Half-yearly Report

BlackRock Income and Growth Investment Trust plc

Half Yearly Results Announcement to 30 April 2015

Performance record

FINANCIAL SUMMARY

	As at  30 April  2015  (unaudited)	As at  31 October  2014  (audited)	Change
Assets
Net asset value per ordinary share	189.45p	170.68p	+11.0
– with income reinvested			+13.1
Ordinary share price (mid-market)	188.00p	167.25p	+12.4
– with income reinvested			+14.6
FTSE All-Share Index (Total Return)	5,876.30	5,380.70	+9.2
Net assets (£’000)*	49,692	45,194	+10.0
Discount to net asset value	0.8%	2.0%
	========	========	========

	For the six  months  ended  30 April  2015  (unaudited)	For the six  months  ended  30 April  2014  (unaudited)	Change
Revenue
Net revenue after taxation (£’000)	953	773	+23.3
Return per ordinary share*	3.61p	2.84p	+27.1
Dividend per ordinary share
Interim	2.40p	2.20p	+9.1
	========	========	========
* The change in net assets reflects the share purchases made and market movements during the period.

Chairman’s statement

for the six months to 30 April 2015

PERFORMANCE

I am pleased to report that for the six month period ended 30 April 2015, the Company’s net asset value per share (“NAV”) returned 13.1% and the share price returned 14.6%. By comparison, the FTSE All-Share Index (Total Return) rose by 9.2%. Since the period end up to 22 June 2015, the Company’s NAV per share has risen by a further 1.9% compared with a fall in the benchmark of 0.6% (all percentages with income reinvested).

Further information on the Company’s performance is set out in the Investment Manager’s Report.

REVENUE RETURN AND DIVIDENDS

Revenue return for the period was 3.61 pence per share (six months to 30 April 2014: 2.84 pence per share) and the Board has declared an interim dividend of 2.40 pence per share (2014: 2.20 pence per share). The dividend will be paid on 4 September 2015 to shareholders on the Company’s register at the close of business on 3 July 2015 (ex-dividend date is 2 July 2015).

The increase in the interim dividend is well supported by earnings in the period and reflects the Board’s recognition of shareholders’ desire for income in addition to capital growth, particularly at a time of historically low interest rates.

SHARE CAPITAL

The Directors recognise the importance to investors that the Company’s share price should not trade at a significant discount to NAV and, in normal market conditions, will therefore use the Company’s share buy back, sale of shares from treasury and share issue powers, with the intention of ensuring that the share price is broadly in line with the underlying NAV.

For the period under review, the Company’s shares traded at an average discount of 1.7% (cum income), and as at 22 June 2015 stood at a discount of 2.4%.

The Directors have the authority to buy back up to 14.99% of the Company’s issued ordinary share capital (excluding any shares held in treasury). During the period 250,000 shares, representing 0.9% of the ordinary shares in issue, excluding treasury shares, at the start of the period, were purchased and placed in treasury for a total consideration of £448,000, excluding transaction costs.

Shares held in treasury may be reissued to satisfy market demand, but only at prices at or above the estimated NAV per share at the time of issue. No reissues have been made in the period under review.

GEARING

The Company operates a flexible gearing policy which depends on prevailing conditions and the outlook for the market. Gearing is subject to a maximum level of 20% of net assets at the time of investment. The maximum gearing used during the period under review was 0.8% and at 30 April 2015 the Company had net cash of 1.2%. Gearing levels and sources of funding are reviewed regularly.

The Company currently has a two year unsecured sterling revolving credit facility of £4 million with Scotiabank (Ireland) Limited, with a maturity date of 31 October 2016 and an uncommitted overdraft facility with The Bank of New York Mellon (International) Limited of £5.5 million or 12.5% of the NAV, whichever is lower.

OUTLOOK

The recent UK general election has removed a major uncertainty for investors, many of whom had feared an inconclusive outcome, which could have resulted in a potentially unstable coalition or minority government. The outright Conservative majority brings with it the prospect of an ‘in/out’ referendum on the UK’s EU membership, and although the run-up to the referendum itself complicates the picture for corporate investment, a settlement of the issue should create a clearer environment for businesses to chart their way ahead.

