Half-yearly Report
BlackRock Income and Growth Investment Trust plc
Half yearly results announcement to 30 April 2013
Performance Record
Financial Highlights
Attributable to ordinary shareholders 30 31 Change
April October %
2013 2012
(unaudited) (audited)
Assets
Net assets (£'000)* 44,099 41,947 +5.1
Net asset value per ordinary share 157.44p 147.81p +6.5
- with income reinvested +8.9
Ordinary share price (mid-market) 154.25p 137.00p +12.6
- with income reinvested +15.1
FTSE All-Share Index (Total Return) 4,946.77 4,338.32 +14.0
Discount to net asset value 2.0% 7.3%
-------- -------- --------
For For
the the
six six
months months
ended ended
30 30
April April
2013 2012 Change
(unaudited) (unaudited) %
Revenue
Net revenue return after taxation (£'000) 797 518 +53.9
Return per ordinary share** 2.82p 1.81p +55.8
Dividend per ordinary share
Interim 2.00p 1.80p +11.1
-------- -------- --------
* The change in net assets reflects the share repurchases made and market movements during the period.
**Further details are given in note 4.
Chairman's Statement
Performance
During the six month period to 30 April 2013, the Company's net asset value per
share ("NAV") and share price rose by 8.9% and 15.1% respectively. By
comparison, the FTSE All-Share Index rose by 14.0% (all percentages with income
reinvested).
Since the end of April, the Company's NAV and benchmark have remained unchanged.
Further information on the Company's performance is set out in the Investment
Manager's Report.
Revenue return and dividends
Revenue return per share for the period was 2.82 pence per share (six months to
30 April 2012: 1.81 pence per share). The Board has declared an interim
dividend of 2.00 pence per share (2012: 1.80 pence per share), the uplift reflecting
the increase in revenue return compared with the comparative period. The dividend will
be paid on 6 September 2013 to shareholders on the Company's register at the close of
business on 26 July 2013 (ex dividend date is 24 July 2013).
Zero discount policy
The Board announced on 29 January 2013 that it had decided to use its share
buy back powers with the objective of ensuring that the Company's share price
tracks at or around NAV in normal market conditions. In addition, and in order
to facilitate the new buy back policy, the existing policy of not buying back
shares to hold in treasury at a discount of less than 4% has been amended to
enable the Company to buy shares at any discount to the estimated NAV.
Any shares repurchased by the Company will now be held in treasury, and might
subsequently be reissued to satisfy market demand, but only at a premium to the
estimated NAV at the time of issue.
370,000 ordinary shares were purchased and placed in treasury during the period
for a total consideration of £576,000 (excluding transaction costs). Since the
end of April a further 280,000 ordinary shares have been purchased and placed
in treasury for a total consideration of £451,000 (excluding transaction
costs).
Gearing
The Company operates a flexible gearing policy which depends on prevailing
conditions and net gearing is subject to a maximum level of 20% of net assets at the time
of investment. Under normal operating conditions it is therefore envisaged that
net gearing will fall within a range of 0% and 20% of net assets. The maximum
net gearing used during the period under review was 7.8% and at 30 April 2013 net
gearing was 4.8%. Gearing levels and sources of funding are reviewed regularly.
The Company currently has an unsecured sterling revolving credit facility of £5
million with ING Bank N.V., with a maturity date of 31 October 2013.
Fund Manager
On 18 April 2013, the Board announced that it had been informed that Nick
McLeod-Clarke, co-manager of the fund, had been requested by BlackRock
Investment Management (UK) Limited to take long-term leave to recuperate from
poor health. As a consequence of uncertainty over the date of Nick's return and to
give shareholders complete clarity regarding the Company's fund management
arrangements the Board agreed that Adam Avigdori, co-manager since 1 April 2012,
should assume immediate responsibility for the portfolio as sole fund manager.
The Board remains in close liaison with BlackRock to ensure that Adam is
fully supported in his role. BlackRock has assured the Board that additional
team members will be recruited to support Adam. The Board will be kept closely
informed in that process.
The Board would like to wish Nick a full and speedy recovery.
Alternative Investment Fund Managers' Directive
The Alternative Investment Fund Managers' Directive ("the Directive") is a European directive
which seeks to reduce potential systemic risk by regulating alternative investment fund managers
("AIFMs"). AIFM's are responsible for investment products that fall within the category of
Alternative Investment Funds ("AIFs") and investment companies are included in this.
We expect the implementation of the Directive to be effecive from 22 July 2013 although
it is currently anticipated that the Financial Conduct Authority ("FCA") will permit a
transitional period of one year within which UK AIFMs must seek authorisation. The Board
is currently taking independant advise on the consequences for the Company and will inform
shareholders once the most appropriate course of action has been decided.
