BlackRock Throgmorton Trust Plc - Half-year Report

BlackRock Throgmorton Trust Plc - Half-year Report

PR Newswire

LONDON, United Kingdom, July 24

BlackRock Throgmorton Trust plc

(Legal Entity Identifier: 5493003B7ETS1JEDPF59)

Information disclosed in accordance with Article 5 Transparency Directive and DTR 4.2

Half Yearly Financial Report 31 May 2024

Performance Record

	As at  31 May  2024	As at  30 November  2023
Net assets (£’000)1	644,498	575,925
Net asset value per ordinary share (pence)	703.55	600.72
Ordinary share price (mid-market) (pence)	639.00	579.00
Benchmark Index2	17,182.78	14,713.60
Discount to cum income net asset value3	(9.2)%	(3.6)%
	=========	=========

	For the  six months  ended  31 May  2024	For the  year  ended  30 November  2023
Performance (with dividends reinvested)
Net asset value per share3	19.2%	(2.3)%
Ordinary share price3	12.5%	(0.8)%
Benchmark Index2	16.8%	(6.0)%
Average discount to cum income net asset value for the period/year3	(8.0)%	(5.2)%
	=========	=========

	For the period  since 1 July 2008  to 31 May  2024	For the period  since 1 July 2008  to 30 November  2023
Performance since 1 July 20084 (with dividends reinvested)
Net asset value per share3	526.0%	425.1%
Ordinary share price3	543.1%	471.7%
Benchmark Index2	183.1%	142.4%
	=========	=========

	For the six  months ended  31 May  2024	For the six  months ended  31 May  2023	Change  %
Revenue
Net revenue profit on ordinary activities after taxation (£’000)	8,885	8,544	+4.0%
Revenue earnings per ordinary share (pence)5	9.44	8.46	+11.6%
	---------------	---------------	---------------
Dividends per ordinary share (pence)
Interim	3.75	3.30	+13.6%
	=========	=========	=========

1    The change in net assets reflects portfolio movements, share buybacks and dividends paid during the period.

2    The Company’s Benchmark Index is the Deutsche Numis Smaller Companies plus AIM (excluding Investment Companies) Index.

3    Alternative Performance Measures, see Glossary contained within the half yearly financial report.

4    Since BlackRock's appointment as Investment Manager on 1 July 2008.

5    Further details are given in the Glossary contained within the half yearly financial report.

Chairman’s Statement

Dear Shareholder

Highlights

·       NAV total return of 19.2%, an outperformance of 2.4 percentage points against the Benchmark Index

·       Share price total return underperformed the Benchmark Index by 4.3 percentage points as our share price discount to NAV widened to 9.2% (30 November 2023: 3.6%) and traded at an average discount of 8.0%

·       Performance remains strong over the longer term; our NAV has outperformed the Benchmark Index by 12.2% over five years (share price by 9.9%) and by 89.6% over 10 years (share price by 104.2%)

·       Interim dividend of 3.75p per share declared (31 May 2023: 3.30p)

Overview
The Company had a positive first six months of the year, delivering a strong absolute return during the six months to 31 May 2024 and outperforming our Benchmark Index by 2.4 percentage points. Earnings per share also rose by 11.6%, enabling the Board to declare an increased interim dividend.

The UK economy has displayed notable resilience and following a shallow technical recession in the second half of 2023, UK GDP returned to growth in 2024, although to date progress remains relatively modest. Overall market sentiment was once again heavily influenced by the path of inflation and interest rates. UK inflation continued its steady trajectory downward during the period, providing welcome relief to corporates and households alike. The rate of inflation for the 12 months to 31 May 2024 came in at 2.0% (the lowest level since July 2021), meeting the Bank of England’s (BoE) inflation target and increasing the likelihood of a summer cut in the base rate of interest.

Investor sentiment, and importantly risk appetite, appear to have improved during the period and UK equity markets continued upward with the FTSE 100 Index hitting an all-time high in early May. Market performance has been supported by a more benign economic backdrop of falling inflation, lower cost of borrowing, rising consumer confidence, high employment and strong wage growth. These factors have been positive for our asset class and this momentum has been reflected in the strong performance of our portfolio in the first six months of our financial year.

Another feature of the period under review has been continued merger and acquisition (M&A) activity by those recognising the value on offer in the UK market. As our portfolio manager, Dan Whitestone, explains in his report which follows, portfolio performance was boosted by several bids for companies within our portfolio and this activity is indicative of quite how cheap UK smaller companies are at the moment.

Post the period end, the Government’s announcement of an early General Election took many by surprise. The election was held on 4 July with Labour winning a landslide majority and taking power. There is now likely to be a great deal of activity as the new government takes the reins and seeks to implement its policies and reform agenda. Although the market has responded positively to the news, the immediate impact of the new government on the economy is likely to be minimal, although the resulting political certainty and pro-growth policies should aid market sentiment and be broadly positive for UK equities, in particular those smaller companies exposed to the domestic economy.

As you will read in his report which follows, our portfolio manager is upbeat about the opportunities available in UK smaller companies. As a Board we share his optimism about the outlook for our portfolio and the opportunities currently available in our asset class.

Performance
Over the six months to 31 May 2024, the Company’s Net Asset Value (NAV) total return was +19.2% compared to a return of +16.8% from the Company’s Benchmark Index, an outperformance of 2.4 percentage points. The Company’s share price returned 12.5%, underperforming the Benchmark Index by 4.3 percentage points as our discount widened during period. Since the period end and up to the close of business on 19 July 2024, the Company’s NAV has risen by 0.7%, and the Benchmark Index has risen by 0.2% (all figures with dividends reinvested).

Over the longer term our performance remains strong. For the five and ten-year periods to 31 May 2024, the Company’s NAV returned +33.0% and +147.9%, and the share price returned +30.7% and +162.5%, comparing favourably to the Benchmark Index returns of +20.8% and +58.3% over the same periods.

Performance record to 31 May 2024 (with dividends reinvested)

	1 Year change %	3 Year change %	5 Year change %	10 Year change %
NAV per share	16.4	-16.0	33.0	147.9
Share price	11.6	-24.2	30.7	162.5
Benchmark Index	12.5	-11.7	20.8	58.3

The Board and our portfolio manager remain resolutely focused on achieving the Company’s objectives of providing shareholders with long-term capital growth and an attractive total return through investment in primarily UK smaller and mid-capitalisation companies.

Further information on the Company’s performance and the factors that contributed to performance during the period and the outlook for the second half of the financial year are set out in the Investment Manager’s Report below.

Revenue return and dividends
The revenue return per share for the period amounted to 9.44 pence per share, compared to 8.46 pence per share earned during the same six-month period last year, an increase of 11.6%. It is positive to see that the level of income generated from our investment portfolio has increased.

The Board recognises that, although the Company’s objective is capital growth, shareholders value consistency of dividends paid by the Company; an interim dividend of 3.75p per share has therefore been declared (2023: 3.30p per share), payable on 27 August 2024 to shareholders on the register on 2 August 2024 (the ex-dividend date is 1 August 2024). The interim dividend is fully covered by revenue generated by the portfolio during the period.

Policy on share price premium/discount
The Board believes that the best way of addressing any discount to NAV over the longer term is to generate good performance and to create demand for the Company’s shares in the secondary market through broadening awareness of the Company’s unique structure and other attractions. In determining whether the premium/discount to NAV (the share rating) at which the Company’s shares trade is excessive or otherwise, the Board considers several factors. These may include but are not limited to whether the share rating is commensurate with the current demand for UK smaller companies and whether the Company’s shares were trading in normal market conditions; the ongoing attractiveness of the investment proposition, in particular the strength of the portfolio management team and process; and the strong long-term performance delivered for shareholders, both in absolute and relative terms.

Share buy back activity
During the six months to 31 May 2024, the Company’s share rating ranged between a discount to NAV of 3.6% at its narrowest (at the start of the period) to its widest discount of 11.0% in mid-April and ended the period at a discount of 9.2% (30 November 2023: 3.6%). This compares with the weighted average discount of the UK smaller companies peer group which ended the period at an average discount of 10.4%.

During the period under review, the Company bought back a total of 4,265,234 ordinary shares for a total consideration of £25,477,000. Since 31 May 2024 and up to the latest practicable date of 19 July 2024, a further 836,063 shares have been bought back for a total consideration of £5,166,000. As at 19 July 2024, the Company’s shares were trading at a discount of 7.7% versus an average discount for the rest of the peer group of 10.9%. All shares were bought back at a discount to the prevailing NAV and were therefore accretive to existing shareholders.

The Board’s objectives are to seek to minimise share price volatility and encourage the Company’s share price to trade within as tight a range as possible, taking into account the various factors described above. However, despite our consistent and targeted action in support of the share rating, it was disappointing to see our discount widen during the period. The Board recognises that shareholders experience the share price performance of the Company and, in conjunction with our Broker and the Manager, we keep the share rating under continuous review seeking to understand and address the drivers of the widening discount.

There are of course several factors which influence the level of premium/discount at which a Company’s shares trade in the market, many of which are outside of the Board’s direct scope of control or influence; not least the pervasive selling we have witnessed since early 2022 which has depressed share prices in our asset class and acted to widen discounts. It is important to view the Company’s share rating in the wider market context, noting that the Investment Trust sector average discount at 31 May 2024 had widened to 14.1% compared to 12.8% at the end of 2023 and 11.2% at the end of 2022, remaining correlated with Gilt yields. Buy back activity was significantly elevated across the sector as a whole as boards grappled with selling pressure. In April (when your Company’s discount was at its widest) 118 investment trusts repurchased shares (representing the highest monthly figure for the number of investment companies buying back shares since 1996).

Overall, we believe the share buy back activity undertaken has been beneficial in reducing the volatility of our share rating and delivering NAV accretion. Your Board will continue to monitor the Company’s share rating and may deploy its powers to support it by issuing or buying back the Company’s shares where it believes that it is in shareholders’ long-term best interests to do so.

Corporate governance
The Board takes its governance responsibilities very seriously and follows best practice requirements as closely as possible. As I reported in our Annual Report, we have complied with all applicable regulation and guidance with regard to matters of board diversity such as the FTSE Women Leaders Review and the recommendations of the Parker Review, now enshrined in the UK Listing Rules. The Board remains committed to exercising the highest standards of good governance and, as we do each year, will report to shareholders in the Annual Report on our compliance with the UK Code of Corporate Governance and other matters of good governance.

Change of advisor
Following a competitive process, and as announced on 18 June 2024, the Board resolved to appoint Winterflood Securities Limited as sole corporate broker and financial adviser.

On behalf of the Board I would like to thank our previous broker, Stifel, who played a key role in 2018 during a period of pivotal strategic change for the Company and supported our growth and subsequent ascent into the FTSE 250 Index. We thank the team for their service to the Company over many years.

Shareholder communication
As we do each year, our Senior Independent Director and I recently met with several of our largest shareholders to answer any questions they had and encourage candid feedback on the Company. We believe both parties find this direct engagement insightful and beneficial. As a Board, we would of course like to hear the views of all shareholders. With this in mind, should you have any questions or feedback for the Board, you can write to me at our registered office address (given within the half yearly financial report) or by email at: [e-mail].

