Blackrock Engy Regulatory News (BERI)

BlackRock Energy and Resources Income Trust Plc - Final Results

PR Newswire

London, January 31

BLACKROCK ENERGY AND RESOURCES INCOME TRUST PLC

(LEI: 54930040ALEAVPMMDC31)

Annual Results announcement for the year ended 30 November 2021

PERFORMANCE RECORD

1 The change in net assets reflects market movements, the buyback and issue of shares and dividends paid during the year.

2 Alternative Performance Measures, see Glossary contained in the Annual Report for the year ended 30 November 2021 (which can be found on the Company’s website at www.blackrock.com/uk/beri) on pages 131 to 133.

3 Further details are given in the Glossary contained in the Annual Report for the year ended 30 November 2021.

CHAIRMAN’S STATEMENT

MARKET OVERVIEW

The year began on a promising note as the election of President Biden in the United States and the prospect of new ‘green deal’ spending in the US and Europe lifted markets and economies began to reopen across the world, boosted by unprecedented fiscal and monetary stimulus programmes. This, in turn, drove exceptional levels of commodity demand and has given rise to significant logistical challenges and shortages of labour which have consequently pushed inflation to levels not seen since before the financial crisis in 2008.

The inflation narrative is likely to dominate markets over the coming year; typically, inflation is positive for companies in the commodities space. As supply chains and markets are heavily interconnected, the impact of higher prices must be carefully analysed to identify investment challenges and opportunities.

The COVID-19 pandemic also continues to generate market volatility and economic upheaval. The emergence of a new Omicron variant of the disease contributed to the seventh largest one-day fall in oil prices in history in December 2021.

Within the energy transition space, COP26 took place during November 2021 with many countries pledging to cut 30% of methane emissions by 2030, to continue the shift away from coal use and end deforestation by 2030.

President Biden also signed the $1trillion infrastructure bill into law and car manufacturers announced ambitious plans for investment in the development of electric vehicles. The Company’s portfolio was well positioned to move flexibly between traditional energy, mining and energy transition sectors as investment opportunities came up within these volatile markets.

PERFORMANCEI am pleased to report that during the year to 30 November 2021, your Company’s Net Asset Value per share increased by an impressive 34.4% and its share price by 41.7% (both percentages in Sterling terms with dividends reinvested). The Company’s objectives are to achieve both an annual dividend target and, over the long term, capital growth. Consequently, the Board does not formally benchmark performance against mining and energy sector indices as meeting a specific dividend target is not within the scope of these indices. However, to set the performance in the context of the sectors in which it invests, the EMIX Global Mining Index rose by 12.5% and the MSCI World Energy Index rose by 41.2% over the same period. The Company holds around 30% of its portfolio in energy transition stocks; to give the renewable energy sector context, the S&P Global Clean Energy Index rose by 1.4% over the year ended 30 November 2021 and the WilderHill Clean Energy Index fell by 6.1% (all percentages in Sterling terms with dividends reinvested). It should be noted that these comparisons are given for illustrative purposes only.

Traditional energy stocks in the oil and gas sector were the biggest contributor to performance over the period. The portfolio managers negotiated the volatility in energy prices well with appropriately timed shifts in exposure to the sector as prices surged and fell. The mining sector also contributed positively to performance on the back of strong commodity prices. These gains were offset by losses in the energy transition sector as companies struggled with higher costs and lower margins and a degree of profit taking.

The Board has increased the annual dividend target for the Company for the year by 10% to 30 November 2022 to 4.40p per share.

1 Alternative Performance Measures. Further details of the calculation of performance with dividends reinvested are given in the Glossary contained in the Annual Report for the year ended 30 November 2021.

2 The Company was launched on 13 December 2005.

Further information on investment performance is given in the Investment Manager’s Report. Since the period end and up until close of business on 1 February 2022 the Company’s NAV has increased by 8.7% and the share price has risen by 16.3% (with dividends reinvested).

REVENUE RETURN AND DIVIDENDSDespite challenges faced by the wider equity markets as a result of the ongoing COVID-19 crisis, the income from the investments held by your Company has remained robust. The revenue return for the year to 30 November 2021 was 4.96 pence per share, a 15.1% increase compared to the prior year earnings per share of 4.31 pence. Indeed, the level of revenue generated is such that the minimum dividend that the Company is required to pay for the financial year to 30 November 2021 to satisfy investment trust tax regulations has exceeded the 4.00p per share target set by the Board in January 2021. As a result, the Board announced in December 2021 that it would pay a fourth quarterly dividend for the year to 30 November 2021 of 1.10 pence per share (making the total dividend payment for the year of 4.10 pence per share) and also that it would increase the annual dividend target for the Company for the year to 30 November 2022 to 4.40p per share.

The Company will aim to meet this target dividend next year and beyond, primarily from a mix of dividend income from the portfolio and revenue reserves, although this may be supported by the distribution of other distributable reserves if required. The Company may also write options to generate revenue return, although the portfolio managers’ focus is on investing the portfolio to generate an optimal level of total return without striving to meet an annual income target and will only undertake option transactions to the extent that the overall contribution is beneficial to total return.

The dividend target should not be interpreted as a profit forecast. The target level represents a yield of 4.6% based on the share price as at the close of business on 30 November 2021.

GEARINGThe Company operates a flexible gearing policy which depends on prevailing market conditions. It is not intended that gearing will exceed 20% of the gross assets of the Company. The maximum gearing used during the period was 9.7%, and the level of gearing at 30 November 2021 was 5.8%. Average gearing over the year to 30 November 2021 was 6.3%. For calculations, see the Glossary contained in the Annual Report for the year ended 30 November 2021.

DISCOUNT CONTROLThe Directors recognise the importance to investors that the Company’s share price should not trade at a significant premium or discount to NAV, and therefore, in normal market conditions, may use the Company’s share buyback and share issue powers and sale of shares from treasury to ensure that the share price is broadly in line with the underlying NAV. The Company currently has authority to buy back up to 14.99% of the Company’s issued share capital (excluding treasury shares) and to allot ordinary shares representing up to 10% of the Company’s issued ordinary share capital. Over the year to 30 November 2021, the Company’s shares have traded at an average discount of 5.6%, and within a range of a 13.2% discount to a 5.8% premium. In May 2021, the Company’s shares moved to trade at a premium and the Company reissued 2,880,000 shares from treasury for net proceeds of £2,875,000 (representing an average premium of 1.61%) to meet investor demand. Subsequently, shares moved to trade at a discount again and the Company bought back a total of 51,992 ordinary shares in September 2021 for a total consideration of £48,000 at a discount of 8.4%. These shares were placed in treasury for potential reissue, thereby saving the associated costs of an issue of new shares if demand arises.

BOARD COMPOSITIONThe Board supports the increasing focus on independence, tenure and succession planning set out in the updated Financial Reporting Council’s review of the UK Corporate Governance Code, which applies for periods commencing on or after 1 January 2019. With this in mind, the Board commenced a search during the year to identify a new Director to join the Board, assisted by a third-party recruitment firm, Odgers Berndtson. Following a detailed evaluation of each of the candidates, the Board selected Carole Ferguson who was subsequently appointed with effect from 22 December 2021. Mrs Ferguson brings a wealth of experience and expertise in the financial services sector in research, finance and sustainability, both complementing and enhancing the skills and experience of the existing Board. Mrs Ferguson will stand for election at the forthcoming Annual General Meeting.

Further information on Carole Ferguson and all of the Directors can be found in their biographies contained in the Annual Report for the year ended 30 November 2021.

It has been a privilege for me to serve on the Company’s Board since July 2013, taking on the role of Chair in March 2015. As my tenure as Director will exceed nine years with effect from July 2022, in accordance with best corporate governance practice I have decided to stand down at the forthcoming AGM on 15 March 2022 and not to seek re-election. I would like to thank all shareholders for their support and to thank my Board colleagues and the team at BlackRock for helping make my tenure as Chair an enjoyable one. I am delighted to announce that Adrian Brown will take over the role of Chair following my retirement at the AGM1. Mr Brown has been a Director of BERI for over two years and has a wealth of experience in the financial sector. Further details of his biography can be found on page 32 of the Annual Report for the year ended 30 November 2021.

Information on the recruitment and selection process undertaken and details of the Board’s policy on the re-election of directors, director tenure and succession planning can be found in the Directors’ Report on page 56 of the Directors’ Report contained within the Annual Report for the year ended 30 November 2021.

ANNUAL GENERAL MEETING ARRANGEMENTSI am pleased to report that it is the Board’s intention that this year’s AGM will be held in person at 10.30 a.m. on Tuesday, 15 March 2022 at the offices of BlackRock at 12 Throgmorton Avenue, London EC2N 2DL.

At present, UK Government restrictions on public gatherings are no longer in force in connection with COVID-19 and the AGM can be held in the normal way with physical attendance by shareholders. However, shareholders should be aware that it is possible that such restrictions could be reimposed prior to the date of the AGM. In such event, these restrictions could mean that the AGM is required to be held as a closed meeting as happened last year with physical attendance limited to only a small number of attendees comprising the required quorum for the meeting and those persons whose attendance is necessary for the conduct of the meeting, and that any other persons will be refused entry. Accordingly, all shareholders are recommended to vote by proxy in advance of the AGM and to appoint the Chairman of the meeting as their proxy. This will ensure that shareholders’ votes will be counted even if they (or any appointed proxy) are not able to attend. All votes will be taken by poll so that all proxy votes are counted.

The Company may impose entry restrictions on persons wishing to attend the AGM (including, if required, refusing entry) in order to secure the orderly conduct of the AGM and the safety of the attendees.

All shareholders intending to attend should either be fully vaccinated or obtain a negative COVID-19 test result before entering the venue. Negative test results must be obtained no earlier than one day before entering the venue and fully vaccinated shareholders are also strongly encouraged to get tested. Attendees will also be required to wear a face covering at all times within the venue except when seated in the relevant meeting room.

Shareholders are also requested not to attend the AGM if they have tested positive for COVID-19 in the 10 days prior to the AGM, are experiencing new or worsening COVID-19 related symptoms, have been in close contact with anyone who is experiencing symptoms or has contracted COVID-19 during the 14 days prior to the AGM, or are required to self isolate pursuant to UK Government guidance. In the absence of any re-imposition of restrictions, the Board very much looks forward to meeting with shareholders.

MARKET OUTLOOK AND PORTFOLIO POSITIONINGA tailwind of fiscal and monetary easing continues to drive strong demand for commodities at a time when supply risks are rising. Although the Omicron variant poses a headwind to economic growth, vaccination rates are rising and the global economy is likely to continue to reopen during 2022. Logistical bottlenecks are causing pockets of inflation as economic activity ramps up – undoubtedly some of this is transitory in nature. As we look out over the next several years, we see a period of structurally higher inflation than we have seen for several years as pricing power shifts back to labour markets and many industries seek to ‘reshore’ manufacturing processes. Traditional resources sectors like mining and energy tend to perform well in inflationary environments and our ability to pivot across the three pillars (Mining, Traditional Energy and Energy Transition) offers significant flexibility to investors.

