Blackrock I&g Regulatory News (BRIG)

BlackRock Income and Growth Investment Trust Plc - Half-year Report

PR Newswire

London, June 19

BLACKROCK INCOME AND GROWTH INVESTMENT TRUST PLC

LEI: 5493003YBY59H9EJLJ16

HALF YEARLY FINANCIAL REPORT FOR THE SIX MONTHS ENDED 30 APRIL 2023

PERFORMANCE RECORD

1 The change in net assets reflects portfolio movements, the purchase of the Company’s own shares and dividends paid.2 Alternative Performance Measures, see Glossary in the Half Yearly Financial Report.3 Further details are given in the Glossary in the Half Yearly Financial Report.

CHAIRMAN’S STATEMENT

Dear Shareholder

OverviewI am pleased to report that our portfolio has performed well during the six months to 30 April 2023, delivering a strong positive return and outperforming our benchmark. It has also continued to provide shareholders with capital growth and income during what has been a particularly turbulent first half to the financial year.

The period was once again dominated by powerful macroeconomic drivers, as stubborn inflation and the threat of a US banking crisis (and contagion in the UK) acted to undermine already fragile market confidence, which had been briefly buoyed by the mild winter averting an energy crisis in Europe. Swift intervention by central banks did help stabilise markets. In the UK, double digit inflation and persistent wage growth data left the Bank of England with little option but to implement a 25 basis point rise in interest rates in May, raising the base rate to 4.5%, the highest level since 2008. The central bank’s own forecasts for the UK economy have improved, with a recession in 2023 now expected to be avoided. The UK market responded well to this revision of UK GDP growth and performed strongly towards the end of our half year. Sentiment was also aided by indications that the rate hiking cycle may be nearing its peak, stronger than anticipated consumer spending data, and China’s reopening, which was supportive of markets globally.

PerformanceAgainst this challenging backdrop, the Company’s net asset value per share (NAV) returned 14.8%, compared with the Company’s benchmark, the FTSE All-Share Index (total return), which returned 12.5%. The Company’s share price returned 14.4% (all percentages in Sterling with dividends reinvested).

Subsequent to the period end and as at 19 June 2023, the net asset value per share of the Company has decreased by 2.9% from 215.22 pence per share to 209.01 pence per share and the Company’s share price has fallen by 1.8% from 191.00 pence per share to 187.50 pence per share. The Company’s Benchmark Index has decreased by 2.8% over the same period.

Further information on the significant components of overall performance and the changes to portfolio composition are set out in the Investment Manager’s report below.

Revenue Profit and DividendsRevenue profit for the period was 3.44 pence per share (six months to 30 April 2022: 3.53 pence per share), a small decrease of 2.5% year-on-year. The Board is declaring an unchanged interim dividend of 2.60 pence per share which will be paid on 1 September 2023 to shareholders on the Company’s register at the close of business on 21 July 2023 (the ex-dividend date is 20 July 2023). I am pleased to report that our interim dividend is fully covered by the revenue generated during the six-month period to 30 April 2023.

Share CapitalThe Directors recognise the importance to investors that the Company’s share price should not trade at a significant discount to NAV, and therefore, in normal market conditions, may use the Company’s share buy back, sale of shares from treasury and share issuance powers to seek to ensure that the share price does not differ excessively from the underlying NAV. During the period the Company’s shares traded at an average discount of 8.8% and ended the period at 11.3%. At the close of business on 19 June 2023 the discount had narrowed to 10.3%.

A total of 222,118 ordinary shares were bought back and cancelled during the period at an average price of 181.43 pence.

GearingThe Company operates a flexible gearing policy which depends on prevailing conditions and the outlook for the market. Gearing is subject to a maximum level of 20% of net assets at the time of investment. As at 30 April 2023 the Company had net gearing of 5.3%. Gearing levels and sources of funding are reviewed regularly to ensure that the Company has access to the most competitive borrowing rates available to it. The Company has a one-year unsecured Sterling Revolving Credit Facility of £8,000,000 with The Bank of New York Mellon (International) Limited, of which £4,000,000 is currently drawn.