We appreciate how important access to regular information is to our shareholders. To supplement our Company website, we offer shareholders the ability to sign up to the BlackRock Trust Matters newsletter which includes information on the Company as well as news, views and insights on the investment trust market. Information on how to sign up is included on the inside cover of the half yearly financial report.

Outlook
As you will read in his report which follows, Dan describes a more promising environment for growth. He is optimistic about the future and emboldened by what he believes is a significant mispricing within UK small and mid-caps, driven by pervasive outflows of capital from the UK small-cap market over several years. This can be seen in the disconnect between the sales and earnings growth delivered by companies and the prevailing share price. Therefore, he believes our asset class currently presents investors with a clear and compelling investment opportunity, the like of which has not been seen for many years.

Our portfolio manager’s fundamental approach has not changed. He focuses on identifying financially strong, cash generative companies, those which have innovative and disruptive business models and market leading offerings that can compound returns over time. The Board remains fully supportive of his investment approach and philosophy, moreover we share his enthusiasm around the opportunities available in UK smaller companies.

CHRISTOPHER SAMUEL
Chairman
24 July 2024

Investment Manager’s Report For the six months ended 31 May 2024

Market review and overall investment performance
For the first half of 2024, the Company’s NAV delivered a positive return (net of fees) of +19.2%, outperforming the Benchmark Index by +2.4%. The Company’s share price returned +12.5%. Despite the omnipresent dark cloud of negative sentiment that envelopes this exciting and differentiated universe, it was somewhat heartening to witness a meaningful period of positive returns. It may surprise some to see that the returns of our Benchmark Index (+16.8%), the FTSE 250 Index (+15.6%) and the FTSE Small Cap Index (+15.0%) don’t look out of place alongside the Nasdaq Composite Index (+17.6%) which itself has benefitted from the inexorable growth of Nvidia which accounted for 31% of that return. My own hope (belief) is that this is just the start, reflecting a combination of i) continued resilient trading, ii) low valuations (versus their own history, versus large caps, and versus their own prospects for profit and cash flow growth), iii) an improving macro environment (falling inflation, increasing consumer confidence and household cash flows, high savings rates, and real wage growth), iv) strong balance sheets, and v) elevated levels of merger and acquisition (M&A) activity underpinning the valuation argument. I dare put forward a sixth point, which is the election of the Labour Government would herald not only a period of political stability but also a “pro-growth” agenda which could benefit many holdings in the Company.

Whilst the last six months witnessed another period of fund outflows for UK small and medium sized companies, May 2024 marked the first monthly net inflow since May 2021. That’s an incredible statistic really; the first monthly inflow after 35 consecutive months of outflows. Indeed, those 35 months of outflows total to around $16.5 billion, which in our view has acted as a significant drag on returns, overpowering fundamentals. Accordingly, the value of any listed UK small and medium sized company has increasingly been dictated by the clearing price of an outflow, a trend that looks to be ameliorating at long last, reflecting the slowdown in outflows through the period and finally the inflow in May. Maybe this is in part because so many market participants have effectively given up on the UK? Thinking about the UK more broadly, the allocation from UK pension funds to the UK stock market has shrunk from 52% in 1990 down to circa 4% now, which represents a withdrawal of circa £1.9 trillion from UK listed equities over the last 25 years. Our discussions with UK Wealth Managers suggest a similar path, and I would suspect the retail platforms of direct investments too. Maybe there’s just not much left to sell now? The challenges and industry concentration of the FTSE 100 Index are well understood, but the UK small and mid-cap market is a much more diverse and differentiated opportunity set comprised of many idiosyncratic compelling investment cases. One should not overlook the comparable returns that UK small and mid-sized companies have delivered in the last six months versus the US indices, so to go a step further, with such an extreme change in investor positioning, any improvement in the macro-economic backdrop that lifts sentiment could see the recent rally really accelerate considering how extreme positioning has now become.

Performance review
For the Company, stock specifics were the dominant driver of returns for the period, so we take some assurance that we got more things right than wrong and the returns were not driven by one big thematic bet or factor move. Assessing the impact of the increasing levels of M&A activity we have seen in recent months is complicated with several considerations. If M&A helps underpin valuations more broadly in the sector that is a positive, but short term returns today need to be judged against the long term opportunity cost we may forgo. Value is in the eye of the beholder, to us some of the recently announced bids feel very opportunistic, others more perplexing. Over this six month period the Company has benefitted from Mattioli Woods and to a lesser extent Spirent, but we have also experienced a headwind of around 1% from not owning other shares in our benchmark that have been bid for in the period. We continue to run with a small number of short positions versus history to protect against increasing levels of M&A activity and also because we believe that in aggregate the sector is simply far too cheap and due a re-rating. If we are right in our views on recovery then history would suggest that will lead to another fertile period for shorting as a rising tide will lift all boats including some with large structural flaws, or an over exuberant or complacent crew, or indeed those exposed to changing currents if we were to stretch the analogy further.

The top contributor to performance was 4imprint rising over 50% in the period on the back of successive strong financial updates with positive revisions to forecasts. Despite a broader slowdown in the wider US promotional products market, 4Imprint has continued to deliver impressive revenue growth reflecting ongoing market share gains (helps when you have a differentiated business model but have less than 5% market share) and expanding profit margins on increased marketing efficiencies. We remain long term supporters but have taken advantage of the share price rally to reduce our holding at all-time highs, which gives us the flexibility to buy more on any pull back.

The second biggest contributor was SigmaRoc, which has continued to trade strongly delivering full year 2023 results ahead of expectations and subsequently delivering a strong quarter one of 2024 trading update. Shares in SigmaRoc hit a valuation of around 6x current year’s earnings towards the end of last year, one of many examples of some of the valuation opportunities that this market has thrown up. Gamma Communications rose after the company delivered another set of robust results, showing over 9% organic revenue growth. Highlighting their resilience as UK corporate demand for cloud telecoms remains positive. With over 10% of their market cap in net cash the company’s board has recently initiated a share buyback programme.

Turning to the detractors, the biggest was WH Smith which fell despite “in-line” results. The contentious issue is the mix of profits with UK better and US worse reflecting timing of store opening programme, refurbishments and also a slowdown in their In-Motion business (weaker product cycle). As the US is the key driver of future profit growth we understand the concerns, albeit see the slowdown as temporary, not structural, whilst Management continue to deliver an impressive rate of contract wins in the US which should lead to a materially higher profit base in time. The second biggest detractor was Watches of Switzerland which issued a profit warning in January. As I covered this in some detail in our January monthly update I will merely reiterate that we reduced the position significantly back then reflecting the evolving investment case and now have an effective benchmark weight as we weigh up valuation and long term opportunity versus near term uncertainty. Shares in CVS Group fell in response to an announcement from the Competition and Markets Authority (CMA) that they would be progressing to a full Market Investigation into the veterinary market in the UK. The CMA had announced an initial review in September last year and we reduced the position to reflect uncertainty then. With a circa 18 month investigation hanging over the company we have reduced the position size further.

Portfolio positioning  
The portfolio continues to be built from a myriad of idiosyncratic investment opportunities where we see a compelling runway for growth. However, no investment can be viewed without some broader macro context, and as consumer and industrial shares are two of the biggest areas of exposure, I thought it instructive to share some thoughts here. To summarise briefly, I believe the operating environment for the majority of the UK small and medium-sized complex is likely to improve through the year, something still to be reflected in consensus forecasts and valuations. My argument is broadly two fold:

·        First is that the economic backdrop is better than feared and there are several reasons why this should improve further, which I’ve outlined below.

·        Second is that many of our consumer and industrial companies have done a better job than appreciated in mitigating the reduction in like for like volumes they’ve experienced through price increases, cost re-engineering, and further market share gains. Therefore, we think many of our holdings are in a position to achieve far higher levels of profitability in the recovery which could drive a significant increase in valuation and in some specific cases drive a higher cross-cycle multiple of earnings.

As a team, we believe the operating environment is better than feared and there is a strong case why this should improve further. Inflation in the UK has fallen materially through 2024, and whilst each inflation print is scrutinised (some beats, some misses, some noticeable lags such as Services) the big picture is that it continues to fall and is indeed running closer to the 2% level if we annualise the last few months. Oil and gas looks less of a risk to inflation (at the time of writing), whilst food continues to fall. Services continues to lag but we hope falls in the months ahead. Wage inflation certainly has the capacity to upend the broader trend in inflation, however, we observe from many of our interactions with management teams that there are reasons for optimism. This reflects growing first hand evidence that although wage inflation is running ahead of the Consumer Price Index, it reflects the timing of wage settlements still to annualise, whilst labour availability is improving as job vacancies fall and companies have been able to revise their internal budgets for staff costs.

Contrary to what you might think, consumer confidence in the UK is now running at the highest in over 20 years, whereas the ASDA Income tracker (a proxy for household cash flow) has reached a 30 month high with quite an extraordinary positive reading in May at 16% year over year. Despite the consensus view that the UK’s savings rate would be depleted through 2023 in a cost of living crisis, it actually increased so the average UK consumer has more money to spend and feels confident. This no doubt reflects that many are experiencing real wage growth for the first time in decades and retain a high degree of job security. Business conditions continue to improve, see the Purchasing Managers’ Index or the Lloyds Business Survey as exemplars, which in turn should help drive economic growth from its current low level. The election of the Labour Government removed a prolonged period of uncertainty and could hopefully usher in a period of stability which will promote business confidence further, allied to a pro-growth agenda which could be particularly beneficial for our positions in housebuilders, construction and the supply chain.

In terms of positioning, Consumer and Industrials are the two biggest areas of gross exposure, reflecting where we see some of the most compelling stock specific opportunities. Many of our investments here have not only protected profitability better than expected, but have also developed an impressive track record of shareholder returns. So depressed valuations, a protected profit base which can grow meaningfully from here, combined with a permanently reduced share count is an attractive proposition which could reward the Company handsomely in time.

We have continued to add to heavy construction and aggregates (e.g. Breedon) on the back of an improving demand backdrop and an industry structure that has seen the permanent withdrawal of capacity which has been reflected in strong pricing to offset volume reductions. Consequently, profits have still demonstrated impressive year on year growth despite the reduction in volumes, so with a reengineered cost base, profits in the next cycle could reach new highs as volumes recover. Indeed, we expect 2024 to mark the trough for volumes, not just for Breedon but for many other “growth cyclicals” we own, and so thinking more broadly the recovery could translate into better-than-expected profit recovery across a range of companies, benefitting the likes of the brick manufacturers, or the “repair, maintenance and improve” (RMI) sector. In many cases we find these investments trading on close to trough multiples on trough earnings and accordingly we have continued to add to our exposure here believing the risk/reward to be particularly compelling.