In the traditional energy sector fiscal prudence is likely to pave the way for further improved shareholder returns. On the energy transition side, the long-term trajectory towards Net Zero is a certainty; the significant amounts of infrastructure investment required are likely to underpin demand for a number of commodities in the medium term, while the shift to a lower carbon economy presents a significant investment opportunity, although it will be crucial to be highly selective in choosing the industries and companies that form part of the energy transition portion of the portfolio. The Board is confident that the Company is currently well placed to benefit from this key investment trend.

ED WARNER3 February 2022

1 In accordance with best corporate governance practice, Mr Brown will step down from the Audit and Management Engagement Committee when he becomes Chairman on 15 March 2022.

INVESTMENT MANAGER’S REPORT

MARKET OVERVIEWTiming is everything in markets and, even for the long-term investors, the point of entry or exit can play a material role on returns. The market moves seen during November mean that this report carries a rather different set of numbers and tone to it than was envisaged at the end of October. Oil prices falling by over 20% in a month are a sharp reminder of the need to maintain a balanced and risk-aware portfolio as well as to retain some dry powder to take advantage of corrections that occur even within strong long-term uptrends.

The second half of 2021 saw incredible divergence between different commodities, the producers of these commodities and companies involved in the energy transition. The reopening of economies across the world continued to drive forward at pace with the fiscal and monetary stimulus programmes enacted over the last 18 months driving exceptional levels of demand for goods. Whilst this has been a great tailwind for commodity demand in the western world, it has also created shortages of labour and significant logistical challenges. Inflation has risen to levels not seen since before the financial crisis and in our view is likely to remain higher in 2022 than the modest inflation targets set by most central banks across the globe. The inflation narrative is one that is typically good for commodities but we need to keep in mind that previous inflationary cycles did not have the strong Environmental, Social and Governance (ESG) interplay and that investors are still sceptical of resource companies drifting from their commitment to shareholder returns.

There were also reminders over the last six months of just how interconnected different supply chains and markets now are and that you cannot look at a company, let alone an industry, in isolation. There are many examples we could cite here but one that connects mining to renewable energy may be surprising to many and worth highlighting. One of the main components of a solar cell is silicon; in China the price of silicon jumped by over 300% in late summer as the coal price surged in China (silicon is made in furnaces in China, burning coke and sand to produce it). Whilst coal and silicon prices have calmed since then, the silicon price has almost doubled relative to this time last year, which is threatening the economics of a number of solar projects planned for 2022. Understanding these energy and material feedback loops is critical. We believe that by having a portfolio that can flexibly move between areas and a team that analyses the whole energy/ energy transition and materials space, we can navigate these challenging markets.

Source: Datastream

1 Average of 30/11/19-30/11/20 to average of 30/11/20-30/11/21

2 Morgan Stanley Capital International All Country Weighted Index

3 Morgan Stanley Capital International

PORTFOLIO ACTIVITY AND INVESTMENT PERFORMANCEPortfolio activity in the second half of the year has focused on a couple of key areas. First, we were quite active in the traditional energy sector during the second half of the year. As can be seen in the portfolio positioning chart included on page 11 of the Annual Report for the year ended 30 November 2021, we increased our energy exposure through to July and then pared it back as we thought markets had got ahead of themselves. We did this by trimming the traditional energy position as a whole and rotating some of the holdings within the energy sector. During the last few months, we increased the exposure, with a gas bias, as we saw global gas markets tightening rapidly with inventories in Europe lower than seasonal averages.

Secondly, we made changes within the mining sector to reflect the risks we saw to the steel-making commodities because of the slowdown in the Chinese property sector. We reduced our iron ore holdings and added to more base metal exposed companies such as Glencore, which was trading at an attractive free cashflow yield and has a trading business that should benefit from the ongoing logistics/supply chain challenges and price volatility. We also added two steel companies to the portfolio as the combination of China restricting exports, lack of new capacity in Europe/US, and upcoming green infrastructure spend should see higher margins persist for longer than current valuations imply.

Finally, within the energy transition sector we were focused on identifying holdings that could be vulnerable to margin compression in an environment of input cost inflation and also those that are more interest rate sensitive.

This resulted in positions such as a wind turbine manufacturer being reduced in the portfolio, and towards the end of the year we saw several announcements from companies in this space warning of sharply high costs and lower margins for 2022. Although we remain excited about the long-term growth prospects across many enablers and adopters of decarbonisation, we had a greater proportion of the portfolio invested in mining and traditional energy for most of the year as we judged the investment opportunities to be more compelling from a valuation and risk-adjusted perspective.

Overall the Company had a strong year of returns, generating 34.4% overall (2020: 13.9%).

INCOMEThe trend of improving returns back to shareholders in the traditional energy and mining sectors continued apace during 2021. Record dividends were paid by a number of large mining companies in addition to share buybacks in several cases. Encouragingly, the companies enacting such moves have also continued to strengthen their balance sheets and the overall financial health of the companies is very strong relative to their own history.

Perhaps the most significant positive surprise on the income side during the year was the step up in shareholder returns from the traditional energy companies. This came not only from the integrated oil majors (e.g. Chevron, which delivered a modest dividend increase) but importantly from the Exploration and Production (E&P) sector. The shift to a better balance between reinvestment and shareholder distributions is very welcome with companies such as Devon Energy increasing its regular dividend as well as announcing a series of special dividends.

In terms of option income, 2021 saw the continuation of our recent trend of a lower proportion of income coming from option writing. Option premiums accounted for just over 10% of gross income for the year, down from around 25% in 2020 and even higher levels in 2015-18. We will be opportunistic in our approach to option writing – we were active at the end of 2020 in selling puts as we saw strong upside on economic recovery across the energy markets but did very little in the middle part of the year as volatility dropped and selling options became less attractive.

It should also be noted that 2021 saw the Company return to a more normal position of a tax expense, compared to 2020 where we benefitted from an extraordinary gain on a substantial tax refund.

TRADITIONAL ENERGYFollowing a dismal 2020, energy was the top-performing global sector (+28.6%1) through the last financial year. Oil prices were up more than 50% on average year-over-year.

Last year we outlined our belief that the energy sector was entering a new era, one characterised by better capital allocation and increasing returns to shareholders. For a sector that has been synonymous with poor capital returns for decades, scepticism was warranted particularly as oil prices tracked a steady recovery throughout the year. Yet, quite remarkably, the US shale companies are on pace to reinvest less than 60% of their internally generated cash flows this year. This is in stark contrast to the ten years ending 2019, where the sector reinvested as much as 150% of each dollar generated. By mid-year, industry balance sheets were largely repaired and cash returns to shareholders inflected dramatically.

At this point it is probably worth asking what has changed in the oil and gas sector. Historically, this was a sector perennially incentivised to chase double-digit top line growth that predictably led to oversupply and the inevitable boom-bust cycles. Now, shareholders are being promised double-digit returns comprised of high single-digit cash returns supplemented by low single-digit, profitable, volume growth. This discipline is what differentiates the current situation from previous cycles.

It should be noted that the Organisation of the Petroleum Exporting Countries (OPEC) and supporting countries (OPEC-plus) have continued to exhibit similar discipline in managing supply/ demand imbalances since the global pandemic kicked off in earnest in March 2020. Whilst oil markets were initially unsettled by the news OPEC-plus would commence adding back up to 400,000 barrels per day each month from August 2021, the group has continued to moderate its plans to accommodate the fragile recovery in underlying demand.

Not surprisingly, stock prices of E&P companies outpaced the broader energy market and this was an area where the portfolio was positioned strongly for most of the year. In contrast, this discipline proved less helpful for the Oilfield Services (OFS) companies which continued to struggle with over-capacity across most service lines and a reluctance among oil companies to increase budgets.

Reflecting back on last year’s expectation that the industry was entering a new era of discipline, it was clear that this would benefit a strong oil price recovery. However, the less obvious effect of discipline in oil was discipline in natural gas. With fewer oil wells being drilled, this meant lower associated natural gas volumes. Coupled with a regulatory reluctance to sanction new pipelines in North America, the decade-long bear market in natural gas prices is firmly over. This prompted a deliberate shift towards high quality North American natural gas producers within the portfolio.

The era of the shareholder is characterised by stringent capital allocation. This fiscal prudence is being reinforced by investors, yet is set against a consumer unwilling to make the tough decisions towards faster decarbonisation. Many pundits continue to focus myopically on forecasting peak oil demand (which we view as inevitable), yet singularly fail to recognise that we passed peak investment seven years ago.

That we need to continue apace to bend the carbon emissions curve downwards if we are to hit Net Zero is a given. Sadly, policy makers and consumers continue to apply the majority of their focus towards supply-side reductions. With little heed paid to bending down the demand side curve, this mismatch may continue to keep commodity prices high for many years to come.

The underinvestment in oil and natural gas coincided with a sharp restart in the global economy. Colder northern hemisphere temperatures at both ends of the year have tightened gas markets in Europe and Asia as demand for heating surged and renewable intermittency reared its head. Political tensions between Russia and the European Union (EU) have undoubtedly played a hand in driving up natural gas and power prices to record highs this year.

The surge in US natural gas prices this year paled in comparison to the record highs experienced in Europe and Asia where spot markers breached $40/mmbtu through October. Record high gas prices also left their mark on carbon markets with the European Emissions Trading Scheme (ETS) price hitting a record €75/t (US$85/t) during November. Whilst the bifurcation in gas prices between North America and the rest of the world can be partially explained by political tensions between the EU and Russia, the primary driver remains underinvestment in our opinion. Recognising these dislocations, we positioned the Company towards those companies in a position to supply Europe with natural gas.

We continue to believe that natural gas (ultimately coupled with carbon removal) is a critical bridging fuel to a lower carbon world. On the one hand, many parts of Europe are looking to shut down baseload nuclear capacity. On the other hand, rapid deployment of renewables means we need natural gas to help deal with intermittency (the sun does not always shine and the wind does not always blow). Frustratingly, policy makers in some countries are not approving responsibly-managed domestic gas projects that could alleviate the emerging supply/demand imbalance. The losers in this scenario are those that can least afford record high energy prices today.

ENERGY TRANSITIONWhen we first introduced Energy Transition stocks into the Company in May 2020, we had a clear and simple view: the path to Net Zero would not be a straight line and hence a balanced and nimble approach was warranted. Solving for Net Zero requires a complete replumbing of our global energy system – and energy transitions of this scale are measured in decades rather than months. Just as important is that they require efforts from all stakeholders. The good news so far is that capital markets and industry have made good progress with more companies outlining credible plans to hit Net Zero and the underlying economics of wind and solar continue to make enormous strides. Yet, as outlined earlier, consumers and policy makers are not reacting as swiftly nor with any visible cohesion. It was perhaps a little unsurprising then that COP26 in Glasgow this year ended with little in the way of significant progress.

On a more positive note, the long-term prospects for stocks embracing the Energy Transition continue to brighten with the US$1.75 trillion “build it back better” US bill gaining initial House of Representatives approval in November. This came shortly after the EU approved its Green Deal in May.

Rapidly rising European natural gas and power prices throughout the second half of the year have seen a swift reaction from several governments to cap retail prices ahead of winter. The burden of this cost is to a large extent being borne by European utility companies and as a result we cut the Company’s exposure during the period. We tilted these funds towards key suppliers of natural gas to Europe.

