regularly reviews the performance of the portfolio, as
well as the net asset value and share price of the Company and compares this
against various companies and indices. The Company does not have a benchmark.
However, the Board reviews performance and ongoing charges against a peer group
of European investment trusts and open-ended funds, as well as the FTSE World
Europe ex UK Index.
As at As at
31 31
August August
2020 2019
Net asset value per share 459.97p 399.52p
Net asset value total return1, 2 +16.9% +6.3%
Share price 447.00p 385.00p
Share price total return1, 2 +18.0% +7.9%
Discount to net asset value2 2.8% 3.6%
Revenue return per share 6.85p 4.87p
Ongoing charges2, 3 1.01% 1.08%
======== ========
1 This measures the Company's share price and NAV total return, which
assumes dividends paid by the Company have been reinvested.
2 Alternative Performance Measures, see Glossary on pages 104 to 106 of the
Annual Report and Financial Statements.
3 Ongoing charges represent the management fee and all other operating
expenses, excluding finance costs, direct transaction costs, custody
transaction charges, VAT recovered, taxation and certain non-recurring items,
as a % of average daily net assets.
PRINCIPAL RISKS
The Company is exposed to a variety of risks and uncertainties. As required by
the 2018 UK Corporate Governance Code (the UK Code), the Board has put in place
a robust ongoing process to identify, assess and monitor the principal risks
and emerging risks facing the Company. A core element of this process is the
Company's risk register which identifies the risks facing the Company and
assesses the likelihood and potential impact of each risk and the quality of
controls operating to mitigate it. A residual risk rating is then calculated
for each risk based on the outcome of the assessment.
The risk register, its method of preparation and the operation of key controls
in BlackRock's and third-party service providers' systems of internal control,
are reviewed on a regular basis by the Audit and Management Engagement
Committee. In order to gain a more comprehensive understanding of BlackRock's
and other third party service providers' risk management processes and how
these apply to the Company's business, BlackRock's internal audit department
provides an annual presentation to the Audit Committee chairmen of the
BlackRock investment trusts setting out the results of testing performed in
relation to BlackRock's internal control processes. The Audit and Management
Engagement Committee also periodically receives and reviews internal control
reports from BlackRock and the Company's service providers.
The Board has undertaken a robust assessment of both the principal and emerging
risks facing the Company, including those that would threaten its business
model, future performance, solvency or liquidity. The COVID-19 pandemic has
given rise to unprecedented challenges for businesses across the globe and the
Board has taken into consideration the risks posed to the Company by the crisis
and incorporated these into the Company's risk register. The risks identified
by the Board have been described in the table that follows, together with an
explanation of how they are managed and mitigated. Emerging risks are
considered by the Board as they come into view and are incorporated into the
existing review of the Company's risk register. Additionally, the Manager
considers emerging risks in numerous forums and the Risk and Quantitative
Analysis team produces an annual risk survey. Any material risks of relevance
to the Company identified through the annual risk survey will be communicated
to the Board.
The Board will continue to assess these risks on an ongoing basis. In relation
to the UK Code, the Board is confident that the procedures that the Company has
put in place are sufficient to ensure that the necessary monitoring of risks
and controls has been carried out throughout the reporting period.
The principal risks and uncertainties faced by the Company during the financial
year, together with the potential effects, controls and mitigating factors are
set out in the following table.
Principal risk Mitigation/Control
Counterparty
The potential loss that the Company could Due diligence is undertaken before
incur if a counterparty is unable (or contracts are entered into and exposures
unwilling) to perform on its commitments. are diversified across a number of
counterparties.
The Depositary is liable for restitution
for the loss of financial instruments held
in custody unless able to demonstrate the
loss was a result of an event beyond its
reasonable control.
Investment performance
The returns achieved are reliant primarily To manage this risk the Board:
upon the performance of the portfolio.
· regularly reviews the Company's
The Board is responsible for: investment mandate and long-term strategy;
· deciding the investment strategy · has set investment restrictions
to fulfil the Company's objective; and and guidelines which the Investment Manager
monitors and regularly reports on;
· monitoring the performance of the
Investment Manager and the implementation · receives from the Investment
of the investment strategy. Manager a regular explanation of stock
selection decisions, portfolio exposure,
An inappropriate investment policy may lead gearing and any changes in gearing and the
to: rationale for the composition of the
investment portfolio;
· underperformance compared to the
reference index; · monitors and maintains an adequate
spread of investments in order to minimise
· a reduction or permanent loss of the risks associated with particular
capital; and countries or factors specific to particular
sectors, based on the diversification
· dissatisfied shareholders and requirements inherent in the investment
reputational damage. policy;
· receives and reviews regular
reports showing an analysis of the
Company's performance against the FTSE
World Europe ex UK Index and other similar
indices; and
· has been assured that the
Investment Manager has training and
development programmes in place for its
employees and its recruitment and
remuneration packages are developed in
order to retain key staff.
Legal and regulatory compliance
The Company has been approved by HM Revenue The Investment Manager monitors investment
& Customs as an investment trust, subject movements, the level and type of forecast
to continuing to meet the relevant income and expenditure and the amount of
eligibility conditions, and operates as an proposed dividends to ensure that the
investment trust in accordance with Chapter provisions of Chapter 4 of Part 24 of the
4 of Part 24 of the Corporation Tax Act Corporation Tax Act 2010 are not breached.
2010. As such, the Company is exempt from The results are reported to the Board at
capital gains tax on the profits realised each meeting.
from the sale of its investments.
Compliance with the accounting rules
Any breach of the relevant eligibility affecting investment trusts are also
conditions could lead to the Company losing carefully and regularly monitored.
investment trust status and being subject
to corporation tax on capital gains The Company Secretary, Manager and the
realised within the Company's portfolio. In Company's professional advisers provide
such event, the investment returns of the regular reports to the Board in respect of
Company may be adversely affected. compliance with all applicable rules and
regulations. The Board and the Manager also
Any serious breach could result in the monitor changes in government policy and
Company and/or the Directors being fined or legislation which may have an impact on the
the subject of criminal proceedings, or the Company.
suspension of the Company's shares which
would in turn lead to a breach of the
Corporation Tax Act 2010.
Amongst other relevant laws, the Company is
required to comply with the provisions of
the Companies Act 2006, the Alternative
Investment Fund Managers' Directive, the UK
Listing Rules, Disclosure Guidance and
Transparency Rules and Market Abuse
Regulation.
Market
Market risk arises from volatility in the The Board considers the diversification of
prices of the Company's investments. It the portfolio, asset allocation, stock
represents the potential loss the Company selection, and levels of gearing on a
might suffer through realising investments regular basis and has set investment
in the face of negative market movements. restrictions and guidelines which are
monitored and reported on by the Investment
Changes in general economic and market Manager.
conditions, such as currency exchange
rates, interest rates, rates of inflation, The Board monitors the implementation and
industry conditions, tax laws, political results of the investment process with the
events and trends, including the impact of Investment Manager.
the UK leaving the EU, can also
substantially and adversely affect the The Board also recognises the benefits of a
securities and, as a consequence, the closed-end fund structure in extremely
Company's prospects and share price. volatile markets such as those experienced
with the COVID-19 pandemic. Unlike
Market risk includes the potential impact open-ended counterparts, closed-end funds
of events which are outside the Company's are not obliged to sell-down portfolio
control, such as the COVID-19 pandemic. holdings at low valuations to meet
liquidity requirements for redemptions.
During times of elevated volatility and
market stress, the ability of a closed-end
fund structure to remain invested for the
long term enables the Portfolio Managers to
adhere to disciplined fundamental analysis
from a bottom-up perspective and be ready
to respond to dislocations in the market as
opportunities present themselves.
