Throgmorton Trust Regulatory News (THRG)

BlackRock Throgmorton Trust plc

(Legal Entity Identifier: 5493003B7ETS1JEDPF59)

Information disclosed in accordance with Article 5 Transparency Directive and DTR 4.1

Annual Results Announcement for the year ended 30 November 2023

Performance record

Annual performance for the ten years to 30 November 2023

Annual performance figures to 30 November change %, calculated in Sterling terms with dividends reinvested.

Sources: BlackRock and Datastream.

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

2 The Company’s Benchmark Index is the Numis Smaller Companies plus AIM (excluding Investment Companies) Index. With effect from 22 March 2018, the Numis Smaller Companies plus AIM (excluding Investment Companies) Index replaced the Numis Smaller Companies excluding AIM (excluding Investment Companies) Index as the Company’s Benchmark Index. From 1 December 2013 to 21 March 2018, the Company’s Benchmark Index was the Numis Smaller Companies excluding AIM (excluding Investment Companies) Index. Prior to 1 December 2013, the Company’s Benchmark Index was the Numis Smaller Companies plus AIM (excluding Investment Companies) Index. The performance of the Benchmark Indices during these periods has been blended to reflect these changes.

3 Alternative Performance Measures, see Glossary contained within the Annual Report and Accounts.

4 Further details are given in the Glossary contained within the Annual Report and Accounts.

Chairman’s statement

Financial year’s highlights

· NAV outperformed the Benchmark Index over one year by 3.7 percentage points

· Performance remains strong over the longer term; our NAV has outperformed the Benchmark Index by 17% over five years (share price by 29.0%) and by 72.5% over 10 years (share price by 95.8%)

· NAV underperformed the Benchmark Index over three years by 4.3%, and outperformed over five years by 17% and over 10 years by 72.5%

· Share price narrowed to a 3.6% discount to NAV at the year end and traded at an average discount of 5.2% to NAV during the financial year

· Final dividend declared of 11.45p per share (2022: 8.50p)

(All returns are in Sterling terms with dividends reinvested).

OVERVIEW 

I am pleased to report that the Company outperformed our benchmark index by 3.7% during the twelve months to 30 November 2023. Although it is disappointing that in absolute terms our Net Asset Value fell by 2.3% for the year under review, over the longer term, performance remains strong, with the Company’s NAV return outperforming the benchmark index by 17.0% over five years and by 72.4% over ten years. At the share price level, the outperformance was 29.0% and 95.8% over the same periods.

As you will read in the Investment Manager’s report which follows, our portfolio manager, Dan Whitestone, highlights that UK Smaller Company valuations are very low, both versus their own history and other asset classes. 2023 has once again been difficult to navigate, with significant market volatility and a widening gap between the fortunes of smaller and larger companies. However, given a macroeconomic backdrop of falling inflation, rising consumer confidence, and strong wage growth, these factors may well serve as a potential catalyst for a re-rating of the sector. Therefore, the outlook for our asset class may be brighter than many recognise.

Trading and earnings across our portfolio remain robust and the level of revenue produced by our portfolio has increased by 27.9% This has enabled the Board to increase our total dividends for the year by an impressive 32.9% year-on-year.

MARKET OVERVIEW In my Half-Yearly statement in July, I described how the first six months of our financial year were dominated by powerful geopolitical and macroeconomic drivers. Markets were focused on the path of inflation and interest rates, seemingly above all else and this theme continued through the second half of the financial year to 30 November 2023.

The rate of UK inflation, as measured by the Consumer Price Index, steadily reduced during the year, down from 10.7% at the start of our financial year to 3.9% as at 30 November 2023. This brought some welcome relief to UK consumers and corporates alike. The path of inflation had been driven by high energy and food prices and although these fell during the year, they remain far higher than in recent years. Ongoing structural issues in the UK labour market also kept wage demands high, somewhat offsetting the easing rate of food inflation and lower energy prices.

The Bank of England (BOE) continued its policy of monetary tightening throughout most of the year with the Monetary Policy Committee (MPC) voting to hold the base rate at 5.25% in September 2023. This is the highest level since February 2008 and ended a run of fourteen consecutive rate increases since December 2021. It was well-received by the equity markets. In the US, the Central Bank held the base rate of interest steady at 5.25% signalling interest rate cuts were likely in 2024. This saw almost all asset classes rise significantly in a year-end rally in response. In contrast the BOE was more hawkish, flagging that UK wage growth remained elevated and that the MPC will continue to consider the economic data before a rate cut was contemplated. This supports a ‘higher for longer’ narrative and more recently, UK data has been mixed with wage growth softening but with inflation above expectations in December at 4.0%, potentially pushing back expectations of an interest rate cut in early 2024.

Another feature of the year under review was the elevated geo-political risk, with the focus switching from the conflict in Ukraine to rising tensions in the Middle East. There is increasing concern around the inflationary impact of disruption to major shipping routes in the Red Sea and an escalation into a wider conflict in the region. Looking forward, there are also several significant elections in 2024, notably in the UK, US and Europe, with a range of outcomes, all of which could impact market volatility and sentiment.

For a second year running the UK equity market continues to look cheap on a range of valuation metrics and this gives our portfolio manager cause for genuine optimism for UK smaller companies. He notes that the trading environment is more benign, with falling inflation, strong employment data and wage growth out-pacing inflation for the first time in many years. Importantly, sales growth and earnings remain robust for many of the companies within our portfolio, and the revenue generated by our portfolio this year rose by an impressive 27.9%. This has enabled the Board to increase the total dividend paid by the Company by 32.9% versus the prior financial year. In addition, the UK economy has displayed notable resilience, with household balance sheets and corporate earnings in better shape than many anticipated. In 2023 the UK avoided a much-feared economic recession and is forecasting modest growth in 2024. A ‘soft landing’ – a slowdown in economic growth that avoids a recession – may still be possible, although UK GDP growth was 0.3% in November 2023. In any case, the current cycle of monetary policy tightening appears to have peaked, and markets are focusing on if and when interest rates will be cut; an event that may be the catalyst for a broader change in market sentiment towards UK Smaller Companies and, in particular, the high-quality growth companies in which we invest.

PERFORMANCEOver the twelve months to 30 November 2023, the Company’s NAV returned -2.3%, compared with a total return of -6.0% from the Company’s Benchmark Index, the Numis Smaller Companies plus AIM (excluding Investment Companies) Index, an outperformance of 3.7 percentage points. At the share price level, the return was -0.8% as the Company’s share rating narrowed from a discount of 5.0% at the start of the financial year to a discount of 3.6% at the year end.