Outlook
Recovery in the US has given rise to speculation that the US Federal Reserve's policy of
purchasing government bonds may be scaled back. Stresses within the Eurozone persist, and
there is a partial slowdown in growth in demand in emerging markets. UK markets are not immune
to these factors and the ability of the UK economy to generate sustainable growth also depends
upon an improvement in demand and higher levels of corporate activity. Whilst a number of the
extreme features of the credit crisis have receded, we can anticipate further volatility in financial
markets as they move towards a more conventional interest rate environment. Nevertheless, UK corporate
balance sheets are generally well founded, with scope for dividend payments to be sustained or improved.
This, combined with UK companies' exposure to growth markets, provides grounds for some cautious
optimism for future portfolio returns.
Jonathan Cartwright
Chairman
20 June 2013
Interim Management Report and Responsibility Statement
The Chairman's Statement and the Investment Manager's Report 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
- Income/dividend
- Regulatory
- Operational
- Market
- Financial
- Gearing; and
- Third party service providers.
The Board reported on the principal risks and uncertainties faced by the
Company in the Annual Report and Financial Statements for the year ended 31
October 2012. A detailed explanation can be found in the Directors' Report on
pages 15 and 16 and in note 18 on pages 44 to 48 of the Annual Report and
Financial Statements which are available on the website maintained by the
Investment Manager, BlackRock Investment Management (UK) Limited, at
www.blackrock.co.uk/brig.
In the view of the Board, there have not been any changes to the fundamental
nature of these risks since the previous report and these principal risks and
uncertainties 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
The Investment Manager is regarded under the Listing Rules as a related party
and details of the management and performance fees payable are set out in note
3. The related party transactions with the Directors are set out in note 9.
Going concern
The Directors believe that it is appropriate to continue to adopt the going concern
basis in preparing the financial statements as the assets of the Company
consist mainly of securities which are readily realisable and accordingly that
the Company has adequate financial resources to continue in operational
existence for the foreseeable future.
Directors' responsibility statement
The Disclosure 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 the Accounting Standards
Board's Statement `Half Yearly Financial Reports'; 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 FSA's Disclosure 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 20 June 2013 and
the above responsibility statement was signed on its behalf by the Chairman.
Jonathan Cartwright
For and on behalf of the Board
20 June 2013
Investment Manager's Report
Performance
The Investment Manager reports that for the six month period ended 30 April
2013 the Company's NAV returned 8.9% and the share price 15.1%. Over the same
period, the FTSE All-Share Index returned 14.0%. (All percentages are in
sterling with income reinvested.)
Market overview
Equity markets rose in the fourth quarter of 2012, continuing the trend set in the
early summer when policy-makers signalled an aggressively loose monetary stance
to tackle global economic weakness and the Eurozone crisis. Large defensive
sectors were among the worst performers. Mobile telecommunications,
pharmaceuticals and oil producers fell due to the risk reversal in markets and
some stock specific disappointments at GlaxoSmithKline and Vodafone. Meanwhile,
banks and life assurance were among the largest risers despite continued
negative developments for the banks over the LIBOR scandal.
UK equities rose strongly during the first quarter of 2013 as investors showed
a renewed appetite for risk. Markets globally made significant advances as they
overcame the disappointments of US sequestration, the UK sovereign debt
downgrade, the machinations of the Italian elections and the bailout of Cypriot
banks. Despite an anticipated resurgence in global growth the natural resources
sectors were notable underperformers through a combination of poor capital
allocation, rising costs and weak commodity prices. In April, the FTSE
All-Share Index posted its eleventh consecutive month of positive returns, with
defensives (including health care, telecommunications and utilities) and
financials having the greatest positive impact on market returns.
Contributors to performance
While the portfolio rose in absolute terms over the period, it underperformed
the Index by a considerable margin. The largest detractor from relative returns
was the holding of Chilean copper miner Antofagasta, with a mixture of stock
specific and industry issues to blame. First, Antofagasta's cost guidance for
2013 was disappointing as rising power prices took their toll. Secondly, prices
weakened as markets became concerned about the rising supply in key commodities
including iron ore; and thirdly, reported profits from mining companies were
generally in line with expectations but cash flow was disappointing as capital
expenditure continued to increase. However, the weakness of Antofagasta was
largely offset by not holding other shares in the mining sector, which also
underperformed.