Operational
In common with most other investment trust Due diligence is undertaken before
companies, the Company has no employees. contracts are entered into with third-party
The Company therefore relies on the service providers. Thereafter, the
services provided by third parties and is performance of the provider is subject to
dependent on the control systems of the regular review and reported to the Board.
Manager, the Depositary, Custodian and Fund
Accountant, which maintains the Company's The Board reviews on a regular basis an
assets, dealing procedures and accounting assessment of the fraud risks that the
records. Company could potentially be exposed to and
also a summary of the controls put in place
The security of the Company's assets, by the Manager, Depositary, Custodian, Fund
dealing procedures, accounting records and Accountant and Registrar specifically to
adherence to regulatory and legal mitigate these risks.
requirements depend on the effective
operation of the systems of these other Most third-party service providers produce
third-party service providers. There is a internal control reports to provide
risk that a major disaster, such as floods, assurance regarding the effective operation
fire, a global pandemic, or terrorist of internal controls as reported on by
activity, renders the Company's service their reporting accountants. These reports
providers unable to conduct business at are provided to the Audit and Management
normal operating effectiveness. Engagement Committee for review. The
Committee would seek further
Failure by any service provider to carry representations from service providers if
out its obligations to the Company could not satisfied with the effectiveness of
have a material adverse effect on the their control environment.
Company's performance. Disruption to the
accounting, payment systems or custody The Company's assets are subject to a
records (including cyber security risk) strict liability regime and, in the event
could prevent the accurate reporting and of a loss of assets, the Depositary must
monitoring of the Company's financial return assets of an identical type or the
position. corresponding amount, unless able to
demonstrate the loss was a result of an
event beyond its reasonable control.
The Board reviews the overall performance
of the Manager, Investment Manager and all
other third-party service providers on a
regular basis and compliance with the
Investment Management Agreement annually.
The Board also considers the business
continuity arrangements of the Company's
key service providers on an ongoing basis
and reviews these as part of its review of
the Company's risk register. In respect of
the unprecedented and emerging risks posed
by the COVID-19 pandemic in terms of the
ability of service providers to function
effectively, the Board has received reports
from key service providers setting out the
measures that they have put in place to
address the crisis, in addition to their
existing business continuity framework.
Having considered these arrangements and
reviewed service levels since the crisis
has evolved, the Board are confident that a
good level of service has and will be
maintained.
Financial
The Company's investment activities expose Details of these risks are disclosed in
it to a variety of financial risks which note 15 to the Financial Statements,
include market risk, counterparty credit together with a summary of the policies for
risk, liquidity risk and the valuation of managing these risks.
financial instruments.
Marketing
Marketing efforts are inadequate or do not The Board reviews marketing strategy and
comply with relevant regulatory initiatives and the Manager is required to
requirements. There is a failure to provide regular updates on progress.
communicate adequately with shareholders or BlackRock has a dedicated investment trust
reach out to potential new shareholders sales team visiting both existing and
resulting in reduced demand for the potential clients on a regular basis. Data
Company's shares and a widening of the on client meetings and issues raised are
discount. provided to the Board on a regular basis.
All investment trust marketing documents
are subject to appropriate review and
authorisation.
VIABILITY STATEMENT
In accordance with provision 31 of the 2018 UK Corporate Governance Code, the
Directors have assessed the prospects of the Company over a longer period than
the twelve months referred to by the 'Going Concern' guidelines.
The Board is cognisant of the uncertainty surrounding the potential duration of
the COVID-19 pandemic, its impact on the global economy and the prospects for
many of the Company's portfolio holdings. Notwithstanding this crisis, and
given the factors stated below, the Board expects the Company to continue for
the foreseeable future and has therefore conducted this review for a period of
three years. This is generally the investment holding period investors consider
while investing in the European sector.
In its assessment of the viability of the Company, the Directors have noted
that:
· the Company invests predominantly in highly liquid, large listed
companies so its assets are readily realisable;
· the Company has limited gearing and no concerns around facilities,
headroom or covenants;
· the Company's forecasts for revenues, expenses and liabilities are
relatively stable and it has largely fixed overheads which comprise a small
percentage of net assets (1.01%); and
· the business model should remain attractive for much longer than three
years, unless there is significant economic or regulatory change.
The Directors have also reviewed:
· the impact of a significant fall in European equity markets on the
value of the Company's investment portfolio, factoring in the impact of the
recent volatility related to the COVID-19 pandemic;
· the ongoing relevance of the Company's investment objective, business
model and investment policy in the current environment; and
· the level of demand for the Company's shares.
The Board has also considered a number of other factors, including:
· portfolio liquidity in light of the COVID-19 pandemic on global market
liquidity. As at 21 October 2020, 97.7% of the portfolio was estimated as being
capable of being liquidated within 3 days;
· the Company's revenue and expense forecasts in light of the COVID-19
pandemic and its anticipated impact on dividend income and market valuations.
The Board is confident that the Company's business model remains viable and
that there are sufficient resources to meet all liabilities as they fall due
for the period under review;
· the Company's borrowing facility and considers that the Company
continues to meet its financial covenants in respect of this facility;
· the principal risks and uncertainties as set out above and is
confident that the Company has appropriate controls and processes in place to
manage these and to maintain its operating model, even given the challenges
posed by COVID-19;
· the operational resilience of the Company and its key service
providers and their ability to continue to provide a good level of service for
the foreseeable future;
· the effectiveness of business continuity plans in place for the
Company and key service providers; and
· the level of income generated by the Company and future income
forecasts.
Based on the results of their analysis, the Directors have concluded that there
is a reasonable expectation that the Company will continue in operation and
meet its liabilities as they fall due over the period of their assessment.
SECTION 172 STATEMENT: PROMOTING THE SUCCESS OF THE COMPANY
New regulations (The Companies (Miscellaneous Reporting) Regulations 2018)
require directors of large companies to explain more fully how they have
discharged their duties under section 172(1) of the Companies Act 2006 in
promoting the success of their companies for the benefit of members as a whole.
This includes the likely consequences of their decisions in the longer term and
how they have taken wider stakeholders' needs into account.
The enhanced disclosure that follows covers how the Board has engaged with and
understands the views of stakeholders and how stakeholders' needs have been
taken into account, the outcome of this engagement and the impact that it has
had on the Board's decisions. The Board considers the main stakeholders in the
Company to be the Manager, Investment Manager and the shareholders. In addition
to this, the Board considers investee companies and key service providers of
the Company to be stakeholders; the latter comprise the Company's Custodian,
Depositary, Registrar and Broker.
Stakeholders
Manager and Other
Shareholders Investment Manager key service providers Investee companies
Continued shareholder The Board's main In order for the Portfolio holdings
support and working relationship Company to function are ultimately
engagement are is with the Manager, as an investment shareholders' assets
critical to the who is responsible trust with a listing and the Board
continued existence for the Company's on the premium recognise the
of the Company and portfolio management segment of the importance of good
the successful (including asset official list of the stewardship and
delivery of its allocation, stock and FCA and trade on the communication with
long-term strategy. sector selection) and London Stock investee companies in
The Board is focused risk management, as Exchange's (LSE) main meeting the Company's
on fostering good well as ancillary market for listed investment objective
working relationships functions such as securities, the Board and strategy. The
with shareholders and administration, relies on a diverse Board monitors the
on understanding the secretarial, range of advisors for Manager's stewardship
views of shareholders accounting and support in meeting arrangements and
in order to marketing services. relevant obligations receives regular
incorporate them into The Manager has and safeguarding the feedback from the
the Board's strategy sub-delegated Company's assets. For Manager in respect of
and objectives in portfolio management this reason the Board meetings with the
delivering long-term to the Investment consider the management.
capital growth. Manager. Successful Company's Custodian,
management of Depositary, Registrar
shareholders' assets and Broker to be
by the Investment stakeholders. The
Manager is critical Board maintains
for the Company to regular contact with
successfully deliver its key external
its investment service providers and
strategy and meet its receives regular
objective. The reporting from them
Company is also through the Board and
reliant on the committee meetings,
Manager as AIFM to as well as outside of
provide support in the regular meeting
meeting relevant cycle.
regulatory
obligations under the
AIFMD and other
relevant legislation.