The longer-term performance remains strong. The Company’s NAV return underperformed the Benchmark Index by 4.3% over three years, outperformed by 17.0% over five years and by 72.4% over ten years. The share price underperformed the Benchmark Index by 7.7% over three years, outperformed by 29.0% over five years and by 95.8% over ten years. (All percentages calculated in Sterling terms with dividends reinvested.)

As at close of business on 31 January 2024, the Company’s NAV had increased by 8.8%, compared to the Benchmark Index which increased by 5.4%. The share price over the same period increased by 6.0%. Further information on portfolio performance, positioning and the outlook for the forthcoming year can be found in the Investment Manager’s report below.

The Board and our Manager remain focused on achieving the Company’s objectives of providing shareholders with long-term capital growth and an attractive total return and remain confident in the investment approach and process. We thank shareholders for your loyalty and support.

PERFORMANCE FEE Following an outperformance versus the benchmark during the financial year, a performance fee accrual of £2,014,000 has been accrued. Our performance fee is calculated over a two-year rolling period and therefore no fee is payable to the Manager for the current financial year. Further information on management fees can be found in Note 4 to the financial statements below.

POLICY ON SHARE PRICE DISCOUNT/PREMIUMWe recognise that a widening of, and volatility in, the Company’s discount is viewed by some investors as a key disadvantage of investment trusts. The Board believes that the best way of addressing any discount volatility over the longer term is to generate good performance and to create demand for the Company’s shares in the secondary market through broadening awareness of the Company’s unique structure, strong investment team and robust investment process, and our long-term investment track record in an attractive sector that is difficult to navigate.

The Board considers several factors in determining whether the premium/discount to NAV (the share rating) at which the Company’s shares trade is excessive or otherwise. These may include but are not limited to: whether the share rating is commensurate with the current demand for UK Smaller Companies and whether the Company’s shares are trading in normal market conditions; the ongoing attractiveness of the investment proposition, in particular the strength of the portfolio management team and process; and the strong long-term performance delivered for shareholders, both in absolute and relative terms.

SHARE BUY BACK ACTIVITY During the year to 30 November 2023 the Company’s share rating ranged between a discount of 1.0% to 9.2% and ended the year at 3.6% (30 November 2022: discount of 5.0%). The 12-month average discount at 30 November 2023 was 5.2% (2022: average discount: 3.5%). During the financial year the Company bought back a total of 5,286,703 ordinary shares into treasury (2022: 2,015,000) for a total consideration of £29,807,000 (2022: £11,544,000). All shares were bought back at a discount to the prevailing NAV, were therefore accretive to existing shareholders, and were placed into treasury for future re-issue. The advantage of holding shares in treasury over cancelling them is that they remain listed. This means that where there is an opportunity to re-issue these shares, the Company does not have to pay additional fees for admission to trading as would be required with an issue of new shares. It is the Board’s policy that it will generally only take shares into treasury where it believes there is a reasonable likelihood of re-issue in the future.

Since 30 November 2023 and up to the latest practicable date of 31 January 2024, a further 580,669 shares have been bought back for a total consideration of £3.519.000. As at this date, the Company’s shares were trading at a discount of 6.1%. No ordinary shares were issued during the period.

The Board believes that the share buy back activity undertaken has been effective and has been in shareholders’ interests. Despite what has been a challenging and volatile year, it is pleasing that the Company’s share rating has been relatively stable and has traded within a fairly tight range for most of the year, and at a consistently tighter discount relative to the peer group average. As we navigate these more volatile and uncertain markets, your Board will continue to monitor the Company’s share rating and may deploy its powers to issue or buy back the Company’s shares where it believes that it is in shareholders’ long-term best interests to do so.

As it does each year, the Board will once again seek at the Company’s Annual General Meeting (AGM) to renew the authorities granted by shareholders to issue or buy back shares. We encourage shareholders to vote in favour of these resolutions which are described in more detail in the Director’s Report contained within the Annual Report and Accounts.

REVENUE RETURN AND DIVIDENDS The revenue return per share for the year amounted to 16.56 pence per share, compared with 12.95 pence per share for the previous year, an increase of 27.9%. The Board recognises that, although the Company’s objective is capital growth, shareholders value the dividends paid by the Company. The Directors are therefore pleased to declare a proposed final dividend of 11.45 pence per share for the year ended 30 November 2023 (2022: 8.50p). This, together with the interim dividend of 3.30 pence per share paid on 1 September 2023, gives a total dividend for the year of 14.75 pence per share, increasing the total dividend distributed to shareholders in the prior financial year by 32.9%. This dividend will be paid on 28 March 2024, subject to shareholder approval at the forthcoming AGM, to shareholders on the Company’s register on 23 February 2024.

BOARD COMPOSITION AND DIVERSITY The Board regularly considers its composition and that of its committees and has an ongoing succession plan in place designed to ensure that it retains an appropriate balance of skills, knowledge, experience, independence, and diversity that meets or exceeds relevant best practice and the requirements of the UK Corporate Governance Code, including guidance on tenure and the composition of the Board’s committees.

We are cognisant of the benefits of a diverse range of skills on the Board and the Company is compliant with the Parker Review recommendation that FTSE 350 companies have at least one director from an ethnically diverse background by 2024. The Board is also compliant with the recommendations of the FTSE Women Leaders Review. The review set targets for FTSE 350 companies which are designed to achieve boards with 40% female representation (previously 33%) and at least one woman in the role of Chair or Senior Independent Director on the board by the end of 2025. We have also disclosed data on the breakdown of the Board by gender and ethnicity. The disclosure can be found within the Annual Report and Accounts.

The Board is cognisant of the concept of “overboarding” and considers the time commitment required by the Directors’ other roles, taking into account their nature and complexity. The Board reviews this information annually, for each Director, including my own as Chairman of the Board, to ensure that all Directors have sufficient capacity to carry out their role effectively. Before recommending a Director for re-election, their independence, attendance record and ongoing commitment to the affairs of the Company is also considered. Further information on the Board’s assessment of Directors independence and other time commitments can be found in the Corporate Governance Statement contained within the Annual Report and Accounts.