We have also continued to build up our exposure to housebuilders in the last 6 months from very low levels, a sector we feel will consolidate further in the pursuit of landbank and operational synergies to deliver faster profit recovery. Indeed, the sector has had a torrid time in the last couple of years with housing starts down almost 25% in 2023 and now running at roughly half the level to reach the governments targets. This malaise has spread into associated industries, for example brick dispatches are at a low not seen outside the financial crisis. Compounding this, and I am sure something you can all relate to, the last 6 months has seen the wettest weather in the UK since the 1870’s! Current trading across the sector therefore has been poor, as it has for the supply chain and the light industrial RMI space as so many home improvement projects have stalled on weather related issues. However there are genuine green shoots emerging, with housebuilders reporting interest levels and sales rates increasing slowly as swap rates come down and mortgages become more affordable. No one denies the importance of housebuilding as a national industry and in time we would expect volumes to recover towards 200,000 new houses per annum and, with the right policy support (Labour’s proposed supply-side reforms could make a real difference) potentially some way beyond. For context we really need to be building somewhere in the order of 500,000 new houses per annum for some years to really address the UK’s supply imbalance.

Another area we have been adding to is Property. We think Great Portland’s capital raise, whilst calling the bottom of the prime London office market is noteworthy when trading on a 40% discount to net asset value. Yield compression would of course be additive, but isn’t required in our view to make the investment case work considering the outlook for rental rates (supply constraints high occupancy) and expanding development profits on cost. This is a share we have added to in addition to Workspace, another company that has recently called the trough whilst trading at a +30% discount to a depressed cyclical low net asset value, whilst delivering 10% like for like rent roll growth.

Reflecting on our non-domestic exposure, this tends to lean towards Industrials where despite a broader moderation in activity levels, there have been many cross currents and high levels of dispersion between companies and sub-sectors and geographies. Destocking has been a big theme in the sector, with supply chain issues initially leading to overordering, and then in turn overstocking (as supply chain issues resolved); this then led many businesses to destock, cutting orders and resulting in a slowdown in revenues. The stop-start nature of these supply chain issues throughout the year has impacted a range of geographies and sub-sectors differently, as they are all at different points in the cycle. We got some of these dynamics right and some wrong in 2023 and the same is true in 2024. On the whole, within General Industrial we have noticed an improvement in the book-to-bill ratios as many have turned a corner and can hopefully accelerate through second half of 2024 and into the financial year 2025. Reshoring in the US, as well as several Government programmes (Chips, Inflation Reduction Act) continue to provide additional tailwinds of growth for quite a few US focused but UK listed small and mid caps we have exposure to e.g. Oxford Instruments, Rotork, Hill & Smith.

Outlook
Looking ahead to 2024 market volatility is unlikely to abate and clearly this marks a significant year for elections worldwide, which may inject further turbulence into the macro backdrop. As I’ve outlined above, I think the valuation case for UK small and medium sized companies remains compelling, with many of the holdings in the Company trading on single digit price to earnings ratios and high Free Cash Flow yields but unlike so many archetypical “value” sectors, have far superior growth prospects. Whilst our global facing companies trade on higher valuations, these look low to us compared to their prospects for growth and certainly against their US listed counterparts despite similar growth rates and end market exposures. We’ve long maintained the view that flows have been the primary headwind to valuations, and so any change in the flow picture could prompt a material valuation rebound. The progress of the assets class against this flow backdrop in the last six months should not be underestimated and maybe May’s month of inflows might just herald in a new dawn. Time will tell. But the bigger picture for us is one of a gradual recovery, and in our view this is not reflected in valuations so remains the biggest risk/reward opportunity for us.

DAN WHITESTONE
BlackRock Investment Management (UK) Limited
24 July 2024

Portfolio of investments

1. ▲ Oxford Instruments (2023: 3rd)
Electronic & Electrical Equipment
Market value: £20,161,000
Share of net assets: 3.1% (2023: 2.8%)

Designer and manufacturer of tools and systems for industry and research

2. ▼ Breedon (2023: 1st)
Construction & Materials
Market value: £19,219,000
Share of net assets: 3.0% (2023: 3.3%)

Supplier of construction materials

3. ▼ Gamma Communications* (2023: 2nd)
Mobile Telecommunications
Market value: £18,499,000
Share of net assets: 2.9% (2023: 3.0%)

Provider of communication services to UK businesses

4. ► Grafton Group (2023: 4th)
Support Services
Market value: £17,316,000
Share of net assets: 2.7% (2023: 2.8%)

Builders’ merchants in the UK, Ireland and Netherlands

5. ▲ IntegraFin (2023: 15th)
Financial Services
Market value: £16,604,000¹
Share of net assets: 2.6% (2023: 1.8%)

UK savings platform for financial advisors

6. ▲ Hill & Smith Holdings (2023: 12th)
Industrial Metals & Mining
Market value: £15,989,000
Share of net assets: 2.5% (2023: 2.2%)

Supplier of infrastructure products and galvanizing services

7. ► Rotork (2023: 7th)
Electronic & Electrical Equipment
Market value: £15,881,000
Share of net assets: 2.5% (2023: 2.5%)

Manufacturer of industrial flow equipment

8. ► WH Smith (2023: 8th)
General Retailers
Market value: £15,270,000
Share of net assets: 2.4% (2023: 2.5%)

Retailer of books, stationery, magazines, newspapers and confectionary

9. ▲ Tatton Asset Management* (2023: 11th)
Financial Services
Market value: £14,988,000
Share of net assets: 2.3% (2023: 2.2%)

Provision of discretionary fund management services to the IFA market

10. ▼ 4imprint Group (2023: 6th)
Media
Market value: £14,859,000
Share of net assets: 2.3% (2023: 2.7%)

Supplier of promotional merchandise in the US

*     Traded on the Alternative Investment Market (AIM) of the London Stock Exchange.

1    Includes long derivative positions.

Percentages shown are the share of net assets.

The market value shown is the gross exposure to the shares through equity investments and long derivative positions. For equity investments, the market value is the fair value of the shares. For long derivative positions, it is the market value of the underlying shares to which the portfolio is exposed via the contract.

Percentages in brackets represent the portfolio holding as at 30 November 2023. Arrows indicate the change in relative ranking of the position in the portfolio compared to its ranking as at 30 November 2023.