A summary of the key areas of engagement undertaken by the Board with its key
stakeholders in the year under review and how Directors have acted upon this to
promote the long-term success of the Company are set out in the table below.
Area of
Engagement Issue Engagement Impact
Investment mandate The Board has The Board worked The portfolio
and objective responsibility to closely with the activities undertaken
shareholders to Investment Manager by the Investment
ensure that the throughout the year Manager can be found
Company's portfolio in further developing in their Report on
of assets is invested investment strategy pages 9 to 13 of the
in line with the and underlying Annual Report and
stated investment policies, not simply Financial Statements.
objective and in a for the purpose of The Investment
way that ensures an achieving the Manager aims to
appropriate balance Company's investment construct a portfolio
between spread of objective but in the that is high
risk and portfolio interests of conviction and
returns. shareholders and concentrated in
future investors. nature but
diversified by end
market exposures.
Outperformance of the
reference index in
the year has
reflected this.
Details regarding the
Company's NAV and
share price
performance can be
found in the
Chairman's
Statement and in the
Strategic Report
above.
Shareholders Continued shareholder The Board is The Board values any
support and committed to feedback and
engagement are maintaining open questions from
critical to the channels of shareholders ahead of
continued existence communication and to and during Annual
of the Company and engage with General Meetings in
the successful shareholders. The order to gain an
delivery of its Company welcomes and understanding of
long-term strategy. encourages attendance their views and will
and participation take action when and
from shareholders at as appropriate.
its Annual General Feedback and
Meetings. questions will also
Shareholders will help the Company
have the opportunity evolve its reporting,
to meet the Directors aiming to make
and Investment reports more
Manager and to transparent and
address questions to understandable.
them directly. The
Investment Manager Feedback from all
will also provide a substantive meetings
presentation on the between the
Company's performance Investment Manager
and the outlook. and shareholders will
be shared with the
The Annual Report and Board. The Directors
Half Yearly Financial will also receive
Report are available updates from the
on the BlackRock Company's Broker on
website and are also any feedback from
circulated to shareholders, as well
shareholders either as share trading
in printed copy or activity, share price
via electronic performance and an
communications. In update from the
addition, regular Investment Manager.
updates on
performance, monthly The portfolio
factsheets, the daily management team
NAV and other attended a number of
information are also professional investor
published on the meetings and held
Manager's website at discussions with a
blackrock.com/uk/ number of wealth
brge. management desks and
offices in respect of
Unlike trading the Company during
companies, one-to-one the year under
shareholder meetings review.
normally take the
form of a meeting Portfolio holdings
with the Investment are ultimately
Manager as opposed to shareholders' assets
members of the Board. and the Board
The Company's recognise the
willingness to enter importance of good
into discussions with stewardship and
institutional communication with
shareholders is also investee companies in
demonstrated by the meeting the Company's
programmes of investment objective
institutional and strategy. The
presentations by the Board monitors the
Investment Manager. Manager's stewardship
arrangements and
If shareholders wish receives regular
to raise issues or feedback from the
concerns with the Investment Manager in
Board, they are respect of meetings
welcome to do so at with the management
any time. The of portfolio
Chairman is available companies.
to meet directly with
shareholders
periodically to
understand their
views on governance
and the Company's
performance where
they wish to do so.
He may be contacted
via the Company
Secretary whose
details are given on
page 101 of the
Annual Report and
Financial Statements.
Responsible investing More than ever, the The Board believes The Investment
importance of good that responsible Manager believes
governance and investment and there is likely to be
consideration of sustainability are a positive
sustainable integral to the correlation between
investment are key longer-term delivery strong ESG practices
factors in making of the Company's and investment
investment decisions. success. The Board performance over
Climate change is works closely with time.
becoming a defining the Investment
factor in companies' Manager to regularly
long-term prospects review the Company's
across the investment performance,
spectrum, with investment strategy
significant and and underlying
lasting implications policies to ensure
for economic growth that the Company's
and prosperity. investment objective
continues to be met
in an effective,
responsible and
sustainable way in
the interests of
shareholders and
future investors.
The Investment
Manager's approach to
the consideration of
Environmental, Social
and Governance (ESG)
factors in respect of
the Company's
portfolio, as well as
the Investment
Manager's engagement
with investee
companies to
encourage the
adoption of
sustainable business
practices which
support long-term
value creation, are
kept under review by
the Board. The Board
also expects to be
informed by the
Manager of any
sensitive voting
issues involving the
Company's
investments.
The Investment
Manager reports to
the Board in respect
of its ESG policies
and how these are
integrated into the
investment process; a
summary of
BlackRock's approach
to ESG and
sustainability is set
out on pages 37 and
38 of the Annual
Report and Financial
Statements. The
Investment Manager's
engagement and voting
policy is detailed on
pages 40 and 41 of
the Annual Report and
Financial Statements
and on the BlackRock
website.
Discount management The Board recognises The Board monitors The Board continues
that it is in the the Company's share to monitor the
long-term interests rating on an ongoing Company's discount to
of shareholders that basis and receives NAV and will look to
shares do not trade regular updates from buyback shares and/or
at a significant the Manager and the operate six monthly
discount or premium Company's Broker tender offers if it
to their prevailing regarding the level is deemed to be in
NAV. The Board of discount. The the interests of
believes this may be Board believes that shareholders as a
achieved in two ways: the best way of whole.
the use of regular maintaining the share
tender offers and the rating at an optimal The Board decided not
active use of share level over the long to implement a
buyback powers. term is to create semi-annual tender
demand for the shares offer in November
in the secondary 2019 as, over the six
market. To this end, months to 31 August
the Investment 2019, the average
Manager is devoting discount to net asset
considerable effort value (cum income)
to broadening the (NAV) was 4.0%. It
awareness of the also decided not to
Company, particularly implement the May
to wealth managers 2020 semi-annual
and to the wider tender offer, as over
retail market. the six months to 29
February 2020, the
In addition, the average discount to
Board has worked net asset value (cum
closely with the income) (NAV) was
Manager to develop 3.3%. The Board
the Company's instead decided to
marketing strategy, use its share buyback
with the aim of powers and during the
ensuring effective financial year the
communication with Company bought back
existing shareholders 390,000 shares at a
and to attract new cost of GBP1,506,000.
shareholders to the
Company in order to The Company's average
improve liquidity in discount for the year
the Company's shares to 31 August 2020 was
and to sustain the 4.0% and the discount
share rating of the at 21 October 2020
Company. stood at 2.1%.
Service levels of The Board The Manager reports All performance
third-party providers acknowledges the to the Board on the evaluations were
importance of Company's performance performed on a timely
ensuring that the on a regular basis. basis and the Board
Company's principal The Board carries out concluded that all
suppliers are a robust annual key third-party
providing a suitable evaluation of the service providers,
level of service, Manager's including the Manager
including the Manager performance, their were operating
in respect of commitment and effectively and
investment available resources. providing a good
performance and level of service. The
delivering on the The Board performs an Board has received
Company's investment annual review of the updates in respect of
mandate; the service levels of all business continuity
Custodian and third-party service planning from the
Depositary in respect providers and Company's Manager,
of their duties concludes on their Custodian,
towards safeguarding suitability to Depositary, Fund
the Company's assets; continue in their Accountant,
the Registrar in its role. The Board Registrar, Printer
maintenance of the receives regular and Broker and is
Company's share updates from the confident that
register and dealing AIFM, Depositary, arrangements are in
with investor Registrar and Broker place to ensure a
queries; and the on an ongoing basis. good level of service
Company's Broker in will continue to be
respect of the In light of the provided despite the
provision of advice challenges presented impact of the
and acting as a by the COVID-19 COVID-19 pandemic.
market maker for the pandemic to the
Company's shares. operation of The interest rate on
businesses across the the Company's
globe, the Board has overdraft facility
worked closely with with BNYM was reduced
the Manager to gain during the year by 10
comfort that relevant basis points.
business continuity
plans are operating
effectively for all
of the Company's key
service providers.