BOARD PERFORMANCE EVALUATION As a constituent of the FTSE 350, and as recommended by the UK Corporate Governance Code, the Company undertook a comprehensive, externally facilitated, Board performance evaluation this financial year. The evaluation was carried out by a wholly independent third party, Stogdale St James Limited and included one-to-one interviews with the Board, representatives of the Manager and service providers, the completion of evaluation questionnaires and the observation of the Board and its interactions by the evaluator. A separate evaluation of my performance as Chairman was also undertaken by the independent evaluator, the results of which were considered by our Senior Independent Director and circulated to the Board. This process resulted in a small number of findings and recommendations that the Board will adopt, notwithstanding that the overall conclusion was very positive in terms of the effectiveness of the Board, its composition, and the skills, expertise and commitment of the Directors. We believe that the combination of our ongoing succession plan and structured search and selection process through which the Board identifies new appointments, coupled with the annual Board evaluation of their ongoing performance, allows the Board to confidently assert that its composition is appropriate for a Company of this size and complexity and that each Director is effectively discharging their role. Further information on the evaluation of the performance of the Board can be found within the Annual Report and Accounts.

Further details of the background and experience the Board of Directors can be found in their biographies contained within the Annual Report and Accounts. The Board’s policy on Board diversity and associated disclosures can be found in the Corporate Governance Statement within the Annual Report and Accounts.

OUR APPROACH TO ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) INTEGRATION Consideration of material ESG issues is built into our Manager’s investment process and climate risk is considered to be a key part of investment risk, an approach your Board supports. The style of our Investment Manager naturally steers away from companies with weak balance sheets and poor cash flow which is a common characteristic of the few resource stocks in the Benchmark Index. It should be noted that the Company does not have an explicit mandate for sustainable, ESG or impact-focused investment, nor has it adopted exclusionary screens. The Investment Manager’s integration of ESG factors into his analysis is, though, an important lens through which to identify long term winners, just as poor ESG outcomes provide a useful tool in establishing candidates for the short book.

Further information on the Manager's approach to responsible investing can be found within the Annual Report and Accounts.

ANNUAL GENERAL MEETING The Board is pleased to announce that the Company’s Annual General Meeting (AGM) will be held in person on Tuesday, 19 March 2024 at 12.00 p.m. at the offices of BlackRock at 12 Throgmorton Avenue, London, EC2N 2DL. Details of the business of the meeting are set out in the Notice of Annual General Meeting contained within the Annual Report and Accounts.

Prior to the formal business of the meeting, our Investment Manager will make a presentation to shareholders. This will be followed by a question and answer session. Shareholders who are unable to attend the meeting in person but who wish to follow the AGM proceedings can do so via a live webinar this year. Details on how to register, together with access details, will be available shortly on the Company’s website at: www.blackrock.com/uk/thrg or by contacting the Company Secretary at cosec@blackrock.com. It is not possible to attend, speak or vote via this medium and it is solely intended to provide shareholders with the ability to watch the proceedings.

Additionally, if you are unable to attend you can exercise your right to vote by proxy or appoint a proxy to attend in your place. Details of how to do this are included on the AGM Proxy Card provided to shareholders with the annual report. If you hold your shares through a platform or nominees, you will need to contact them and ask them to appoint you as a proxy in respect of your shares in order to attend, speak and vote at the AGM. Further information on the business of this year's AGM can be found in the Notice of the AGM contained within the Annual Report and Accounts.

SHAREHOLDER COMMUNICATION AND ENGAGEMENT We appreciate how important access to regular information is to our shareholders. To supplement our Company website, we offer shareholders the ability to sign up to the Trust Matters newsletter which includes information on the Company as well as news, views and insights on the investment trust market. Information on how to sign up is included on the inside front cover of the Annual Report and Accounts.

Following positive feedback and greater attendance and participation at the Company’s AGM last  year, I have once again sought to engage with shareholders who hold their shares through an intermediary or platform via the provisions of Section 793 of the Companies Act 2006. The Board encourages all shareholders to either attend the AGM or exercise your right to vote by proxy.

The Board is aware that certain execution only investment platforms are now providing shareholders with the ability to vote electronically. The Board encourages shareholders to take advantage of this functionality where it is available to you.

The Board takes its responsibilities very seriously and is committed to exercising the highest standard of corporate governance. It also regularly considers the views of its major shareholders, offering to meet with them annually, and seeks to engage with all shareholders where possible. Should you wish to contact me, you can do so via our Company Secretary whose details are set out within the Annual Report and Accounts.

OUTLOOKAs you will read in his report which follows, our portfolio manager is optimistic about the future. He highlights what he believes is a significant mis-pricing of UK Small Cap companies, evidenced by the disconnect between the growth in corporate sales and earnings and the valuations ascribed by the market. UK smaller companies are currently trading at valuations which look very cheap versus other asset classes, and compared with their historical averages. In addition, our portfolio highlights in his report the differential between the performance of UK small-cap and large cap equities, the widest since the Global Financial Crisis. With a gradually improving macroeconomic backdrop and several potential catalysts for a re-rating of the sector, not least a cut in interest rates, he believes the opportunity set presented by our asset class is highly compelling for the medium-term investor.

Our Investment Manager’s fundamental philosophy remains unchanged, with a continued focus on financially strong companies with innovative business models and differentiated offerings which are capable of delivering sustained growth over time. This approach has served the Company well over many years and the Board remains fully supportive of our Investment Manager and his approach.

CHRISTOPHER SAMUELChairman2 February 2024

INVESTMENT MANAGER’S REPORT FOR YEAR ENDED 30 NOVEMBER 2023

MARKET REVIEW AND OVERALL INVESTMENT PERFORMANCE Interest rate policy and inflation remained top of minds during the second half of the financial year, with markets heavily influenced on a month-by-month basis by the latest inflation figures and rhetoric from central banks around the world. Thankfully, inflation has been coming down throughout the year, and most recently we have seen a stark change in narrative from higher for longer to peak rates and imminent central bank pivot. This has not been a consistent narrative throughout the past six months, with spikes in volatility caused by concerns for the growth outlook for China, mixed economic data fuelling the “higher for longer” narrative, fears of the ‘inevitable’ hard recession, geopolitical conflict, and mixed earnings, to name a few. And whilst the most recent change in sentiment has provided a supportive backdrop for the Company, it does continue the trend of heightened volatility within markets.

PERFORMANCE REVIEW For the second half of 2023, the Company’s NAV outperformed the benchmark by +1.3%, falling by 2.4% in absolute terms versus our benchmark which fell by 3.7%. In terms of the underlying portfolio performance, the long book, before fees, lost 2.9% whilst the short book had a strong period generating 0.9% for the six months ended 30 November 2023 (for the full year, before fees, the long portfolio contributed -2.0% and the short portfolio contributed +0.4% respectively to NAV returns).

This takes the Company’s total return for the financial year of 2023 to -2.3%, and although disappointing to report a loss it should be noted that the Company outperformed its benchmark by +3.7% over this same period, indeed outperforming in both the first half and the second half of our financial year.