The holding in Tullow Oil detracted from returns after it failed to find oil in
its "Priodontes" well in French Guiana, which had been flagged as one of its
more exciting prospects. The recent run of poor drilling results has eroded the
exploration premium in the share price, although we believe that significant
opportunity remains from exploration in Kenya and other exploration wells to be
drilled later this year. Shares of cruise operator Carnival were weak after the
company announced that its ship the Carnival Triumph, which was crippled by an
engine fire in the Gulf of Mexico in February, will be out of service longer
than had been initially expected resulting in additional cruises being
cancelled. Global exhibitions and information company UBM reported 2012 results
that disappointed the market with a weak outlook statement despite being slightly
ahead of expectations. However, the exhibitions business has reported consistently
good growth driven primarily by the level of emerging markets exposure.
Amongst the top contributors to relative returns was Playtech, the developer of
software platforms and content for the gaming industry, which performed well as
shares of online gaming companies surged on news of plans for a change in New
Jersey's Gambling Law. Playtech is the leading provider of back-end technology
to many online gaming sites. Carphone Warehouse was a contributor to returns
after announcing the buyout of its joint venture partner, Best Buy, and
stronger than expected revenues from its UK operations. Capital & Counties,
owner of properties in Covent Garden and Earls Court, continued to perform well
following the strong increase in its asset values as its prime central London property
has benefited from rental uplifts, the continued strength of the London commercial
property market and the potential for a residential development at Earls Court.
Shares of asset manager Jupiter Fund Management performed well after the
company reported good investment performance and strong net asset flows.
Outlook/Strategy
Macroeconomic data is improving globally led, in particular, by the US where
manufacturing and construction related activity have picked up from a low base.
In recent weeks, we have seen increasing speculation that this improvement in
underlying economic data will lead to a tapering or ending of quantitative easing.
Given the fragility of the economic recovery, we expect the Federal Reserve to be
very cautious in withdrawing their support although this speculation is likely to
continue for the foreseeable future. Meanwhile, lower, though still
positive, rates of growth in emerging markets are putting pressure on the
business models of resource companies, particularly those that had relied on
rapid commodity price appreciation.
Equity valuations have been lifted by a downward reassessment of risk levels in
equity investment, given higher levels of inflation and lower bond yields. UK
equity valuations still look attractive compared to those of most other asset
classes, with the prospect of high quality earnings and dividend growth. In the
current economic environment we retain our preference for companies with high
quality franchises that can still prosper through exposure to growth markets
and we believe that the earnings of UK companies can still grow due to their
exposure to these international markets. We observe that markets seem to be no
longer dominated by a simple "risk-on, risk-off" trading mentality and it
appears that risk taking is now being rewarded on a more fundamental basis.
Adam Avigdori
BlackRock Investment Management (UK) Limited
20 June 2013
Ten Largest Investments
HSBC - 8.4% (2012: 7.4%, www.hsbc.com) is one of the world's largest banking
and financial services organisations. Its principal businesses include
commercial banking, global banking and markets, private banking and personal
financial services. Its international network covers 81 countries and
territories worldwide, across Europe, Asia-Pacific, North America, Latin
America and the Middle East and North Africa.
Royal Dutch Shell `B' - 7.2% (2012: 7.8%, www.shell.com) is one of the world's
largest independent oil and gas companies. Its upstream operations are engaged
in searching for and recovering crude oil and natural gas, the liquefaction and
transportation of gas, and the extraction of bitumen from oil sands. The
downstream businesses are engaged in manufacturing; distribution and marketing
activities for oil products and chemicals, in alternative energy and carbon
dioxide management.
British American Tobacco - 6.0% (2012: 5.0%, www.bat.com) is one of the world's
leading tobacco groups, with more than 200 brands in the portfolio selling in
approximately 180 markets worldwide. It also has a significant interest in
tobacco leaf growing, working with thousands of farmers internationally.
Vodafone Group - 5.5% (2012: 5.6%, www.vodafone.co.uk) is a global mobile
communications company providing a range of communications services including
voice, messaging, data and fixed-line solutions. It operates in Europe, Africa,
Asia-Pacific and the Middle East, and in the United States has a significant
investment in Verizon Wireless.
GlaxoSmithKline - 5.4% (2012: 3.5%, www.gsk.com) is a global healthcare group,
operating in the research, development, manufacture and marketing of
pharmaceutical products, including vaccines, over-the-counter medicines and
health-related consumer products.
Tate & Lyle - 3.3% (2012: 3.1%, www.tateandlyle.com) is the holding company for
an international group of companies that produce and market ingredients and
solutions for the food, beverage, industrials and agriculture industries around
the world. The company's range of products includes nutritive sweeteners,
industrial starches, ethanol and animal feed.
Shire - 3.2% (2012: 2.5%, www.shire.com) is a specialty pharmaceutical company
that markets, licences and develops prescription medicines that focus on
treatments for Attention Deficit and Hyperactivity Disorders (ADHD), human
genetic disorders, gastrointestinal and renal diseases.