Board composition The Board is All Directors are As at the date of
committed to ensuring subject to a formal this report, the
that its own evaluation process on Board was comprised
composition brings an an annual basis (more of two men and two
appropriate balance details and the women. No Director
of knowledge, conclusions of the has a tenure in
experience and 2020 evaluation excess of nine years,
skills, and that it process are given on although Ms Curling
is compliant with page 54 of the Annual will have served on
best corporate Report and Financial the Board for exactly
governance practice Statements). All nine years at the
under the UK Code, Directors stand for date of the
including guidance on re-election by forthcoming Annual
tenure and the shareholders General Meeting.
composition of the annually.
Board's committees. Details of each
Shareholders may Directors'
attend the Annual contribution to the
General Meeting and success and promotion
raise any queries in of the Company are
respect of Board set out in the
composition or Directors' Report on
individual Directors page 44 of the Annual
in person, or may Report and Financial
contact the Company Statements and
Secretary or the details of Directors'
Chairman using the biographies can be
details provided on found on pages 25 and
page 101 of the 26 of the Annual
Annual Report and Report and Financial
Financial Statements Statements.
with any issues.
The Directors are not
aware of any issues
that have been raised
directly by
shareholders in
respect of Board
composition in the
year under review.
Details for the proxy
voting results in
favour and against
individual Directors'
re-election at the
2019 AGM are given on
the Manager's website
at www.blackrock.com/
uk/brge.
SUSTAINABILITY AND ESG POLICIES
Environmental, social and governance (ESG) issues can present both
opportunities and threats to long-term investment performance. These ethical
and sustainability issues cannot be ignored, and your Board has appointed a
manager that is committed to applying the highest standards of ESG practice.
Effective engagement with management is, in most cases, the most constructive
way of driving meaningful change in the behaviour of investee company
management. This is particularly true for the Company's Manager given the
extent of BlackRock's shareholder engagement (BlackRock held 3,040 engagements
with 2,020 companies based in 54 markets for the year to 30 June 2020). As well
as the influence afforded by its sheer scale, BlackRock is well placed as
Manager to fulfil these requirements due to the integration of ESG into its
investment processes, the emphasis it places on sustainability, its
collaborative approach in its investment stewardship activities and its
position in the industry as one of the largest suppliers of sustainable
investment products in the global market. More information on BlackRock's
approach to sustainability is set out below. Further details of ESG in the
Investment Manager's investment process are given on pages 55 and 56 of the
Annual Report and Financial Statements.
Responsible ownership - BlackRock's approach
As a fiduciary to its clients, BlackRock has built its business to protect and
grow the value of clients' assets. From BlackRock's perspective,
business-relevant sustainability issues can contribute to a company's long-term
financial performance and thus further incorporating these considerations into
the investment research, portfolio construction and stewardship process can
enhance long-term risk adjusted returns. By expanding access to data, insights
and learning on material ESG risks and opportunities in investment processes
across BlackRock's diverse platform, BlackRock believes that the investment
process is greatly enhanced. The Company's Portfolio Managers work closely with
BlackRock's Investment Stewardship team to assess the governance quality of
companies and investigate any potential issues, risks or opportunities. The
Portfolio Managers use ESG information when conducting research and due
diligence on new investments and again when monitoring investments in the
portfolio.
BlackRock's approach to sustainable investing
Considerations about sustainability have been at the centre of BlackRock's
investment approach for many years and the firm offers more than 100
sustainable products and solutions. BlackRock believes that climate change is now a defining factor in companies' long-term prospects and that will have a significant and lasting impact on economic growth and prosperity. It is BlackRock's belief that climate risk now equates to investment risk and this will drive a profound reassessment of risk and asset values as investors seek to react to the impact of climate policy changes. This in turn is likely to drive a significant reallocation of capital away from traditional carbon intensive industries over the next decade. In January 2020, with this transition in mind, BlackRock announced that it would accelerate its sustainable investing efforts and make a number of enhancements to its investment management and risk processes, including the following: · heightening scrutiny on sectors with a high ESG risk, such as thermal coal producers, due to the investment risk they present to client portfolios; · putting ESG analysis at the heart of Aladdin (BlackRock's proprietary trading platform) and using proprietary tools to help analyse ESG risk; and · placing oversight of ESG risk with BlackRock's Risk and Quantitative Analysis group, to ensure that ESG risk is given increased weighting as a risk factor and is analysed with the same weight given to traditional measures such as credit or liquidity risk. Investment Stewardship BlackRock also places a strong emphasis on sustainability in its stewardship activities. BlackRock has engaged with companies on sustainability-related questions for a number of years, urging management teams to make progress while also deliberately giving companies time to enhance disclosure consistent with the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-related Financial Disclosures (TCFD). This includes each company's plan for operating under a scenario where the Paris Agreement's goal of limiting global warming to less than two degrees is fully realised, as expressed by the TCFD guidelines. To this end, BlackRock is now a member of Climate Action 100+, a group of investors that engages with companies to improve climate disclosure and align business strategy with the goals of the Paris Agreement. BlackRock will be aligning its engagement and stewardship priorities to UN Sustainable Development Goals (including Gender Equality and Affordable and Clean Energy). BlackRock is committed to voting against management to the extent that they have not demonstrated sufficient progress on sustainability issues. BlackRock is committed to transparency in terms of disclosure on its engagement with companies and voting rationales. In the year to 30 June 2020, BlackRock voted against or withheld votes from 5,100+ directors at 2,800 different companies. More details about BlackRock's investment stewardship process can be found on BlackRock's website at https://www.blackrock.com/corporate/literature/ publication/blk-annual-stewardship-report-2020.pdf. BY ORDER OF THE BOARD CAROLINE DRISCOLL FOR AND ON BEHALF OF BLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED Company Secretary 22 October 2020 RELATED PARTY TRANSACTIONS BlackRock Fund Managers Limited (BFM, AIFM or the Manager) was appointed as the Company's AIFM with effect from 2 July 2014. BlackRock Investment Management (UK) Limited (BIM (UK) or Investment Manager) acts as the Company's Investment Manager under a delegation agreement with BFM. BIM (UK) also acted as the Secretary of the Company throughout the year. The management contract is terminable by either party on six months' notice. Under the agreement, the Board continues to be independent from the AIFM. The agreement provides the appropriate balance between the Board's control over the Company, its investment policies and compliance with regulatory obligations. The Company pays an annual management fee to BFM which is calculated based on 0.85% of net asset value on the last day of each month. Where the Company invests in other investments or cash funds managed by BIM (UK), any underlying fee charged is rebated. Fees are adjusted by adding all dividends declared during the period. No penalty on termination of the investment management contract would be payable by the Company in the event that six months' written notice is given to the Manager. There are no provisions relating to the payment of fees in lieu of notice. The Company contributes to a focused investment trust sales and marketing initiative operated