The other notable issue for Energy Transition stocks this year has been that of tightening global supply chains causing inflationary pressures. Despite the strong long-term outlook for renewables, this cost inflation overwhelmed the wind and solar manufacturers causing sharp underperformance. We have reduced exposure to both sectors in anticipation of continued inflationary pressures. Although inflationary issues are expected to persist into next year, we do view them as transitory. However, as more and more economies look to “reshore” their supply chains and manufacturing capabilities we see scope for inflationary headwinds to become a longer dated feature.

Ironically, inflation resulting from “reshoring” is being compounded by higher energy prices which in turn are forcing many industries to pursue more aggressively energy efficient investments. This bodes well for companies exposed to areas such as building insulation, heat pumps and industrial efficiency equipment and monitoring.

MININGAfter a great first half of 2021, the second half of the year was decidedly worse with a few mined commodity prices delivering modest positive returns but most of them falling from their mid-year highs. The long-term demand support for many metals that will come from the investment into decarbonisation of power, transport etc. will be positive but the last six months have been a timely reminder of the importance of China as the world’s largest consumer of metals.

The most notable feature of the second half of the year was the significant fall in Chinese steel production. For October and November, steel production rates were down 15-20% compared to the same months in the previous year. For context, oil demand in the US and Europe fell by a similar amount during the widespread lockdowns of April 2020. The contraction in steel production was initially prompted by environmental and power curbs as shortages of power and spiking energy prices caused authorities in China to look to reduce the output of power intensive industries. This was then compounded by a pronounced slowdown in steel demand from real estate/construction in China. Property tightening measures had already slowed demand and then the financial difficulties experienced by a well-known developer appear to have caused another air-pocket in demand. However just as Western central banks are starting to tighten monetary conditions, we have seen the first signs of easing in China and expect this to continue in the first part of 2022. This should be supportive of a pickup in demand for steelmaking materials, for example iron ore, and their prices.

Over the course of 2021, there have been a number of political events that have refocused the market on the challenges of maintaining current mine supply, in addition to incentivising investment into new capacity. The elections in Peru in the first half of the year were heavily focused on the mining industry and the eventual winner was the leftist candidate Pedro Castillo. Whilst his populist rhetoric during his campaign has yet to be translated into negative legislation for the industry, it has almost certainly deterred capital investment into new mining projects. Peru is the world’s second largest copper producer so disruption to future production by delaying or cancelling investment is likely to support medium-term copper prices. Similar threats face the world’s largest copper producer, Chile, where the Senate recently pushed forward discussion on increasing royalties/ taxes on mining. This would also impact the outlook for future lithium supply as Chile produces over a fifth of the world’s current lithium and sits on some of the largest undeveloped reserves globally.

The mining companies remain in an extremely strong financial position and the theme of capital discipline/ shareholder returns that we have written about in a number of previous reports remains well intact. The charts set out on page 16 of the Annual report for the year ended 30 November 2021 show the strength of balance sheets in the mining sector compared to other sectors as well as the attractive dividend yield relative to broader equity markets.

OUTLOOKThe outlook for next year can be framed in much the same way as 2021. On the one hand, the long-term direction of travel towards Net Zero remains clear. On the other hand, the path there will not be a straight line which should bode well for the Company as we have the ability to exercise flexibility around the energy transition – particularly navigating both transitory and more structural inflationary pressures. Although the Omicron variant has increased the risk of economic slowdown, vaccination rates are rising and we believe the global economy will continue reopening throughout the course of 2022.

With a tailwind of fiscal and monetary easing from China driving a strong restocking cycle, we see positive demand drivers for iron ore and copper at a time when supply risks are rising.

Fiscal prudence is likely to remain a feature of the traditional energy space next year paving the way for further improved shareholder returns. The key for traditional energy share price performance may lie not in sputtering demand, but in rapidly evaporating spare crude capacity. In such circumstances, further spikes in prices cannot be ruled out.

From an Energy Transition perspective supply chain inflation likely means a tougher outlook for wind and solar manufacturers at least for the first half of the year. Persistently high gas and power prices (especially in Europe) are likely to feature through 2022 and may well rear their heads again in winter 2022/23. This poses further headwinds to utility companies, particularly outside North America. With that said, inflationary pressures and reshoring are sharpening industry focus in energy efficiency – and we see this as an attractive area heading into 2022 and beyond.

TOM HOLL AND MARK HUMEBLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED3 February 2022

TEN LARGEST INVESTMENTS

1 + Vale (2020: 2nd)Diversified mining groupMarket value: £7,540,000Share of investments: 5.9%1 (2020: 6.0%)

One of the largest mining groups in the world with operations in 30 countries. Vale is the world’s largest producer of iron ore and iron ore pellets, and the world’s largest producer of nickel. The group also produces manganese ore, ferroalloys, metallurgical and thermal coal, copper, platinum group metals, gold, silver, cobalt, potash, phosphates and other fertiliser nutrients.

2 + Glencore (2020: n/a)Diversified mining groupMarket value: £7,428,000Share of investments: 5.8% (2020: n/a)

One of the world’s largest globally diversified natural resources groups. The group’s operations include approximately 150 mining and metallurgical sites and oil production assets. Glencore’s mined commodity exposure includes copper, cobalt, nickel, zinc, lead, ferroalloys, aluminium, iron ore, gold and silver.

3 + Chevron (2020: 4th)Integrated oil groupMarket value: £5,906,000Share of investments: 4.6% (2020: 5.2%)

An integrated oil and gas producer engaged in all aspects of the oil and gas industry. The group has both upstream and downstream operations, as well as alternative energy operations including solar, wind and biofuels.

4 - BHP (2020: 1st)Diversified mining groupMarket value: £4,912,000Share of investments: 3.8% (2020: 6.3%)

The world’s largest diversified natural resources group. The company is a major producer of aluminium, iron ore, copper, thermal and metallurgical coal, manganese, uranium, nickel, silver, titanium minerals and diamonds. The group also has significant interests in oil, gas and liquefied natural gas.

5 + Anglo American (2020: 7th)Diversified mining groupMarket value: £4,455,000Share of investments: 3.5% (2020: 3.4%)

A global mining group. The group’s mining portfolio includes bulk commodities including iron ore, manganese, and metallurgical coal, base metals including copper and nickel and precious metals and minerals including platinum and diamonds. Anglo American has mining operations globally, with significant assets in Africa and South America.

6 + First Quantum Minerals (2020: 8th)Copper producerMarket value: £4,432,000Share of investments: 3.5%2 (2020: 3.1%)

An established growing copper mining group operating seven mines including the ramp-up of their newest mine, Cobre Panama, which declared commercial production in September 2019. The group is a significant copper producer and also produces nickel, gold and zinc.

7 + ConocoPhillips (2020: 13th)Exploration & ProductionMarket value: £3,398,000Share of investments: 2.7% (2020: 2.7%)

An American multinational corporation engaged in hydrocarbon exploration. ConocoPhillips is one of the world’s largest independent Exploration & Production (E&P) groups based on production and proved reserves. They have operations in 15 countries and are committed to the efficient and effective exploration and production of oil and natural gas.

8 + EDP Renovaveis (2020: 21st)ElectrificationMarket value: £2,888,000Share of investments: 2.3% (2020: 1.6%)

A global leader in the renewable energy sector, with presence in 25 markets. The group is the fourth largest wind energy producer.

9 + TotalEnergies (2020: 14th)Integrated oil groupMarket value: £2,825,000Share of investments: 2.2% (2020: 2.7%)

A French multinational integrated oil and gas group, which is one of the seven supermajor oil groups. The group has rebranded from Total to TotalEnergies, as it looks to be a world-class player in the energy transition sector.

10 = Enel (2020: 10th)ElectrificationMarket value: £2,705,000Share of investments: 2.1% (2020: 2.9%)

An Italian electric utility and network operator and a leading owner of renewable energy assets. The group operates in more than 30 countries, bringing energy to people through the adoption of new sustainability-oriented technologies.

1 2.1% relates to fixed interest holdings in Vale.

2 1.3% relates to fixed interest holdings in First Quantum Minerals.

All percentages reflect the value of the holding as a percentage of total investments. For this purpose, where more than one class of securities is held, these have been aggregated. The percentages in brackets represent the value of the holding as at 30 November 2020.

Together, the ten largest investments represent 36.4% of total investments (ten largest investments as at 30 November 2020: 43.1%).

INVESTMENTS AS AT 30 NOVEMBER 2021

* The investment in the Vale debenture is illiquid and has been valued using secondary market pricing information provided by the Brazilian Financial and Capital Markets Association (ANBIMA).

All investments are ordinary shares unless otherwise stated. The total number of holdings (including options) at 30 November 2021 was 68 (30 November 2020: 63). There were no open options as at 30 November 2021 (30 November 2020: 2).

The equity and fixed income investment total of £127,784,000 (30 November 2020: £97,580,000) above before the deduction of the negative option valuations of £nil (30 November 2020: £11,000) represents the Group’s total investments held at fair value as reflected in the Consolidated and Parent Company Statements of Financial Position below. The table above excludes cash and gearing; the level of the Group’s gearing may be determined with reference to the bank overdraft of £12,927,000 and cash and cash equivalents of £6,552,000 that are also disclosed in the Consolidated and Parent Company Statements of Financial Position. Details of the AIC methodology for calculating gearing are given in the Glossary contained within the Annual Report for the year ended 30 November 2021.

As at 30 November 2021, the Group did not hold any equity interests comprising more than 3% of any company’s share capital.

STRATEGIC REPORT

The Directors present the Strategic Report of the Company for the year ended 30 November 2021. The aim of the Strategic Report is to provide shareholders with the information required to enable them to assess how the Directors have performed in their duty to promote the success of the Company for the collective benefit of shareholders.

The Chairman’s Statement together with the Investment Manager’s Report and the Section 172 Statement setting out how the Directors promote the success of the Company (as set out below) form part of the Strategic Report. The Strategic Report was approved by the Board at its meeting on 3 February 2022.

BUSINESS AND MANAGEMENT OF THE COMPANYBlackRock Energy and Resources Income Trust plc (the Company) is an investment trust company that has a premium listing on the London Stock Exchange. Its principal activity is portfolio investment and option writing. The Company’s wholly owned subsidiary is BlackRock Energy and Resources Securities Income Company Limited (together ‘the Group’). Its principal activity is investment dealing.

Investment trusts, like unit trusts and open-ended investment companies (OEICs), are pooled investment vehicles which allow exposure to a diversified range of assets through a single investment thus spreading, although not eliminating, investment risk. In accordance with the Alternative Investment Fund Managers’ Directive (AIFMD) the Company is an Alternative Investment Fund (AIF). BlackRock Fund Managers Limited (the Manager) is the Company’s Alternative Investment Fund Manager (AIFM). The management of the investment portfolio and the administration of the Company have been contractually delegated to the Manager. The Manager, operating under guidelines determined by the Board, has direct responsibility for decisions relating to the running of the Company and is accountable to the Board for the investment, financial and operating performance of the Company.

The Company delegates fund accounting services to the Manager, which in turn subdelegates these services to the Fund Accountant, The Bank of New York Mellon (International) Limited. The Company sub-delegates registration services to the Registrar, Computershare Investor Services PLC. Other service providers include the Depositary, also performed by The Bank of New York Mellon (International) Limited. Details of the contractual terms with these service providers are set out on page 53 of the Directors’ Report contained within the Annual Report for the year ended 30 November 2021.