It is worth remembering that the companies listed on the UK stock market derive around two thirds of their overall earnings overseas, where the outlook has become more difficult to predict with confidence. China’s economic growth continues to slow and the US recovery also appears to have stalled. Markets generally have so far taken a sanguine view of these trends, given that they underpin the continuation of loose monetary policy. Encouragingly, European economies have shown signs of recovery, boosted by quantitative easing by the European Central Bank, and a similar picture appears to be unfolding in Japan. Inevitably, however, such policies of providing liquidity to the market will reduce or cease and this creates the prospect of adjustments in equity and bond markets.

Our portfolio managers continue to focus on companies which, in their view, offer good prospects across a range of possible macroeconomic outcomes – either through self–help or because of the strength and market positioning of their products. Our primary focus remains to assemble an attractive and diversified portfolio of UK listed companies which have the prospect of growing their dividends alongside underlying capital growth.

Jonathan Cartwright
Chairman
23 June 2015

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; and
• Gearing.

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 2014. A detailed explanation can be found in the Strategic Report on pages 7 and 8 and in note 18 on pages 48 to 53 of the Annual Report and Financial Statements which are available on the website maintained by BlackRock at 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.

GOING CONCERN

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. For this reason, they continue to adopt the going concern basis in preparing the financial statements. The Company has a portfolio of investments which are considered to be readily realisable and is able to meet all of its liabilities from its assets and income generated from these assets. Ongoing charges (excluding interest costs and taxation) are approximately 1.2% of net assets.

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 management fee payable are set out in note 3 and note 10. The related party transactions with the Directors are set out in note 9.

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 applicable UK Accounting Standards and 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 FCA’s Disclosure and Transparency Rules.

The half yearly financial report has not been audited or reviewed by the Company’s Auditors.

The half yearly financial report was approved by the Board on 23 June 2015 and the above responsibility statement was signed on its behalf by the Chairman.

Jonathan Cartwright
For and on behalf of the Board
23 June 2015

Investment manager’s report

Performance

Over the six month reporting period ended 30 April 2015 the Company’s NAV returned 13.1% and the share price returned 14.6%. During the same period, the FTSE All-Share Index (Total Return) rose by 9.2%. (All percentages with income reinvested.)

Investment Approach and Process

In assembling the Company’s portfolio we adopt a relatively concentrated approach to investment, to ensure that our best ideas contribute significantly to returns. We believe that it is the role of the portfolio overall to achieve a premium level of yield, rather than every individual company within it, giving the Company increased flexibility to invest where returns are most attractive. This relatively concentrated approach results in a portfolio which differs substantially from the Index and, in any individual year, the returns will vary, sometimes significantly from those of the benchmark. Over longer periods our objective is to achieve returns greater than the Index, but with lower volatility.

The foundation of the portfolio, approximately 70%, is in high free cash flow companies that can sustain cash generation and pay a growing yield whilst aiming to deliver a double digit total return. Additionally, we look to identify and invest 20% of the portfolio in ‘growth’ companies operating in areas that have significant barriers to entry and scalable business models that enable them to grow consistently. We also look for turnaround companies, at around 10% of portfolio value, which represent those companies that are out of favour in the market, facing temporary challenges with high yields/very low valuations, but with recovery potential. The expected return from this segment is expected to contribute meaningfully to returns over time.

Market Review

UK equities advanced as macro-economic considerations returned to dominate markets in the first quarter: the Swiss National Bank ended its currency rate cap, prior to the European Central Bank launching a Quantitative Easing bond purchase programme in Europe; the bailout negotiations for Greece continued; the US Federal Reserve moved ever-closer to raising interest rates whilst the UK reported an inflation rate of 0% as food and oil price deflation reduced prices. At the margin, European economic data has provided modest positive surprises whilst data from the US has disappointed as the West Coast ports strike and cold weather on the East Coast has depressed activity.

Contributors to Performance

The portfolio outperformed significantly over the period, benefiting from a diverse number of positions. The largest contributor to performance came from the holding in Essentra which reported strong revenue growth for 2014, giving confidence that management can deliver on their goal to double revenues by 2020. Another strong performer was our holding in Domino Printing Sciences which rose significantly as the company received a bid approach from Japan’s Brother Industries. Cineworld Group reported full year pre-tax profits which more than doubled, boosted by the purchase of Cinema City International in 2014, and Howdens Joinery Group issued a good trading update for the second half of the year after successfully navigating through their key trading period, resulting in further upgrades. Our holding in Friends Life rallied after Aviva agreed to buy the company and subsequently synergies from the combination became apparent and Wolseley continued to deliver strong revenue growth, particularly in the USA, whilst maintaining margins. Other contributions to performance came from holdings in Imperial Tobacco Group, DS Smith, Burberry Group, Hays and Direct Line Insurance.