by BlackRock on behalf of the investment trusts under its management. The Company's contribution to the consortium element of the initiative, which enables the trusts to achieve efficiencies by combining certain sales and marketing activities, represents a budget of up to 0.025% per annum of its net assets (GBP348 million) as at 31 December 2019 and this contribution is matched by BIM (UK). In addition, a budget of a further GBP25,000 has been allocated for Company specific sales and marketing activity. Total fees paid or payable for these services for the year ended 31 August 2020 amounted to GBP111,000 (excluding VAT) (2019: GBP103,000). The purpose of the programme overall is to ensure effective communication with existing shareholders and to attract new shareholders to the Company. This has the benefit of improving liquidity in the Company's shares and helps sustain the stock market rating of the Company. The Board currently consists of four non-executive Directors, all of whom are considered to be independent of the Company's Manager. None of the Directors has a service contract with the Company. The Chairman receives an annual fee of GBP41,000, the Chairman of the Audit and Management Engagement Committee receives an annual fee of GBP32,500 and each other Director receives an annual fee of GBP 28,000. Three members of the Board hold shares in the Company. Eric Sanderson holds 4,000 ordinary shares, Peter Baxter holds 5,000 ordinary shares and Paola Subacchi holds 3,012 ordinary shares. As at 31 August 2020, fees of GBP11,000 (2019: GBP10,000) were outstanding to Directors in respect of their annual fees. STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND FINANCIAL STATEMENTS The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company as at the end of each financial year and of the profit or loss of the Company for that period. In preparing those financial statements, the Directors are required to: · present fairly the financial position, financial performance and cash flows of the Company; · select suitable accounting policies in accordance with United Kingdom Generally Accepted Accounting Practice and then apply them consistently; · present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; · make judgements and estimates that are reasonable and prudent; · state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and · prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are also responsible for preparing the Strategic Report, the Directors' Report, the Directors' Remuneration Report, the Corporate Governance Statement and the Report of the Audit and Management Engagement Committee in accordance with the Companies Act 2006 and applicable regulations, including the requirements of the Listing Rules and the Disclosure Guidance and Transparency Rules. The Directors have delegated responsibility to the Manager for the maintenance and integrity of the Company's corporate and financial information included on the BlackRock website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Each of the Directors at the date of this report, whose names are listed on pages 25 and 26 of the Annual Report and Financial Statements, confirm to the best of their knowledge that: · the financial statements, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and · the Strategic Report contained in the Annual Report and Financial Statements includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces. The 2018 UK Corporate Governance Code also requires Directors to ensure that the Annual Report and Financial Statements are fair, balanced and understandable. In order to reach a conclusion on this matter, the Board has
requested that the Audit and Management Engagement Committee advise on whether
it considers that the Annual Report and Financial Statements fulfils these
requirements. The process by which the Committee has reached these conclusions
is set out in the Audit and Management Engagement Committee's Report on pages
58 to 62 of the Annual Report and Financial Statements. As a result, the Board
has concluded that the Annual Report for the year ended 31 August 2020, taken
as a whole, is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company's position, performance,
business model and strategy.
FOR AND ON BEHALF OF THE BOARD
ERIC SANDERSON
Chairman
22 October 2020
FINANCIAL STATEMENTS
INCOME STATEMENT FOR THE YEARED 31 AUGUST 2020
Revenue Revenue Capital Capital Total Total
2020 2019 2020 2019 2020 2019
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gains on investments held at fair - - 54,642 17,320 54,642 17,320
value through profit or loss
Losses on foreign exchange - - (2,088) (315) (2,088) (315)
Income from investments held at fair 3 4,682 5,924 - - 4,682 5,924
value through profit or loss
Other income 3 96 2 - - 96 2
--------------- --------------- --------------- --------------- --------------- ---------------
Total income 4,778 5,926 52,554 17,005 57,332 22,931
========= ========= ========= ========= ========= =========
Expenses
Investment management fee 4 (585) (531) (2,340) (2,122) (2,925) (2,653)
Other operating expenses 5 (566) (710) (8) (25) (574) (735)
--------------- --------------- --------------- --------------- --------------- ---------------
Total operating expenses (1,151) (1,241) (2,348) (2,147) (3,499) (3,388)
========= ========= ========= ========= ========= =========
Net profit on ordinary activities 3,627 4,685 50,206 14,858 53,833 19,543
before finance costs and taxation
Finance costs written back/(expense) 237 (40) (120) (25) 117 (65)
--------------- --------------- --------------- --------------- --------------- ---------------
Net profit on ordinary activities 3,864 4,645 50,086 14,833 53,950 19,478
before taxation
Taxation credit/(charge) 1,912 (485) - - 1,912 (485)
--------------- --------------- --------------- --------------- --------------- ---------------
Net profit on ordinary activities 7 5,776 4,160 50,086 14,833 55,862 18,993
after taxation
========= ========= ========= ========= ========= =========
Earnings per ordinary share (pence) 7 6.85 4.87 59.36 17.35 66.21 22.22
========= ========= ========= ========= ========= =========
The total column of this statement represents the Company's profit and loss
account. The supplementary revenue and capital columns 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 year. All income is attributable to the
equity holders of the Company.
The net profit on ordinary activities for the year disclosed above represents
the Company's total comprehensive income.
STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 31 AUGUST 2020
Called Called
up share redemption Special Capital Revenue
capital reserve reserve reserves reserve Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
For the year ended 31 August 2020
At 31 August 2019 110 130 48,845 279,255 10,102 338,442
Total comprehensive income:
Net profit for the year - - - 50,086 5,776 55,862
Transaction with owners, recorded
directly to equity:
Ordinary shares purchased into 8 - - (1,498) - - (1,498)
treasury
Share purchase costs 8 - - (8) - - (8)
Dividends paid1 6 - - - - (4,937) (4,937)
--------------- --------------- --------------- --------------- --------------- ---------------
At 31 August 2020 110 130 47,339 329,341 10,941 387,861
========= ========= ========= ========= ========= =========
For the year ended 31 August 2019
At 31 August 2018 110 130 54,869 264,422 10,888 330,419
Total comprehensive income:
Net profit for the year - - - 14,833 4,160 18,993
Transaction with owners, recorded
directly to equity:
Ordinary shares purchased into - - (2,520) - - (2,520)
treasury
Tender offers into treasury - - (3,477) - - (3,477)
Share purchase and tender costs - - (70) - - (70)
Share purchase and tender costs - - 43 - - 43
written back
Dividends paid2 6 - - - - (4,946) (4,946)
--------------- --------------- --------------- --------------- --------------- ---------------
At 31 August 2019 110 130 48,845 279,255 10,102 338,442
========= ========= ========= ========= ========= =========
1 Interim dividend paid in respect of the year ended 31 August 2020 of
1.75p per share was declared on 27 April 2020 and paid on 10 June 2020. Final
dividend paid in respect of the year ended 31 August 2019 of 4.10p per share
was declared on 22 October 2019 and paid on 10 December 2019.
2 Interim dividend paid in respect of the year ended 31 August 2019 of
1.75p per share was declared on 1 May 2019 and paid on 31 May 2019. Final
dividend paid in respect of the year ended 31 August 2018 of 4.00p per share
was declared on 24 October 2018 and paid on 10 December 2018.
For information on the Company's distributable reserves please refer to note 14
on page 85 of the Annual Report and Financial Statements.