Shareholder CommunicationThe Board appreciates how important access to regular information is to our shareholders. To supplement our Company website, we now offer shareholders the ability to sign up to the Trust Matters newsletter which includes information on the Company as well as news, views and insights. Further information on how to sign up is included on the inside cover of the Half Yearly Financial Report.

OutlookAs you will read in their report which follows below, your portfolio managers expect economic and market volatility to remain a key theme as we move through the second half of the financial year. In this challenging environment, they favour companies that have resilience, robust balance sheets, strong cash flows and, importantly, pricing power. They also believe weaker competitors will flounder against a backdrop of demand weakness, wage inflation and margin pressure. By contrast, companies which possess these characteristics will prosper and consolidate their market position. Therefore, they remain focused on bottom-up stock selection and are excited about the increasing opportunities on offer.

Your Board remains fully supportive of our portfolio managers’ approach as they continue to deliver on the Company’s investment objective of providing growth in capital and income over the longer term.

GRAEME PROUDFOOTChairman21 June 2023

INVESTMENT MANAGER’S REPORT

PerformanceFor the six months since 31 October 2022, the Company’s NAV returned 14.8%, outperforming its Benchmark Index, the FTSE All-Share Index, which returned 12.5% over the same period.

Investment approachIn assembling the Company’s portfolio, we adopt a concentrated investment approach to ensure that our best ideas contribute significantly to returns. We believe that it is the role of the portfolio overall to generate an attractive and growing yield alongside capital growth rather than every individual company within the portfolio. This gives the Company increased flexibility to invest where returns are most attractive. This approach results in a portfolio which differs substantially from the Benchmark Index and in any individual year the returns will vary, sometimes significantly from those of the Benchmark Index. Over longer periods our objective is to achieve returns greater than the Benchmark Index, but with lower volatility. The foundation of the portfolio, approximately 70%, is in high free cash flow generating companies that can sustain cash generation and pay growing dividends whilst aiming to deliver a double-digit total return. Additionally, we look to identify and invest 20% of the portfolio in ‘growth’ companies that have significant barriers to entry and scalable business models that enable them to grow consistently. We also look for turnaround companies, for around 10% of the portfolio, which represent those companies that are out of favour with the market, facing temporary challenges with high yields or very low valuations, but with attractive recovery potential.

Market overviewMarkets remained focused on interest rate policy, driven as much by the quantum and duration of the moves as by the impact of the tightening in policy over the last 15 months. Just after central bankers had been quick to reaffirm their commitment to curbing inflation, markets were hit by fears of a banking crisis, caused not by asset quality problems but by liquidity concerns: the collapse of Silicon Valley Bank was triggered by a breath-takingly fast run on deposits, which also pressurised regional banks in the United States of America (US); Credit Suisse was, in turn, rescued by UBS with assistance from the Swiss government; and finally the collapse of First Republic Bank in April 2023. The spike in volatility led market participants to question how much further tightening was needed but also to wonder how much damage had already been done. Despite this, UK equities made progress over the reporting period, helped by lower commodity prices in Europe, China’s rapid reopening and further signs that the domestic economy may be under less pressure than feared.

There were few themes driving market performance although large-caps continued to outperform small-cap and mid-cap indices. Domestic cyclicals performed well: UK consumer spending habits proved more robust than expected, boosting retailers and leisure stocks. In addition, towards the end of the period, we saw a spike in mergers and acquisitions activity for UK companies, particularly in the mid and small-cap space, with growing interest in the attractive valuation discount seen across the UK market.

Contributors to and detractors from performanceThe portfolio outperformed its Benchmark Index during the period driven by strong stock specific factors. In Financial Services, 3i Group was the contributor to relative portfolio performance as the company delivered strong results with discount retailer Action performing very well over the Christmas period. This drove a significant increase in 3i Group’s NAV which positively surprised against expectations. Standard Chartered was another positive contributor to performance during the period. Buoyed by some bid speculation, the shares were supported by a mix of solid short-term results and greater optimism from management in achieving their return on equity targets.