BUSINESS MODELThe Company invests in accordance with the investment objective. The Board is collectively responsible to shareholders for the long-term success of the Company. There is a clear division of responsibility between the Board and the Manager. Matters reserved for the Board include setting the Company’s strategy, including its investment objective and policy, setting limits on gearing, capital structure, governance, and appointing and monitoring of the performance of service providers, including the Manager. As the Company’s business model follows that of an externally managed investment trust, it does not have any employees and outsources its activities to third party service providers including the Manager who is the principal service provider.

INVESTMENT OBJECTIVEThe Company’s objectives are to achieve an annual dividend target and, over the long term, capital growth by investing primarily in securities of companies operating in the mining and energy sectors.

INVESTMENT POLICY AND STRATEGYThe Company seeks to achieve its objectives through a focused portfolio, consisting of approximately thirty to one hundred and fifty securities.

Although the Company has the flexibility to invest within this range, at 30 November 2021 the portfolio consisted of 68 investments, and the detailed portfolio listing is provided above.

There are no restrictions on investment in terms of geography or sub-sector and, in addition to equities, other types of securities, such as convertible bonds and debt issued primarily by mining or energy companies, may be acquired. Although most securities will be quoted, listed or traded on an investment exchange, up to 10% of the gross assets of the Group, at the time of investment, may be invested in unquoted securities. Investment in securities may be either direct or through other funds, including other funds managed by BlackRock or its associates, with up to 15% of the portfolio being invested in other listed investment companies, including listed investment trusts. Up to 10% of the gross assets of the Group, at the time of investment, may be invested in physical assets, such as gold and in securities of companies that operate in the commodities sector other than the mining and energy sectors.

No more than 15% of the gross assets of the Group will be invested in any one company as at the date any such investment is made and the portfolio will not own more than 15% of the issued shares of any one company, other than the Company’s subsidiary. The Group may deal in derivatives, including options and futures, up to a maximum of 30% of the Group’s assets for the purposes of efficient portfolio management and to enhance portfolio returns. In addition, the Group is also permitted to enter into stock lending arrangements up to a maximum of 33.3% of the total asset value of the portfolio.

The Group may, from time to time, use borrowings to gear its investment policy or in order to fund the market purchase of its own ordinary shares. This gearing typically is in the form of an overdraft or short-term facility, which can be repaid at any time. Under the Company’s Articles of Association, the Board is obliged to restrict the borrowings of the Company to an aggregate amount equal to 40% of the value of the gross assets of the Group. However, borrowings are not anticipated to exceed 20% of gross assets at the time of drawdown of the relevant borrowings.

The Group’s financial statements are maintained in British Pound Sterling. Although many investments are denominated and quoted in currencies other than Sterling, the Company does not intend to employ a hedging policy against fluctuations in exchange rates but may do so in the future if circumstances warrant implementing such a policy.

No material change will be made to the investment policy without shareholder approval.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”) IMPACTThe Board’s ESG approach is set out below. The direct impact of the Company’s activities is minimal as it has no employees, premises, physical assets or operations either as a producer or a provider of goods or services. Neither does it have customers. Its indirect impact occurs through the investments that it makes, and this is mitigated through BlackRock’s approach to ESG integration.

PERFORMANCEDetails of the Company’s performance for the year are given in the Chairman’s Statement above. The Investment Manager’s Report above includes a review of the main developments during the year, together with information on investment activity within the Company’s portfolio.

RESULTS AND DIVIDENDSThe Company’s revenue earnings for the year amounted to 4.96p per share (2020: 4.31p). Details of dividends paid and declared in respect of the year, together with the Company’s dividend policy, are set out in the Chairman’s Statement above.

FUTURE PROSPECTSThe Board’s main focus is the achievement of an annual dividend target and, over the long term, capital growth. The future of the Company is dependent upon the success of the investment strategy. The outlook for the Company is discussed in both the Chairman’s Statement and in the Investment Manager’s Report above.

EMPLOYEES, SOCIAL, COMMUNITY AND HUMAN RIGHTS ISSUESThe Company has no employees, and all the Directors are non-executive, therefore, there are no disclosures to be made in respect of employees. The Company believes that it is in shareholders’ interests to consider environmental, social and governance factors and human rights issues when selecting and retaining investments. Details of the Company’s policy on socially responsible investment are set out on page 69 of the Annual Report for the year ended 30 November 2021.

MODERN SLAVERY ACTAs an investment vehicle the Company does not provide goods or services in the normal course of business and does not have customers. Accordingly, the Directors consider that the Company is not required to make any slavery or human trafficking statement under the Modern Slavery Act 2015. The Board considers the Company’s supply chain, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter.

DIRECTORS AND GENDER REPRESENTATIONThe Directors of the Company are set out in the Governance structure and Directors’ biographies on pages 30 to 33 of the Annual Report for the year ended 30 November 2021. All the Directors held office throughout the year with the exception of Mr Andrew Robson (who was appointed to the Board on 8 December 2020) and Mrs Carole Ferguson who was appointed to the Board on 22 December 2021). The Board consists of three male Directors and two female Directors.

KEY PERFORMANCE INDICATORSA number of performance indicators (KPIs) are used to monitor and assess the Company’s success in achieving its objectives and to measure its progress and performance. The principal KPIs are described below:

PerformanceAt each meeting the Board reviews the performance of the portfolio as well as the net asset value and share price for the Company and compares this to the performance of other companies in the peer group. The Company does not have a benchmark; however, the Board also reviews performance in the context of the blended performance of the EMIX Global Mining (ex Gold) Index, MSCI World Energy Index and the S&P Global Clean Energy Index and a 40:30:30 composite of the three indices effective from 1 June 2020. The Board also monitors performance relative to a peer group of commodities and natural resources focused funds and also regularly reviews the Company’s performance attribution analysis to understand how performance was achieved. This provides an understanding of how components such as sector exposure, stock selection and asset allocation impacted performance. Information on the Company’s performance is given in the performance record above and the Chairman’s Statement and Investment Manager’s Report above respectively.

Share ratingThe Board monitors the level of the Company’s premium or discount to NAV on an ongoing basis and considers strategies for managing any premium or discount. In the year to 30 November 2021, the Company’s share price to NAV traded in the range of a discount of 13.2% to a premium of 5.8% on a cum income basis. The average discount for the year was 5.6%. A total of 2,800,000 shares were issued from treasury during the year. The Company bought back a total of 51,992 shares during the year and further details are given in the Chairman’s Statement above. Details of shares bought back since the year end date are given in note 9 below.

Further details setting out how the discount or premium at which the Company’s shares trade is calculated are included in the Glossary contained within the Annual Report for the year ended 30 November 2021.

Ongoing chargesThe ongoing charges represent the Company’s management fee and all other recurring operating expenses, excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain non-recurring items, expressed as a percentage of average daily net assets. The ongoing charges are based on actual costs incurred in the year as being the best estimate of future costs. The Company’s Manager has also agreed to cap ongoing charges by rebating a portion of the management fee to the extent that the Company’s ongoing charges exceed 1.25% of average net assets. The Board reviews the ongoing charges and monitors the expenses incurred by the Company on an ongoing basis. A definition setting out in detail how the ongoing charges ratio is calculated is included in the Glossary contained within the Annual Report for the year ended 30 November 2021.

Dividend target and income generationThe level of income is considered at each meeting and the Board receives detailed income forecasts. The Board also monitors the risks and returns from option writing, and regularly reviews the Company’s levels of distributable reserves.

The table below sets out the key KPIs for the Company. These KPIs fall within the definition of ‘Alternative Performance Measures’ (APMs) under guidance issued by the European Securities and Markets Authority (ESMA) and additional information explaining how these are calculated is set out in the Glossary contained within the Annual Report for the year ended 30 November 2021.

1 This measures the Company’s NAV and share price total returns, which assumes dividends paid by the Company have been reinvested.

2 Alternative Performance Measures, see contained within the Annual Report for the year ended 30 November 2021.

3 This is the difference between the share price and the cum-income NAV per share.

4 Revenue return per share of 4.31 pence per share for the year to 30 November 2020 includes an amount of 0.83 pence per share in respect of withholding tax rebates that are non-recurring. See page 102 of the Annual Report for the year ended 30 November 2021 for additional information.

5 Ongoing charges represent the management fee and all other recurring operating expenses excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain non-recurring items, expressed as a percentage of average daily net assets.

Principal risksThe Company is exposed to a variety of risks and uncertainties. The Board has in place a robust process to identify, assess and monitor the principal risks of the Company. A core element of this process is the Company’s risk register which identifies the risks facing the Company and assesses the likelihood and potential impact of each risk and the controls established for mitigation. A residual risk rating is then calculated for each risk.

The risk register is regularly reviewed, and the risks reassessed. The risk environment in which the Company operates is also monitored and regularly appraised. New risks are also added to the register as they are identified which ensures that the document continues to be an effective risk management tool.

The risk register, its method of preparation and the operation of key controls in the Manager’s and third-party service providers’ systems of internal control are reviewed on a regular basis by the Audit and Management Engagement Committee. In order to gain a more comprehensive understanding of the Manager’s and other third-party service providers’ risk management processes, and how these apply to the Company’s business, BlackRock’s internal audit department provides an annual presentation to the Audit and Management Engagement Committee Chairman setting out the results of testing performed in relation to BlackRock’s internal control processes. The Audit and Management Engagement Committee also periodically receives presentations from BlackRock’s Risk & Quantitative Analysis teams, and reviews Service Organisation Control (SOC 1) reports from BlackRock and from the Company’s Custodian (The Bank of New York Mellon (International) Limited). The Custodian is appointed by the Company’s Depositary and does not have a direct contractual relationship with the Company.

The Board has undertaken a robust assessment of both the principal and emerging risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. The COVID-19 pandemic has given rise to unprecedented challenges for businesses across the globe and the Board has taken into consideration the risks posed to the Company by the crisis and incorporated these into the Company’s risk register. The risks identified by the Board have been described in the table that follows, together with an explanation of how they are managed and mitigated. Emerging risks are considered by the Board as they come into view and are incorporated into the existing review of the Company’s risk register. Additionally, the Manager considers emerging risks in numerous forums and the Risk and Quantitative Analysis team produces an annual risk survey. Any material risks of relevance to the Company identified through the annual risk survey will be communicated to the Board. The Board will continue to assess these risks on an ongoing basis. In relation to the UK Code, the Board is confident that the procedures that the Company has put in place are sufficient to ensure that the necessary monitoring of risks and controls has been carried out throughout the reporting period.

The principal risks and uncertainties faced by the Company during the financial year, together with the potential effects, controls and mitigating factors are set out in the following table.

VIABILITY STATEMENTIn accordance with provision 31 of the 2018 UK Corporate Governance Code, the Directors have assessed the prospects of the Company over a longer period than the twelve months referred to by the ‘Going Concern’ guidelines. The Board is cognisant of the uncertainty surrounding the potential duration of the COVID-19 pandemic, its impact on the global economy and the prospects for many of the Company’s portfolio holdings. Notwithstanding this crisis, and given the factors stated below, the Board expects the Company to continue for the foreseeable future and has therefore conducted this review for a period of five years. This is generally the investment holding period investors consider while investing in the sector. The Board also believes that the Company and its key third party service providers have in place appropriate business continuity plans and will be able to maintain service levels through the COVID-19 pandemic. The Board conducted this review for the period up to the AGM in 2027.