#	Company	£’000^	%	Description
11	Baltic Classifieds Group	13,962	2.2	Operator of online classified businesses in the Baltics
	Software & Computer Services
12	GlobalData*	13,100¹	2.0	Data analytics and consulting
	Media
13	Chemring Group	12,243	1.9	Provider of technology products and services to aerospace, defence and security markets
	Aerospace & Defence
14	Boku*	11,932	1.9	Digital payments platform
	Support Services
15	Workspace Group	11,559	1.8	Supply of flexible workspace to businesses in London
	Real Estate Investment Trusts
16	Computacenter	10,935	1.7	Computer services
	Software & Computer Services
17	FTSE 250 Index Future	9,619¹	1.5	Index future
	Financial Services
18	GPE	9,608¹	1.5	Owner of commercial real estate in central London
	Real Estate Investment Trusts
19	Morgan Sindall	9,485¹	1.5	Supplier of office fit out, construction and urban regeneration services
	Construction & Materials
20	Hunting	9,438¹	1.5	Oil services business
	Oil Equipment and Services
21	Next Fifteen Communications*	9,283	1.4	Provider of digital communication products and services
	Media
22	TT Electronics	9,111¹	1.4	Global manufacturer of electronic components
	Electronic & Electrical Equipment
23	Vesuvius	9,064¹	1.4	British engineered ceramics company
	Industrial Engineering
24	Bellway	8,647	1.3	UK housebuilder
	Household Goods and Home Construction
25	Intermediate Capital Group	8,460	1.3	Private equity business
	Investment Banking & Brokerage
26	Indivior PLC	8,267	1.3	Pharmaceuticals business specialising in addiction and mental health treatments
	Pharmaceuticals & Biotechnology
27	SIG	8,226	1.3	Supplier of building, roofing and insulation products
	Industrial Support Services
28	JET2*	8,168	1.3	Low cost tour operator and airline
	Travel & Leisure
29	Dunelm Group	7,960	1.2	Retailer of homeware products
	General Retailers
30	Luceco	7,783	1.2	Supplier and manufacturer of high quality LED lighting products
	Electronic & Electrical Equipment
31	Zotefoams	7,644¹	1.2	Manufacturer of polyolefin foams used in sport, construction, marine, automation, medical equipment and aerospace
	Chemicals
32	Alfa Financial Software	7,265	1.1	Provider of software to the finance industry
	Software & Computer Services
33	Victorian Plumbing*	7,197¹	1.1	Online retailer of bathroom products
	Home Improvement Retailers
34	IG Group Holdings	7,151	1.1	Online provider of spread betting and CFD trading services
	Financial Services
35	Porvair	7,024¹	1.1	Specialist filtration and environmental technology
	Industrial Engineering
36	Cranswick	6,978	1.1	Producer of premium, fresh and added-value food products
	Food Producers
37	MJ Gleeson	6,969	1.1	UK housebuilder
	Household Goods and Home Construction
38	CVS Group*	6,927	1.1	Operator of veterinary surgeries
	General Retailers
39	Genuit	6,867	1.1	Manufacturer of plastic piping systems
	Construction & Materials
40	Lok’nStore*	6,760	1.0	Provider of self-storage space in the UK
	Real Estate Investment & Services
41	TP ICAP	6,689	1.0	Inter-dealer broker
	Investment Banking & Brokerage
42	FRP Advisory Group PLC*	6,658	1.0	Provider of forensics, corporate finance, debt and financial advisory services
	Support Services
43	Kier Group	6,642	1.0	UK construction, services and property group
	Support Services
44	Clarkson	6,566	1.0	Provider of shipping services
	Industrial Transportation
45	SigmaRoc*	6,431	1.0	Buy-and-build group targeting construction materials assets in the UK and Northern Europe
	Construction & Materials
46	Moneysupermarket.com	6,379¹	1.0	Provider of price comparison website specialising in financial services
	Software & Computer Services
47	Cairn Homes&	6,322¹	1.0	Builder of community apartments and homes
	Household Goods and Home Construction
48	Robert Walters	6,188	1.0	Provider of specialist recruitment services
	Support Services
49	Xero&	6,121¹	0.9	Software company specialising in accounting for small businesses
	Software & Computer Services
50	Judges Scientific*	5,977	0.9	Designer and producer of scientific instruments
	Electronic & Electrical Equipment
51	Euronext*	5,932¹	0.9	European stock exchange
	Financial Services
52	Balfour Beatty	5,778	0.9	Multinational infrastructure group
	Construction & Materials
53	Senior Plc	5,717	0.9	Specialist engineering business
	Aerospace & Defence
54	YouGov*	5,570	0.9	Provider of survey data and specialist data analytics
	Media
55	Ibstock	5,563	0.9	Manufacturer of clay bricks and concrete products
	Construction & Materials
56	AB Dynamics*	5,554	0.9	Developer and supplier of specialist automotive testing systems
	Industrial Engineering
57	Sirius Real Estate	5,529	0.9	Owner and operator of business parks, offices and industrial complexes in Germany
	Real Estate Investment & Services
58	Ashtead*	5,411	0.8	International equipment rental business
	Oil, Gas & Coal
59	Spectris	5,287	0.8	Supplier of productivity enhancing instrumentation and controls
	Electronic & Electrical Equipment
60	SThree	5,179	0.8	Provider of specialist professional recruitment services
	Support Services
61	Zegona Communications	5,121	0.8	Provider of telecommunications services
	Mobile Telecommunications
62	DiscoverIE	5,015	0.8	International designer, manufacturer and supplier of customised electronics
	Electronic & Electrical Equipment
63	Polar Capital Holdings*	4,920	0.8	Provider of investment management services
	Financial Services
64	Future	4,841	0.8	Multi-platform media business covering technology, entertainment, creative arts, home interest and education
	Media
65	Crest Nicholson	4,752	0.7	UK housebuilder
	Household Goods and Home Construction
66	Applied Industrial Technologies&	4,591¹	0.7	Provider of fluid power solutions
	Industrial Support Services
67	Londonmetric Property	4,591¹	0.7	Investor in, and developer of property
	Real Estate Investment Trusts
68	Young & Co’s Brewery*	4,569	0.7	Owner and operator of pubs mainly in the London area
	Travel & Leisure
69	Oxford Biomedica	4,455¹	0.7	Gene cell therapy
	Pharmaceuticals & Biotechnology
70	Serica Energy*	4,369	0.7	Oil and gas producer
	Oil, Gas & Coal
71	Renishaw	4,338	0.7	Engineering and scientific technology company
	Electronic & Electrical Equipment
72	Accesso Technology*	4,305¹	0.7	Provider of ticketing and virtual queuing solutions
	Software & Computer Services
73	Kainos Group	4,275¹	0.7	Provider of digital technology solutions
	Software & Computer Services
74	Auction Technology Group	4,162	0.6	Operator of marketplaces for curated online auctions
	General Retailers
75	OSB Group	4,143	0.6	Specialist lending business
	Financial Services
76	Medpace Holdings&	4,088¹	0.6	Clinical research organization (CRO) conducting global clinical research for the development of drugs and medical devices
	Pharmaceuticals & Biotechnology
77	Lundin Mining&	3,865¹	0.6	Diversified base metals miner
	Industrial Metals & Mining
78	Central Asia Metals*	3,803¹	0.6	Production of base metals with operations in Kazakhstan and North Macedonia
	Industrial Metals & Mining
79	Ashmore Group	3,802¹	0.6	Emerging market focused investment manager
	Financial Services
80	XP Power	3,791	0.6	Leading provider of power solutions
	Electronic & Electrical Equipment
81	TI Fluid Systems	3,767	0.6	Manufacturer of thermal management and fluid handling systems
	Automobiles & Parts
82	Glenveagh Properties&	3,761¹	0.6	Builder of community apartments and homes
	Household Goods and Home Construction
83	Babcock International Group	3,745	0.6	British aerospace, defence and nuclear engineering services company
	Aerospace & Defence
84	Deliveroo	3,616	0.6	Online food delivery business
	Software & Computer Services
85	Cerillion*	3,561	0.6	Provider of billing, charging and customer management systems
	Software & Computer Services
86	Restore*	3,472	0.5	Records management business
	Support Services
87	Safestore	3,469	0.5	Provider of self-storage units
	Real Estate Investment Trusts
88	Rambus&	3,464¹	0.5	US listed chip and silicon IP producer
	Technology Hardware & Equipment
89	Inficon&	3,442¹	0.5	Provider of innovative instrumentation and critical sensor technologies
	Electronic & Electrical Equipment
90	Gooch & Housego*	3,392	0.5	Designer and manufacturer of advanced photonic systems
	Electronic & Electrical Equipment
91	Bytes Technology	3,284	0.5	Specialist in software, security and cloud services
	Software & Computer Services
92	Eckoh*	3,256	0.5	Global provider of secure payments products
	Software & Computer Services
93	Forterra	3,170	0.5	Manufacturer of building products
	Construction & Materials
94	RHI Magnesita	3,165	0.5	Supplier of refractory products, systems and services
	Chemicals
95	Marshalls	3,088¹	0.5	British construction materials group
	Construction & Materials
96	PayPoint	3,051¹	0.5	Digital payments business
	Industrial Support Services
97	Herc Holdings*	3,029¹	0.5	Equipment rental business
	Industrial Transportation
98	Hiscox	3,004¹	0.5	Provision of insurance services
	Non-life Insurance
99	Creo Medical Group PLC*	2,989¹	0.4	Manufacturer of medical devices
	Medical Equipment and Services
100	Permanent TSB	2,981	0.4	Irish bank
	Banks
101	BE Semiconductor&	2,913¹	0.4	Manufacturer of semiconductor equipment
	Technology Hardware & Equipment
102	Wetherspoon (J.D)	2,891	0.4	Ownership and management of pubs in the UK
	Travel & Leisure
103	Domino’s	2,881	0.4	Multinational pizza restaurant chain
	Travel & Leisure
104	Dowlais Group	2,846	0.4	Provider of specialist automotive engineering services
	Automobiles & Parts
105	Team17*	2,773	0.4	Video game developer and publisher
	Leisure Goods
106	RH&	2,612¹	0.4	Retailer of home furnishings
	General Retailers
107	Animalcare Group*	2,513	0.4	Veterinary pharmaceuticals business
	Pharmaceuticals & Biotechnology
108	Watches of Switzerland	2,510	0.4	Retailer of luxury watches
	Personal Goods
109	Videndum	2,447¹	0.4	Provider of media hardware products and software solutions
	Industrial Engineering
110	The Pebble Group*	2,302	0.4	Designer and manufacturer of promotional goods
	Media
111	Maxcyte*	1,767	0.3	Clinical-stage global cell-based therapies and life sciences company
	Media
112	Trainline	1,685¹	0.3	Provider of online rail and train ticketing services
	Travel & Leisure
113	Advanced Medical Solutions*	1,293¹	0.2	Developer and manufacturer of advanced wound care solutions
	Healthcare Equipment & Services
114	Funding Circle Holdings	185	–	Provider of funding services to small businesses
	Financial Services
		---------------	---------------
	Long investment positions (excluding BlackRock’s Institutional Cash Series plc – Sterling Liquid Environmentally Aware Fund)	742,031	115.2
		=========	=========
	Short investment positions	(14,544)	(2.3)
		=========	=========

1    Includes long derivative positions.

*     Traded on the Alternative Investment Market (AIM) of the London Stock Exchange.

&    Holdings listed on exchanges outside of the UK.

^     The market value shown is the gross exposure to the shares through equity investments and long derivative positions. For equity investments, the market value is the fair value of the shares. For long derivative positions, it is the market value of the underlying shares to which the portfolio is exposed via the contract.

Percentages shown are the share of net assets.

At 31 May 2024, the Company held equity interests in three companies comprising more than 3% of a company’s share capital as follows: Tatton Asset Management (4.0%); TT Electronics (3.4%); and Eckoh (3.1%).

Fair value and gross market exposure of investments as at 31 May 2024

		Gross market	Gross market exposure as a %  of net assets2
	Fair value1  £’000	exposure2,3  £’000	31 May  2024	31 May  2023	30 November  2023
Long equity investment positions (excluding BlackRock’s Institutional Cash Series plc - Sterling Liquid Environmentally Aware Fund)	612,126	612,126	95.0	98.3	96.8
Long derivative positions	2,230	129,905	20.2	13.6	14.6
	---------------	---------------	---------------	---------------	---------------
Subtotal of long investment positions	614,356	742,031	115.2	111.9	111.4
	=========	=========	=========	=========	=========
Short investment positions	(354)	(14,544)	(2.3)	(3.6)	(3.8)
	---------------	---------------	---------------	---------------	---------------
Subtotal of long and short investment positions	614,002	727,487	112.9	108.3	107.6
	=========	=========	=========	=========	=========
Cash and cash equivalents	43,517	(69,968)	(10.9)	(7.8)	(6.7)
Other net current liabilities	(13,021)	(13,021)	(2.0)	(0.5)	(0.9)
	---------------	---------------	---------------	---------------	---------------
Net assets	644,498	644,498	100.0	100.0	100.0
	=========	=========	=========	=========	=========

The Company was geared through the use of long and short derivative positions. Gross and net gearing as at 31 May 2024 was 117.4% and 112.9% respectively (31 May 2023: 115.5% and 108.3%; 30 November 2023: 115.2% and 107.6% respectively). Gross and net gearing are Alternative Performance Measures, see Glossary contained within the half yearly financial report.

1    Fair value is determined as follows:

–    Long equity investment positions are valued at bid prices where available, otherwise at latest market traded quoted prices.

–    The exposure to securities held through long derivative positions directly in the market would have amounted to £127,675,000 at the time of purchase, and subsequent movement in market prices have resulted in unrealised gains on the long derivative positions of £2,230,000 resulting in the value of the total long derivative market exposure to the underlying securities increasing to £129,905,000 as at 31 May 2024. If the long positions had been closed on 31 May 2024, this would have resulted in a gain of £2,230,000 for the Company.

–    The notional exposure of selling the securities via the short derivative positions would have been £14,190,000 at the time of entering into the contract, and subsequent movement in market prices have resulted in unrealised losses on the short derivative positions of £354,000 resulting in the value of the total short derivative market exposure of these investments decreasing to £14,544,000 as at 31 May 2024. If the short positions had been closed on 31 May 2024, this would have resulted in a loss of £354,000 for the Company.

2    Gross market exposure for equity investments is the same as fair value; bid prices are used where available and, if unavailable, latest market traded quoted prices are used. For both long and short derivative positions, the gross market exposure is the market value of the underlying shares to which the portfolio is exposed via the contract.

3    The gross market exposure column for cash and cash equivalents has been adjusted to assume the Company traded direct holdings, rather than exposure being gained through long and short derivative positions.