Elsewhere, several of the more defensive holdings within the Company performed strongly including RELX, Reckitt, Tate & Lyle and Smith & Nephew where results highlighted improved trading conditions and/or continued strong cash generation. Amongst the smaller cap holdings within the portfolio, Games Workshop, a recent addition to the portfolio, performed strongly in December on the back of the announcement that the company formed an agreement in principle with Amazon to develop film/TV projects with their Warhammer franchise.

Pearson was a detractor from relative performance during the period; the company was a very strong performer in 2022 and the beginning of 2023 saw some consolidation in its share price, particularly after the announcement of the impact of generative Artificial Intelligence (AI) at US peer Chegg. Watches of Switzerland was another detractor from performance as the company’s share price fell on the back of their Q3 results. While the sales growth slowed down in Q3, this was predominantly driven by jewellery, which fell mainly as a result of the company’s own decision not to discount and to hold its price premium versus competition.

Moonpig, the online card and gifting platform, performed weakly as postal strikes during the holiday period caused customers to fear that their cards would not be delivered on time. EuroAPI, the European pharmaceutical manufacturer, cut 2022 earnings expectations due to an issue with documentation in their Budapest plant and disappointing volumes from a major customer.

Use of gearing has been fairly consistent during the period which has ranged between 3 to 8%.

TransactionsDuring the period we purchased Swiss pharmaceutical company, Roche Holding, following a period of underperformance. We believe there is a good opportunity to purchase a leading oncology franchise and research and development capability at a very attractive valuation and supported by a strong balance sheet. Similarly, we also purchased Admiral Group late in Q1 following a period of weakness in the shares. We are starting to see the motor insurance market stabilise following a period of volatility during COVID-19.

We funded these new holdings from sales in Equifax, Kone and Whitbread following strong recent performance. Whilst Kone and Equifax have been relatively recent additions, purchased in the second half of 2022, we have been pleasantly surprised by the early strong performance. Both share prices reached levels where we felt their prospects were well understood and consequently used these to fund purchases later. We also meaningfully reduced our position in British American Tobacco following its outperformance during 2022.

We also fully exited our remaining small position in Moonpig as we view the relative strength of the balance sheets and revenue opportunities at some of our other consumer facing holdings to be more attractive.

We added three new midcaps to the portfolio including Games Workshop, Howden Joinery, and Watches of Switzerland following significant share price underperformance due to a weakening consumer backdrop; we believe that these are advantaged franchises which, aided by strong balance sheets, cash generation and continued investment, will emerge from this downturn as stronger competitors and with enhanced return prospects.

OutlookInflation has consistently surprised in its depth and breadth, driven by resilient demand, supply chain constraints, and most importantly by rising wages in more recent data. Central banks across the developed world continue to unwind ten years of excess liquidity by tightening monetary policy, desperate to prevent the entrenchment of higher inflation expectations. Meanwhile, March saw the first signs of financial stress with the bankruptcy of Silicon Valley Bank and Signature Bank in the US serving to highlight the potential issues of the aggressive retrenchment of liquidity. Whilst the ramifications of this crisis remain unclear, it is likely that credit conditions and the availability of credit will continue to recede. This strengthens our belief that companies with robust balance sheets capable of funding their own growth will outperform. We are mindful of this and feel it is incredibly important to focus on companies with strong, competitive positions, at attractive valuations that can deliver in this environment.

The political and economic impact of the war in Ukraine has been significant in uniting Europe and its allies, whilst exacerbating the demand/supply imbalance in the oil and soft commodity markets. We are conscious of the impact this has on the cost of energy, and we continue to expect divergent regional monetary approaches with the US being somewhat more insulated from the impact of the conflict, than for example, Europe. We also see the potential for longer-term inflationary pressures from decarbonisation and deglobalisation, the latter as geopolitical tensions rise more broadly across the world.