In its assessment of the viability of the Company the Directors have noted that:

· the Company predominantly invests in highly liquid, large listed companies so its assets are readily realisable;

· the Company has gearing facilities in place and no concerns around facilities, headroom or covenants;

· the Company’s forecasts for revenues, expenses and liabilities are relatively stable, it has largely fixed overheads which comprise a small percentage of net assets and ongoing charges are capped at 1.25% of average net asset value; and

· the business model should remain attractive for longer than five years unless there is significant economic or regulatory change.

The Directors have also reviewed:

· the impact of a significant fall in global commodity equity markets on the value of the Company’s investment portfolio, factoring in the volatility seen related to the COVID-19 pandemic;

· the ability of portfolio companies to pay dividends, and the Company’s portfolio yield and ability to meet its dividend target over the longer term;

· the ongoing relevance of the Company’s investment objective, business model and investment policy in the current environment; and

· the level of demand for the Company’s shares.

The Board has also considered a number of other factors in its assessment, including:

· portfolio liquidity;

· the Company’s revenue and expense forecasts. The Board is confident that the Company’s business model remains viable and that there are sufficient resources to meet all liabilities as they fall due for the period under review;

· the Company’s borrowing facility and the fact that the Company continues to meet its financial covenants in respect of this facility;

· the principal risks and uncertainties as set out above and the fact that the Company has appropriate controls and processes in place to manage these and to maintain its operating model;

· the operational resilience of the Company and its key service providers and their ability to continue to provide a good level of service for the foreseeable future;

· the effectiveness of business continuity plans in place for the Company and key service providers; and

· the level of income generated by the Company and future income forecasts.

Based on the results of their analysis, the Directors have concluded that there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment.

SECTION 172 STATEMENT: PROMOTING THE SUCCESS OF BLACKROCK ENERGY AND RESOURCES INCOME TRUST PLCThe Companies (Miscellaneous Reporting) Regulations 2018 require Directors to explain in detail how they have discharged their duties under Section 172(1) of the Companies Act 2006 in promoting the success of their companies for the benefit of members as a whole. This enhanced disclosure covers how the Board has engaged with and understands the views of stakeholders and how stakeholders’ needs have been taken into account, the outcome of this engagement and the impact that it has had on the Board’s decisions.

As the Company is an externally managed investment company and does not have any employees or customers, the Board considers the main stakeholders in the Company to be the shareholders, key service providers (being the Manager and Investment Manager, the Custodian, Depositary, Registrar and Broker) and investee companies. The reasons for this determination, and the Board’s overarching approach to engagement, are set out in the table below.

A summary of the key areas of engagement undertaken by the Board with its key stakeholders in the year under review and how Directors have acted upon this to promote the long-term success of the Company are set out in the table below.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE APPROACHThe Board’s approachEnvironmental, social and governance (ESG) issues can present both opportunities and threats to long term investment performance. The Company’s investment universe comprises sectors that are undergoing significant structural change and are likely to be highly impacted by increasing regulation as a result of climate change and other social and governance factors. Your Board is committed to ensuring that we have appointed a manager that integrates ESG considerations into its investment process and has the skill and vision to navigate the structural transition that the Company’s investment universe is undergoing. The Board believes effective engagement with management is, in most cases, the most constructive way of driving meaningful change in the behaviour of investee company management. This is particularly true for the Company’s Manager given the extent of BlackRock’s shareholder engagement (BlackRock held 3,000 engagements with companies based in 54 markets for the year to 30 June 2021, and voted on more than 165,000 management and shareholder proposals at more than 16,000 meetings1). The Board believes that BlackRock is well placed as Manager to fulfil these requirements due to the integration of ESG into its investment processes, the emphasis it places on sustainability, its constructive approach in its investment stewardship activities and its position in the industry as one of the largest suppliers of sustainable investment products in the global market. More information on BlackRock’s global approach to ESG integration, as well as activity specific to the BlackRock Energy and Resources Income Trust plc portfolio is set out below. BlackRock has defined ESG integration as the practice of incorporating material ESG information and consideration of sustainability risks into investment decisions in order to enhance risk-adjusted returns. ESG integration does not change the Company's investment objective or constrain the Investment Manager’s investable universe, and does not mean that an ESG or impact focused investment strategy or any exclusionary screens have been or will be adopted by the Company (apart from the exclusion of companies that generate more than 25% of their revenues from thermal coal production as mentioned below). Similarly, ESG integration does not determine the extent to which the Company may be impacted by sustainability risks. More information on sustainability risks may be found in the AIFMD Fund Disclosures document of the Company available on the Company's website at https://www.blackrock.com/uk/individual/literature/policies/itc-disclosure-blackrock-energy-and-resources-income-trust-plc.pdf.

1 Source: BlackRock 2021 Voting Spotlight report and BlackRock Investment Stewardship website https://www.blackrock.com/corporate/about-us/investment-stewardship#engagement-and-voting-history

BlackRock Energy and Resources Income Trust plc – engagement with portfolio companies in 2021Given the Board’s belief in the importance of engagement and communication with portfolio companies, they receive regular updates from the Manager in respect of activity undertaken for the year under review. The Board notes that over the year to 30 November 2021, 94 total company engagements were held with the management teams of 32 portfolio companies representing 59% of the portfolio by value at 30 November 2021. To put this into context, there were 63 companies in the BlackRock Energy and Resources Income Trust plc portfolio at 30 November 2021). Additional information is set out in the table below as well as the key engagement themes for the meetings held in respect of the Company’s portfolio holdings.

1 Source: Institutional Shareholder Services as of 5 December 2021

Engagement Themes*1

Environmental: 86%

Governance: 84%

Social: 52%

Top Six Engagement Topics*1

Climate Risk Management: 69%

Operational Sustainability: 52%

Social Risks and Opportunities: 38%

Corporate Strategy: 54%

Board Composition and Effectiveness: 45%

Environmental Impact Management: 35%

* Engagements include multiple company meetings during the year with the same company. Most engagement conversations cover multiple topics and are based on BlackRock vote guidelines and BlackRock’s engagement priorities can be found at: https://www.blackrock.com/corporate/about-us/investment-stewardship#engagement-priorities. Percentages reflect the number of meetings at which a particular topic is discussed as a percentage of the total meetings held; as more than one topic is discussed at each meeting the total will not add up to 100%.

1 Sources: ISS Proxy Exchange and BlackRock Investment Stewardship.

THE IMPORTANCE AND CHALLENGES OF CONSIDERING ESG WHEN INVESTING IN THE NATURAL RESOURCES SECTOR AND BLACKROCK’S GLOBAL APPROACH TO ESG INTEGRATION2

1 Source: BlackRock’s 2021 voting spotlight report which can be found at https://www.blackrock.com/corporate/literature/publication/2021-voting-spotlight-full-report.pdf

2 The data in this table applies to BIS’s engagements globally across all BlackRock-managed portfolios.

BLACKROCK’S APPROACH TO ESG INTEGRATIONBlackRock believes that sustainability risk – and climate risk in particular – now equates to investment risk, and this will drive a profound reassessment of risk and asset values as investors seek to react to the impact of climate policy changes. This in turn (in BlackRock's view) is likely to drive a significant reallocation of capital away from traditional carbon intensive industries over the next decade. BlackRock believes that carbon-intensive companies will play an integral role in unlocking the full potential of the energy transition, and to do this, they must be prepared to adapt, innovate and pivot their strategies towards a low carbon economy.

As part of BlackRock’s structured investment process, ESG risks and opportunities (including sustainability/climate risk) are considered within the portfolio management team’s fundamental analysis of companies and industries. ESG factors have been a key consideration of the BlackRock Natural Resources Team’s investment process since inception and the Company’s portfolio managers work closely with BIS to assess the governance quality of companies and investigate any potential issues, risks or opportunities.

As part of their approach to ESG integration, the portfolio managers use ESG information when conducting research and due diligence on new investments and again when monitoring investments in the portfolio. In particular, portfolio managers now have access to 1,200 key ESG performance indicators in Aladdin (BlackRock's proprietary trading system) from third-party data providers. BlackRock’s internal sustainability research framework scoring is also available alongside third-party ESG scores in core portfolio management tools. BlackRock’s scale and unparalleled access to company management allows it to engage on issues that are identified through questioning management teams and conducting site visits. In conjunction with the portfolio management team, BIS meets with boards of companies frequently to evaluate how they are strategically managing their longer-term issues, including those surrounding ESG and the potential impact these may have on company financials. BIS's and the portfolio management team’s understanding of ESG issues is further supported by BlackRock’s Sustainable Investment Team (BSI). BSI look to advance ESG research and integration, active engagement and the development of sustainable investment solutions across the firm.

INVESTMENT STEWARDSHIPAs a fiduciary to its clients, BlackRock has built its business to protect and grow the value of clients’ assets. As part of this fiduciary duty to its clients, BIS is committed to promoting sound corporate governance through engagement with investee companies, development of proxy voting policies that support best governance practices and also through wider engagement on public policy issues

GLOBAL PRINCIPLESBlackRock’s approach to corporate governance and stewardship is explained in its Global Principles. These high-level Principles are the framework for BlackRock’s more detailed, market-specific voting guidelines, all of which are published on the BlackRock website. The Principles describe BlackRock’s philosophy on stewardship (including how it monitors and engages with companies), its policy on voting, its integrated approach to stewardship matters and how it deals with conflicts of interest. These apply across relevant asset classes and products as permitted by investment strategies. BlackRock reviews its Global Principles annually and updates them as necessary to reflect in market standards, evolving governance practice and insights gained from engagement over the prior year. BlackRock’s Global Principles are available on its website at https:// www.blackrock.com/corporate/literature/fact-sheet/blk-responsible-investment-engprinciples-global.pdf

MARKET-SPECIFIC PROXY VOTING GUIDELINESBlackRock’s voting guidelines are intended to help clients and companies understand its thinking on key governance matters. They are the benchmark against which it assesses a company’s approach to corporate governance and the items on the agenda to be voted on at the shareholder meeting. BlackRock applies its guidelines pragmatically, taking into account a company’s unique circumstances where relevant. BlackRock informs voting decisions through research and engages as necessary. BlackRock reviews its voting guidelines annually and updates them as necessary to reflect changes in market standards, evolving governance practice and insights gained from engagement over the prior year.

BlackRock’s market-specific voting guidelines are available on its website at https://www.blackrock.com/corporate/about-us/investment-stewardship#guidelines.

In 2021, BIS explicitly asked that all companies disclose a business plan aligned with the goal of limiting global warming to well below 2ºC, consistent with achieving net zero global greenhouse gas (GHG) emissions by 2050. BlackRock viewed these disclosures as essential to helping investors assess a company’s ability to transition its business to a low carbon world and to capture value-creation opportunities created by the climate transition. BlackRock also asked that companies align their disclosures to the TCFD framework and the Sustainability Accounting Standards Board (SASB) standards. For 2022, BIS are evolving its perspective on sustainability reporting to recognize that companies may use standards other than that of the SASB, and reiterates its ask for metrics that are industry- or company-specific. BIS is also encouraging companies to demonstrate that their plans are resilient under likely decarbonisation pathways, and the global aspiration to limit warming to 1.5°C. BIS is also asking companies to disclose how considerations related to having a reliable energy supply and just how transition affects their plans. More information in respect of BlackRock’s investment stewardship approach to sustainable investing can be found at https://www.blackrock.com/corporate/ literature/publication/blk-commentary-climate-risk-and-energy-transition.pdf.