Distribution of investments as at 31 May 2024

Sector	% of  long portfolio	% of  short portfolio	% of net  portfolio
Oil, Gas & Coal	1.3	0.0	1.3
Oil Equipment & Services	1.3	0.0	1.3
	---------------	---------------	---------------
Oil & Gas	2.6	0.0	2.6
	=========	=========	=========
Chemicals	1.5	0.0	1.5
Industrial Metals & Mining	3.2	0.0	3.2
	---------------	---------------	---------------
Basic Materials	4.7	0.0	4.7
	=========	=========	=========
Aerospace & Defence	3.0	0.0	3.0
Construction & Materials	8.2	(0.3)	7.9
Electronic & Electrical Equipment	11.6	0.0	11.6
Industrial Engineering	3.3	0.0	3.3
Industrial Support Services	2.2	(0.1)	2.1
Industrial Transportation	1.3	(0.3)	1.0
Support Services	7.9	0.0	7.9
	---------------	---------------	---------------
Industrials	37.5	(0.7)	36.8
	=========	=========	=========
Food Producers	1.0	0.0	1.0
Personal Goods	0.3	0.0	0.3
	---------------	---------------	---------------
Consumer Staples	1.3	0.0	1.3
	=========	=========	=========
Healthcare Equipment & Services	0.2	0.0	0.2
Pharmaceuticals & Biotechnology	2.9	(0.3)	2.6
Medical Equipment and Services	0.4	0.0	0.4
	---------------	---------------	---------------
Health Care	3.5	(0.3)	3.2
	=========	=========	=========
Automobiles & Parts	0.9	0.0	0.9
General Retailers	5.1	(0.3)	4.8
Home Improvement Retailers	1.0	0.0	1.0
Household Goods and Home Construction	4.2	0.0	4.2
Leisure Goods	0.4	0.0	0.4
Media	6.9	0.0	6.9
Travel & Leisure	2.8	0.0	2.8
	---------------	---------------	---------------
Consumer Discretionary	21.3	(0.3)	21.0
	=========	=========	=========
Banks	0.4	0.0	0.4
Financial Services	9.3	0.0	9.3
Investment Banking & Brokerage	2.1	0.0	2.1
Non-life Insurance	0.4	0.0	0.4
	---------------	---------------	---------------
Financials	12.2	0.0	12.2
	=========	=========	=========
Real Estate Investment & Services	1.7	0.0	1.7
Real Estate Investment Trusts	4.0	0.0	4.0
	---------------	---------------	---------------
Real Estate	5.7	0.0	5.7
	=========	=========	=========
Software & Computer Services	9.2	(0.4)	8.8
Technology Hardware & Equipment	0.9	(0.3)	0.6
	---------------	---------------	---------------
Technology	10.1	(0.7)	9.4
	=========	=========	=========
Mobile Telecommunications	3.1	0.0	3.1
	---------------	---------------	---------------
Telecommunications	3.1	0.0	3.1
	=========	=========	=========
Total Investments	102.0	(2.0)	100.0
	=========	=========	=========

The above percentages are calculated on the net portfolio as at 31 May 2024. The net portfolio is calculated as long equity and derivative positions, less short derivative positions as at 31 May 2024.

Analysis of the Portfolio

Market capitalisation as at 31 May 2024

	Long positions1% of net portfolio	Short positions% of net portfolio
£5bn – £10bn	4.1%	0.0%
£2.5bn – £5bn	11.5%	-0.6%
£2bn – £2.5bn	2.6%	0.0%
£1.5bn – £2bn	15.6%	-0.1%
£1bn – £1.5bn	27.7%	-0.5%
£500m – £1bn	19.0%	-0.6%
£0m – £500m	20.7%	-0.2%

¹ The above investments may comprise exposures to long equity and long derivative positions.

Source: BlackRock

Position size as at 31 May 2024

Market value	Long positions1	Short positions
£20m+	1	0
£15m – £20m	7	0
£10m – £15m	8	0
£5m – £10m	46	0
£2.5m – £5m	46	-1
£0m – £2.5m	6	-8

¹ The above investments may comprise exposures to long equity and long derivative positions.

Source: BlackRock.

Portfolio holdings within Key Indices as at 31 May 2024

	Gross Basis1	Net Basis2
FTSE 250	55.9%	55.3%
FTSE AIM	26.1%	27.0%
FTSE Small Cap	10.2%	10.6%
Other	6.7%	5.9%
FTSE 100	1.1%	1.2%

Portfolio holdings within Benchmark Index (the Deutsche Numis Smaller Companies plus AIM

(excluding Investment Companies) Index)

	Gross Basis1,3	Net Basis2,3
Within Benchmark	83.5%	80.7%
Off-Benchmark	16.5%	19.3%

Source: BlackRock.

¹ Long exposure plus short exposure as a percentage of the portfolio in aggregate excluding investment in BlackRock’s Institutional Cash Series plc – Sterling Liquid Environmentally Aware Fund.

² Long exposure less short exposure as a percentage of the portfolio excluding investment in BlackRock’s Institutional Cash Series plc – Sterling Liquid Environmentally Aware Fund.

³ Holdings included within the Benchmark Index as at 30 November 2023 were 68.2% on a Gross Basis and 70.4% on a Net Basis.

Interim Management Report and Responsibility Statement

The Chairman’s Statement and the Investment Manager’s Report above give details of the important events which have occurred during the period and their impact on the financial statements.

Principal risks and uncertainties
The principal risks faced by the Company can be divided into various areas as follows:

·        Performance;

·        Market;

·        Income/dividend;

·        Financial;

·        Operational; and

·        Regulatory.

The Board reported on the principal risks and uncertainties faced by the Company in the Annual Report and Financial Statements for the year ended 30 November 2023. A detailed explanation can be found in the Strategic Report on pages 43 to 46 and in note 16 on pages 111 to 122 of the Annual Report and Financial Statements which are available on the website maintained by BlackRock at www.blackrock.com/uk/thrg.

The Directors have also assessed the impact of market conditions arising from the conflicts in Russia/Ukraine and the Middle East on the Company’s ability to meet its investment objective. Based on the latest available information, the Company continues to be managed in line with its investment objective, with no disruption to its operations.

In the view of the Board, there have not been any changes to the fundamental nature of the principal risks and uncertainties since the previous report and these are equally applicable to the remaining six months of the financial year as they were to the six months under review.

Related party disclosure and transactions with the Investment Manager
BlackRock Fund Managers Limited (BFM) was appointed as the Company’s Alternative Investment Fund Manager (AIFM) with effect from 2 July 2014. BFM has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services, to BlackRock Investment Management (UK) Limited (BIM (UK)). Both BFM and BIM (UK) are regarded as related parties under the Listing Rules. Details of the fees payable are set out in note 4 and note 11 of the financial statements.

The related party transactions with the Directors are set out in note 12 of the financial statements.

Going concern
The Board remains mindful of the ongoing uncertainty surrounding the potential duration of the conflicts in Russia/ Ukraine and the Middle East and its longer-term effects on the global economy and the current heightened geopolitical risk. Nevertheless, the Directors, having considered the nature and liquidity of the portfolio, the Company’s investment objective and the Company’s projected income and expenditure, are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future and is financially sound.

The Company has a portfolio of investments which are predominantly readily realisable and is able to meet all its liabilities from these assets. Accounting revenue and expense forecasts are maintained and reported to the Board regularly and it is expected that the Company will be able to meet all its obligations. Ongoing charges for the year ended 30 November 2023 were 0.54% of net assets and it is expected that this is unlikely to change significantly going forward.

Based on the above, the Board is satisfied that it is appropriate to continue to adopt the going concern basis in preparing the financial statements.

Directors’ responsibility statement
The Disclosure Guidance and Transparency Rules (DTR) of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Interim Management Report and Financial Statements.

The Directors confirm to the best of their knowledge that:

·        the condensed set of financial statements contained within the Half Yearly Financial Report has been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting; and

·        the Interim Management Report, together with the Chairman’s Statement and Investment Manager’s report, include a fair review of the information required by 4.2.7R and 4.2.8R of the FCA’s Disclosure Guidance and Transparency Rules.

The Half Yearly Financial Report has not been audited or reviewed by the Company’s Auditor.

The Half Yearly Financial Report was approved by the Board on 24 July 2024 and the above responsibility statement was signed on its behalf by the Chairman.

CHRISTOPHER SAMUEL
For and on behalf of the Board
24 July 2024

Statement of Comprehensive Income for the six months ended 31 May 2024

	Notes	Six months ended  31 May 2024  (unaudited)			Six months ended  31 May 2023  (unaudited)			Year ended  30 November 2023  (audited)
		Revenue  £’000	Capital  £’000	Total  £’000	Revenue  £’000	Capital  £’000	Total  £’000	Revenue  £’000	Capital  £’000	Total  £’000
Income from investments held at fair value through profit or loss	3	8,240	518	8,758	7,869	—	7,869	15,981	—	15,981
Net income from derivatives	3	768	—	768	655	—	655	830	—	830
Other income	3	625	—	625	754	—	754	1,139	—	1,139
		---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------
Total income		9,633	518	10,151	9,278	—	9,278	17,950	—	17,950
		=========	=========	=========	=========	=========	=========	=========	=========	=========
Net profit/(loss) on investments held at fair value through profit or loss		—	83,772	83,772	—	(4,300)	(4,300)	—	(28,389)	(28,389)
Net loss on foreign exchange		—	(43)	(43)	—	(42)	(42)	—	(114)	(114)
Net profit/(loss) from derivatives		—	15,517	15,517	—	(980)	(980)	—	242	242
		---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------
Total		9,633	99,764	109,397	9,278	(5,322)	3,956	17,950	(28,261)	(10,311)
		=========	=========	=========	=========	=========	=========	=========	=========	=========
Expenses
Investment management fee and performance fees	4	(321)	(3,713)	(4,034)	(325)	(2,461)	(2,786)	(629)	(3,903)	(4,532)
Other operating expenses	5	(406)	(11)	(417)	(405)	(10)	(415)	(792)	(20)	(812)
		---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------
Total operating expenses		(727)	(3,724)	(4,451)	(730)	(2,471)	(3,201)	(1,421)	(3,923)	(5,344)
		=========	=========	=========	=========	=========	=========	=========	=========	=========
Net profit/(loss) on ordinary activities before finance costs and taxation		8,906	96,040	104,946	8,548	(7,793)	755	16,529	(32,184)	(15,655)
Finance costs		(11)	(34)	(45)	(10)	(30)	(40)	(25)	(75)	(100)
		---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------
Net profit/(loss) on ordinary activities before taxation		8,895	96,006	104,901	8,538	(7,823)	715	16,504	(32,259)	(15,755)
		=========	=========	=========	=========	=========	=========	=========	=========	=========
Taxation (charge)/credit		(10)	–	(10)	6	–	6	6	–	6
		---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------
Net profit/(loss) on ordinary activities after taxation		8,885	96,006	104,891	8,544	(7,823)	721	16,510	(32,259)	(15,749)
		---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------
Earnings/(loss) per ordinary share (pence)	7	9.44	101.97	111.41	8.46	(7.75)	0.71	16.56	(32.36)	(15.80)
		=========	=========	=========	=========	=========	=========	=========	=========	=========

The total columns of this statement represent the Company’s Statement of Comprehensive Income, prepared in accordance with UK-adopted International Accounting Standards (IAS). The supplementary revenue and capital accounts are both prepared under guidance published by the Association of Investment Companies (AIC). All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period. All income is attributable to the equity holders of the Company.

The Company does not have any other comprehensive income/(loss). The net profit/(loss) for the period disclosed above represents the Company’s total comprehensive income/(loss).