Imperial Tobacco Group - 3.2% (2012: 2.7%, www.imperial-tobacco.co.uk) is a
leading international tobacco company that operates in over 160 countries
worldwide. It manufactures, markets, and sells a portfolio of brands and
products across all tobacco categories.
Barclays - 2.7% (2012: nil, www.barclays.co.uk) is a global financial services
provider engaged in retail banking, credit cards, wholesale banking, investment
banking, wealth management and investment management services. The company
operates in over 50 countries with a presence in Europe, the Americas, Africa
and Asia.
Diageo - 2.7% (2012: nil, www.diageo.com) is a global premium drinks business
that produces, distils and markets alcoholic beverages. The company offers a
wide range of branded alcoholic beverages, including vodkas, whiskys,
tequilas, gins, and beer.
All percentages reflect the value of the holding as a percentage of total
investments. The percentages in brackets represent the value of the holding as
at 31 October 2012.
Together the ten largest investments represent 47.6% of the Company's portfolio
(ten largest investments as at 31 October 2012: 47.1%)
Distribution of Investments as at 30 April 2013
Analysis of portfolio by sector
Portfolio Benchmark
% %
Banks 13.4 12.3
Oil & Gas Producers 12.6 15.4
Pharmaceuticals & Biotechnology 10.1 7.5
Tobacco 9.2 5.0
Non-life Insurance 5.7 0.9
Mobile Telecommunications 5.5 5.4
Life Insurance 4.3 3.9
Mining 4.3 7.4
Media 4.1 2.9
Travel & Leisure 3.5 3.0
Electronic & Electrical Equipment 3.4 0.4
Food Producers 3.3 2.5
Support Services 2.8 4.3
General Retailers 2.8 1.8
Beverages 2.7 4.5
Gas, Water & Multiutilities 2.4 3.3
Financial Services 3.6 2.0
Real Estate Investment & Services 2.2 0.3
Software & Computer Services 1.4 0.7
General Industrials 1.0 0.7
Household Goods & Home Construction 0.7 2.5
Cash and Cash Equivalents 1.0
Sources: BlackRock and Datastream.
Investment Size
Number of % of
Investments Portfolio
less than £1m 31 40.4
£1m to £2m 10 27.1
£2m to £3m 3 16.9
£3m to £4m 2 15.6
Investments
as at 30 April 2013
Market %
value of
£'000 Investments
Banks
HSBC 3,933 8.4
Barclays 1,283 2.7
Standard Chartered 1,052 2.3
-------- --------
6,268 13.4
-------- --------
Oil & Gas Producers
Royal Dutch Shell `B' 3,356 7.2
BP 898 1.9
BG Group 801 1.7
Tullow Oil 712 1.5
Soco International 149 0.3
--------- --------
5,916 12.6
-------- --------
Pharmaceuticals & Biotechnology
GlaxoSmithKline 2,532 5.4
Shire 1,508 3.2
AstraZeneca 681 1.5
-------- --------
4,721 10.1
-------- --------
Tobacco
British American Tobacco 2,797 6.0
Imperial Tobacco 1,488 3.2
-------- --------
4,285 9.2
-------- --------
Non-life Insurance
Admiral 1,267 2.7
Lancashire Holdings 955 2.1
esure 433 0.9
-------- --------
2,655 5.7
-------- --------
Mobile Telecommunications
Vodafone Group 2,576 5.5
-------- --------
2,576 5.5
-------- --------
Life Insurance
Legal & General 1,221 2.6
Prudential 802 1.7
-------- --------
2,023 4.3
-------- --------
Mining
Rio Tinto 861 1.8
Antofagasta 694 1.5
BHP Billiton 442 1.0
-------- --------
1,997 4.3
-------- --------
Media
UBM 1,042 2.2
Reed Elsevier 878 1.9
-------- --------
1,920 4.1
-------- --------
Travel & Leisure
Carnival 933 2.0
Ladbrokes 438 0.9
Domino's Pizza 259 0.6
-------- --------
1,630 3.5
-------- --------
Electronic & Electrical Equipment
Melrose 674 1.4
Oxford Instruments 634 1.4
Spectris 273 0.6
-------- --------
1,581 3.4
-------- --------
Food Producers
Tate & Lyle 1,532 3.3
-------- --------
1,532 3.3
-------- --------
Support Services
Wolseley 884 1.9
Ashtead 441 0.9
-------- --------
1,325 2.8
-------- --------
General Retailers
Carphone Warehouse 955 2.1
Halfords 346 0.7
-------- --------
1,301 2.8
-------- --------
Beverages
Diageo 1,262 2.7
-------- --------
1,262 2.7
-------- --------
Gas, Water & Multiutilities
Pennon 592 1.3
United Utilities 543 1.1
-------- --------
1,135 2.4
-------- --------
Financial Services
3i Group 675 1.4
Jupiter Fund Management 618 1.3
Hargreaves Lansdown 408 0.9
-------- --------
1,701 3.6
-------- --------
Real Estate Investment & Services
Capital & Counties 1,000 2.2
-------- --------
1,000 2.2
-------- --------
Software & Computer Services
Playtech 650 1.4
-------- --------
650 1.4
-------- --------
General Industrials
Rexam 449 1.0
-------- --------
449 1.0
-------- --------
Household Goods & Home Construction
Bovis Homes 302 0.7
-------- --------
302 0.7
-------- --------
46,229 99.0
-------- --------
Cash and Cash Equivalents
BlackRock Institutional Cash Fund 475 1.0
-------- --------
475 1.0
-------- --------
Total value of investments 46,704 100.0
======== ========
All investments are in ordinary shares unless otherwise stated.