For the purposes of this performance review we think it more instructive to comment specifically on the second half to avoid repeating the detailed write up of the first half presented in our interim financial statements. More detail in respect of performance attribution is set out in the table in the glossary contained within the Annual Report and Accounts.

The second consecutive year of losses for our benchmark reflects the significant negative sentiment that clouds UK and small and medium sized companies in particular. This is reflected in the fund flow data which shows November 2023 marked the 28th consecutive month of outflows in UK small and mid-caps. It is my view that this pervasive selling pressure has resulted in a significant mispricing within UK small and mid-caps, evidenced by the low price-to-earnings ratio for the small and mid-cap universe (FTSE 250 10.5x and FTSE Small Cap 8.3x) but also the extent of relative underperformance versus the FTSE 100. To put this into context, the FTSE 250 has underperformed the FTSE 100 in 17 of the last 24 months, and now is the largest and longest period of relative underperformance on record, far exceeding the Great Financial Crisis.

However, despite the bearish views, persistently high inflation, a recession, and a collapse in corporate profitability, the second half of 2023 has given cause for more optimism reflecting falling inflation, strong employment and increasing consumer confidence. The underlying fundamentals (i.e. sales growth, margins, balance sheet strength, free cash generation) of many of the Company’s holdings remain robust and company updates on the whole have been supportive. Of course, in any given year there will be disappointments, and this year is no exception, but in aggregate, I think the earnings of the Company’s holdings and the broader small and mid-cap investment universe have proved far more resilient than many predicted.

Focusing on the biggest contributors and detractors for the second half, the largest contributor was Ergomed which announced a recommended cash offer from the Private Equity firm Permira at a 28% premium to the previous day’s closing price. Whilst helpful to this period's performance we are incredibly disappointed to lose another of our genuinely differentiated and exciting UK mid-cap growth companies which we have had the privilege of owning for many years. We congratulate Miro Reljanovic (Founder and CEO) for all he has delivered and wish him the best. However, in our view Ergomed is a great example of the inherent value within the broader UK mid-cap complex (and our long book!), where many predominantly international earners, with strong balance sheets continue to grow, yet trade on significant valuation discounts to their US listed peers.

The second biggest contributor was our short position in a UK listed software company. After a meteoric rise, fuelled by news flow about very large contract wins, the shares were suspended earlier this year upon the detection of a fraud. After an independent investigation, it transpired most of those contract wins did not exist and 90% of bookings were fake. Revenues, rather than growing, were actually falling. After coming within days of running out of cash, the company completed a restructuring and rescue fund raising in July. We closed out our short in the placing 96% below the suspension price.

The third biggest contributor was from our long position in Computacenter which has continued to trade well, reporting a 24% year-over-year increase in organic gross invoice income at their interims, reflecting strong end market dynamics (digital transformation, cyber security etc) and continued market share gains. Other notable contributors include Tatton Asset Management, Games Workshop, Baltic Classified Group, and Hill & Smith, all of which delivered successive positive updates throughout the period and ended with earnings higher than predicted at the start of the year.

Turning to the detractors, the biggest was from our long position in CVS Group, which fell sharply on the news that the Competition and Markets Authority (CMA) are launching an inquiry into how “veterinary services are bought and sold amid concerns that pet owners may not be getting a good deal or receiving the information needed to make good choices”. Whilst we have spoken to management at length and also have experience of CMA inquiries into other industries, due to the sensitivity of this we feel it imprudent to comment now. We still own this stock, which at the time of writing, accounts for around 2.5% of NAV.

The second largest detractor was WH Smith which despite reporting continued solid trading throughout the period, fell back either due to the lack of an upgrade to full-year guidance or just general aversion to UK mid-cap growth companies. WH Smith remains a top 10 holding at the time of writing. The third largest detractor was SigmaRoc which also continued to deliver solid trading results throughout the period, reporting like-for-like revenue growth of 13% and a double-digit profit increase, yet the shares languished on 7x current year's earnings.

PORTFOLIO POSITIONING AND OUTLOOK 2023 saw a continuation of many themes of uncertainty carried forward from 2022, and the market continued to grapple with the interplay between inflation, monetary and fiscal policy and corporate earnings. The overall positioning of the Company reflects our outlook which has not changed significantly over the last six months. As discussed in our interim report, my view remains that interest rates had peaked and inflation would fall markedly. As the year-on-year impact on inflation rolled over, the impending fall in utility bills would offer some meaningful shelter to those still to re-mortgage to a new higher priced fixed deal. Over a third of homeowners mortgage free, and a large percentage of the mortgage book having re-mortgaged earlier in 2023, there are many who will benefit from strong employment, falling utility costs and higher interest on cash. Indeed, many banks have upgraded their household cash flow forecasts through 2023 as a consequence and consumer confidence continues to remain robust. Generally speaking, financial conditions are not too stretched; corporates and consumers are reasonably well capitalised, and banks have plenty of capital. As such, the path of employment will dictate the consumer outlook, but we continue to expect the trough to be shallower than in previous downturns.

For UK domestic focused PLCs, 2024 will likely see growing dispersion in financial returns as those with strong market share stories (digital, trading down, new product verticals, etc) will outperform and grow despite a more challenging backdrop. Input costs have now reversed for many and so the attention will focus on top line and in particular underlying volume growth as price will become a far less significant lever to flex. The converging valuations of many UK consumer shares has been a source of immense frustration for us, with well-capitalised market share winners, with high gross margins trading on similar price to earnings ratios and free cash flow yields to their far inferior peer group. We hope 2024 will mark the year of more dispersion in valuations between winners and losers which should benefit this Company well.

Housebuilding and RMI (Repair, Maintenance and Improvement) has had a tough 2023, but I continue to believe the outlook is far better than it was in September 2022, despite valuations in a similar place. In recent weeks I have added to housebuilders as well as RMI related plays, as in my view valuations are close to trough on earnings that are also close to trough so the recovery potential in both earnings and multiple is substantial. With positioning so extreme, we have seen only in recent days and weeks what implications that can have on these types of shares as falling borrowing costs, a steadying housing market and strong employment have forced a reappraisal.

We retain a significant exposure to industrials and our approach remains selective. Though industrial activity moderated in 2023, there have been many cross currents and dispersion between companies and sub-sectors and geographies. Destocking has been a big theme in the sector, with supply chain issues initially leading to overordering, and then in turn overstocking (as supply chain issues resolved); this then led many businesses to destock, cutting orders and resulting in a slowdown in revenues. The stop-start nature of these supply chain issues throughout the year has impacted a range of geographies and sub-sectors differently, as they are all at different points in the cycle. We got some of these dynamics right and some wrong in 2023.