Over the six months to 30 April 2015, not owning Tesco was a detractor from performance as the company rallied after publishing its Christmas trading statement. Having been a poor performer in 2014, Tesco shares bounced in January on better Christmas trading and plans from the new CEO to cut costs and repair the balance sheet. We remain sceptical that a turnaround will be simple given structural problems in the sector. Other detractors included AstraZeneca and British American Tobacco which both lagged the strong market rally and Rio Tinto underperformed due to the significant fall in the iron ore price.

Transactions

During the reporting period we purchased new positions in Lloyds Banking Group, Barclays, Hays, Stagecoach Group and DS Smith whilst adding to our holdings in Next, Friends Life (which subsequently merged with Aviva), Admiral Group and Carnival. We sold positions in those companies which we felt had become fully valued including Reckitt Benckiser Group, Essentra, Burberry Group and Marks & Spencer Group.

Outlook

Eurozone economic activity overall is showing signs of improvement as the European Central Bank starts Quantitative Easing, albeit that factors relating to the Greek economy remain challenging. We continue to focus more on the specific drivers of individual companies and the ability to determine their future rather than relying on a specific macro outcome. Given that the outlook for both economic growth and interest rates remains uncertain, we seek those companies that can drive returns through self-help and have a clear strategy to deploy the cash flow they generate. The portfolio is primarily invested in high free cash flow companies that can sustain cash generation and pay a growing dividend yield, but also has exposure to companies with sustainable growth franchises and turnaround situations.

Adam Avigdori and Mark Wharrier
BlackRock Investment Management (UK) Limited
23 June 2015

Ten largest investments

30 April 2015

HSBC Holdings: 5.3% (2014: 6.3%) is one of the world’s largest banking and financial services organisations. Its principal businesses are commercial banking, global banking and markets, retail banking and wealth management. Its international network covers 73 countries and territories worldwide, across Europe, Asia, the Middle East, North Africa, North America and Latin America.

British American Tobacco: 5.1% (2014: 6.3%) is one of the world’s leading tobacco groups, with more than 200 brands in the portfolio selling in approximately 180 markets worldwide.

AstraZeneca: 4.9% (2014: 5.3%) is a global pharmaceutical company, operating in the research, development, manufacture and marketing of pharmaceutical products, including the areas of cardiovascular and metabolic disease, oncology, respiratory, inflammation and autoimmunity.

Lloyds Banking Group: 3.8% (2014: nil) is a UK-based financial services group, providing a wide range of banking and financial services, focused on personal and commercial customers. Its main business activities are retail, commercial and corporate banking, general insurance, and life, pensions and investment provision.

Rio Tinto: 3.8% (2014: 3.7%) is one of the world’s leading mining companies, supplying iron ore, aluminium, copper, diamonds, gold, industrial minerals (borates, titanium dioxide and salt), iron ore, thermal and metallurgical coal and uranium operating in over 40 countries across six continents with significant operations in Australia, North America, Asia, Europe, Africa and South America.

BP Group: 3.7% (2014: 3.1%) is one of the world’s leading international oil and gas companies, providing fuel for transportation, energy for heat and light, lubricants for engines and petrochemicals products, which are used in diverse items such as paints, clothes and packaging. It has operations in almost 80 countries across Europe, the United States, Canada, Africa, the Middle East and Asia Pacific.

Reed Elsevier: 3.7% (2014: 4.3%) is a global provider of professional information solutions that includes publication of scientific, medical, technical and legal journals, it is also the world’s leading exhibitions, conference and events business.

Next: 3.6% (2014: 2.0%) is a UK-based retailer offering clothing, footwear and accessories operating its business through four segments: Next Retail, a chain of stores in the United Kingdom and Ireland, Next Directory, a home shopping catalogue, Next International Retail, with almost 200 stores globally and Next Sourcing, design, sourcing, buying, merchandising and quality control.