We would expect broader demand weakness although the ‘scars’ of supply chain disruption are likely to support parts of industrial capital expenditure demand as companies seek to enhance the resilience of their supply chains. A notable feature of our conversations with a wide range of corporates has been the ease with which they have been able to pass on cost increases and protect or even expand margins during 2022 as evidenced by US corporate margins reaching 70-year highs. As we look ahead into the second half of 2023, we believe demand will weaken as the transitory inflationary pressures start to fade. This will mean that pricing conversations will become more challenging despite continued pressure from wage inflation which may prove more persistent. While this does not bode well for margins in aggregate, we believe we will continue to see greater differentiation as corporates’ pricing power will come under intense scrutiny.

The UK’s fiscal policy has somewhat diverged from the G7 as the present government attempts to create stability after the severe reaction from the “mini-budget”. The early signs of stability are welcome as financial market liquidity has increased and the outlook, whilst challenging, has improved. Although the UK stock market retains a majority of internationally weighted revenues, the domestic facing companies have continued to be impacted by this backdrop, notably financials, housebuilders and property companies. The valuation of the UK market remains highly supportive as Sterling weakness supports earnings of international companies, whilst UK companies are in many cases at COVID-19 or Brexit lows in share price or valuation terms. Although we anticipate further volatility ahead as earnings estimates moderate, we know that in the course of time, risk appetites will return, and opportunities emerge.

We continue to focus the portfolio on cash generative businesses with durable, competitive advantages boasting strong leadership as we believe these companies are best-placed to drive returns over the long term. We anticipate economic and market volatility will persist throughout the year and we are excited by the opportunities this will likely create by identifying those companies using this cycle to strengthen their long-term prospects as well as attractive turnaround situations.

ADAM AVIGDORI AND DAVID GOLDMANBLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED21 June 2023

TEN LARGEST INVESTMENTS

1 = AstraZeneca (2022: 1st)Sector: Pharmaceuticals & BiotechnologyMarket value: £3,574,000Percentage of portfolio: 7.5% (2022: 8.4%)

AstraZeneca is an Anglo-Swedish multinational pharmaceutical group with its headquarters in the UK. It is a science-led biopharmaceutical business with a portfolio of products for major disease areas including cancer, cardiovascular infection, neuroscience and respiration.

2 = Shell (2022: 2nd)Sector: Oil & Gas ProducersMarket value: £3,567,000Percentage of portfolio: 7.5% (2022: 8.4%)

Shell is a global oil and gas company. The company operates in both Upstream and Downstream industries. The Upstream division is engaged in searching for and recovering crude oil and natural gas, the liquefaction and transportation of gas. The Downstream division is engaged in manufacturing, distribution and marketing activities for oil products and chemicals.

3 = RELX (2022: 3rd)Sector: MediaMarket value: £2,499,000Percentage of portfolio: 5.3% (2022: 5.8%)

RELX is a global provider of professional information solutions that includes publication of scientific, medical, technical and legal journals. It also has the world’s leading exhibitions, conference and events business.

4 = Reckitt (2022: 4th)Sector: Household Goods & Home ConstructionMarket value: £2,380,000Percentage of portfolio: 5.0% (2022: 4.7%)

Reckitt is a global leader in consumer health, hygiene and household products. Its products are sold in 200 countries and its 19 most profitable brands are responsible for 70% of net revenues.

5 + 3i Group (2022: 8th)Sector: Financial ServicesMarket value: £1,918,000Percentage of portfolio: 4.0% (2022: 3.2%)

3i Group is a leading international investor focused on mid-market private equity and infrastructure.

6 = Rio Tinto (2022: 6th)Sector: MiningMarket value: £1,837,000Percentage of portfolio: 3.9% (2022: 4.0%)

Rio Tinto is a metals and mining group operating in approximately 36 countries around the world, producing iron ore, copper, diamonds, gold and uranium.

7 + Smith & Nephew (2022: 10th)Sector: Health Care Equipment & ServicesMarket value: £1,532,000Percentage of portfolio: 3.2% (2022: 2.9%)

Smith & Nephew develops and markets advanced medical devices. The company is involved in orthopaedics, endoscopy and advanced wound management. The company is in relatively economically defensive products with expected revenue growth from the sale of medical science devices with market leading trauma and sports medicine businesses which represent over 50% of revenues.