Within General Industrial we noticed that quite a few of our companies flagged a recent pick up in their book-to-bill ratios in November and December 2023. Perhaps there is some genuine emerging evidence that several have turned a corner and growth can accelerate through 2024. Reshoring in the US, as well as several Government programmes (Chips, IRA) continues to provide additional tailwinds of growth for quite a few US focused, but UK listed, small and mid-caps we have exposure to e.g. Hill & Smith.

There is much that can be debated about the economic outlook, but we think the valuation of UK small and mid-cap companies is compelling. It is therefore with some sadness, that the great de-equitization of UK public sector continues. Non-market participants are seemingly taking a very different view on the value of company equity and thereby their associated cash flows, and this is evidenced by i) corporate share buy-backs (the majority of our investments are buying back their equity), ii) Corporate M&A (e.g. Deutsche's cash-bid for Numis), and iii) Private Equity (e.g. Permira’s acquisition of Ergomed, and EQT's acquisition of Dechra Pharmaceuticals). These were 3 holdings of the Company we were very sorry to see depart, and in the case of Ergomed and Dechra are the loss of holdings this Company has owned for many years. Alas, we expect this is a trend that will continue; private equity continues to sit on near record levels of cash (we estimate circa US$438 billion in Europe) which they are keen to deploy. A challenge for us will be to ensure we don’t let the significant disconnect in valuations away from strong fundamentals and future cash flow growth enable others to realise the inherent value available in our home market, denying us of compelling future returns just for a cash bid today. My hope is that this focuses the market on the opportunities in front of us and catalyses a re-rating.

Looking ahead to 2024, market volatility is unlikely to abate, and 2024 will mark a significant year for Elections worldwide which may well inject further turbulence into the macro backdrop. However, there are reasons for optimism. We enter 2024 with inflation and mortgage rates falling, whilst productivity and factory construction and corporate profits are rising. Labour markets are showing signs of softness but remain robust, and with low levels of unemployment many are experiencing the benefits of real wage growth for the first time in years, which should in time lead to higher services PMIs. Inventory balances are low after a prolonged period of destocking and so our hope is that manufacturing PMIs turn upwards which will boost the outlook for growth. As for inflation, we believe pressure will ease this year with deflationary pressures gaining traction during the course of 2024. Oil and gas prices are low (at the time of writing) amidst concerns of oversupply which will continue to alleviate pressure on corporate input costs and consumer wallets. In the US, the indications over recent weeks are that the Fed is likely to hold rates (with a bias to cut). As we’ve seen in the last couple of months, we think this has the potential to catalyse a broadening out of market leadership away from some very narrow areas of outperformance, both in the US and the UK, which overall should be a net positive for our positioning. In summary, the picture we see is one of a gradual recovery, and in our view this is not reflected in valuations of UK small and medium sized companies which we think offer compelling value in both absolute and relative terms. Indeed, the Company now possesses many companies on single digit price to earnings ratios, with double digit Free Cash Flow yields, but unlike so many archetypical “value” sectors, have far superior growth prospects. As a result, the net market exposure of the Company is slowly increasing and is now around 106%, while the gross is c.114%.

DAN WHITESTONEBlackRock Investment Management (UK) Limited2 February 2024

PORTFOLIO OF INVESTMENTS

1 ▲ Breedon (2022: 12th)Construction & MaterialsMarket value: £18,919,000Share of net assets: 3.3% (2022: 2.4%)

Supplier of construction materials

2 ▲ Gamma Communications* (2022: 7th)Mobile TelecommunicationsMarket value: £17,506,000Share of net assets: 3.0% (2022: 2.8%)

Provider of communication services to UK businesses

3 ▼ Oxford Instruments (2022: 2nd)Electronic & Electrical EquipmentMarket value: £15,989,000Share of net assets: 2.8% (2022: 3.1%)

Designer and manufacturer of tools and systems for industry and research

4 ▲ Grafton Group (2022: 13th)Support ServicesMarket value: £15,915,000Share of net assets: 2.8% (2022: 2.1%)

Builders’ merchants in the UK, Ireland and Netherlands

5 ▲ YouGov* (2022: 11th)MediaMarket value: £15,642,000Share of net assets: 2.7% (2022: 2.4%)

Provider of survey data and specialist data analytics

6 ▼ 4imprint Group (2022: 3rd)MediaMarket value: £15,344,000Share of net assets: 2.7% (2022: 3.1%)

Supplier of promotional merchandise in the US

7 ▲ Rotork (2022: 23rd)Electronic & Electrical EquipmentMarket value: £14,498,000Share of net assets: 2.5% (2022: 1.6%)

Manufacturer of industrial flow equipment

8 ▲ WH Smith (2022: 9th)General RetailersMarket value: £14,285,000Share of net assets: 2.5% (2022: 2.6%)

Retailer of books, stationery, magazines, newspapers and confectionary

9 ▲ Computacenter (2022: 16th)Software & Computer ServicesMarket value: £13,978,0001Share of net assets: 2.4% (2022: 2.0%)

Computer services

10 ▼ CVS Group* (2022: 5th)General RetailersMarket value: £13,924,000Share of net assets: 2.4% (2022: 2.9%)

Operator of veterinary surgeries

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

1 Includes long derivative positions.

Percentages shown are the share of net assets.

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

Percentages in brackets represent the portfolio holding as at 30 November 2022. Arrows indicate the change in relative ranking of the position in the portfolio compared to its ranking as at 30 November 2022.

1 Includes long derivative positions

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

& Holdings listed on exchanges outside of the UK

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

Percentages shown are the share of net assets

At 30 November 2023, the Company held equity interests in six companies comprising more than 3% of a company’s share capital as follows: Tatton Asset Management (4.1%); Sigmaroc (3.7%); TT Electronics (3.4%); Luceco (3.1%); Eckoh (3.1%); and Mattioli Woods (3.0%).

FAIR VALUE AND GROSS MARKET EXPOSURE OF INVESTMENTS AS AT 30 NOVEMBER 2023

The Company uses gearing through the use of long and short derivative positions. Gross and Net Gearing as at 30 November 2023 were 115.2% and 107.6% respectively (2022: 109.3% and 104.3% respectively). Gross and Net Gearing are Alternative Performance Measures, see Glossary contained within the Annual Report and Accounts.

1 Fair value is determined as follows:

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

– The exposure to securities held through long derivative positions directly in the market would have amounted to £85,241,000 at the time of purchase, and subsequent movement in market prices have resulted in unrealised losses on the long derivative positions of £(1,120,000) resulting in the value of the total long derivative market exposure to the underlying securities decreasing to £84,121,000 as at 30 November 2023. If the long positions had been closed on 30 November 2023, this would have resulted in a loss of £(1,120,000) for the Company.