Imperial Tobacco Group: 3.3% (2014: 3.9%) 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.

GlaxoSmithKline: 3.3% (2014: 4.2%) is a global health care group operating in the research, development, manufacture and marketing of pharmaceutical products, including vaccines, over-the-counter medicines and health related consumer products.

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 2014. Together, the ten largest investments represent 40.5% of total investments (ten largest investments as at 31 October 2014: 48.6%).

Distribution of Investments

as at 30 April 2015

ANALYSIS OF PORTFOLIO BY SECTOR

	% of investments	Benchmark
Banks	11.1	10.9
Travel & Leisure	10.1	4.2
Support Services	8.9	4.7
Tobacco	8.4	4.5
Pharmaceuticals & Biotechnology	8.2	7.8
Oil & Gas Producers	6.7	12.1
Life Insurance	6.4	4.8
Media	6.2	3.6
General Retailers	6.0	2.5
Mining	3.8	6.0
Non-life Insurance	3.6	1.1
Cash and Cash Equivalents	3.3	-
Electronic & Electrical Equipment	3.1	0.5
Personal Goods	2.8	2.0
Fixed Line Telecommunications	2.5	2.0
Beverages	2.4	3.8
Financial Services	2.4	2.7
General Industrials	1.5	0.7
Household Goods & Home Construction	1.4	2.9
Industrial Engineering	1.2	0.8

Sources: BlackRock and Datastream.

INVESTMENT SIZE

	Number of Investments	% of Investments
< £1m	20	26.3
£1m to £2m	19	58.4
£2m to £3m	3	15.3

Source: BlackRock.

Investments

as at 30 April 2015

	Market  value	% of  investments
	£’000
Banks
HSBC Holdings	2,702	5.3
Lloyds Banking Group	1,942	3.8
Barclays	983	2.0
	--------	--------
	5,627	11.1
	--------	--------
Travel & Leisure
Carnival	1,563	3.1
Compass Group	1,380	2.7
Cineworld Group	850	1.7
Stagecoach Group	846	1.7
Patisserie Holdings	486	0.9
	--------	--------
	5,125	10.1
	--------	--------
Support Services
Wolseley	1,459	2.9
Rentokil Initial	1,289	2.5
Hays	992	2.0
Howden Joinery Group	767	1.5
	--------	--------
	4,507	8.9
	--------	--------
Tobacco
British American Tobacco	2,595	5.1
Imperial Tobacco Group	1,692	3.3
	--------	--------
	4,287	8.4
	--------	--------
Pharmaceuticals & Biotechnology
AstraZeneca	2,504	4.9
GlaxoSmithKline	1,652	3.3
	--------	--------
	4,156	8.2
	--------	--------
Oil & Gas Producers
BP Group	1,880	3.7
Royal Dutch Shell 'B'	1,504	3.0
	--------	--------
	3,384	6.7
	--------	--------
Life Insurance
Aviva	1,533	3.0
Legal & General Group	1,229	2.4
Prudential	505	1.0
	--------	--------
	3,267	6.4
	--------	--------
Media
Reed Elsevier	1,870	3.7
Sky	755	1.5
Pearson	501	1.0
	--------	--------
	3,126	6.2
	--------	--------
General Retailers
Next	1,800	3.6
DFS Furniture	522	1.0
Dixons Carphone	374	0.7
Auto Trader Group	364	0.7
	--------	--------
	3,060	6.0
	--------	--------
Mining
Rio Tinto	1,924	3.8
	--------	--------
	1,924	3.8
	--------	--------
Non-life Insurance
Direct Line Insurance	1,308	2.6
Admiral Group	514	1.0
	--------	--------
	1,822	3.6
	--------	--------
Electronic & Electrical Equipment
Domino Printing Sciences	991	2.0
Spectris	593	1.1
	--------	--------
	1,584	3.1
	--------	--------
Personal Goods
Unilever	1,416	2.8
	--------	--------
	1,416	2.8
	--------	--------
Fixed Line Telecommunications
BT Group	1,258	2.5
	--------	--------
	1,258	2.5
	--------	--------
Beverages
Diageo	1,239	2.4
	--------	--------
	1,239	2.4
	--------	--------
Financial Services
Ashmore Group	695	1.4
3i Group	532	1.0
	--------	--------
	1,227	2.4
	--------	--------
General Industrials
DS Smith	774	1.5
	--------	--------
	774	1.5
	--------	--------
Household Goods & Home Construction
Berkeley Group Holdings	677	1.4
	--------	--------
	677	1.4
	--------	--------
Industrial Engineering
Bodycote	621	1.2
	--------	--------
	621	1.2
	--------	--------
	49,081	96.7
	--------	--------
Cash and Cash Equivalents
BlackRock's Institutional Cash Fund	1,654	3.3
	--------	--------
	1,654	3.3
	--------	--------
Total Value of Securities	50,735	100.0
	========	========