The total number of holdings as at 30 April 2013 was 46 (31 October 2012: 39).
Income Statement
for the six months ended 30 April 2013
Revenue Capital Total
Notes £’000 £’000 £’000
Six Year Six Year Six Year
months ended ended months ended ended Months ended ended
30.04.13 30.04.12 31.10.12 30.04.13 30.04.12 31.10.12 30.04.13 30.04.12 31.10.12
(unaudited)(unaudited)(audited)(unaudited)(unaudited)(audited)(unaudited)(unaudited) (audited)
Net gains
on
investments
at
fair value
through
profit
or loss - - - 3,032 1,503 2,788 3,032 1,503 2,788
Income from
investments
at fair
value
through
profit
or loss 2 953 722 1,658 - - - 953 722 1,658
Investment
Management
fee 3 (31) (52) (89) (93) (79) (165) (124) (131) (254)
Performance
fee 3 - - - - (4) (38) - (4) (38)
Other
Operating
expenses (120) (145) (265) (10) (143) (145) (130) (288) (410)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net return
Before
Finance
costs
and
taxation 802 525 1,304 2,929 1,277 2,440 3,731 1,802 3,744
Finance
costs (5) (7) (14) (16) (21) (41) (21) (28) (55)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Return on
Ordinary
Activities
Before
taxation 797 518 1,290 2,913 1,256 2,399 3,710 1,774 3,689
Taxation on
Ordinary
activities - - - - - - - - -
-------- -------- -------- -------- -------- -------- ------- -------- --------
Return on
Ordinary
Activities
After
taxation 797 518 1,290 2,913 1,256 2,399 3,710 1,774 3,689
-------- -------- -------- -------- -------- -------- -------- -------- --------
Return per
Ordinary
share (basic
and
diluted) 4 2.82p 1.81p 4.52p 10.30p 4.38p 8.41p 13.12p 6.19p 12.93p
-------- -------- -------- -------- -------- -------- -------- -------- --------
The total column of this statement represents the Income Statement of the
Company. The supplementary revenue and capital columns are both prepared under
guidance published by the Association of Investment Companies ("AIC"). The
Company had no recognised gains or losses other than those disclosed in the
Income Statement and the Reconciliation of Movements in Shareholders' Funds.
All items in the above statement derive from continuing operations.
There is no material difference between the profit on ordinary shares before
taxation and the profit for the period, stated above, and their historical
cost equivalents.
Reconciliation of Movements in Shareholders' Funds
for the six months ended 30 April 2013 and comparative periods
Called Share Capital Special Capital Revenue Total
up Premium Redemption Reserve Reserve Reserve £'000
Share Account Reserve £'000 £'000 £'000
Capital £'000 £'000
£'000
Six months ended 30
April 2013
(unaudited)
At 31 October 2012 329 14,819 220 26,401 (1,917) 2,095 41,947
Return for the period - - - - 2,913 797 3,710
Shares repurchased
during the period - - - (579) - - (579)
Dividends on ordinary
shares - - - - - (979) (979)
Net assets at 30
April 2013 329 14,819 220 25,822 996 1,913 44,099
------- ------- -------- -------- ------ ------- -----
Six months ended 30
April 2012
(unaudited)
At 31 October 2011 342 14,819 207 27,379 (4,316) 2,256 40,687
Return for the period - - - - 1,256 518 1,774
Shares repurchased
during the period (8) - 8 (977) - - (977)
Cancellation of
ordinary shares held
in treasury (5) - 5 - - - -
Dividends on ordinary
shares - - - - - (941) (941)
-------- -------- -------- ------- ------- ------- -------
Net assets at 30
April 2012 329 14,819 220 26,402 (3,060) 1,833 40,543
------- ------- -------- ------- -------- ------- --------
Year ended 31 October
2012 (audited)
At 31 October 2011 342 14,819 207 27,379 (4,316) 2,256 40,687
Return for the year - - - - 2,399 1,290 3,689
Shares repurchased
during the year (8) - 8 (978) - - (978)
Cancellation of
ordinary shares held
in treasury (5) - 5 - - - -
Dividends on ordinary
shares - - - - - (1,451) (1,451)
------- ------- -------- ------- ------- ------- -------
Net assets at 31
October 2012 329 14,819 220 26,401 (1,917) 2,095 41,947
------- ------- -------- ------- ------- ------- -------
The transaction costs incurred on the acquisition and disposal of investments
are included within the capital reserve.