Statement of Changes in Equity for the six months ended 31 May 2024

	Note	Called  up share  capital  £’000	Share  Premium  account  £’000	Capital  Redemption  reserve  £’000	Special  reserve  £’000	Capital  reserves  £’000	Revenue  reserve  £’000	Total  £’000
For the six months ended 31 May 2024 (unaudited)
At 30 November 2023		5,160	242,122	11,905	3,231	295,624	17,883	575,925
Total comprehensive income:
Net profit for the year		—	—	—	—	96,006	8,885	104,891
Transactions with owners, recorded directly to equity:
Ordinary shares bought back into treasury		—	—	—	(7,821)	(17,529)	—	(25,350)
Share purchase costs		—	—	—	(47)	(80)	—	(127)
Transfer of special reserve		—	—	—	4,637	(4,637)	—	—
Dividends paid1	6	—	—	—	—	—	(10,841)	(10,841)
		---------------	---------------	---------------	---------------	---------------	---------------	---------------
At 31 May 2024		5,160	242,122	11,905	—	369,384	15,927	644,498
		=========	=========	=========	=========	=========	=========	=========
For the six months ended 31 May 2023 (unaudited)
At 30 November 2022		5,160	242,122	11,905	33,038	327,883	13,249	633,357
Total comprehensive (loss)/income:
Net (loss)/profit for the period		—	—	—	—	(7,823)	8,544	721
Transactions with owners, recorded directly to equity:
Ordinary shares bought back into treasury		—	—	—	(5,053)	—	—	(5,053)
Share purchase costs		—	—	—	(23)	—	—	(23)
Dividends paid2		—	—	—	—	—	(8,595)	(8,595)
		---------------	---------------	---------------	---------------	---------------	---------------	---------------
At 31 May 2023		5,160	242,122	11,905	27,962	320,060	13,198	620,407
		=========	=========	=========	=========	=========	=========	=========
For the year ended 30 November 2023 (audited)
At 30 November 2022		5,160	242,122	11,905	33,038	327,883	13,249	633,357
Total comprehensive (loss)/income:
Net (loss)/profit for the year		—	—	—	—	(32,259)	16,510	(15,749)
Transactions with owners, recorded directly to equity:
Ordinary shares bought back into treasury		—	—	—	(29,646)	—	—	(29,646)
Share purchase costs		—	—	—	(161)	—	—	(161)
Dividends paid3		—	—	—	—	—	(11,876)	(11,876)
		---------------	---------------	---------------	---------------	---------------	---------------	---------------
At 30 November 2023		5,160	242,122	11,905	3,231	295,624	17,883	575,925
		=========	=========	=========	=========	=========	=========	=========

1    Final dividend of 11.45p per share for the year ended 30 November 2023, declared on 2 February 2024 and paid on 28 March 2024.

2    Final dividend of 8.50p per share for the year ended 30 November 2022, declared on 10 February 2023 and paid on 31 March 2023.

3    Final dividend of 8.50p per share for the year ended 30 November 2022, declared on 10 February 2023 and paid on 31 March 2023 and interim dividend of 3.30p per share for the year ended 30 November 2023, declared on 27 July 2023 and paid on 1 September 2023.

For information on the Company’s distributable reserves, please refer to note 9 below.

Statement of Financial Position as at 31 May 2024

	Notes	31 May  2024  (unaudited) £’000	31 May  2023  (unaudited) £’000	30 November  2023  (audited) £’000
Non current assets
Investments held at fair value through profit or loss	10	612,126	610,447	557,594
		---------------	---------------	---------------
Current assets
Other receivables		3,503	3,169	2,280
Derivative financial assets held at fair value through profit or loss	10	3,022	1,460	703
Current tax asset		451	315	365
Cash collateral pledged with brokers		380	1,060	775
Cash and cash equivalents		43,520	12,983	24,328
		---------------	---------------	---------------
Total current assets		50,876	18,987	28,451
		=========	=========	=========
Total assets		663,002	629,434	586,045
		=========	=========	=========
Current liabilities
Other payables		(14,677)	(5,629)	(7,740)
Derivative financial liabilities held at fair value through profit or loss	10	(1,146)	(1,088)	(1,454)
Bank overdraft		(3)	–	(306)
Liability for cash collateral received		(2,678)	(2,310)	(620)
		---------------	---------------	---------------
Total current liabilities		(18,504)	(9,027)	(10,120)
		=========	=========	=========
Net assets		644,498	620,407	575,925
		=========	=========	=========
Total equity
Called up share capital	8	5,160	5,160	5,160
Share premium account		242,122	242,122	242,122
Capital redemption reserve		11,905	11,905	11,905
Special reserve		—	27,962	3,231
Capital reserves		369,384	320,060	295,624
Revenue reserve		15,927	13,198	17,883
		---------------	---------------	---------------
Total shareholders’ funds		644,498	620,407	575,925
		=========	=========	=========
Net asset value per ordinary share (pence)	7	703.55	618.58	600.72
		=========	=========	=========

Cash Flow Statement for the six months ended 31 May 2024

	Six months  ended  31 May  2024  (unaudited) £’000	Six months  ended  31 May  2023  (unaudited) £’000	Year  ended  30 November  2023  (audited) £’000
Operating activities
Net profit/(loss) on ordinary activities after taxation	104,901	715	(15,755)
Add back finance costs	45	40	100
Net (profit)/loss on investments held at fair value through profit or loss (including transaction costs)	(83,772)	4,300	28,389
Net (profit)/loss from derivatives (including transaction costs)	(15,517)	980	(242)
Financing costs on derivatives	(1,604)	(1,218)	(2,324)
Net loss on foreign exchange	43	42	114
Sales of investments held at fair value through profit or loss	149,070	96,831	207,680
Purchases of investments held at fair value through profit or loss	(119,830)	(134,807)	(216,892)
Net receipts on closure of derivatives	14,494	2,464	5,915
Increase in other receivables	(1,082)	(721)	(470)
Increase in other payables	2,861	2,301	2,892
(Increase)/decrease in amounts due from brokers	(141)	683	1,321
Increase in amounts due to brokers	4,001	208	2,365
Net movement in cash collateral received/(pledged)	2,453	(4,620)	(6,025)
	---------------	---------------	---------------
Net cash inflow/(outflow) from operating activities before taxation	55,922	(32,802)	7,068
	=========	=========	=========
Taxation paid	(96)	(135)	(185)
	---------------	---------------	---------------
Net cash inflow/(outflow) from operating activities	55,826	(32,937)	6,883
	=========	=========	=========
Financing activities
Interest paid	(45)	(40)	(100)
Cash paid for ordinary shares bought back into treasury	(25,402)	(4,196)	(29,564)
Dividends paid	(10,841)	(8,595)	(11,876)
	---------------	---------------	---------------
Net cash outflow from financing activities	(36,288)	(12,831)	(41,540)
	=========	=========	=========
Increase/(decrease) in cash and cash equivalents	19,538	(45,768)	(34,657)
Effect of foreign exchange rate changes	(43)	(42)	(114)
	---------------	---------------	---------------
Change in cash and cash equivalents	19,495	(45,810)	(34,771)
	=========	=========	=========
Cash and cash equivalents at start of period/year	24,022	58,793	58,793
	---------------	---------------	---------------
Cash and cash equivalents at end of the period/year	43,517	12,983	24,022
	=========	=========	=========
Comprised of:
Cash at bank	872	129	—
Bank overdraft	(3)	—	(306)
Cash Fund1	42,648	12,854	24,328
	---------------	---------------	---------------
	43,517	12,983	24,022
	=========	=========	=========

¹ Cash Fund represents funds held on deposit with the BlackRock Institutional Cash Series plc - Sterling Liquid Environmentally Aware Fund.

Notes to the financial statements for the six months ended 31 May 2024

1. Principal activity
The principal activity of the Company is that of an investment trust company within the meaning of Section 1158 of the Corporation Tax Act 2010.

2. Basis of presentation
The half yearly financial statements for the six month period ended 31 May 2024 have been prepared in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the Financial Conduct Authority and with the UK-adopted International Accounting Standard 34 (IAS 34), Interim Financial Reporting. The half yearly financial statements should be read in conjunction with the Company’s Annual Report and Financial Statements for the year ended 30 November 2023, which have been prepared in accordance with UK-adopted International Accounting Standards (IAS) in conformity with the requirements of the Companies Act 2006.

Insofar as the Statement of Recommended Practice (SORP) for investment trust companies and venture capital trusts, issued by the Association of Investment Companies (AIC) in October 2019 and updated in July 2022, is compatible with UK-adopted IAS, the financial statements have been prepared in accordance with guidance set out in the SORP.

Adoption of new and amended International Accounting Standards and interpretations:
IFRS 17 - Insurance contracts (effective 1 January 2023). This standard replaced IFRS 4 and applies to all types of insurance contracts. IFRS 17 provides a consistent and comprehensive model for insurance contracts covering all relevant accounting aspects.

This standard did not have any impact on the Company as it has no insurance contracts.

IAS 12 - Deferred tax related to assets and liabilities arising from a single transaction (effective 1 January 2023). The IASB has amended IAS 12 Income Taxes to require companies to recognise deferred tax on particular transactions that, on initial recognition, give rise to equal amounts of taxable and deductible temporary differences. According to the amended guidance, a temporary difference that arises on initial recognition of an asset or liability is not subject to the initial recognition exemption if that transaction gave rise to equal amounts of taxable and deductible temporary differences. These amendments might have a significant impact on the preparation of financial statements by companies that have substantial balances of right-of-use assets, lease liabilities, decommissioning, restoration and similar liabilities. The impact for those affected would be the recognition of additional deferred tax assets and liabilities.

The amendment of this standard did not have any significant impact on the Company.

IAS 8 - Definition of accounting estimates (effective 1 January 2023). The IASB has amended IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to help distinguish between accounting policies and accounting estimates, replacing the definition of accounting estimates.

IAS 1 and IFRS Practice Statement 2 - Disclosure of accounting policies (effective 1 January 2023). The IASB has amended IAS 1 Presentation of Financial Statements to help preparers in deciding which accounting policies to disclose in their financial statements by stating that an entity is now required to disclose material accounting policies instead of significant accounting policies.

IAS 12 - International Tax Reform Pillar Two Model Rules (effective 1 January 2023). The IASB has published amendments to IAS 12 Income Taxes to respond to stakeholders’ concerns about the potential implications of the imminent implementation of the OECD pillar two rules on the accounting for income taxes. The amendment is an exception to the requirements in IAS 12 that an entity does not recognise and does not disclose information about deferred tax assets as liabilities related to the OECD pillar two income taxes and a requirement that current tax expenses must be disclosed separately to pillar two income taxes.

Relevant International Accounting Standards that have yet to be adopted:
IAS 1 - Classification of liabilities as current or non current (effective 1 January 2024). The IASB has amended IAS 1 Presentation of Financial Statements to clarify its requirement for the presentation of liabilities depending on the rights that exist at the end of the reporting period. The amendment requires liabilities to be classified as non current if the entity has a substantive right to defer settlement for at least 12 months at the end of the reporting period. The amendment no longer refers to unconditional rights.

IAS 1 - Non current liabilities with covenants (effective 1 January 2024). The IASB has amended IAS 1 Presentation of Financial Statements to introduce additional disclosures for liabilities with covenants within 12 months of the reporting period. The additional disclosures include the nature of covenants, when the entity is required to comply with covenants, the carrying amount of related liabilities and circumstances that may indicate that the entity will have difficulty complying with the covenants.

None of the standards that have been issued, but are not yet effective, are expected to have a material impact on the Company.