All investments are in ordinary shares unless otherwise stated.

The total number of holdings as at 30 April 2015 was 42 (31 October 2014: 36).

Income statement

for the six months ended 30 April 2015

		Revenue £’000	Revenue £'000	Revenue £'000	Capital £'000	Capital £’000	Capital £'000	Total £'000	Total £’000	Total £'000
		Six months  ended	Six months  ended	Year  ended	Six months  ended	Six months  ended	Year  ended	Six months  ended	Six months ended	Year ended
	Notes	30.04.15  (unaudited)	30.04.14  (unaudited)	31.10.14  (audited)	30.04.15  (unaudited)	30.04.14  (unaudited)	31.10.14  (audited)	30.04.15  (unaudited)	30.04.14  (unaudited)	31.10.14  (audited)
Gains on investments held at fair value through profit or loss		–	–	–	5,046	1,152	1,485	5,046	1,152	1,485
Income from investments held at fair value through profit or loss	2	1,091	928	1,881	–	–	–	1,091	928	1,881
Investment management fee	3	(35)	(34)	(67)	(106)	(100)	(201)	(141)	(134)	(268)
Other operating expenses		(99)	(117)	(283)	(9)	(4)	(4)	(108)	(121)	(287)
		--------	--------	--------	--------	--------	--------	--------	--------	--------
Net return before finance costs and taxation		957	777	1,531	4,931	1,048	1,280	5,888	1,825	2,811
Finance costs		(4)	(4)	(7)	(11)	(10)	(22)	(15)	(14)	(29)
		--------	--------	--------	--------	--------	--------	--------	--------	--------
Return on ordinary activities before taxation		953	773	1,524	4,920	1,038	1,258	5,873	1,811	2,782
Taxation on ordinary activities		–	–	–	–	–	–	–	–	–
		--------	--------	--------	--------	--------	--------	--------	--------	--------
Return on ordinary activities after taxation		953	773	1,524	4,920	1,038	1,258	5,873	1,811	2,782
		--------	--------	--------	--------	--------	--------	--------	--------	--------
Return per ordinary share	4	3.61p	2.84p	5.66p	18.66p	3.81p	4.67p	22.27p	6.65p	10.33p
		======	======	======	======	======	======	======	======	======

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 activities 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 2015 and comparative periods

	Called up  share  capital	Share  premium  account	Capital  redemption  reserve	Special  reserve	Capital  reserves	Revenue  reserve	Total
	£’000	£’000	£’000	£’000	£’000	£’000	£’000
Six months ended 30 April 2015 (unaudited)
At 31 October 2014	329	14,819	220	23,306	4,398	2,122	45,194
Return for the period	–	–	–	–	4,920	953	5,873
Shares repurchased during the period	–	–	–	(448)	–	–	(448)
Dividends paid	–	–	–	–	–	(927)	(927)
	--------	--------	--------	--------	--------	--------	--------
At 30 April 2015	329	14,819	220	22,858	9,318	2,148	49,692
	--------	--------	--------	--------	--------	--------	--------
Six months ended 30 April 2014 (unaudited)
At 31 October 2013	329	14,819	220	24,846	3,140	2,137	45,491
Return for the period	–	–	–	–	1,038	773	1,811
Shares repurchased during the period	–	–	–	(756)	–	–	(756)
Dividends paid	–	–	–	–	–	(952)	(952)
	--------	--------	--------	--------	--------	--------	--------
At 30 April 2014	329	14,819	220	24,090	4,178	1,958	45,594
	--------	--------	--------	--------	--------	--------	--------
Year ended 31 October 2014 (audited)
At 31 October 2013	329	14,819	220	24,846	3,140	2,137	45,491
Return for the year	–	–	–	–	1,258	1,524	2,782
Shares repurchased during the year	–	–	–	(1,540)	–	–	(1,540)
Dividends paid	–	–	–	–	–	(1,539)	(1,539)
	--------	--------	--------	--------	--------	--------	--------
At 31 October 2014	329	14,819	220	23,306	4,398	2,122	45,194
	====	=====	====	=====	====	=====	=====