BALANCE SHEET AS AT 31 AUGUST 2020
2020 2019
Notes GBP'000 GBP'000
Fixed assets
Investments held at fair value through profit or loss 409,802 340,814
Current assets
Debtors 1,871 1,702
Cash and cash equivalents 141 268
--------------- ---------------
Total current assets 2,012 1,970
========= =========
Creditors - amounts falling due within one year
Bank overdraft (21,817) (173)
Other creditors (2,136) (4,169)
Total current liabilities (23,953) (4,342)
Net current liabilities (21,941) (2,372)
--------------- ---------------
Net assets 387,861 338,442
========= =========
Capital and reserves
Called up share capital 8 110 110
Capital redemption reserve 130 130
Special reserve 47,339 48,845
Capital reserves 329,341 279,255
Revenue reserve 10,941 10,102
--------------- ---------------
Total shareholders' funds 387,861 338,442
========= =========
Net asset value per ordinary share (pence) 7 459.97 399.52
========= =========
STATEMENT OF CASH FLOWS FOR THE YEARED 31 AUGUST 2020
2020 2019
Notes GBP'000 GBP'000
Operating activities
Net profit on ordinary activities before taxation 53,950 19,478
Add back finance costs (written back)/expense (117) 65
Gains on investments held at fair value through profit or (54,642) (17,320)
loss
Losses on foreign exchange 2,088 315
Sales of investments held at fair value through profit or 121,281 127,363
loss
Purchase of investments held at fair value through profit or (135,627) (114,096)
loss
(Increase)/decrease in debtors (351) 96
(Decrease)/increase in creditors (872) 1,825
Taxation on investment income (653) (383)
Interest paid (150) (65)
Refund of UK corporation tax 1,461 -
Refund/(deduction) of withholding tax reclaims 392 (266)
--------------- ---------------
Net cash (used in)/generated from operating activities (13,240) 17,012
========= =========
Financing activities
Ordinary shares purchased into treasury (1,498) (2,520)
Tender offer into treasury - (3,477)
Share purchase and tender costs (8) (70)
Dividends paid 6 (4,937) (4,946)
Net cash used in financing activities (6,443) (11,013)
--------------- ---------------
(Decrease)/increase in cash and cash equivalents (19,683) 5,999
========= =========
Cash and cash equivalents at the start of the year 95 (5,589)
Effect of foreign exchange rate changes (2,088) (315)
--------------- ---------------
Cash and cash equivalents at the end of the year (21,676) 95
========= =========
Comprised of:
Cash at bank 141 268
Bank overdraft (21,817) (173)
--------------- ---------------
(21,676) 95
========= =========
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARED 31 AUGUST 2020
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. ACCOUNTING POLICIES
The principal accounting policies adopted by the Company are set out below:
(a) Basis of preparation
The financial statements have been prepared in accordance with 'The Financial
Reporting Standard applicable in the UK and Republic of Ireland' (FRS 102) 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 the provisions
of the Companies Act 2006.
The financial statements have been prepared on a going concern basis. The
Directors have considered any potential impact of COVID-19 pandemic and the
mitigation measures which key service providers, including the Manager, have in
place to maintain operational resilience on the going concern of the Company.
The Directors have reviewed compliance with the covenants associated with the
bank overdraft facility, income and expense projections and the liquidity of
the investment portfolio in making their assessment.
The revised SORP issued in October 2019 is applicable for accounting periods
beginning on or after 1 January 2019. As a result, the gain arising from
disposals of investments of GBP21,750,000 (2019: gain of GBP987,000) and gain on
revaluation of investments of GBP32,892,000 (2019: gain of GBP16,333,000) have now
been combined, as shown in note 10 to the financial statements in the Annual
Report and Financial Statements. The result of this change in presentation has
no impact on the net asset value or total return for both the current year and
prior year. No other accounting policies or disclosures have changed as a
result of the revised SORP.
The principal accounting policies adopted by the Company are set out below.
Unless specified otherwise, the policies have been applied consistently
throughout the year and are consistent with those applied in the preceding
year. All of the Company's operations are of a continuing nature.
The preparation of the Company's financial statements requires management to
make judgements, estimates and assumptions that affect the reported amounts in
the financial statements. These assumptions and estimates could result in
outcomes that require a material adjustment to the carrying amount of assets or
liabilities affected in the current and future periods, depending on
circumstance. The Directors do not believe that any accounting judgements or
estimates have a significant risk of causing a material adjustment to the
carrying amount of assets and liabilities within the next financial year.
The Company's financial statements are presented in sterling, which is the
currency of the primary economic environment in which the Company operates. All
values are rounded to the nearest thousand pounds (GBP'000) except where
otherwise indicated.
(b) Presentation of Income Statement
In order to better reflect the activities of an investment trust company and in
accordance with guidance issued by the AIC, supplementary information which
analyses the Income Statement between items of a revenue and a capital nature
has been presented alongside the Income Statement.
(c) Segmental reporting
The Directors are of the opinion that the Company is engaged in a single
segment of business being investment business.
(d) Income
Dividends receivable on equity shares are treated as revenue for the year on an
ex-dividend basis. Where no ex-dividend date is available, dividends receivable
on or before the year end are treated as revenue for the year. Provisions are
made for dividends not expected to be received.
Special dividends are recognised on an ex-dividend basis and treated as capital
or revenue depending on the facts or circumstances of each dividend.
Dividends are accounted for in accordance with Section 29 of FRS 102 on the
basis of income actually receivable, without adjustment for tax credits
attaching to the dividend. Dividends from overseas companies continue to be
shown gross of withholding tax.
Deposit interest receivable is accounted for on an accruals basis.
Where the Company has elected to receive its dividends in the form of
additional shares rather than in cash, the cash equivalent of the dividend is
recognised as revenue. Any excess in the value of the shares received over the
amount of the cash dividend is recognised in capital.
(e) Expenses
All expenses, including finance costs, are accounted for on an accruals basis.
Expenses have been charged wholly to the revenue column of the Income
Statement, except as follows:
· expenses which are incidental to the acquisition or disposal of an
investment are treated as capital. Details of transaction costs on the
purchases and sales of investments are disclosed in note 10, on page 84 of the
Annual Report and Financial Statements;
· expenses are treated as capital where a connection with the
maintenance or enhancement of the value of the investments can be demonstrated;
and
· the investment management fee and finance costs have been allocated
80% to the capital column and 20% to the revenue column of the Income Statement
in line with the Board's expected long-term split of returns, in the form of
capital gains and income respectively, from the investment portfolio.
(f) Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax. The tax currently payable is based on the taxable profit for the year.
Taxable profit differs from net profit as reported in the Income Statement
because it excludes items of income or expenses that are taxable or deductible
in other years and it further excludes items that are never taxable or
deductible. The Company's liability for current tax is calculated using tax
rates that were applicable at the balance sheet date.
The current tax effect of different items of expenditure is allocated between
capital and revenue on the marginal basis using the Company's effective rate of
corporation tax for the accounting period.
Deferred taxation is recognised in respect of all timing differences at the
financial reporting date, where transactions or events that result in an
obligation to pay more taxation in the future or right to less taxation in the
future have occurred at the balance sheet date. Deferred tax is measured on a
non-discounted basis, at the average tax rates that are expected to apply in
the periods in which the timing differences are expected to reverse based on
tax rates and laws that have been enacted or substantively enacted by the
balance sheet date. This is subject to deferred taxation assets only being
recognised if it is considered more likely than not that there will be suitable
profits from which the future reversal of the timing differences can be
deducted.
(g) Investments held at fair value through profit or loss
The Company's investments are classified as held at fair value through profit
or loss in accordance with Sections 11 and 12 of FRS 102 and are managed and
evaluated on a fair value basis in accordance with its investment strategy.
All investments are classified upon initial recognition as held at fair value
through profit or loss. Purchases of investments are recognised on a trade date
basis. Sales are recognised at the trade date of the disposal and the proceeds
are measured at fair value, which is regarded as the proceeds of the sale less
any transaction costs.
The fair value of the financial investments is based on their quoted bid price
at the balance sheet date on the exchange on which the investment is quoted,
without deduction for the estimated future selling costs.
Changes in the value of investments held at fair value through profit or loss
and gains and losses on disposal are recognised in the Income Statement as
'Gains or losses on investments held at fair value through profit or loss'.