8 - Unilever (2022: 7th)Sector: Personal GoodsMarket value: £1,523,000Percentage of portfolio: 3.2% (2022: 3.3%)

The consumer staples business operating in food, home and personal care has strong positions in emerging markets, where long-term growth trends in various countries that currently generate the majority of revenues.

9 + Phoenix Group (2022: 13th)Sector: Life InsuranceMarket value: £1,446,000Percentage of portfolio: 3.1% (2022: 2.8%)

Phoenix Group is one of the largest providers of insurance services in the United Kingdom. The company offers a broad range of pensions and savings products to support people across all stages of the savings life cycle.

10 - Pearson (2022: 9th)Sector: MediaMarket value: £1,327,000Percentage of portfolio: 2.8% (2022: 3.2%)

The education business has been taken over by a new management team who have restricted the business and put focus on areas of growth including English language learning and virtual books.

All percentages reflect the value of the holding as a percentage of total investments as at 30 April 2023.Percentages in brackets represent the value of the holding as at 31 October 2022.Together, the ten largest investments represent 45.5% of total investments (ten largest investments as at 31 October 2022: 48.4%).

DISTRIBUTION OF INVESTMENTS AS AT 30 APRIL 2023

ANALYSIS OF PORTFOLIO BY SECTOR

Sources: BlackRock and Datastream. 

INVESTMENT SIZE

Source: BlackRock. 

INVESTMENTS AS AT 30 APRIL 2023

1 Non-UK listed investments.2 Company under liquidation.

All investments are in ordinary shares unless otherwise stated. The total number of investments held at 30 April 2023 was 47 (31 October 2022: 45).

As at 30 April 2023, the Company did not hold any equity interests comprising more than 3% of any company’s share capital.

INTERIM MANAGEMENT REPORT AND RESPONSIBILITY STATEMENT

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

PRINCIPAL RISKS AND UNCERTAINTIESThe principal risks faced by the Company can be divided into various areas as follows:

· Investment performance;· Income/dividend;· Gearing;· Legal & regulatory compliance;· Operational;· Political;· Market; and· Financial.

The Board reported on the principal risks and uncertainties faced by the Company in the Annual Report and Financial Statements for the year ended 31 October 2022. A detailed explanation can be found in the Strategic Report on pages 32 to 34 and in note 16 on pages 88 to 93 of the Annual Report and Financial Statements which are available on the website maintained by BlackRock at: www.blackrock.com/uk/brig.

Certain financial markets have been negatively impacted by the ongoing geopolitical tensions arising from Russia’s invasion of Ukraine and the impact of the subsequent range of sanctions, regulations and other measures which impaired normal trading in Russian securities. The Board and the Investment Manager continue to monitor investment performance in line with the Company’s investment objectives, and the operations of the Company and the publication of net asset values are continuing.

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

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

For this reason, they continue to adopt the going concern basis in preparing the financial statements. The Company has a portfolio of investments which are considered to be readily realisable and is able to meet all of its liabilities from its assets and income generated from these assets. Ongoing charges (calculated as a percentage of average daily net assets and based on the management fee and all other operating expenses, excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation, prior year expenses written back and certain non-recurring items) for the year ended 31 October 2022 were approximately 1.18%.

RELATED PARTY DISCLOSURE AND TRANSACTIONS WITH THE MANAGERBlackRock Fund Managers Limited (BFM) was appointed as the Company’s Alternative Investment Fund Manager (AIFM) with effect from 2 July 2014. BFM has, with the Company’s consent, delegated certain portfolio and risk management services, and other ancillary services, to BlackRock Investment Management (UK) Limited (BIM (UK)). Both BFM and BIM (UK) are regarded as related parties under the Listing Rules. Details of the management fee payable are set out in note 3 and note 11 below. The related party transactions with the Directors are set out in note 10 below.

DIRECTORS’ RESPONSIBILITY STATEMENTThe Disclosure Guidance and Transparency Rules of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Interim Management Report and Financial Statements.

The Directors confirm to the best of their knowledge that:

· the condensed set of financial statements contained within the Half Yearly Financial Report has been prepared in accordance with the applicable UK Accounting Standard FRS 104 ‘Interim Financial Reporting’; and

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

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

The Half Yearly Financial Report was approved by the Board on 21 June 2023 and the above responsibility statement was signed on its behalf by the Chairman.