BlackRock has been a member of Climate Action 100+ since 2020 and has aligned its engagement and stewardship priorities to UN Sustainable Development Goals (including Gender Equality and Affordable and Clean Energy). A map of how BIS's engagement priorities align to the UN Sustainable Development Goals (SDGs) can be found at https://www. blackrock.com/corporate/literature/publication/blk-engagement-priorities-aligned-to-sdgs.pdf.

BlackRock is committed to transparency in terms of disclosure on its engagement with companies and voting rationales and is committed to voting against management to the extent that they have not demonstrated sufficient progress on ESG issues. This year, BlackRock voted against or withheld votes from 6,560 directors globally at 3,400 different companies driven by concerns regarding director independence, executive compensation, insufficient progress on board diversity, and overcommitted directors, reflecting our intensified focus on sustainability risks. In the 2020-21 proxy year, BlackRock voted against 255 directors and against 319 companies for climate-related concerns that could negatively affect long-term shareholder value. More detail in respect of BIS’s engagement and voting history can be found at https://www.blackrock.com/corporate/literature/ publication/2021-voting-spotlight-full-report.pdf.

BIS also publishes voting bulletins explaining its vote decision, and the engagement and analysis underpinning it, on certain high-profile proposals at company shareholder meetings. Vote bulletins for 2021 can be found at https:// www.blackrock.com/corporate/about-us/investment-stewardship#vote-bulletins.

BLACKROCK’S REPORTING AND DISCLOSURESIn terms of its own reporting, BlackRock believes that the SASB provides a clear set of standards for reporting sustainability information across a wide range of issues, from labour practices to data privacy to business ethics. For evaluating and reporting climate-related risks, as well as the related governance issues that are essential to managing them, the TCFD provides a valuable framework. BlackRock recognises that reporting to these standards requires significant time, analysis, and effort. BlackRock’s 2021 TCFD report can be found at https://www.blackrock.com/ corporate/literature/continuous-disclosure-and-important-information/tcfd-report-2021-blkinc.pdf

BY ORDER OF THE BOARDSARAH BEYNSBERGERFOR AND ON BEHALF OFBLACKROCK INVESTMENT MANAGEMENT (UK) LIMITEDCompany Secretary3 February 2022

RELATED PARTY TRANSACTIONS AND TRANSACTIONS WITH THE AIFM AND THE INVESTMENT MANAGER

BlackRock Fund Managers Limited (BFM) was appointed as the Company’s AIFM with effect from 2 July 2014. The management contract is terminable by either party on six months’ notice.

BlackRock Investment Management (UK) Limited (BIM (UK)) acts as the Company’s Investment Manager under a delegation agreement with BFM. BIM (UK) also acted as the Secretary of the Company throughout the year. Up to 16 March 2020 BFM received a management fee of 0.95% on the first £250 million of gross assets and 0.90% thereafter. With effect from this date the Company’s management fee was amended such that BFM now receives a fee of 0.80% on gross assets. In addition, and also with effect from 17 March 2020, BFM has agreed, if required, to rebate a portion of the Company’s Management fee each year to ensure that the Company’s Ongoing Charges, as set out and defined in its annual report (and for avoidance of doubt including the management fee) do not exceed 1.25% per annum of net assets. Further details in relation to the management fee are given in note 4 below. The Board believes that the current fee structure is appropriate for an investment company in this sector.

The Group contributes to a focused investment trust sales and marketing initiative operated by BIM (UK) on behalf of the investment trusts under its management. For the year ended 30 November 2021, the Group’s contribution to the consortium element of the initiative, which enables the trusts to achieve efficiencies by combining certain sales and marketing activities, represented 0.025% per annum of its net assets (£97.2 million) as at 31 December 2019, and this contribution is matched by BIM (UK). For the year ended 30 November 2020, £34,000 (excluding VAT) has been invoiced and paid in respect of this initiative. The purpose of the programme is to ensure effective communication with existing shareholders and to attract new shareholders to the Company. This has the benefit of improving liquidity in the Company’s shares and helps sustain the stock market rating of the Company. The total fees paid or payable for these services for the year ended 30 November 2021 amounted to £34,000 excluding VAT (2020: £32,000). Marketing fees of £22,000 excluding VAT (2020: £20,000) were outstanding as at the year end.

BFM and BIM (UK) are subsidiaries of BlackRock, Inc. which is a publicly traded corporation on the New York Stock Exchange operating as an independent firm.

The Board consists of five 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. For the year ended 30 November 2021, the Chairman received an annual fee of £38,000, the Chairman of the Audit and Management Engagement Committee received an annual fee of £32,000 and the other Directors received an annual fee of £27,000.

The related party transactions with Directors are set out in the Directors’ Remuneration Report contained within the Company’s Annual Report for the year to 30 November 2021. At 30 November 2021, £10,000 (2020: £10,000) was outstanding in respect of Directors’ fees.

As at 30 November 2021 and 2020, the Directors’ interests in the Company’s Ordinary Shares were as follows:

1 Mr Brown acquired 10,397 shares on 16 September 2021.

2 Mr Robson joined the Board with effect from 8 December 2020 and acquired 14,000 shares on 11 December 2020 and an additional 10,000 shares on 28 July 2021.

3 Mrs Ferguson joined the Board with effect from 22 December 2021 and held no shares as at that date.

All of the holdings of the Directors are beneficial. No other changes to these holdings have been notified up to the date of this report.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND FINANCIAL STATEMENTS

The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable United Kingdom law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have elected to prepare the Group and Parent Company financial statements in accordance with International Accounting Standards in conformity with the Companies Act 2006.

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company as at the end of each financial year and of the profit or loss of the Group for that year.

Under the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules, Group financial statements are required to be prepared in accordance with International Financial Reporting Standards (‘IFRSs’) adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.

In preparing these financial statements, the Directors are required to:

· present fairly the financial position, financial performance and cash flows of the Group and the Company;

· select suitable accounting policies in accordance with IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, then apply them consistently;

· present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

· make judgements and estimates that are reasonable and prudent;

· in respect of the Group financial statements, state whether International Accounting Standards in conformity with the Companies Act 2006 and IFRSs adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union have been followed, subject to any material departures disclosed and explained in the financial statements;

· in respect of the Parent Company financial statements, state whether International Accounting Standards in conformity with the Companies Act 2006 have been followed, subject to any material departures disclosed and explained in the financial statements;

· provide additional disclosures when compliance with the specific requirements in IFRS as adopted by the European Union is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group’s financial position and financial performance; and

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and/or the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Company and enable them to ensure that the financial statements comply with the Companies Act 2006.

They are also responsible for safeguarding the assets of the Group and for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are also responsible for preparing the Strategic Report, the Directors’ Report, the Directors’ Remuneration Report, the Corporate Governance Statement and the Report of the Audit and Management Engagement Committee in accordance with the Companies Act 2006 and applicable regulations, including the requirements of the Listing Rules and the Disclosure Guidance and Transparency Rules. The Directors have delegated responsibility to the Manager for the maintenance and integrity of the Group’s corporate and financial information included on the BlackRock website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors, whose names are listed on pages 31 to 33 of the Annual Report ended 30 November 2021 confirm to the best of their knowledge that:

· the consolidated financial statements, prepared in accordance with International Accounting Standards in conformity with the Companies Act 2006 and IFRSs adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Company and undertakings included in the consolidation taken as a whole; and

· the annual report and financial statements include a fair review of the development and performance of the business and the position of the Company and undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that it faces.

The 2018 UK Corporate Governance Code also requires Directors to ensure that the Annual Report and Financial Statements are fair, balanced and understandable. In order to reach a conclusion on this matter, the Board has requested that the Audit and Management Engagement Committee advise on whether it considers that the Annual Report and Financial Statements fulfils these requirements. The process by which the Committee has reached these conclusions is set out in the Audit and Management Engagement Committee’s Report on pages 72 to 76 of the Annual Report for the year ended 30 November 2021. As a result, the Board has concluded that the Annual Report for the year ended 30 November 2021, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s and the Company’s position, performance, business model and strategy.

FOR AND ON BEHALF OF THE BOARDED WARNERChairman3 February 2022

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 NOVEMBER 2021

The total column of this statement represents the Group’s Statement of Comprehensive Income, prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union. 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 year. All income is attributable to the equity holders of the Group.

The Group does not have any other comprehensive income. The net profit for the year disclosed above represents the Group’s total comprehensive income.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 NOVEMBER 2021

1 4th interim dividend of 1.00p per share for the year ended 30 November 2020, declared on 8 December 2020 and paid on 15 January 2021; 1st interim dividend of 1.00p per share for the year ended 30 November 2021, declared on 16 March 2021 and paid on 22 April 2021; 2nd interim dividend of 1.00p per share for the year ended 30 November 2021, declared on 8 June 2021 and paid on 16 July 2021 and 3rd interim dividend of 1.00p per share for the year ended 30 November 2021, declared on 14 September 2021 and paid on 19 October 2021.

2 4th interim dividend of 1.00p per share for the year ended 30 November 2019, declared on 10 December 2019 and paid on 20 January 2020; 1st interim dividend of 1.00p per share for the year ended 30 November 2020, declared on 17 March 2020 and paid on 23 April 2020; 2nd interim dividend of 1.00p per share for the year ended 30 November 2020, declared on 9 June 2020 and paid on 17 July 2020 and 3rd interim dividend of 1.00p per share for the year ended 30 November 2020, declared on 15 September 2020 and paid on 20 October 2020.

PARENT COMPANY STATEMENT OF CHANGES IN EQUITY

1 4th interim dividend of 1.00p per share for the year ended 30 November 2020, declared on 8 December 2020 and paid on 15 January 2021; 1st interim dividend of 1.00p per share for the year ended 30 November 2021, declared on 16 March 2021 and paid on 22 April 2021; 2nd interim dividend of 1.00p per share for the year ended 30 November 2021, declared on 8 June 2021 and paid on 16 July 2021 and 3rd interim dividend of 1.00p per share for the year ended 30 November 2021, declared on 14 September 2021 and paid on 19 October 2021.

2 4th interim dividend of 1.00p per share for the year ended 30 November 2019, declared on 10 December 2019 and paid on 20 January 2020; 1st interim dividend of 1.00p per share for the year ended 30 November 2020, declared on 17 March 2020 and paid on 23 April 2020; 2nd interim dividend of 1.00p per share for the year ended 30 November 2020, declared on 9 June 2020 and paid on 17 July 2020 and 3rd interim dividend of 1.00p per share for the year ended 30 November 2020, declared on 15 September 2020 and paid on 20 October 2020.

For information on the Company’s distributable reserves please refer to note 15 in the Annual Report for the year ended 30 November 2021.