– The notional exposure of selling the securities gained via the short derivative positions would have been £(22,454,000) at the time of entering into the contract, and subsequent movement in market prices have resulted in unrealised gains on the short derivative positions of £368,000 resulting in the value of the total short derivative market exposure of these investments increasing to £(22,086,000) at 30 November 2023. If the short positions had been closed on 30 November 2023, this would have resulted in a gain of £368,000 for the Company.

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

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

DISTRIBUTION OF INVESTMENTS AS AT 30 NOVEMBER 2023

The above percentages are calculated on the net portfolio as at 30 November 2023. The net portfolio is calculated as long equity and derivative positions, less short derivative positions as at 30 November 2023.

Analysis of the portfolio

Market capitalisation as at 30 November 2023

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

Source: BlackRock

Position size as at 30 November 2023

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

Source: BlackRock.

Portfolio holdings within Key Benchmark Indices

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

(excluding Investment Companies) Index)

Source: BlackRock.

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

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

3 Holdings included within the Benchmark Index as at 30 November 2022 were 58.6% on a Gross Basis and 56.8% on a Net Basis.

STRAGETIC REPORT

The Directors present the Strategic Report of the Company for the year ended 30 November 2023.

PRINCIPAL ACTVITIES The Company is a public company limited by shares which carries on business as an investment trust and its principal activity is portfolio investment.

OBJECTIVE The Company’s objective is to provide shareholders with long-term capital growth and an attractive total return through investment primarily in UK smaller and mid-capitalisation companies traded on the London Stock Exchange.

STRATEGY, BUSINESS MODEL, INVESTMENT POLICY AND INVESTMENT PROCESS The Company invests in accordance with the objective given above. The Board is collectively responsible to shareholders for the long-term success of the Company and is its governing body. There is a clear division of responsibility between the Board and the Manager, BlackRock Fund Managers Limited (BFM). Matters for the Board include setting the Company’s strategy, including its investment objective and policy, setting limits on gearing (both bank borrowings and the effect of derivatives), capital structure, governance, and appointing and monitoring of performance of service providers, including the Manager.

The Company’s business model follows that of an externally managed investment trust; therefore the Company does not have any employees and outsources its activities to third party service providers, including the Manager who is the principal service provider.

The management of the investment portfolio and the administration of the Company have been contractually delegated to BFM. The Manager, operating under guidelines determined by the Board, has direct responsibility for the decisions relating to the day-to-day running of the Company and is accountable to the Board for the investment, financial and operating performance of the Company.

Other service providers include the Depositary and the Fund Accountant, The Bank of New York Mellon (International) Limited, and the Registrar, Computershare Investor Services PLC. Details of the contractual terms with third party service providers are set out in the Directors’ Report contained within the Annual Report and Accounts.

INVESTMENT POLICY The Company’s performance is measured against the Numis Smaller Companies plus AIM (excluding Investment Companies) Index (the Benchmark Index). The Investment Manager, BlackRock Investment Management (UK) Limited (BIM (UK)), may invest in companies outside the Benchmark Index without restriction, subject to the following limits.

The Company may hold up to 15% of its gross assets, at the time of acquisition, in securities of companies which are listed or traded on a stock exchange outside the UK.

In addition to the normal long only portfolio, the Company will likely hold a mixture of long and short contracts for difference (CFDs) and/or comparable equity derivatives that would result in a typical net market exposure of between 100% and 115%. In extremis, the Company could deploy the full 30% of permissible leverage into short CFDs and/or comparable equity derivatives, thereby reducing its overall net market exposure to 70%.

The Company may also invest up to 2.5% of its net assets (measured at the time of investment) in unquoted securities, including securities issued by companies incorporated outside the United Kingdom. However, the Company may invest more than 2.5%, but no more than 3.75%, of its net assets (both measured at the time of investment), in unquoted securities in circumstances where such investment is in an existing investee company and, in the Investment Manager’s opinion, a failure of the Company to make such investment would have a material adverse effect on the value of the Company’s investment in such investee company.

In addition, the Company is permitted to employ leverage up to 30% of net assets, which it does primarily through the use of CFDs and/or comparable equity derivatives, rather than bank borrowings, therefore enabling the Company to have a maximum net market exposure of 130%.

In normal circumstances the Company will likely hold a mixture of long and short CFDs and/or comparable equity derivatives that would result in a typical net market exposure of between 100% and 115%*.

Portfolio risk will be mitigated by investment in a diversified portfolio of holdings. No more than 5% of the Company’s gross assets, at the time of acquisition, may be invested in any one single holding, excluding holdings in cash or money market funds, where up to 10% of the Company’s gross assets may be held. The Company may also invest in collective investment vehicles. However, the Company will not invest more than 10% of its gross assets, at the time of the acquisition, in other listed closed-ended investment funds, unless such companies have a stated investment policy not to invest more than 15% of their gross assets in other listed closed-ended investment funds, in which case the limit is 15% of gross assets.

The Board’s policy is that net gearing, borrowings less cash, should not exceed 20% of gross assets. The Company expects to employ any leverage primarily through its use of CFDs and/or comparable equity derivatives.

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

INVESTMENT PROCESS A unique feature of the Company is that it has the ability to go both long and short up to approximately 30% of the Company’s net assets.

Notwithstanding recent positive returns from UK small and mid-capitalisation companies, while the sector has generated positive returns over the long term, there can be significant volatility. Such an environment provides an attractive opportunity to add value via both long and short positions which can exploit share price moves whether up or down. As the maximum short portfolio exposure through derivatives is 30% of net assets, the Company will at all times retain an exposure to the market, as shown in the chart contained within the Annual Report and Accounts. In the course of their research the investment management team comes across companies which they judge are likely to underperform; the ability to take short positions therefore enhances the opportunity to make money for shareholders. This is not possible in a conventional or long only portfolio.

When markets are expected to rise in the medium term, the long/short strategy is used to generate additional market exposure through ensuring that the long exposure exceeds the short exposure in a range between 0% to 15% of the net assets of the Company. Rising or ‘bull’ markets have historically (in the UK) persisted for longer than falling or ‘bear’ markets. A typical net market exposure might therefore be between 100% and 115%. This is lower than the ‘gross exposure’, which is the combination of the long equity positions, plus the net of long and short derivative positions expressed as a percentage of net assets.

ESG INTEGRATION The Manager defines Environmental, Social and Governance (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. This statement does not imply that the Company has an ESG-aligned investment objective, but rather describes how ESG information is considered as part of the overall investment process.