GRAEME PROUDFOOTFOR AND ON BEHALF OF THE BOARD21 June 2023

INCOME STATEMENT FOR THE SIX MONTHS ENDED 30 APRIL 2023

The total columns of this statement represent the Company’s profit and loss account. The supplementary revenue and capital accounts are both prepared under guidance published by the Association of Investment Companies (AIC). All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period. All income is attributable to the equity holders of the Company.

The net profit/(loss) on ordinary activities for the period disclosed above represents the Company’s total comprehensive income/(loss).

STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 APRIL 2023

1 Final dividend paid in respect of the year ended 31 October 2022 of 4.70p per share, declared on 2 February 2023 and paid on 15 March 2023.2 Final dividend paid in respect of the year ended 31 October 2021 of 4.60p per share, declared on 13 January 2022 and paid on 17 March 2022.3 Interim dividend paid in respect of the six months ended 30 April 2022 of 2.60p per share, declared on 22 June 2022 and paid on 1 September 2022. Final dividend paid in respect of the year ended 31 October 2021 of 4.60p per share, declared on 13 January 2022 and paid on 17 March 2022.

For information on the Company’s distributable reserves, please refer to note 8 below.

BALANCE SHEET AS AT 30 APRIL 2023

STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 APRIL 2023

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

NOTES TO THE FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 APRIL 2023

1. PRINCIPAL ACTIVITY AND BASIS OF PREPARATIONThe 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 financial statements of the Company are prepared on a going concern basis in accordance with Financial Reporting Standard 104 Interim Financial Reporting (FRS 104) applicable in the United Kingdom and Republic of Ireland and the revised Statement of Recommended Practice – ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ (SORP) issued by the Association of Investment Companies (AIC) in October 2019 and updated in July 2022 and the provisions of the Companies Act 2006.

The accounting policies and estimation techniques applied for the condensed set of financial statements are as set out in the Company’s Annual Report and Financial Statements for the year ended 31 October 2022.

2. INCOME

Dividends and interest received in cash during the year amounted to £746,000 and £43,000 respectively (six months ended 30 April 2022: £725,000 and £2,000; year ended 31 October 2022: £1,838,000 and £23,000).

No special dividends have been recognised in capital (six months ended 30 April 2022: £nil; year ended 31 October 2022: £169,000).

3. INVESTMENT MANAGEMENT FEE

Under the terms of the investment management agreement, BFM is entitled to a fee of 0.6% per annum of the Company’s quarter end market capitalisation. The investment management fee is allocated 25% to the revenue account and 75% to the capital account. There is no additional fee for company secretarial and administration services.

4. OTHER OPERATING EXPENSES

1 No non-audit services were provided by the Company’s auditors in the six months ended 30 April 2023 (six months ended 30 April 2022: none; year ended 31 October 2022: none).2 Relates to other administration costs written back in the six months ended 30 April 2023 (six months ended 30 April 2022: none; year ended 31 October 2022: other administration costs).3 For the six months ended 30 April 2023, expenses of £2,000 (six months ended 30 April 2022: £3,000; year ended 31 October 2022: £6,000) were charged to the capital account of the Income Statement. These relate to transaction costs charged by the custodian on sale and purchase trades.

The transaction costs incurred on the acquisition of investments amounted to £30,000 for the six months ended 30 April 2023 (six months ended 30 April 2022: £42,000; year ended 31 October 2022: £75,000). Costs relating to the disposal of investments amounted to £3,000 for the six months ended 30 April 2023 (six months ended 30 April 2022: £6,000; year ended 31 October 2022: £9,000). All transaction costs have been included within capital reserves.

5. DIVIDENDThe Directors have declared an interim dividend of 2.60p per share for the period ended 30 April 2023 payable on 1 September 2023 to shareholders on the register on 21 July 2023. The total cost of the dividend based on 20,921,646 ordinary shares in issue at 19 June 2023 was £544,000 (30 April 2022: £551,000).