The transaction costs incurred on the acquisition and disposal of investments are included within the capital reserves. Purchase and sale costs amounted to £87,000 and £17,000 respectively for the six months ended 30 April 2015 (six months ended 30 April 2014: £103,000 and £22,000; year ended 31 October 2014: £169,000 and £37,000).

Balance sheet

as at 30 April 2015

		30 April  2015	30 April  2014	31 October  2014
	Notes	£’000  (unaudited)	£’000  (unaudited)	£’000  (audited)
Fixed assets
Investments held at fair value through profit or loss		50,735	48,130	47,419
		--------	--------	--------
Current assets
Debtors		1,188	794	103
Cash at bank		661	110	110
		--------	--------	--------
		1,849	904	213
		--------	--------	--------
Creditors – amounts falling due within one year
Bank loan		(2,000)	(2,000)	(2,000)
Other creditors		(892)	(1,440)	(438)
		--------	--------	--------
		(2,892)	(3,440)	(2,438)
		--------	--------	--------
Net current liabilities		(1,043)	(2,536)	(2,225)
		--------	--------	--------
Net assets		49,692	45,594	45,194
		======	======	======
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		22,858	24,090	23,306
Capital reserves		9,318	4,178	4,398
Revenue reserve		2,148	1,958	2,122
		--------	--------	--------
Total equity shareholders' funds	4	49,692	45,594	45,194
		========	========	========
Net asset value per ordinary share	4	189.45p	169.25p	170.68p
		========	========	========

Cash flow statement

for the six months ended 30 April 2015

	Six months  ended  30 April  2015	Six months  ended  30 April  2014	Year ended  31 October  2014
	£’000  (unaudited)	£’000  (unaudited)	£’000  (audited)
Net cash inflow from operating activities	662	387	1,220
Servicing of finance	(15)	(14)	(29)
	--------	--------	--------
Capital expenditure and financial investment
Purchases of investments	(22,532)	(28,661)	(50,125)
Proceeds from sale of investments	23,811	29,828	51,845
	--------	--------	--------
Net cash inflow from capital expenditure and financial investment	1,279	1,167	1,720
	--------	--------	--------
Equity dividends paid	(927)	(952)	(1,539)
	--------	--------	--------
Net cash inflow before financing	999	588	1,372
	--------	--------	--------
Financing
Purchase of ordinary shares for cancellation and held in treasury	(448)	(756)	(1,540)
Repayment of loan	–	–	(2,000)
Drawdown of loan	–	–	2,000
	--------	--------	--------
Net cash outflow from financing	(448)	(756)	(1,540)
	--------	--------	--------
Increase/(decrease) in cash	551	(168)	(168)
	=====	=====	=====

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 2015

	Six months  ended  30 April  2015	Six months  ended  30 April  2014	Year ended  31 October  2014
	£’000  (unaudited)	£’000  (unaudited)	£’000  (audited)
Net return before finance costs and taxation	5,888	1,825	2,811
Capital return before finance costs and taxation	(4,931)	(1,048)	(1,280)
	--------	--------	--------
Net revenue return before finance costs and taxation	957	777	1,531
Expenses charged to capital	(115)	(104)	(205)
Increase in debtors	(201)	(267)	(47)
Increase/(decrease) in creditors	21	(19)	(59)
	--------	--------	--------
Net cash inflow from operating activities	662	387	1,220
	=====	=====	=====

Notes to the financial statements

for the six months ended 30 April 2015

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 report has been prepared using the same accounting policies set out in the Company’s financial statements for the year ended 31 October 2014.