Also included within this heading are transaction costs in relation to the
purchase or sale of investments.
The fair value hierarchy consists of the following three levels:
Level 1 - Quoted market price for identical instruments in active markets.
Level 2 - Valuation techniques using observable inputs.
Level 3 - Valuation techniques using significant unobservable inputs.
(h) Debtors
Debtors include sales for future settlement, other debtors and pre-payments and
accrued income in the ordinary course of business. If collection is expected in
one year or less, they are classified as current assets. If not, they are
presented as non-current assets.
(i) Creditors
Creditors include purchases for future settlements, interest payable, share
buyback costs and accruals in the ordinary course of business. Creditors are
classified as creditors - amounts due within one year if payment is due within
one year or less. If not, they are presented as creditors - amounts due after
more than one year.
(j) Dividends payable
Under Section 32 of FRS 102, final dividends should not be accrued in the
financial statements unless an obligation exists at the end of the reporting
period. Dividends payable to equity shareholders are recognised in the
Statement of Changes in Equity when they have been approved by shareholders and
have become a liability of the Company. Interim dividends are only recognised
in the financial statements in the period in which they are paid.
(k) Cash and cash equivalents
Cash comprises cash in hand and on demand deposits. Cash equivalents include
bank overdrafts repayable on demand and short-term, highly liquid investments,
that are readily convertible to known amounts of cash and that are subject to
an insignificant risk of changes in value.
(l) Foreign currency translation
In accordance with Section 30 of FRS 102, the Company is required to nominate a
functional currency being the currency in which the Company predominately
operates. The functional and reporting currency is sterling, reflecting the
primary economic environment in which the Company operates. Transactions in
foreign currencies are translated into sterling at the rates of exchange ruling
on the date of the transaction. Foreign currency monetary assets and
liabilities and non-monetary assets held at fair value are translated into
sterling at the rates of exchange ruling at the balance sheet date. Profits and
losses thereon are recognised in the capital column of the Income Statement and
taken to the capital reserve.
(m) Shares repurchased/tendered and held in treasury
The full cost of shares repurchased/tendered and held in treasury can be
charged to either capital reserves or the special reserve.
(n) Bank borrowings
Bank overdrafts are recorded as the proceeds received. Finance charges are
accounted for on an accruals basis in the Income Statement.
3. INCOME
2020 2019
GBP'000 GBP'000
Investment income:
UK dividends 472 345
Overseas dividends 4,147 5,441
Overseas special dividends 63 138
--------------- ---------------
4,682 5,924
========= =========
Other income:
Bank interest - 2
Interest on corporation tax refund 80 -
Interest on withholding tax reclaims 16 -
96 2
--------------- ---------------
Total income 4,778 5,926
========= =========
Dividends and interest received in cash during the period amounted to GBP
3,651,000 and GBPnil respectively (2019: GBP5,062,000 and GBP2,000).
No special dividends have been recognised in capital during the year (2019: GBP
nil).
4. INVESTMENT MANAGEMENT FEE
2020 2019
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment 585 2,340 2,925 531 2,122 2,653
management fee
--------------- --------------- --------------- --------------- --------------- ---------------
Total 585 2,340 2,925 531 2,122 2,653
========= ========= ========= ========= ========= =========
The investment management fee is levied quarterly, based on 0.85% per annum of
net asset value on the last day of each month. The investment management fee is
allocated 80% to capital reserves and 20% to the revenue reserve.
5. OTHER OPERATING EXPENSES
2020 2019
GBP'000 GBP'000
Allocated to revenue:
Broker fees 48 49
Custody fees 50 44
Depositary fees 36 41
Audit fees 34 29
Legal fees 24 30
Registrars' fees 80 80
Directors' emoluments1 131 130
Marketing fees 111 103
Postage and printing fees 64 38
Tax agent fees 36 36
AIC fees 26 25
Professional fees 15 16
Write back of prior year expenses (156) -
Other administration costs 67 89
--------------- ---------------
566 710
========= =========
Allocated to capital:
Custody transaction costs 8 25
--------------- ---------------
574 735
========= =========
The Company's ongoing charges2, calculated as a percentage of average 1.01% 1.08%
daily net assets and using the management fee and all other operating
expenses, excluding finance costs, direct transaction costs, custody
transaction charges, VAT recovered, taxation and certain non-recurring
items were:
========= =========
1 Further information on Directors' emoluments can be found in the
Directors' Remuneration Report on page 48 of the Annual Report and Financial
Statements.
2 Alternative performance measure, see Glossary on pages 104 to 106 of the
Annual Report and Financial Statements.
6. DIVIDS
2020 2019
Dividends paid on equity Record date Payment date GBP'000 GBP'000
shares
2018 Final dividend of 2 November 10 December - 3,458
4.00p 2018 2018
2019 Interim dividend of 10 May 2019 31 May 2019 - 1,488
1.75p
2019 Final dividend of 1 November 10 December 3,461 -
4.10p 2019 2019
2020 Interim dividend of 15 May 2020 10 June 2020 1,476 -
1.75p
--------------- ---------------
4,937 4,946
========= =========
The Directors have proposed a final dividend of 4.40p per share in respect of
the year ended 31 August 2020. The dividend will be paid on 9 December 2020,
subject to shareholders' approval on 1 December 2020, to shareholders on the
Company's register on 30 October 2020. The proposed final dividend has not been
included as a liability in these financial statements, as final dividends are
only recognised in the financial statements when they have been approved by
shareholders.
The total dividends payable in respect of the year which form the basis of
determining retained income for the purpose of section 1158 of the Corporation
Tax Act 2010 and section 833 of the Companies Act 2006, and the amount proposed
for the year ended 31 August 2020, meet the relevant requirements as set out in
this legislation.
2020 2019
Dividends paid or proposed or declared on equity shares GBP'000 GBP'000
Interim paid of 1.75p (2019: 1.75p) 1,476 1,488
Final proposed of 4.40p* (2019: 4.10p) 3,710 3,461
--------------- ---------------
5,186 4,949
========= =========
* Based on 84,323,101 ordinary shares (excluding treasury shares) in issue
on 22 October 2020.
All dividends paid or payable are distributed from the Company's revenue
profits.
7. EARNINGS AND NET ASSET VALUE PER ORDINARY SHARE
Revenue, capital earnings and net asset value per ordinary share are shown
below and have been calculated using the following:
2020 2019
Net revenue profit attributable to ordinary shareholders 5,776 4,160
(GBP'000)
Net capital profit attributable to ordinary shareholders 50,086 14,833
(GBP'000)
--------------- ---------------
Total profit attributable to ordinary shareholders (GBP 55,862 18,993
'000)
========= =========
Total shareholders' funds (GBP'000) 387,861 338,442
========= =========
Earnings per share
The weighted average number of ordinary shares in issue 84,368,978 85,459,456
during the year on which the earnings per ordinary share
was calculated was:
The actual number of ordinary shares in issue at the end 84,323,101 84,713,101
of the year on which the net asset value was calculated
was:
Calculated on weighted average number of ordinary shares
Revenue profit (pence) 6.85 4.87
Capital profit (pence) 59.36 17.35
--------------- ---------------
Total (pence) 66.21 22.22
========= =========
As at As at
31 August 31 August
2020 2019
Net asset value per share (pence) 459.97 399.52
Ordinary share price (pence) 447.00 385.00
========= =========
There were no dilutive securities at the year end.