In accordance with FRS102, Section 32, Events After the End of the Reporting Period, the interim dividend payable on the ordinary shares has not been included as a liability in the financial statements, as interim dividends are only recognised when they have been paid.

6. EARNINGS/(LOSS) AND NET ASSET VALUE PER ORDINARY SHARERevenue, capital earnings/(loss) and net asset value per ordinary share are shown below and have been calculated using the following:

There were no dilutive securities at 30 April 2023 (30 April 2022: none; 31 October 2022: none).

7. CALLED UP SHARE CAPITAL

In the six months ended 30 April 2023, 222,118 ordinary shares (six months ended 30 April 2022: 198,206; year ended 31 October 2022: 226,928) were purchased and subsequently cancelled for a total cost including expenses of £403,000 (six months ended 30 April 2022: £364,000; year ended 31 October 2022: £416,000).

Since the period end and up to 15 June 2023, a further 41,542 ordinary shares have been bought back and cancelled for a total cost including expenses of £79,000.

8. RESERVESThe share premium account and capital redemption reserve are not distributable reserves under the Companies Act 2006. The Company’s share premium account was cancelled pursuant to shareholders’ approval of a special resolution at the Company’s Annual General Meeting in 2002 and Court approval on 24 January 2002. The share premium account which totalled £61,852,000 was transferred to a special reserve. This action was taken, in part, to ensure that the Company had sufficient distributable reserves.

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 may be used as distributable reserves for all purposes and, in particular, the repurchase by the Company of its ordinary shares and for payments as dividends. In accordance with the Company’s Articles of Association, the special reserve, capital reserve and revenue reserve may be distributed by way of dividend. The gain on the capital reserve arising on the revaluation of investments of £7,153,000 (six months ended 30 April 2022: gain of £4,735,000; year ended 31 October 2022: gain of £1,486,000) 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 the capital reserve (arising on investments sold) and the revenue reserve may not be entirely distributable if a loss occurred during the realisation of these investments.

9. FINANCIAL RISKS AND VALUATION OF FINANCIAL INSTRUMENTSThe Company’s investment activities expose it to the various types of risk which are associated with the financial instruments and markets in which it invests. The following information is not intended to be a comprehensive summary of all risks and shareholders should refer to the Alternative Investment Fund Managers’ Directive FUND 3.2.2R Disclosures which can be found at www.blackrock.com/uk/brig for a more detailed discussion of the risks inherent in investing in the Company.

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

The current environment of heightened geopolitical risk given the war in Ukraine has undermined investor confidence and market direction. In addition to the tragic and devastating events in Ukraine, the war has constricted supplies of key commodities, pushing prices up and creating a level of market uncertainty and volatility which is likely to persist for some time.

Valuation of financial instrumentsFinancial assets and financial liabilities are either carried in the Balance Sheet at their fair value (for investments) or at an amount which is a reasonable approximation of fair value (for other assets and liabilities such as due from brokers, dividends and interest receivable, due to brokers, accruals, cash and cash equivalents, bank overdrafts and bank loans). Section 34 of FRS 102 requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The valuation techniques used by the Company are explained in the accounting policies note on page 80 of the Annual Report and Financial Statements for the year ended 31 October 2022.

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 available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The Company does not adjust the quoted price for these instruments.

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

Level 3 – Valuation techniques using significant unobservable 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 also includes instruments that are valued based on quoted prices for similar instruments where significant entity determined adjustments or assumptions are required to reflect differences between the instruments and instruments for which there is no active market. The Investment Manager considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary and provided by independent sources that are actively involved in the relevant market.

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

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

Fair values of financial assets and financial liabilitiesFor exchange listed equity investments, the quoted price is the bid price. Substantially, all investments are valued based on unadjusted quoted market prices. Where such quoted prices are readily available in an active market, such prices are not required to be assessed or adjusted for any price related risks, including climate risk, in accordance with the fair value related requirements of the Company’s financial reporting framework.

The table below sets out fair value measurements using the FRS 102 fair value hierarchy.

The Company held one Level 3 security during the six months ended 30 April 2023 (six months ended 30 April 2022: one; year ended 31 October 2022: one).