Under FRS 26 “Financial Instruments: Recognition and Measurement” the Company has designated its fixed asset investments 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 months  ended  30 April  2015	Six months  ended  30 April  2014	Year ended  31 October  2014
	£’000  (unaudited)	£’000  (unaudited)	£’000  (audited)
Investment income:
Franked UK listed dividends	1,085	872	1,804
Overseas listed dividends	6	4	18
Underwriting commission	–	15	22
Scrip dividends from UK investments	–	37	37
	--------	--------	--------
Total	1,091	928	1,881
	========	========	========

3. Investment management fee

	Revenue £'000	Revenue £’000	Revenue £'000	Capital £'000	Capital £’000	Capital £'000	Total £'000	Total £’000	Total £'000
	Six months  ended	Six months ended	Year  ended	Six months  ended	Six months ended	Year  ended	Six months  ended	Six months ended	Year  ended
	30.04.15  (unaudited)	30.04.14  (unaudited)	31.10.14  (audited)	30.04.15  (unaudited)	30.04.14  (unaudited)	31.10.14  (audited)	30.04.15  (unaudited)	30.04.14  (unaudited)	31.10.14  (audited)
Investment management fee	35	34	67	106	100	201	141	134	268
	--------	--------	--------	--------	--------	--------	--------	--------	--------
	35	34	67	106	100	201	141	134	268
	=====	=====	====	====	====	====	====	====	====

BIM (UK) provided management and administrative services to the Company under a contract which was terminated with effect from 2 July 2014. BlackRock Fund Managers Limited (BFM) was appointed as the Company’s AIFM with effect from 2 July 2014. BIM (UK) continues to act as the Company’s Investment Manager under a delegation agreement with BFM.

Under the terms of the investment management agreement with BFM, BFM is entitled to a base fee of 0.60% per annum of the Company’s market capitalisation. There is no additional fee for company secretarial and administration services.

With effect from 1 July 2014 the Company is no longer subject to a performance related fee. Previously a performance fee was payable for the financial period based on the Company’s net asset value outperformance of the benchmark. The performance fee was calculated by applying 15% of the annualised excess return for a performance period to the performance fee net asset value. The benchmark index, which the Company uses for the calculation of the performance fee is the FTSE All-Share Index measured on a total return basis. Further information on this fee arrangement is described on page 16 of the Annual Report and Financial Statements for the year ended 31 October 2014.

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 months  ended  30 April  2015	Six months  ended  30 April  2014	Year ended  31 October  2014
	(unaudited)	(unaudited)	(audited)
Net revenue return attributable to ordinary shareholders (£’000)	953	773	1,524
Net capital return attributable to ordinary shareholders (£’000)	4,920	1,038	1,258
	--------	--------	--------
Total return (£’000)	5,873	1,811	2,782
	--------	--------	--------
Equity shareholders’ funds (£’000)	49,692	45,594	45,194
	--------	--------	--------
The weighted average number of ordinary shares in issue at the end of each period on which the return per ordinary share was calculated was:	26,372,914	27,217,362	26,924,569
	--------	--------	--------
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:	26,229,268	26,939,268	26,479,268
	--------	--------	--------
Revenue return per ordinary share	3.61p	2.84p	5.66p
Capital return per ordinary share	18.66p	3.81p	4.67p
	--------	--------	--------
Total return per ordinary share	22.27p	6.65p	10.33p
	--------	--------	--------
Net asset value per ordinary share (debt at par value)	189.45p*	169.25p**	170.68p***
	--------	--------	--------
Ordinary share price	188.00p	165.25p	167.25p
	======	======	======

* The net asset value is based on 26,229,268 ordinary shares in issue. An additional 6,704,664 ordinary shares were held in Treasury.

**  The net asset value is based on 26,939,268 ordinary shares in issue. An additional 5,994,664 ordinary shares were held in Treasury.

***  The net asset value is based on 26,479,268 ordinary shares in issue. An additional 6,454,664 ordinary shares were held in Treasury

5. Dividend

The Board has declared an interim dividend of 2.40p per share (2014: 2.20p per share), payable on 4 September 2015 to shareholders on the register as at 3 July 2015; the ex–dividend date is 2 July 2015. The total cost of this dividend, based on 26,229,268 shares (excluding treasury shares) in issue at 22 June 2015, is £630,000 (2014: £587,000).