8. SHARE CAPITAL
Ordinary Treasury Total Nominal
shares shares shares value
number number number GBP'000
Allotted, called up and fully
paid share capital comprised:
Ordinary shares of 0.1p each
At 31 August 2019 84,713,101 25,615,837 110,328,938 110
Shares repurchased and held in (390,000) 390,000 - -
treasury
------------------ ------------------ ------------------ ------------------
At 31 August 2020 84,323,101 26,005,837 110,328,938 110
============= ============= ============= =============
During the year 390,000 ordinary shares were repurchased and held in treasury
(2019: 710,000) for a total consideration, including expenses, of GBP1,506,000
(2019: GBP2,537,000). Additionally, during the year there were no tender offers
(2019: one) and no shares (2019: 1,036,590 shares) were transferred to treasury
for a total consideration of GBPnil (2019: GBP3,501,000). The number of ordinary
shares in issue at the year end was 110,328,938 (2019: 110,328,938) of which
26,005,837 were held in treasury (2019: 25,615,837). No treasury shares were
issued or cancelled during the year (2019: nil).
9. 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 at bank 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 above.
Categorisation within the hierarchy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant asset.
The fair value hierarchy has the following levels:
Level 1 - Quoted market price for identical instruments in active markets
A financial instrument is regarded as quoted in an active market if quoted
prices are readily and regularly available from an exchange, dealer, broker,
industry group, pricing service or regulatory agency and those prices represent
actual and regularly occurring market transactions on an arm's length basis.
The Company does not adjust the quoted price for these instruments.
Level 2 - Valuation techniques using observable inputs
This category includes instruments valued using quoted prices for similar
instruments in markets that are considered less active; or other valuation
techniques where all significant inputs are directly or indirectly observable
from market data.
Level 3 - Valuation techniques using significant unobservable inputs
This category includes all instruments where the valuation technique includes
inputs not based on market data and these inputs could have a significant
impact on the instrument's valuation.
This category also includes instruments that are valued based on quoted prices
for similar instruments where significant entity determined adjustments or
assumptions are required to reflect differences between the instruments and
instruments for which there is no active market. The Investment Manager
considers observable data to be that market data that is readily available,
regularly distributed or updated, reliable and verifiable, not proprietary, and
provided by independent sources that are actively involved in the relevant
market.
The level in the fair value hierarchy within which the fair value measurement
is categorised in its entirety is determined on the basis of the lowest level
input that is significant to the fair value measurement. If a fair value
measurement uses observable inputs that require significant adjustment based on
unobservable inputs, that measurement is a Level 3 measurement.
Assessing the significance of a particular input to the fair value measurement
in its entirety requires judgement, considering factors specific to the asset
or liability. The determination of what constitutes 'observable' inputs
requires significant judgement by the Investment Manager.
The table below is an analysis of the Company's financial instruments measured
at fair value at the balance sheet date.
Level 1 Level 2 Level 3 Total
Financial assets at fair value through profit or GBP'000 GBP'000 GBP'000 GBP'000
loss at 31 August 2020
Equity investments 409,802 - - 409,802
======== ======== ======== ========
= = = =
Level 1 Level 2 Level 3 Total
Financial assets at fair value through profit or GBP'000 GBP'000 GBP'000 GBP'000
loss at 31 August 2019
Equity investments 340,814 - - 340,814
======== ======== ======== ========
= = = =
There were no transfers between levels for financial assets and financial
liabilities during the year recorded at fair value as at 31 August 2020 and 31
August 2019. The Company did not hold any Level 3 securities throughout the
financial year or as at 31 August 2020 (2019: nil).
10. TRANSACTIONS WITH THE MANAGER AND INVESTMENT MANAGER
BlackRock Fund Managers Limited (BFM) provides management and administration
services to the Company under a contract which is terminable on six months'
notice. BFM has (with the Company's consent) delegated certain portfolio and
risk management services, and other ancillary services, to BlackRock Investment
Management (UK) Limited (BIM (UK)). Further details of the investment
management contract are disclosed in the Directors' Report on pages 39 and 40
of the Annual Report and Financial Statements.
The investment management fee is levied quarterly, based on 0.85% per annum of
net asset value on the last day of each month. The investment management fee
due for the year ended 31 August 2020 amounted to GBP2,925,000 (2019: GBP
2,653,000). At the year end, GBP1,484,000 was outstanding in respect of the
management fee (2019: GBP1,994,000).
In addition to the above services, BIM (UK) provided the Company with marketing
services. The total fees paid or payable for these services for the period
ended 31 August 2020 amounted to GBP111,000, excluding VAT (2019: GBP103,000).
Marketing fees of GBP181,000 were outstanding at 31 August 2020 (2019: GBP177,000).
The ultimate holding company of the Manager and the Investment Manager is
BlackRock, Inc. a company incorporated in Delaware USA. During the period, PNC
Financial Services Group, Inc. ("PNC") was a substantial shareholder in
BlackRock, Inc. PNC did not provide any services to the Company during the
financial year ended 31 December 2019 and the period up to the 11 May 2020. On
11 May 2020, PNC announced its intent to sell its investment in BlackRock, Inc.
through a registered offering and related buyback by BlackRock, Inc.
11. RELATED PARTY DISCLOSURE
Disclosures of the Directors' interests in the ordinary shares of the Company
and fees and expenses payable to the Directors are set out in the Directors'
Remuneration Report on pages 48 and 49 of the Annual Report and Financial
Statements. At 31 August 2020, GBP11,000 (2019: GBP10,000) was outstanding in
respect of Directors' fees.
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").
As at 31 August 2020
Total % of shares held by Number of Significant
Total % of shares held by Significant Investors who
Related BlackRock Funds Investors who are not are not affiliates of
affiliates of BlackRock Group or
BlackRock Group or BlackRock, Inc.
BlackRock, Inc.
1.6 n/a n/a
========= =========
As at 31 August 2019
Total % of shares held by Number of Significant
Total % of shares held by Significant Investors who
Related BlackRock Funds Investors who are not are not affiliates of
affiliates of BlackRock Group or
BlackRock Group or BlackRock, Inc.
BlackRock, Inc.
1.5 n/a n/a
========= =========
12. CONTINGENT LIABILITIES
There were no contingent liabilities at 31 August 2020 (2019: nil).
13. PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information contained in this announcement does not constitute
statutory accounts as defined in the Companies Act 2006. The Annual Report and
Financial Statements for the year ended 31 August 2020 will be filed with the
Registrar of Companies after the Annual General Meeting.
The figures set out above have been reported upon by the auditor, whose report
for the year ended 31 August 2020 contains no qualification or statement under
section 498(2) or (3) of the Companies Act 2006.
The comparative figures are extracts from the audited financial statements of
BlackRock Greater Europe Investment Trust plc for the year ended 31 August
2019, which have been filed with the Registrar of Companies. The report of the
auditor on those financial statements contained no qualification or statement
under section 498 of the Companies Act.
14. ANNUAL REPORT
Copies of the Annual Report and Financial Statements will be published shortly
and will be available from the registered office, c/o The Company Secretary,
BlackRock Greater Europe Investment Trust plc, 12 Throgmorton Avenue, London
EC2N 2DL.
15. ANNUAL GENERAL MEETING
The Annual General Meeting of the Company will be held at the offices of
BlackRock, 12 Throgmorton Avenue, London EC2N 2DL on Tuesday, 1 December 2020
at 12.00 noon.S
The Annual Report will also be available on the BlackRock website at
blackrock.com/uk/brge. Neither the contents of the Manager's website nor the
contents of any website accessible from hyperlinks on the Manager's website (or
any other website) is incorporated into, or forms part of, this announcement. For further information please contact: Melissa Gallagher, Co-head, Closed End Funds, BlackRock Investment Management (UK) Limited Tel: 020 7743 3893 Stefan Gries, Fund Manager, 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 12 Throgmorton Avenue London EC2N 2DL 22 October 2020 END
(END) Dow Jones Newswires
October 22, 2020 11:57 ET (15:57 GMT)
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