3. Income

	Six months  ended  31 May  2024  (unaudited) £’000	Six months  ended  31 May  2023  (unaudited) £’000	Year  ended  30 November  2023  (audited) £’000
Investment income:
UK dividends	6,466	5,121	12,201
UK special dividends	404	1,175	1,464
UK REIT dividends	335	293	610
Overseas dividends	890	—	1,706
Overseas special dividends	—	1,280	—
Overseas REIT dividends	145	—	—
	---------------	---------------	---------------
Total investment income1	8,240	7,869	15,981
	=========	=========	=========
Net income from derivatives	768	655	830
	---------------	---------------	---------------
Other income:
Deposit interest	8	3	3
Interest from Cash Fund	603	718	1,083
Collateral interest	14	33	53
	---------------	---------------	---------------
	625	754	1,139
	=========	=========	=========
Total income	9,633	9,278	17,950
	=========	=========	=========

¹ UK and overseas dividends are presented based on the country of domicile of the respective underlying portfolio company.

Dividends and interest received in cash in the six months ended 31 May 2024 amounted to £7,463,000 and £521,000 (six months ended 31 May 2023: £7,007,000 and £835,000; year ended 30 November 2023: £15,499,000 and £1,191,000).

Special dividends of £518,000 have been recognised in capital in the six months ended 31 May 2024 (six months ended 31 May 2023: £nil; year ended 30 November 2023: £nil).

4. Investment management and performance fees

	Six months ended  31 May 2024  (unaudited)			Six months ended  31 May 2023  (unaudited)			Year ended  30 November 2023  (audited)
	Revenue  £’000	Capital  £’000	Total  £’000	Revenue  £’000	Capital  £’000	Total  £’000	Revenue  £’000	Capital  £’000	Total  £’000
Investment management fee	321	964	1,285	325	974	1,299	629	1,889	2,518
Performance fee	—	2,749	2,749	—	1,487	1,487	—	2,014	2,014
	---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------
Total	321	3,713	4,034	325	2,461	2,786	629	3,903	4,532
	=========	=========	=========	=========	=========	=========	=========	=========	=========

Investment management fees
The investment management fee is calculated at the rate of 0.35% per annum on month end Gross Assets. For the purposes of this note, Gross Assets are defined as the value of the portfolio of the Company, including uninvested cash, with the portfolio valuation based on value at risk (with value at risk being the gross asset value of the long-only portfolio plus the gross value of the underlying equities, long and short, to which the Company is exposed through derivatives including CFDs and index futures). The management fee is charged 25% to the revenue account and 75% to the capital account of the Statement of Comprehensive Income. There is no additional fee for company secretarial and administration services.

Performance fees
The performance fee is calculated at the rate of 15% of the outperformance of the Company. For the purpose of this note, outperformance is defined as the amount by which the annualised percentage Net Asset Value total return of the Company arithmetically exceeds the annualised percentage return of the Benchmark Index, measured over a rolling two-year performance period. This rate is applied to the average Gross Assets, in that rolling two-year performance period. Outperformance is the amount by which the Net Asset Value total return arithmetically exceeds the Benchmark Index total return.

There is a cap on the annual total management and performance fees of 1.25% per financial year of the average Gross Assets over the rolling two-year performance period (the “Cap” or “Capped Amount”) which has the effect of capping the annual performance fees at circa 0.9% of average Gross Assets and which means that the performance fee from any performance period will not exceed 0.9% of average Gross Assets for the relevant performance period.

The performance fee is calculated daily for the rolling two-year performance period ending 30 November 2024 and the rolling two-year performance period ending 30 November 2025, and accruals are made in the NAV subject to the Cap. The performance fee is payable on 30 November each year in relation to the rolling two-year performance period ending on that date. The accrual is calculated applying the following assumptions:

·        The Benchmark Index remains unchanged;

·        The Net Asset Value total return performs in line with the Benchmark Index total return for the remainder of the respective rolling two-year performance periods ending 30 November 2024 and 30 November 2025; and

·        The future value of Gross Assets for performance fee purposes is the same at the balance sheet date.

The amount of outperformance on which a performance fee has not been paid in a financial year due to the application of the Cap, will be carried forward to offset against future shortfall returns. As at 1 December 2023, the carried forward unpaid net outperformance, net of prior period shortfall returns, available to offset against future shortfall returns was 4.8% (1 December 2022: 10.7%).

On the first day of the financial year, due to the application of the Cap in the prior financial year, any performance fee for the ongoing rolling two-year performance period not yet recognised is accrued in the daily NAV released to the London Stock Exchange on that day.

Performance fees have been wholly allocated to the capital account of the Statement of Comprehensive Income as the performance has been predominantly generated through capital returns from the investment portfolio. The total accrual of performance fee for all rolling two-year performance periods amounted to £4,763,000 as at 31 May 2024 (31 May 2023: £1,487,000; 30 November 2023: £2,014,000), calculated as follows:

·        For the annualised rolling two-year performance period to 30 November 2024, the Company has outperformed the benchmark by 3.2% as at 31 May 2024. A performance fee of £3,569,000 relating to this performance period has been accrued at the date of this report, which does not become payable until 30 November 2024 subject to the ongoing performance of the Company. Of this, an amount of £2,014,000 was recognised during the year ended 30 November 2023.

·        For the annualised rolling two-year performance period to 30 November 2025, the Company has outperformed the benchmark by 1.0% as at 31 May 2024. A performance fee of £1,194,000 relating to this performance period has been accrued at the date of this report, which does not become payable until 30 November 2025 subject to the ongoing performance of the Company.

5. Other operating expenses

	Six months  ended  31 May  2024  (unaudited) £’000	Six months  ended  31 May  2023  (unaudited) £’000	Year  ended  30 November  2023  (audited) £’000
Allocated to revenue:
Custody fees	3	3	7
Auditor’s remuneration1	35	32	58
Registrar’s fees	21	17	44
Directors’ emoluments	111	115	224
Broker fees	18	18	36
Depositary fees	35	36	70
Marketing fees	68	71	149
FCA fees	13	15	27
Printing and postage fees	21	22	43
AIC fees	11	11	21
Stock exchange listing fees	18	16	31
Write back of prior year expenses2	(13)	(9)	(12)
Other administrative costs	65	58	94
	---------------	---------------	---------------
	406	405	792
	=========	=========	=========
Allocated to capital:
Custody transaction charges3	11	10	20
	---------------	---------------	---------------
	417	415	812
	=========	=========	=========

¹     In the six months ended 31 May 2024, no non-audit services were provided by the auditors (six months ended 31 May 2023 none; year ended 30 November 2023: none).

²     Relates to Director’s expenses, legal fees, professional fees and miscellaneous fees written back during the period (six months ended 31 May 2023: Directors’ recruitment fees; year ended 30 November 2023: Directors’ recruitment fees, miscellaneous fees and postage fees).

³     For the six month period ended 31 May 2024, expenses of £11,000 (six months ended 31 May 2023: £10,000; year ended 30 November 2023: £20,000) were charged to the capital account of the Statement of Comprehensive Income. This relates to transaction costs charged by the custodian on sale and purchase trades.

The transaction costs incurred on the acquisition of investments amounted to £555,000 for the six months ended 31 May 2024 (six months ended 31 May 2023: £652,000; year ended 30 November 2023: £975,000). Costs relating to the disposal of investments amounted to £107,000 for the six months ended 31 May 2024 (six months ended 31 May 2023: £66,000; year ended 30 November 2023: £141,000). All transaction costs have been included within capital reserves.

6. Dividends
The Board has declared an interim dividend of 3.75p per share payable on 27 August 2024 to shareholders on the register at 2 August 2024 (six months ended 31 May 2023: interim dividend of 3.30p per share paid on 1 September 2023 to shareholders on the register at 4 August 2023). This dividend has not been accrued in the financial statements for the six months ended 31 May 2024 as, under IAS, interim dividends are not recognised until paid. Dividends are debited directly to reserves.

7. Earnings/(loss) and net asset value per ordinary share
Revenue, capital earnings/(loss) and net asset value per ordinary share are shown below and have been calculated using the following:

	Six months  ended  31 May  2024  (unaudited)	Six months  ended  31 May  2023  (unaudited)	Year  ended  30 November  2023  (audited)
Net revenue profit attributable to ordinary shareholders (£’000)	8,885	8,544	16,510
Net capital profit/(loss) attributable to ordinary shareholders (£’000)	96,006	(7,823)	(32,259)
	---------------	---------------	---------------
Total profit/(loss) attributable to ordinary shareholders (£’000)	104,891	721	(15,749)
	=========	=========	=========
Total shareholders’ funds (£’000)	644,498	620,407	575,925
	=========	=========	=========
The weighted average number of ordinary shares in issue during the period on which the earnings per ordinary share was calculated was:	94,149,841	100,992,473	99,704,909
The actual number of ordinary shares in issue at the period end on which the net asset value per ordinary share was calculated was:	91,606,927	100,295,785	95,872,161
	---------------	---------------	---------------
Earnings/(loss) per ordinary share
Revenue earnings per share (pence) – basic and diluted	9.44	8.46	16.56
Capital earnings/(loss) per share (pence) - basic and diluted	101.97	(7.75)	(32.36)
	---------------	---------------	---------------
Total earnings/(loss) per share (pence) - basic and diluted	111.41	0.71	(15.80)
	=========	=========	=========
	As at  31 May  2024  (unaudited)	As at  31 May  2023  (unaudited)	As at  30 November  2023  (audited)
Net asset value per ordinary share (pence)	703.55	618.58	600.72
Ordinary share price (pence)	639.00	587.00	579.00
	=========	=========	=========

There were no dilutive securities at the period end (six months ended 31 May 2023: none; year ended 30 November 2023 none).

8. Called up share capital

(unaudited)	Ordinary  shares  in issue  number	Treasury  shares  number	Total  shares  number	Nominal  value  £’000
Allotted, called up and fully paid share capital comprised:
Ordinary shares of 5 pence each:
At 30 November 2023	95,872,161	7,337,703	103,209,864	5,160
Ordinary shares bought back into treasury	(4,265,234)	4,265,234	–	–
	---------------	---------------	---------------	---------------
At 31 May 2024	91,606,927	11,602,937	103,209,864	5,160
	=========	=========	=========	=========

During the six months ended 31 May 2024, the Company bought back 4,265,234 shares into treasury (six months ended 31 May 2023: 863,079; year ended 30 November 2023: 5,286,703) for a total consideration of £25,477,000 (six months ended 31 May 2023: £5,076,000; year ended 30 November 2023: £29,807,000) including costs.

Since 31 May 2024 and up to the date of this report, 836,063 shares have been bought back into treasury for a total consideration of £5,166,000.

The ordinary shares give shareholders voting rights, the entitlement to all of the capital growth in the Company’s assets and to all income from the Company that is resolved to be distributed.