6. Called up share capital

	Ordinary  shares	Treasury  shares	Total  shares	Nominal  value
	number	number	number	£’000
Allotted, called up and fully paid share capital comprised:
Ordinary shares of 1p each
At 31 October 2014	26,479,268	6,454,664	32,933,932	329
	--------	--------	--------	--------
Shares purchased and held in treasury	(250,000)	250,000	–	–
	------------	------------	-------------	--------
At 30 April 2015	26,229,268	6,704,664	32,933,932	329
	========	========	========	=====

During the period to 30 April 2015, the Company purchased 250,000 ordinary shares and placed these in treasury for re-issue into the market or for cancellation at a future date at a cost of £448,000 (excluding transaction costs). No ordinary shares were cancelled from treasury.

7. Movement in net debt

	Six months  ended  30 April  2015	Six months  ended  30 April  2014	Year ended  31 October  2014
	£’000  (unaudited)	£’000  (unaudited)	£’000  (audited)
(a) Reconciliation of net cash flow to movements in net debt
Increase/(decrease) in cash	551	(168)	(168)
Repayment of bank loan	–	–	2,000
Drawdown of bank loan	–	–	(2,000)
	--------	--------	--------
Movement in net funds/(debt) in the period	551	(168)	(168)
Opening net debt	(1,890)	(1,722)	(1,722)
	--------	--------	--------
Closing net debt	(1,339)	(1,890)	(1,890)
	--------	--------	--------
(b) Analysis of change in net (debt)/funds
Cash at bank	661	110	110
Bank loan	(2,000)	(2,000)	(2,000)
	--------	--------	--------
Closing net debt	(1,339)	(1,890)	(1,890)
	======	======	=====

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 2015 and 30 April 2014 has not been audited or reviewed by the Company’s Auditors.

The information for the year ended 31 October 2014 has been extracted from the latest published audited financial statements which have been filed with the Registrar of Companies. The report of the Auditors on those financial statements 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 £28,000, the Chairman of the Audit Committee receives an annual fee of £22,500, and each of the other Directors, except Mr Luckraft, receives an annual fee of £19,000. Mr Luckraft’s fee is paid to AXA Investment Management (UK) Limited for the provision of his services as a non-executive Director of the Company. As at 30 April 2015, an amount of £7,000 (30 April 2014: £7,000; 31 October 2014: £7,000) was outstanding in respect of Directors’ fees.

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 including a non-beneficial interest in 155,500 shares. A further 3,000,000 shares are held by Mr Worsley’s connected persons.

Since the period end up to the date of this report there have been no changes in Directors’ holdings.

10. Transactions with AIFM and Investment Manager

BlackRock Fund Managers Limited (BFM) was appointed as the Company’s AIFM with effect from 2 July 2014.

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. The details of the annual fee in relation to these services are disclosed in note 3.

The investment management fee due for the six months ended 30 April 2014 amounted to £141,000 (30 April 2014: £134,000; 31 October 2014: £268,000). At the period end, £209,000 was outstanding in respect of investment management fees (30 April 2014: £66,000; 31 October 2014: £200,000).

In addition to the above services, with effect from 1 November 2013, BlackRock has provided the Company with marketing services. The total fees paid or payable for these services for the period ended 30 April 2015 amounted to £19,000 including VAT (six months ended 30 April 2014: £19,000; 31 October 2014: £38,000). Marketing fees of £58,000 were outstanding at 30 April 2015 (30 April 2014: £19,000; 31 October 2014: £38,000).

The Company has an investment in BlackRock’s Institutional Cash Series plc of £1,654,000 at the period end (30 April 2014: £2,621,000; 31 October 2014: £2,953,000).

11. Contingent liabilities

There were no contingent liabilities at 30 April 2015 (30 April 2014 and 31 October 2014: nil).

12. Annual results

The Board expects to announce the annual results for the year ended 31 October 2015, in January 2016. Copies of the annual results announcement can be obtained from the Secretary on 020 7743 3000. The Annual Report and Financial Statements should be available during January 2016 with the Annual General Meeting being held in February 2016.

For further information, please contact:

Simon White, Managing Director, BlackRock Investment Management (UK) Limited – Tel: [phone]

Adam Avigdori Fund Manager, BlackRock Investment Management (UK) Limited – Tel: [phone]

Mark Wharrier Fund Manager, BlackRock Investment Management (UK) Limited – Tel: [phone]

Emma Philips, Media & Communications, BlackRock Investment Management (UK) Limited – Tel: [phone]