Of course, ESG information is not the sole consideration for investment decisions; instead, the Manager assesses a variety of economic and financial indicators which include ESG considerations in combination with other information in the research phase of the investment process to make investment decisions appropriate to their client’s objectives. This may also include relevant third party insight, as well as internal engagement commentary and input from BlackRock Investment Stewardship (BIS) on governance issues. The Investment Manager conducts regular portfolio reviews with the BlackRock Risk and Quantitative Analysis (RQA) team. These reviews include discussion of the portfolio's exposure to material ESG risks, as well as exposure to sustainability-related business involvements, climate-related metrics, traditional financial risks and other factors.

The Manager’s approach to ESG integration is to broaden the total amount of information its investment professionals consider in order to improve investment analysis, seeking to meet or exceed economic return and financial risk targets. ESG factors can be useful and relevant indicators for investment purposes and can help portfolio managers with their decision-making through identifying potentially negative events or corporate behaviour. The Investment Manager works closely with BIS to assess the governance quality of companies and understand any potential issues, risks or opportunities.

The Manager’s research team monitors differing levels of risk throughout the process and believes that avoiding major downside events can generate significant outperformance over the long-term. Inputs from the RQA team are an integral part of the investment process. The RQA team analyse market and portfolio risk factors including stress tests, correlations, factor returns, cross-sectional volatility and attributions. The Manager’s evaluation procedures and financial analysis of the companies within the portfolio also take into account environmental, social and governance matters and other business issues.

The Company does not meet the criteria for Article 8 or 9 products under the EU Sustainable Finance Disclosure Regulation (SFDR) and the investments underlying this financial product do not take into account the EU criteria for environmentally sustainable economic activities. The Investment Manager has access to a range of data sources, including principal adverse indicator (PAI) data, when making decisions on the selection of investments. However, whilst BlackRock considers ESG risks for all portfolios and these risks may coincide with environmental or social themes associated with the PAIs, the Company does not commit to considering PAIs in driving the selection of its investments.

Further information on the Manager’s approach to ESG and sustainability can be found in the report on Responsible Investing contained within the Annual Report and Accounts.

* The AIC measures gearing at gross level, rather than net market exposure level (i.e. gearing is calculated as borrowings + long CFDs and/or comparable equity derivatives + short CFDs and/or comparable equity derivatives) and therefore the published gearing figures will be higher than the typical net market exposure of between 100% and 115%.

PERFORMANCE 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 DIVIDENDS The results for the Company are set out in the Statement of Comprehensive Income below. The total loss for the year, after taxation, was £15,749,000 (2022: a loss of £295,888,000) of which the revenue return amounted to £16,510,000 (2022: £13,257,000) and a capital loss of £32,259,000 (2022: loss of £309,145,000).

Details of the dividends declared in respect of the year are set out in the Chairman’s Statement above.

KEY PERFORMANCE INDICATORS At each Board meeting, the Directors consider a number of performance measures to assess the Company’s success in achieving its objectives. The key performance indicators (KPIs) used to measure the progress and performance of the Company over time, and which are comparable to those reported by other investment trusts, are set out in the table below. 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 and Accounts.

The Board monitors the KPIs at each meeting. Additionally, it regularly reviews a number of indices and ratios to understand the impact on the Company’s relative performance of the various components such as asset allocation and stock selection. This includes an assessment of the Company’s performance and ongoing charges against its peer group of investment trusts with similar investment objectives.

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

2 Alternative Performance Measures, see Glossary contained within the Annual Report and Accounts.

3 The Company's Benchmark Index is the Numis Smaller Companies plus AIM (excluding Investment Companies) Index.

4 Ongoing charges represent the management fee and all other operating expenses, excluding the performance fee, finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation, prior year expenses written back and certain non-recurring items as a % of average daily net assets.

5 Ongoing charges represent the management fee, performance 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 as a % of average daily net assets. Further information on the management fees paid by the Company can be found in Note 4 to the financial statements below.

SHARE PRICE DISCOUNT/PREMIUM The Directors recognise that it is in the long-term interests of shareholders that the Company’s shares do not trade at an excessive discount or premium to their prevailing NAV for any material length of time. In the year under review the discount/premium to NAV of the ordinary shares on a cum income basis has ranged between a discount of 9.2% and 1.0%, with the average being a discount of 5.2%. The shares ended the year at a discount of 3.6% on a cum income basis. As at 31 January  2024 the discount was 6.1%.

As it does each year, the Board will also be seeking to renew the authority from shareholders at the AGM to issue new shares (or to reissue shares held in treasury) and to buy back shares. Further information on these powers and the Board's policy in this respect can also be found in the Chairman’s Statement above.

PRINCIPAL RISKS As required by the UK Code of Corporate Governance, the Board has in place a robust, ongoing process to identify, assess and monitor the principal and emerging risks of the Company, including those that they consider would threaten its business model, future performance, solvency or liquidity. Emerging risks are considered by the Board as they come into view and are incorporated into the Company’s risk register where applicable. 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.

A core element of this process is the Company’s risk register, which identifies the risks facing the Company and the likelihood and potential impact of each risk, together with the controls established for mitigation. A residual risk rating is calculated for each risk, which allows the effect of any mitigating procedures to be reflected in the register. The current risk register includes a range of risks spread between investment performance risk, income/dividend risk, legal & regulatory risk, counterparty risk, operational risk, market risk, political risk and financial risk.

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 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, the Audit Committee periodically receives presentations from BlackRock’s Internal Audit and Risk & Quantitative Analysis teams. Where produced, the Audit Committee also reviews summaries of the Service Organisation Control (SOC1) reports from the Company’s service providers.

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 below.

INVESTMENT PERFORMANCE

Principal riskThe Board is responsible for:

· setting the investment policy to fulfil the Company’s objectives; and

· monitoring the performance of the Company’s Investment Manager and the strategy adopted.

An inappropriate policy or strategy may lead to:

· poor performance compared to the Company’s Benchmark Index, peer group or shareholder expectations;

· a widening discount to NAV;

· a reduction or permanent loss of capital; and

· dissatisfied shareholders and reputational damage.

Mitigation/ControlTo manage these risks the Board:

· regularly reviews the Company’s investment mandate and long-term strategy;

· has set, and regularly reviews, the investment guidelines and has put in place appropriate limits on levels of gearing and the use of derivatives;

· receives from the Investment Manager a regular explanation of stock selection decisions, portfolio gearing and any changes in gearing and the rationale for the composition of the investment portfolio;

· receives from the Investment Manager regular reporting on the portfolio’s exposure through derivatives, including the extent to which the portfolio is geared in this manner and the value of any short positions;

· monitors the maintenance of an adequate spread of investments in order to minimise the risks associated with particular sectors, based on the diversification requirements inherent in the Company’s investment policy; and

· monitors the share price discount or premium to NAV.