Purchase and sale costs amounted to £156,000 and £32,000 respectively for the
six months ended 30 April 2013
(six months ended 30 April 2012: £155,000 and £11,000; year ended 31 October
2012: £232,000 and £30,000).
Balance Sheet
as at 30 April 2013
Notes 30 30 31
April April October
2013 2012 2012
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Fixed assets
Investments held at fair value
through profit or loss 46,704 43,104 44,495
-------- -------- --------
Current assets
Debtors 744 514 108
Cash at bank 100 20 101
-------- -------- --------
844 534 209
-------- -------- --------
Creditors - amounts falling due
within one year
Bank loan (2,000) (2,000) (2,000)
Other creditors (1,449) (1,095) (757)
-------- -------- --------
(3,449) (3,095) (2,757)
-------- -------- --------
Net current liabilities (2,605) (2,561) (2,548)
-------- -------- --------
Net assets 44,099 40,543 41,947
======== ======== ========
Capital and reserves
Called up share capital 6 329 329 329
Share premium account 14,819 14,819 14,819
Capital redemption reserve 220 220 220
Special reserve 25,822 26,402 26,401
Capital reserves 996 (3,060) (1,917)
Revenue reserve 1,913 1,833 2,095
-------- -------- --------
Total equity shareholders' funds 4 44,099 40,543 41,947
======== ======== ========
Net asset value per ordinary share 4 157.44p 142.86p 147.81p
======== ======== ========
Cash Flow Statement
for the six months ended 30 April 2013
Six Six Year
months months ended
ended ended 31
30 30 October
April April 2012
2013 2012 £'000
£'000 £'000 (audited)
(unaudited) (unaudited)
Net cash inflow from operating activities 708 419 1,158
Returns on investment and servicing of
finance
Interest paid (34) (14) (43)
Capital expenditure and financial
investment
Purchases of fixed asset investments (33,194) (33,534) (52,113)
Sales of fixed asset investments 34,077 32,909 51,369
-------- -------- --------
Net cash inflow/(outflow) from capital
expenditure and financial investment 883 (625) (744)
-------- -------- --------
Equity dividends paid (979) (941) (1,451)
-------- -------- --------
Net cash inflow/(outflow) before
financing 578 (1,161) (1,080)
-------- -------- --------
Financing
Purchase of ordinary shares for
cancellation and held in treasury (579) (978) (978)
Repayment of bank loan - - (2,000)
Drawdown of bank loan - - 2,000
-------- -------- --------
Net cash outflow from financing (579) (978) (978)
-------- -------- --------
Decrease in cash (1) (2,139) (2,058)
======== ======== ========
Reconciliation of Net Return on Ordinary Activities before Finance Costs and
Taxation to Net Cash Flow from Operating Activities
for the six months ended 30 April 2013
Six Six Year
months months ended
ended ended 31
30 30 October
April April 2012
2013 2012 £'000
£'000 £'000 (audited)
(unaudited) (unaudited)
Net return before finance costs and
taxation 3,731 1,802 3,744
Capital return before finance costs and
taxation (2,929) (1,277) (2,440)
-------- -------- --------
Net revenue return before finance costs
and taxation 802 525 1,304
Expenses charged to capital (103) (226) (348)
Special dividends taken to capital 38 - 10
(Increase)/decrease in debtors (209) (77) 29
Increase in creditors 180 197 163
-------- -------- --------
Net cash inflow from operating activities 708 419 1,158
======== ======== ========
Notes to the Financial Statements
for the six months ended 30 April 2013
1. Principal activity and basis of preparation
The Company conducts its business so as to qualify as an investment trust
company within the meaning of sub-sections 1158 - 1165 of the Corporation Tax
Act 2010. The half yearly financial statements have been prepared using the
same accounting policies set out in the Company's financial statements for the
year ended 31 October 2012.