CONSOLIDATED AND PARENT COMPANY STATEMENTS OF FINANCIAL POSITION AS AT 30 NOVEMBER 2021

1 Please refer to note 2 “Restatement of 2020 comparatives” below for further details.

CONSOLIDATED AND PARENT COMPANY CASH FLOW STATEMENTS FOR THE YEAR ENDED 30 NOVEMBER 2021

1 Please refer to note 2 “Restatement of 2020 comparatives” below for further details.

Notes to the financial statements for the year ended 30 November 2021

1. PRINCIPAL ACTIVITYThe principal activity of the Company is that of an investment trust company within the meaning of Section 1158 of the Corporation Tax Act 2010. The Company was incorporated on 4 November 2005 and this is the sixteenth Annual Report.

2. ACCOUNTING POLICIESThe principal accounting policies adopted by the Group and Company are set out below.

(a) Basis of preparationThe Group and Company financial statements have been prepared under the historic cost convention modified by the revaluation of financial assets and financial liabilities held at fair value through profit or loss in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 and, as regards the Group financial statements, International Financial Reporting Standards adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union. The Company has taken advantage of the exemption provided under Section 408 of the Companies Act 2006 not to publish its individual Statement of Comprehensive Income and related notes. All of the Group’s operations are of a continuing nature.

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, is compatible with IFRS, the financial statements have been prepared in accordance with guidance set out in the SORP.

Substantially, all of the assets of the Group consist of securities that are readily realisable and, accordingly, the Directors believe that the Group has adequate resources to continue in operational existence for the period to 30 November 2023, being a period of at least one year from the date of approval of the financial statements and therefore consider the going concern assumption to be appropriate. The Directors have considered any potential impact of the COVID-19 pandemic, its potential longer-term effects on the global economy and the mitigation measures which key service providers, including the Manager, have in place to maintain operational resilience on the going concern of the Company. The Directors have reviewed compliance with the covenants associated with the bank overdraft facility, income and expense projections and the liquidity of the investment portfolio in making their assessment.

The Group’s financial statements are presented in British Pound Sterling (Sterling), which is the functional currency of the Group and the currency of the primary economic environment in which the Group operates. All values are rounded to the nearest thousand pounds (£’000) except when otherwise indicated.

Adoption of new and amended standards and interpretations:Amendments to IFRS 3 – Definition of a business (effective 1 January 2020). This amendment revised the definition of a business. According to feedback received by the International Accounting Standards Board (IASB), application of the current guidance is commonly thought to be too complex and it results in too many transactions qualifying as business combinations. The adoption of this standard has had no impact on the financial statements of the Group.

Amendments to IAS 1 and IAS 8 – Definition of material(effective 1 January 2020). The amendments to IAS 1, ‘Presentation of Financial Statements’ and IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, and consequential amendments to other IASs, required companies to:

(i) use a consistent definition of materiality throughout IASs and the Conceptual Framework for Financial Reporting;

(ii) clarify the explanation of the definition of material; and

(iii) incorporate some of the guidance of IAS 1 about immaterial information.

The adoption of this standard has had no impact on the financial statements of the Group.

Amendments to IFRS 9, IAS 39 and IFRS 7 – Interest rate benchmark reform (effective 1 January 2020). These amendments provided certain reliefs in connection with the interest rate benchmark reform (excluding phase 2 reforms). These reliefs relate to hedge accounting and have the effect that the Inter Bank Offer Rate (IBOR) reform should not generally cause hedge accounting to terminate. However, any hedge ineffectiveness should continue to be recorded in the income statement. Given the pervasive nature of hedges involving IBOR based contracts, the reliefs will affect companies in all industries.

The adoption of this standard has had no impact on the financial statements of the Group.

Relevant IAS standards that have yet to be adopted: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.

This standard has not yet been adopted by the UK. The adoption of this standard is unlikely to have any significant impact on the Group.

Amendments to IFRS 9, IAS 39 and IFRS 7 – Interest rate benchmark reform Phase 2 (effective 1 January 2021). The Phase 2 amendments address issues that might affect financial reporting during the reform of an interest rate benchmark, including the effects of changes to contractual cash flows or hedging relationships arising from the replacement of an interest rate benchmark with an alternative benchmark rate (replacement issues).

The objectives of the Phase 2 amendments are to assist companies in:

· applying IFRS Standards when changes are made to contractual cash flows or hedging relationships because of the interest rate benchmark reform; and

· providing useful information to users of financial statements.

In Phase 2 of its project, the Board amended requirements in IFRS 9 Financial Instruments, IAS 39 Financial Instruments: Recognition and Measurement, IFRS 7 Financial Instruments: Disclosures, IFRS 4 Insurance Contracts and IFRS 16 Leases relating to:

· changes in the basis for determining contractual cash flows of financial assets, financial liabilities and lease liabilities;

· hedge accounting; and

· disclosures.

The Phase 2 amendments apply only to changes required by the interest rate benchmark reform to financial instruments and hedging relationships.

This standard has been adopted by the UK. The adoption of this standard is unlikely to have any significant impact on the Group.

Restatement of 2020 comparativesIn order to better reflect the requirements of IAS 32, ‘Financial Instruments: Presentation’, the parent company’s bank overdraft has been presented separately from the subsidiary’s cash balance in the Consolidated Statement of Financial Position and the Consolidated Cash Flow Statement with comparatives restated. These balances were previously shown on a net basis for the Group, even though the Group did not have the intention to net settle these balances as at the prior period-end. This correction of an error has no impact on the Group’s net assets or the Group’s Statement of Comprehensive Income. The Group’s cash and cash equivalents balance as at 30 November 2020 has been restated from £8,000 to £6,380,000 and the Group overdraft balance has been restated from £5,745,000 to £12,117,000.

(b) Basis of consolidationThe Group’s financial statements are made up to 30 November each year and consolidate the financial statements of the Company and its wholly owned subsidiary, which is registered and operates in England and Wales, BlackRock Energy and Resources Securities Income Company Limited (together ‘the Group’).

Subsidiaries are consolidated from the date of their acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of subsidiaries used in the preparation of the consolidated financial statements are based on consistent accounting policies. All intra-group balances and transactions, including unrealised profits arising therefrom, are eliminated. The subsidiary is not considered to be an investment entity.

(c) Presentation of the Consolidated Statement of Comprehensive IncomeIn order to reflect better the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Consolidated Statement of Comprehensive Income between items of a revenue and a capital nature has been presented alongside the Consolidated Statement of Comprehensive Income.

(d) Segmental reportingThe Directors are of the opinion that the Group is engaged in a single segment of business being investment business.

(e) IncomeDividends receivable on equity shares are recognised as revenue for the year on an ex-dividend basis. Where no ex-dividend date is available, dividends receivable on or before the year end are treated as revenue for the year. Provision is made for any dividends not expected to be received. Special dividends, if any, are treated as a capital or a revenue receipt depending on the facts or circumstances of each dividend. The return on a debt security is recognised on a time apportionment basis so as to reflect the effective yield on the debt security. Interest income and deposit interest is accounted for on an accruals basis.

Options may be purchased or written over securities held in the portfolio for generating or protecting capital returns, or for generating or maintaining revenue returns. Where the purpose of the option is the generation of income, the premium is treated as a revenue item. Where the purpose of the option is the maintenance of capital, the premium is treated as a capital item.

Option premium income is recognised as revenue evenly over the life of the option contract and included in the revenue account of the Consolidated Statement of Comprehensive Income unless the option has been written for the maintenance and enhancement of the Group’s investment portfolio and represents an incidental part of a larger capital transaction, in which case any premia arising are allocated to the capital account of the Consolidated Statement of Comprehensive Income.

Where the Group has elected to receive its dividends in the form of additional shares rather than in cash, the cash equivalent of the dividend is recognised as revenue. Any excess in the value of the shares received over the amount of the cash dividend is recognised in capital.

(f) ExpensesAll expenses, including finance costs, are accounted for on an accruals basis. Expenses have been charged wholly to the revenue account of the Consolidated Statement of Comprehensive Income, except as follows:

· expenses which are incidental to the acquisition or sale of an investment are charged to the capital account of the Consolidated Statement of Comprehensive Income. Details of transaction costs on the purchases and sales of investments are disclosed within note 10 below;

· expenses are treated as capital where a connection with the maintenance or enhancement of the value of the investments can be demonstrated; and

· the investment management fee and finance costs have been allocated 75% to the capital account and 25% to the revenue account of the Consolidated Statement of Comprehensive Income in line with the Board’s expectations of the long term split of returns, in the form of capital gains and income, respectively, from the investment portfolio. The investment management fee rebate accrued as a result of the application of the cap on ongoing charges of 1.25% per annum of average daily net assets is offset against management fees and is allocated between revenue and capital in the ratio of total ongoing charges allocated between revenue and capital during the year.

Finance costs incurred by the Subsidiary are charged 100% to the revenue account.

(g) TaxationThe tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the Consolidated Statement of Comprehensive Income because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that were applicable at the balance sheet date.

Where expenses are allocated between the capital and revenue accounts, any tax relief in respect of expenses is allocated between capital and revenue returns on the marginal basis using the Company’s effective rate of corporation tax for the accounting period.

Deferred taxation is recognised in respect of all temporary differences that have originated but not reversed at the financial reporting date, where transactions or events that result in an obligation to pay more taxation in the future or right to pay less taxation in the future have occurred at the financial reporting date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the temporary differences can be deducted. Deferred tax assets and liabilities are measured at the rates applicable to the legal jurisdictions in which they arise.

(h) Investments held at fair value through profit or lossIn accordance with IFRS 9, the Group classifies its investments at initial recognition as held at fair value through profit or loss and are managed and evaluated on a fair value basis in accordance with its investment strategy and business model.

All investments are measured initially and subsequently at fair value through profit or loss. Purchases of investments are recognised on a trade date basis. Sales of investments are recognised at the trade date of the disposal.

The fair value of the financial investments is based on their quoted bid price at the financial reporting date, without deduction for the estimated selling costs. This policy applies to all current and non-current asset investments held by the Group.

The fair value of the investment in the subsidiary is calculated based on the net asset value of the underlying balances within the subsidiary.

Changes in the value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Consolidated Statement of Comprehensive Income as ‘Net profits on investments held at fair value through profit of loss’. Also included within the heading are transaction costs in relation to the purchase or sale of investments.

For all financial instruments not traded in an active market, the fair value is determined by using various valuation techniques. Valuation techniques include market approach (i.e., using recent arm’s length market transactions adjusted as necessary and reference to the current market value of another instrument that is substantially the same) and the income approach (e.g., discounted cash flow analysis and option pricing models making use of available and supportable market data where possible).

(i) OptionsOptions are held at fair value through profit or loss based on the bid/offer prices of the options written to which the Group is exposed. The value of the option is subsequently marked-to-market to reflect the fair value through profit or loss of the option based on traded prices. Where the premium is taken to the revenue account, an appropriate amount is shown as capital return such that the total return reflects the overall change in the fair value of the option. When an option is exercised, the gain or loss is accounted for as a capital gain or loss. Any cost on closing out an option is transferred to the revenue account along with any remaining unamortised premium.

(j) Other receivables and other payablesOther receivables and other payables do not carry any interest and are short term in nature and are accordingly stated on an amortised cost basis.