9. Reserves
The share premium account and capital redemption reserve are not distributable reserves under the Companies Act 2006. In accordance with ICAEW Technical Release 02/17BL on Guidance on Realised and Distributable Profits under the Companies Act 2006, the special reserve and capital reserves may be used as distributable reserves for all purposes and, in particular, the repurchase by the Company of its ordinary shares and for payments such as dividends. In accordance with the Company’s Articles of Association, the special reserve, capital reserve and revenue reserve may be distributed by way of dividend. The gain on the capital reserve arising on the revaluation of investments of £54,473,000 (six months ended 31 May 2023: gain of £9,770,000; year ended 30 November 2023: no gain) is subject to fair value movements and may not be readily realisable at short notice, as such it may not be entirely distributable. The investments are subject to financial risks, as such capital reserves (arising on investments sold) and the revenue reserve may not be entirely distributable if a loss occurred during the realisation of these investments.

10. Financial risks and valuation of financial instruments
The Company’s investment activities expose it to the various types of risk which are associated with the financial instruments and markets in which it invests. The risks are substantially consistent with those disclosed in the previous annual financial statements with the exception of those outlined below.

Market risk arising from price risk
Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting similar financial instruments traded in the market. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, recessions, climate change or other events could have a significant impact on the Company and the market price of its investments and could result in increased premiums or discounts to the Company’s net asset value.

Valuation of financial instruments
Financial assets and financial liabilities are either carried in the Statement of Financial Position at their fair value (investments and derivatives) or at an amount which is a reasonable approximation of fair value (due from brokers, dividends and interest receivable, due to brokers, accruals, cash at bank and bank overdrafts). IFRS 13 requires the 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 2(g) as set out on page 100 in the Company’s Annual Report and Financial Statements for the year ended 30 November 2023.

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset.

The fair value hierarchy has the following levels:

Level 1 – Quoted market price for identical instruments in active markets
A financial instrument is regarded as quoted in an active market if quoted prices are readily available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The Company does not adjust the quoted price for these instruments.

Level 2 – Valuation techniques using observable inputs
This category includes instruments valued using quoted prices for similar instruments in markets that are considered less than active, or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

Valuation techniques used for non-standardised financial instruments such as options, currency swaps and other over-the-counter derivatives include the use of comparable recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants making the maximum use of market inputs and relying as little as possible on entity specific inputs.

As at the period end the long and short derivative positions were valued using the underlying equity bid price (offer price in respect of short positions) and the contract price at the inception of the trade or at the trade reset date. There have been no changes to the valuation technique since the previous year or as at the date of this report.

Contracts for difference have been classified as Level 2 investments as their valuation has been based on market observable inputs represented by the market prices of the underlying quoted securities to which these contracts expose the Company.

Level 3 – Valuation techniques using significant unobservable inputs
This category includes all instruments where the valuation technique includes inputs not based on market data and these inputs could have a significant impact on the instrument’s valuation.

This category also includes instruments that are valued based on quoted prices for similar instruments where significant entity determined adjustments or assumptions are required to reflect differences between the instruments and instruments for which there is no active market. The Investment Manager considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary and provided by independent sources that are actively involved in the relevant market.

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement.

Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability, including an assessment of the relevant risks including but not limited to credit risk, market risk, liquidity risk, business risk and sustainability risk. The determination of what constitutes ‘observable’ inputs requires significant judgement by the Investment Manager and these risks are adequately captured in the assumptions and inputs used in measurement of Level 3 assets or liabilities.

Fair values of financial assets and financial liabilities
The table below sets out fair value measurements using the IFRS 13 fair value hierarchy.

Financial assets/(liabilities) at fair value through profit or loss at 31 May 2024 (unaudited)	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Assets:
Equity investments	612,126	–	–	612,126
Contracts for difference (fair value)	–	2,527	–	2,527
Index future	495	–	–	495
	---------------	---------------	---------------	---------------
Liabilities:
Contracts for difference (fair value)	–	(1,146)	–	(1,146)
	---------------	---------------	---------------	---------------
	612,621	1,381	–	614,002
	=========	=========	=========	=========

Financial assets/(liabilities) at fair value through profit or loss at 31 May 2023 (unaudited)	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Assets:
Equity investments	610,447	–	–	610,447
Contracts for difference (fair value)	–	1,460	–	1,460
	---------------	---------------	---------------	---------------
Liabilities:
Contracts for difference (fair value)	–	(1,088)	–	(1,088)
	---------------	---------------	---------------	---------------
	610,447	372	–	610,819
	=========	=========	=========	=========

Financial assets/(liabilities) at fair value through profit or loss at 30 November 2023 (audited)	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Assets:
Equity investments	557,594	–	–	557,594
Contract for difference (fair value)	–	703	–	703
	---------------	---------------	---------------	---------------
Liabilities:
Contract for difference (fair value)	–	(1,352)	–	(1,352)
Index future	(102)	–	–	(102)
	---------------	---------------	---------------	---------------
	557,492	(649)	–	556,843
	=========	=========	=========	=========

There were no transfers between levels for financial assets and financial liabilities recorded at fair value during the six months ended 31 May 2024, six months ended 31 May 2023 or year ended 30 November 2023. The Company did not hold any Level 3 securities during the period ended 31 May 2024 (six months ended 31 May 2023: none; year ended 30 November 2023: none).

For exchange listed equity investments the quoted price is the bid price. Contracts for difference are valued based on the bid price of the underlying quoted securities that the contracts relate to. Substantially, all investments are valued based on unadjusted quoted market prices. Where such quoted prices are readily available in an active market, such prices are not required to be assessed or adjusted for any business risks, including climate change risk, in accordance with the fair value related requirements of the Company’s Financial Reporting Framework.

11. Transactions with the Investment Manager and AIFM
BlackRock Fund Managers Limited (BFM) provides management and administration services to the Company under a contract which is terminable on six months’ notice. BFM has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services, to BlackRock Investment Management (UK) Limited (BIM (UK)). Further details of the investment management contract are disclosed on pages 56 and 57 of the Directors’ Report in the Company’s Annual Report and Financial Statements for the year ended 30 November 2023.

The investment management fee due for the six months ended 31 May 2024 amounted to £1,285,000 (six months ended 31 May 2023: £1,299,000; year ended 30 November 2023: £2,518,000). At the period end, £1,869,000 was outstanding in respect of management fees (31 May 2023: £1,906,000; 30 November 2023: £1,864,000).

The total accrual of performance fee for all rolling two-year performance periods amounted to £4,763,000 as at 31 May 2024 (31 May 2023: £1,487,000; 30 November 2023: £2,014,000), calculated as follows:

·        For the annualised rolling two-year performance period to 30 November 2024, the Company has outperformed the benchmark by 3.2% as at 31 May 2024. A performance fee of £3,569,000 has been accrued at the date of this report. Of this, an amount of £2,014,000 was recognised during the year ended 30 November 2023.

·        For the annualised rolling two-year performance period to 30 November 2025, the Company has outperformed the benchmark by 1.0% as at 31 May 2024. A performance fee of £1,194,000 has been accrued at the date of this report.

In addition to the above services, BIM (UK) has provided the Company with marketing services. The total fees paid or payable for these services to 31 May 2024 amounted to £68,000 excluding VAT (six months ended 31 May 2023: £71,000; year ended 30 November 2023: £149,000). Marketing fees of £192,000 excluding VAT (31 May 2023: £192,000; 30 November 2023: £269,000) were outstanding at 31 May 2024.

As at 31 May 2024, an amount of £193,000 (31 May 2023: £198,000; 30 November 2023: £202,000) was payable to the Manager in respect of Directors’ fees.

The Company has an investment in the BlackRock Institutional Cash Series plc – Sterling Liquid Environmentally Aware Fund of £42,648,000 (31 May 2023: £12,854,000; 30 November 2023: £24,328,000) which for the period ended 31 May 2024, 31 May 2023 and year ended 30 November 2023 has been presented in the financial statements as a cash equivalent.

The ultimate holding company of the Manager and the Investment Manager is BlackRock, Inc., a company incorporated in Delaware, USA.

12. Related party disclosure
Directors’ emoluments
The Board consists of six non-executive Directors, all of whom are considered to be independent of the Manager by the Board. None of the Directors has a service contract with the Company. With effect from 1 December 2023, the Chairman receives an annual fee of £48,800, the Chairman of the Audit Committee receives an annual fee of £38,700, the Senior Independent Director receives an annual fee of £34,100 and each of the other Directors receives an annual fee of £33,100.

As at 31 May 2024, an amount of £21,000 (31 May 2023: £18,000; 30 November 2023: £18,000) was outstanding in respect of Directors’ fees.

At the period end, members of the Board, including any connected persons, held ordinary shares in the Company as set out below:

	Ordinary  shares  24 July  2024	Ordinary  shares  31 May  2024	Ordinary  shares  30 November  2023
Christopher Samuel (Chairman)	66,869	66,869	65,606
Nigel Burton	16,888	16,888	16,570
Angela Lane	11,731	11,731	11,673
Louise Nash	3,900	3,900	3,900
Merryn Somerset Webb	3,727	3,727	3,727
Glen Suarez1	4,800	4,800	4,800

¹ Glen Suarez was appointed as a Director on 9 January 2023.

Significant Holdings
The following investors are:

a.      funds managed by the BlackRock Group or are affiliates of BlackRock, Inc. (Related BlackRock Funds); or

b.      investors (other than those listed in (a) above) who held more than 20% of the voting shares in issue in the Company and are as a result, considered to be related parties to the Company (Significant Investors).

	Total % of shares held by  Related BlackRock Funds	Total % of shares held by  Significant Investors who are  not affiliates of BlackRock  Group or BlackRock, Inc.	Number of Significant  Investors who are not  affiliates of BlackRock  Group or BlackRock, Inc.
As at 31 May 2024	1.39	n/a	n/a
As at 30 November 2023	1.34	n/a	n/a
As at 31 May 2023	1.53	n/a	n/a
	=========	=========	=========

13. Contingent liabilities
There were no contingent liabilities as at 31 May 2024 (six months ended 31 May 2023: none; year ended 30 November 2023: none).

14. Publication of non statutory accounts
The financial information contained in this Half Yearly Financial Report does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006. The financial information for the six months ended 31 May 2024 and 31 May 2023 has not been audited.

The information for the year ended 30 November 2023 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies. The report of the auditor on those financial statements contained no qualification or statement under Sections 498(2) or 498(3) of the Companies Act 2006.

15. Annual results
The Board expects to announce the annual results for the year ending 30 November 2024 in February 2025. Copies of the results announcement can be obtained from the Secretary on 020 7743 3000 or by email at [e-mail]. The Annual Report and Financial Statements should be available by the beginning of February 2025, with the Annual General Meeting expected to be held in March 2025.

For further information, please contact:

Sarah Beynsberger, Director, Closed End Funds, BlackRock Investment Management (UK) Limited

Tel: [phone]

Press Enquiries:
Ed Hooper, Lansons Communications – Tel:  [phone]
E-mail:  [e-mail]; [e-mail]

24 July 2024

12 Throgmorton Avenue

London EC2N 2DL

END

The Half Yearly Financial Report will also be available on the BlackRock website at http://www.blackrock.com/uk/thrg. 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.

Should you wish to receive investment trust related news and insights you can subscribe to BlackRock’s Investment Trust Matters newsletter at: https://go.blackrock.com/LP=2142.

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