Under FRS 26 "Financial Instruments: Recognition and Measurement" the Company
has designated its assets and liabilities as being measured at "fair value
through profit or loss". The fair value of fixed asset investments is deemed to
be the bid market value at the close of business on the balance sheet date. The
taxation charge has been calculated by applying an estimate of the annual
effective tax rate to any profit for the period.
The financial statements have been prepared in accordance with applicable
Accounting Standards, pronouncements on half yearly reporting issued by the
Accounting Standards Board and the Statement of Recommended Practice "Financial
Statements of Investment Trust Companies" ("SORP") revised in January 2009.
2. Income
Six Six Year
months months ended
ended ended 31
30 30 October
April April 2012
2013 2012 £'000
£'000 £'000 (audited)
(unaudited) (unaudited)
Investment income:
UK listed dividends 934 681 1,550
Overseas listed dividends 19 41 89
Scrip dividends from UK investments - - 19
-------- -------- --------
Total 953 722 1,658
======== ======== ========
3. Investment management and performance fees
Revenue £'000 Capital £'000 Total £'000
Six Year Six Year Six Year
months ended ended Months ended ended Months ended ended
30.04.13 30.04.12 31.10.12 30.04.13 30.04.12 31.10.12 30.04.13 30.04.12 31.10.12
(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited) (unaudited)(unaudited) (audited)
Investment
Management
fee 31 52 89 93 79 165 124 131 254
-------- -------- -------- -------- -------- -------- -------- -------- --------
Performance
fee - - - - 4 38 - 4 38
-------- -------- -------- -------- -------- -------- -------- -------- --------
31 52 89 93 83 203 124 135 292
======== ======== ======= ======== ======== ======= ======== ======== =======
RCM (UK) Limited ("RCM") acted as Investment Manager until 31 March 2012.
Details of RCM's services and fee arrangements are provided in the 2012 Annual
Report on page 17.
Under the previous investment management agreement, RCM was entitled to a
performance fee of up to 0.75 per cent of the net assets under management in a
single financial year based on the level of outperformance of the Company's net
assets over its benchmark index, the FTSE All-Share Index, during the relevant
performance period. RCM were entitled to charge this fee up until 31 March
2012. The performance fee earned by RCM for the period ended to 31 March 2012
was £nil. Further details of this fee arrangement are available in the 2012
Annual Report on page 17.
Under the existing investment management agreement with BlackRock Investment
Management (UK) Limited ("BlackRock"), a performance fee is payable for the
financial period based on the Company's net asset value outperformance of the
benchmark. The performance fee is calculated by applying 15 per cent of the
annualised excess return for a performance period to the performance fee net
asset value. The benchmark index, which the Company will use for the
calculation of the performance fee is the FTSE All-Share measured on a total
return basis. Further information on this fee arrangement is detailed on page
17 of the 2012 Annual Report.
Performance fees have been wholly allocated to the capital column of the Income
Statement. A performance fee of £nil has been accrued for the six month period
to 30 April 2013 (six months ended 30 April 2012: £4,000 and year ended
31 October 2012: £38,000).
4. Returns and net asset value per ordinary share
Revenue and capital returns per share are shown below and have been calculated
using the following:
Six Six Year
months months ended
ended ended 31
30 30 October
April April 2012
2013 2012 (audited)
(unaudited) (unaudited)
Net revenue return attributable to
ordinary shareholders (£'000) 797 518 1,290
Net capital return attributable to
ordinary shareholders (£'000) 2,913 1,256 2,399
-------- -------- --------
Total return (£'000) 3,710 1,774 3,689
-------- -------- --------
Equity shareholders' funds (£'000) 44,099 40,543 41,947
-------- -------- --------
The weighted number of ordinary shares in
issue at the end of each period, on which
the return per ordinary share was
calculated, was: 28,280,262 28,674,278 28,525,965
-------- -------- --------
The actual number of ordinary shares in
issue at the end of each period, on which
the net asset value per ordinary share
was calculated was: 28,009,268 28,379,268 28,379,268
-------- -------- --------
Revenue return per ordinary share 2.82p 1.81p 4.52p
Capital return per ordinary share 10.30p 4.38p 8.41p
-------- -------- --------
Total return per ordinary share
(basic and diluted) 13.12p 6.19p 12.93p
-------- -------- --------
Net asset value per ordinary share (debt
at par value) 157.44p* 142.86p** 147.81p***
======== ======== ========
* The net asset value is based on 28,009,268 ordinary shares in issue. An
additional 4,924,664 ordinary shares were held in treasury.
** The net asset value is based on 28,379,268 ordinary shares in issue. An
additional 4,554,664 ordinary shares were held in treasury.
*** The net asset value is based on 28,379,268 ordinary shares in issue. An
additional 4,554,664 ordinary shares were held in treasury.