The investment in Patisserie Holdings has been valued at £nil as the company is under liquidation.

There were no transfers between levels of financial assets and financial liabilities recorded at fair value during the six months ended 30 April 2023, six months ended 30 April 2022 and the year ended 31 October 2022.

10. RELATED PARTY DISCLOSUREDirectors’ emolumentsThe Board consists of four non-executive Directors, all of whom are considered to be independent of the Manager by the Board. None of the Directors has a service contract with the Company. With effect from 1 November 2022, the Chairman receives an annual fee of £31,750, the Audit Committee Chairman receives an annual fee of £26,000 and each of the other Directors receives an annual fee of £22,500.

At the period end and as at 15 June 2023 members of the Board held ordinary shares in the Company as set out below:

1 Including a non-beneficial interest of 655,550 ordinary shares.

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 April 2023

As at 30 April 2022

11. TRANSACTIONS WITH THE INVESTMENT MANAGER AND AIFMBlackRock Fund Managers Limited (BFM) provides management and administration services to the Company under a contract which is terminable on six months’ notice. BFM has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services, to BlackRock Investment Management (UK) Limited (BIM (UK)). Further details of the investment management contract are disclosed in the Directors’ Report on pages 43 and 44 in the Annual Report and Financial Statements for the year ended 31 October 2022.

The investment management fee is levied quarterly, based on 0.60% per annum of the Company’s market capitalisation. The investment management fee due for the six months ended 30 April 2023 amounted to £119,000 (six months ended 30 April 2022: £119,000; year ended 31 October 2022: £237,000). At the period end, £119,000 was outstanding in respect of the investment management fee (30 April 2022: £180,000; 31 October 2022: £118,000).

In addition to the above services, BIM (UK) provided the Company with marketing services. The total fees paid or payable for these services for the six months ended 30 April 2023 amounted to £7,000 including VAT (six months ended 30 April 2022: £7,000; year ended 31 October 2022: £13,000). Marketing fees of £18,000 including VAT were outstanding at 30 April 2023 (30 April 2022: £17,000; 31 October 2022: £11,000).

The Company holds an investment in the BlackRock Institutional Cash Series plc - Sterling Liquid Environmentally Aware Fund of £1,564,000 (30 April 2022: £3,635,000; 31 October 2022: £2,604,000) which has been presented in the financial statements as a cash equivalent. This is a fund managed by a company within the BlackRock Group.

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

12. CONTINGENT LIABILITIESThere were no contingent liabilities at 30 April 2023 (30 April 2022: none; 31 October 2022: none).

13. PUBLICATION OF NON STATUTORY ACCOUNTSThe financial information contained in this Half Yearly Financial Report does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006. The financial information for the six months ended 30 April 2023 and 30 April 2022 has not been audited.

The information for the year ended 31 October 2022 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies. The report of the auditor on those accounts contained no qualification or statement under Sections 498 (2) or (3) of the Companies Act 2006.

14. ANNUAL RESULTSThe Board expects to announce the annual results for the year ended 31 October 2023, in December 2023. Copies of the results announcement can be obtained from the Secretary on 020 7743 3000 or by email at cosec@blackrock.com. The Annual Report and Financial Statements should be available in December 2023, with the Annual General Meeting being held in March 2024.

BlackRock Investment Management (UK) Limited12 Throgmorton AvenueLondonEC2N 2DL

21 June 2023

ENDS

The Half Yearly Financial Report will also be available on the BlackRock website at http://www.blackrock.com/uk/brig. Neither the contents of the Manager’s website nor the contents of any website accessible from hyperlinks on the Manager’s website (or any other website) is incorporated into, or forms part of, this announcement.

For further information please contact:Melissa Gallagher, Managing Director Closed End Funds – Tel: 020 7743 3893Emma Phillips, Media & Communications, BlackRock Investment Management (UK) Limited – Tel: 020 7743 2922

Press enquires:

Ed Hooper, Lansons CommunicationsTel: 020 7294 3620E-mail: BlackRockInvestmentTrusts@lansons.com or EdH@lansons.com