(k) Dividends payableUnder IFRS, final dividends should not be accrued in the financial statements unless they have been approved by shareholders before the financial reporting date. Interim dividends should not be accrued in the financial statements unless they have been paid.

Dividends payable to equity shareholders are recognised in the Consolidated Statement of Changes in Equity.

(l) Foreign currency translationTransactions involving foreign currencies are converted at the rate ruling at the date of the transaction. Foreign currency monetary assets and liabilities and non-monetary assets held at fair value are translated into Sterling at the rate ruling on the financial reporting date. Foreign exchange differences arising on translation are recognised in the Consolidated Statement of Comprehensive Income as a revenue or capital item depending on the income or expense to which they relate. For investment transactions and investments held at the year end, denominated in a foreign currency, the resulting gains or losses are included in the profit/(loss) on investments held at fair value through profit or loss in the Consolidated Statement of Comprehensive Income.

(m) Cash and cash equivalentsCash comprises cash in hand and on demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value.

(n) Bank borrowingsBank overdrafts are recorded as the proceeds received. Finance charges are accounted for on an accruals basis in the Consolidated Statement of Comprehensive Income using the effective interest rate method and are added to the carrying amount of the instruments to the extent that they are not settled in the period in which they arise.

(o) Share repurchases and share reissuesShares repurchased and subsequently cancelled – share capital is reduced by the nominal value of the shares repurchased, and the capital redemption reserve is correspondingly increased in accordance with Section 733 of the Companies Act 2006. The full cost of the repurchase is charged to the special reserve.

Shares repurchased and held in treasury – the full cost of the repurchase is charged to the special reserve.

Where treasury shares are subsequently reissued:

· amounts received to the extent of the repurchase price are credited to the special reserve; and

· any surplus received in excess of the repurchase price is taken to the share premium account.

(p) Critical accounting estimates and judgementsThe Group makes estimates and assumptions concerning the future. The resulting accounting estimates and assumptions will, by definition, seldom equal the related actual results. Estimates and judgements are regularly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Directors do not believe that any accounting judgements or estimates have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year.

3. INCOME

During the year, the Group received option premium income in cash totalling £711,000 (2020: £1,238,000) for writing covered call and put options for the purposes of revenue generation.

Option premium income is amortised evenly over the life of the option contract and accordingly, during the period, option premiums of £742,000 (2020: £1,241,000) were amortised to revenue.

At 30 November 2021, there were no open positions (2020: 2) with an associated liability of £nil (2020: £11,000).

Dividends and interest received in cash during the year amounted to £4,951,000 and £411,000 (2020: £2,867,000 and £680,000).

No special dividends have been recognised in capital during the year (2020: £nil).

4. INVESTMENT MANAGEMENT FEE

Up to 16 March 2020, the investment management fee was levied at the rate of 0.95% of gross assets per annum on the first £250 million of the Company’s gross assets reducing to 0.90% thereafter. With effect from 17 March 2020, the investment management fee is levied at 0.80% of gross assets per annum.

Gross assets are calculated based on net assets before the deduction of the bank overdraft.

The fee is allocated 25% to the revenue account and 75% to the capital account of the Consolidated Statement of Comprehensive Income. There is no additional fee for company secretarial and administration services.

In addition, effective from 17 March 2020, the Company is entitled to a rebate from the investment management fee charged by the Manager in the event the Company’s ongoing charges exceed the cap of 1.25% per annum of average daily net assets. The amount of rebate accrued for the year ended 30 November 2021 amounted to £nil (2020: £66,000) and has been adjusted in the investment management fee charged by the Manager. The rebate is offset against management fees and is allocated between revenue and capital in the ratio of total ongoing charges (as defined in the Glossary contained within the Annual Report for the year ended 30 November 2021) allocated between revenue and capital during the year.

5. OTHER OPERATING EXPENSES

1 No non-audit services are provided by the Company’s auditors.

2 Further information on Directors’ emoluments can be found in the Directors’ Remuneration Report on page 62 of the Annual Report for the year ended 30 November 2021. The Company has no employees.

3 For the year ended 30 November 2021, expenses of £7,000 (2020: £6,000) were charged to the capital account of the Statement of Comprehensive Income. These relate to transaction costs charged by the Custodian on sale and purchase trades.

4 Alternative Performance Measure, see Glossary contained within the Annual Report for the year ended 30 November 2021.

Effective 17 March 2020, the Company’s ongoing charges, as defined in the Glossary contained within the Annual Report for the year ended 30 November 2021.(including the investment management fee), will be capped at 1.25% per annum of average daily net assets. The Company is entitled to a rebate from the investment management fee charged by the Manager in the event the Company’s ongoing charges exceed the cap. The rebate applies to ongoing charges incurred by the Company from 17 March 2020. No cap was in place for ongoing charges incurred up to 16 March 2020.

The overall cap on ongoing charges and any applicable rebate is calculated and accrued on a daily basis and is adjusted in the investment management fees charged up to 30 November every year. See note 4 below.

6. FINANCE COSTS

Finance costs for the Company are charged 25% to the revenue account and 75% to the capital account of the Consolidated Statement of Comprehensive Income. Subsidiary finance costs are charged 100% to the revenue account of the Consolidated Statement of Comprehensive Income.

7. DIVIDENDS

The total dividends payable in respect of the year ended 30 November 2021 which form the basis of Section 1158 of the Corporation Tax Act 2010 and Section 833 of the Companies Act 2006, and the amounts proposed, meet the relevant requirements as set out in this legislation.

1 Based on 116,218,357 ordinary shares in issue on 17 December 2021.

8. EARNINGS AND NET ASSET VALUE PER ORDINARY SHARETotal revenue, capital return and net asset value per share are shown below and have been calculated using the following:

There were no dilutive securities at the year end.

9. CALLED UP SHARE CAPITAL

During the year ended 30 November 2021, the Company bought back and transferred 51,992 (2020: 700,000) shares into treasury for a total consideration including costs of £48,000 (2020: £466,000).

The Company also reissued 2,800,000 (2020: nil) shares from treasury for a net consideration after costs of £2,875,000 (2020: £nil). Since the year end and up to 1 February 2022, the Company has re-issued a further 2,375,000 shares from treasury for consideration of £2,692,000.

Since the year end, no ordinary shares have been bought back.

10. RESERVES

The share premium and capital redemption reserve are not distributable profits 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 reserve of the Parent Company may be used as distributable profits for all purposes and, in particular, the repurchase by the Parent Company of its ordinary shares and for payments as dividends. In accordance with the Company’s Articles of Association, the special reserve, capital reserves and the revenue reserve may be distributed by way of dividend. The Parent Company’s capital gains of £436,000 (2020: capital losses of £24,822,000) comprise a loss on capital reserve arising on investments sold of £26,967,000 (2020: loss of £42,264,000), a gain on capital reserve arising on revaluation of listed investments of £23,599,000 (2020: gain of £13,647,000) and a revaluation gain on the investment in the subsidiary of £3,804,000 (2020: gain of £3,795,000). The capital reserve arising on the revaluation of listed investments of £23,599,000 (2020: £13,647,000) 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. The reserves of the subsidiary company are not distributable until distributed as a dividend to the Parent Company.

11. Valuation of financial instrumentsFinancial assets and financial liabilities are either carried in the Consolidated and Parent Company Statements 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 Group 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 Group are explained in the accounting policies note 2(h) to the Financial Statements below.

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

Level 2 – Valuation techniques using observable inputsThis 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.

Level 3 – Valuation techniques using significant unobservable inputsThis 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 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.

Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability. The determination of what constitutes ‘observable’ inputs requires significant judgement by the Investment Manager.

Over-the-counter derivative option contracts have been classified as Level 2 investments as their valuation has been based on market observable inputs represented by the underlying quoted securities to which these contracts expose the Group.

The investment in the subsidiary is classified within Level 3 since the subsidiary is not a listed entity. The fair value of the investment in the subsidiary is calculated based on the net asset value of the underlying balances within the subsidiary. Therefore, no sensitivity analysis has been presented.

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

A reconciliation of fair value measurement in Level 3 is set out below.

12. RELATED PARTY DISCLOSUREDirectors’ emolumentsAt the date of this report, the Board consists of five non-executive Directors, all of whom are considered to be independent of the Manager by the Board.

Disclosures of the Directors’ interests in the ordinary shares of the Company and fees and expenses payable to the Directors are set out in the Directors’ Remuneration Report contained within the Annual Report for the year ended 30 November 2021. At 30 November 2021, £10,000 (2020: £10,000) was outstanding in respect of Directors’ fees.

Significant holdingsThe following investors are:

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

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

As at 30 November 2021

As at 30 November 2020

13. TRANSACTIONS WITH THE INVESTMENT MANAGER AND AIFMBlackRock Fund Managers Limited (BFM) provides management and administrative services to the Group under a contract which is terminable on six months’ notice. BFM has (with the Group’s consent) delegated certain portfolio and risk services, and other ancillary services to BlackRock Investment Management (UK) Limited (BIM (UK)). Further details of the investment management contract are disclosed in the Directors’ Report contained within the Annual Report for the year ended 30 November 2021.

The investment management fee due for the year ended 30 November 2021 amounted to £940,000 (2020: £602,000). At the year end, £498,000 was outstanding in respect of the management fee (2020: £296,000).

Effective from 17 March 2020, the Company is entitled to a rebate from the investment management fee charged by the Manager in the event the Company’s ongoing charges exceeds the cap of 1.25% per annum of average daily net assets. The amount of rebate accrued to the 30 November 2021 amounted to £nil (2020: £66,000) and has been adjusted in the investment management fee charged by the Manager.

Further details in respect of the management fee and rebate are given in note 4 below.

In addition to the above services, BlackRock has provided the Group with marketing services. The total fees paid or payable for these services for the year ended 30 November 2021 amounted to £34,000 excluding VAT (2020: £32,000). Marketing fees of £22,000 excluding VAT (2020: £20,000) were outstanding as at the year end.

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

14. CONTINGENT LIABILITIESThere were no contingent liabilities at 30 November 2021 (2020: nil).

15. PUBLICATION OF NON-STATUTORY ACCOUNTS

The financial information contained in this announcement does not constitute statutory accounts as defined in the Companies Act 2006. The 2021 Annual Report and Financial Statements will be filed with the Registrar of Companies shortly.

The report of the auditor for the year ended 30 November 2021 contains no qualification or statement under Section 498(2) or (3) of the Companies Act 2006.

This announcement was approved by the Board of Directors on 3 February 2022.

16. ANNUAL REPORT

Copies of the Annual Report will be sent to members shortly and will be available from the registered office c/o The Company Secretary, BlackRock Energy and Resources Income Trust plc, 12 Throgmorton Avenue, London EC2N 2DL.

17. ANNUAL GENERAL MEETING

The Annual General Meeting of the Company will be held at 12 Throgmorton Avenue, London EC2N 2DL on Tuesday, 15 March 2022 at 10.30 am.

ENDS

For further information, please contact:

Melissa Gallagher, Managing Director, Investment Companies, BlackRock Investment Management (UK) LimitedTel: 020 7743 3893

Press enquiries:

Lansons Communications

Email: BlackRockInvestmentTrusts@lansons.com

Tel: 020 7490 8828

3 February 2022

12 Throgmorton AvenueLondon EC2N 2DL

END