5. Dividend
The Board has declared an interim dividend of 2.00p per share (2012: 1.80p per
share), payable on 6 September 2013 to shareholders on the register as at 26
July 2013. The ex dividend date is 24 July 2013. The total cost of this
dividend, based on 27,729,268 shares in issue at 20 June 2013, is £555,000
(2012: £511,000).
6. Called up share capital
Ordinary Treasury Total Nominal
shares shares shares value
number number £'000
Allotted, called up and fully
paid share capital comprised:
Ordinary shares of 1p each
At 31 October 2012 28,379,268 4,554,664 32,933,932 329
-------- -------- -------- --------
Shares purchased and held in
treasury (370,000) 370,000 - -
-------- -------- -------- --------
At 30 April 2013 28,009,268 4,924,664 32,933,932 329
======== ======== ======== ========
During the period to 30 April 2013, the Company purchased 370,000 ordinary
shares held in treasury for re-issue into the market or cancellation at a
future date at a cost of £579,000 (excluding costs). No ordinary shares were
cancelled from treasury. Since the end of April, a further 280,000 ordinary
shares have been purchased and placed in treasury for a total consideration of
£451,000 (excluding costs).
7. Movement in net debt
Six Six Year
months months ended
ended ended 31
30 30 October
April April 2012
2013 2012 £'000
£'000 £'000 (audited)
(unaudited) (unaudited)
(a)Reconciliation of net cash flow to
movements in net funds
Reconciliation of net cash flow to
movement in net debt
Decrease in cash (1) (2,139) (2,058)
Repayment of bank loan - - 2,000
Drawdown of bank loan - - (2,000)
-------- -------- --------
Movement in net debt in the period (1) (2,139) (2,058)
Opening net (debt)/funds (1,899) 159 159
-------- -------- --------
Closing net debt (1,900) (1,980) (1,899)
-------- -------- --------
(b)Analysis of change in net (debt)/funds
Cash at bank 100 20 101
Bank loan (2,000) (2,000) (2,000)
======== ======== ========
Opening net (debt)/funds (1,900) (1,980) (1,899)
======== ======== ========
8. Publication of non statutory accounts
The financial information contained in this half yearly financial report does
not constitute statutory accounts as defined in the Companies Act 2006. The
financial information for the six months ended 30 April 2013 and 30 April 2012
has not been audited or reviewed by the Company's auditor.
The information for the year ended 31 October 2012 has been extracted from the
latest published audited financial statements which have been filed with the
Registrar of Companies. The report of the auditor on those accounts contained
no qualification or statement under sections 498(2) or 498(3) of the Companies
Act 2006.
9. Related party disclosure
The Board consists of four non-executive Directors, all of whom are considered
to be independent by the Board. None of the Directors has a service contract
with the Company. The Chairman receives an annual fee of £25,000, the Chairman
of the Audit Committee receives an annual fee of £19,500, and each of the other
Directors receives an annual fee of £17,000. The following members of the Board
hold shares in the Company; Mr Cartwright holds 20,000 shares, Mr Gold 20,000
shares and Mr Worsley 487,539 shares. A further 3,000,000 shares are held by Mr
Worsley's connected persons.
10. Transactions with investment manager
The transaction with BlackRock is set out in note 3.
The investment management fee due for the six months ended 30 April 2013
amounted to £124,000 (six months ended 30 April 2012: £131,000 and year ended
31 October 2012: £254,000).
At the period end, £241,000 was outstanding in respect of investment management
and performance fees (six months ended 30 April 2012: £58,000 and year ended 31
October 2012: £152,000).
11. Contingent liabilities. There were no contingent liabilities at 30 April 2013
(30 April 2012 and 31 October 2012: nil).
12. Annual results
The Board expects to announce the annual results for the year ended 31 October
2013, in December 2013. Copies of the annual results announcement will be available
from the Secretary on 020 7743 3000. The annual report should be
available in early January 2014 with the Annual General Meeting being held in
February 2014.
20 June 2013
12 Throgmorton Avenue
London
EC2N 2DL
The Half Yearly Financial Report will also be available on the BlackRock
Investment Management website at www.blackrock.co.uk/brig. Neither the contents of
the Manager's website nor the contents of any website accessible from hyperlinks on
the Manager's website (or any other website) is incorporated into, or forms part of,
this announcement.
For further information, please contact:
Simon White, Managing Director, BlackRock Investment Management (UK) Limited -
Tel: 020 7743 2178
Adam Avigdori, Fund Manager, BlackRock Investment Management (UK) Limited -
Tel: 020 7743 5406
Emma Philips, Media & Communications, BlackRock Investment Management (UK) Limited -
Tel: 020 7743 2922
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