MARKET RISK

Principal riskMarket risk arises from changes to the prices of the Company’s investments. It represents the potential loss the Company might suffer through holding investments and derivatives. Market risk includes the potential impact of events which are outside the scope of the Company’s control, such as Russia's invasion of Ukraine, the hostilities in the Middle East, and the impacts of climate change.

Mitigation/ControlThe Board carefully considers the diversification of the portfolio, asset allocation, stock selection, unquoted investments and levels of gearing on a regular basis and has set investment restrictions and guidelines which are monitored and reported on by the Investment Manager. The Board monitors the implementation and results of the investment process with the Investment Manager, and key market risk factors are discussed.

The Board also recognises the benefits of a closed-end fund structure in extremely volatile markets such as those experienced with the COVID-19 pandemic and more recently the impact of Russia’s invasion of Ukraine and the potential impact of the hostilities in the Middle East on the global economy. Unlike open-ended counterparts, closed-end funds are not obliged to sell down portfolio holdings at low valuations to meet liquidity requirements for redemptions. During times of elevated volatility and market stress, the ability of a closed-end fund structure to remain invested for the long-term enables the Investment Manager to adhere to disciplined fundamental analysis from a bottom-up perspective and be ready to respond to dislocations in the market as opportunities present themselves.

INCOME/DIVIDEND RISK

Principal riskThe amount of dividends and future dividend growth will depend on the performance of the Company’s underlying portfolio holdings. Changes in the composition of the portfolio and any change in the tax treatment of the dividends or interest received by the Company may reduce the level of dividends received by shareholders.

Mitigation/ControlThe Board monitors this risk through the receipt of detailed income forecasts and considers the level of income at each meeting. The Company also has a revenue reserve and powers to pay dividends from capital which could potentially be used to support the Company’s dividend if required.

FINANCIAL RISK

Principal riskThe Company’s investment activities expose it to a variety of financial risks that include market risk, foreign currency risk and interest rate risk. At 30 November 2023, the Company had approximately 29.5% of its gross asset value invested in AIM traded equity securities and 4.5% of its gross assets in international markets, and, by the very nature of its investment objective, largely invests in smaller companies. Liquidity in these securities can from time to time become constrained, making these investments difficult to realise at or near published prices.

Mitigation/ControlThe Company is not materially exposed to foreign currency and interest rate risk. For mitigation of market risk, see above. There are also risks linked to the Company’s use of derivative transactions including long and short investment positions. Details are disclosed in note 11 of the Annual Report and Accounts, together with a summary of the policies for managing and controlling these risks in note 16 of the Annual Report and Accounts.

OPERATIONAL RISK

Principal riskIn common with most other investment trust companies, the Company has no employees. The Company therefore relies upon the services provided by BlackRock (the Manager and AIFM) and The Bank of New York Mellon (International) Limited (the Depositary and Fund Accountant) who maintain the Company’s accounting records.

Failure by any service provider to carry out its obligations to the Company could have a material adverse effect on the Company’s performance. Disruption to the accounting, payment systems or custody records, as a result of a cyber-attack or otherwise, could impact the monitoring and reporting of the Company’s financial position.

The security of the Company’s assets, dealing procedures, accounting records and maintenance of regulatory and legal requirements, depend on the effective operation of these systems.

Mitigation/ControlThe Board reviews the overall performance of the Manager, Investment Manager and all other third party service providers and compliance with the investment management agreement on a regular basis.

The Fund Accountant’s and the Manager’s internal control processes are regularly tested and monitored throughout the year and are evidenced through their Service Organisation Control (SOC 1) reports, which are subject to review by an Independent Service Assurance Auditor. The SOC 1 reports provide assurance in respect of the effective operation of internal controls.

The Company’s financial instruments held in custody are subject to a strict liability regime and in the event of a loss of such financial instruments held in custody, the Depositary must return assets of an identical type or the corresponding amount, unless able to demonstrate that the loss was a result of an event beyond its reasonable control.

The Board considers succession arrangements for key employees of the Manager and the Board also considers the business continuity arrangements of the Company’s key service providers on an ongoing basis and reviews these as part of its review of the Company’s risk register. In respect of the unprecedented risks posed by the COVID-19 pandemic in terms of the ability of service providers to function effectively, the Board has received reports from key service providers setting out the measures that they have put in place to address the crisis, in addition to their existing business continuity framework. Having considered these arrangements and reviewed service levels since the crisis has evolved, the Board is confident that a good level of service has and will be maintained.

The Board also receives regular updates from BlackRock’s internal audit function and the Company’s Audit Committee Chairman attends an annual briefing from the head of BlackRock’s internal audit function once a year. This is supplemented by a written report which describes the progress made against the current internal audit plan, any issues identified and the plan for the forthcoming year.

LEGAL AND REGULATORY RISK

Principal riskThe Company has been approved by HM Revenue & Customs as an investment trust, subject to continuing to meet the relevant eligibility conditions, and operates as an investment trust in accordance with Chapter 4 of Part 24 of the Corporation Tax Act 2010. As such, the Company is exempt from capital gains tax on the profits realised from the sale of its investments.

Any breach of the relevant eligibility conditions could lead to the Company losing its investment trust status and being subject to corporation tax on capital gains realised within the Company’s portfolio. In such event the investment returns of the Company may be adversely affected. Any serious breach could result in the Company and/or the Directors being fined or the subject of criminal proceedings or the suspension of the Company’s shares which would in turn lead to a breach of the Corporation Tax Act 2010.

Mitigation/ControlThe Investment Manager monitors investment movements, the level of forecast income and expenditure and the amount of proposed dividends, if any, to ensure that the provisions of Chapter 4 of Part 24 of the Corporation Tax Act 2010 are not breached, and the results are reported to the Board at each meeting.

Following authorisation under the Alternative Investment Fund Managers’ Directive as retained and onshored in the UK (AIFMD), the Company and its appointed Alternative Investment Fund Manager (AIFM) are subject to the risks that the requirements of the AIFMD are not correctly complied with. The Board and the AIFM also monitor changes in government policy and legislation which may have an impact on the Company.

Compliance with the accounting standards applicable to quoted companies and those applicable to investment trusts are also regularly monitored to ensure compliance.

RISK OF REGULATORY CHANGE

Principal riskAmongst other relevant laws and regulations, the Company is required to comply with the provisions of the Companies Act 2006, the Alternative Investment Fund Managers’ Directive (as retained and onshored in the UK), the Market Abuse Regulation (also as retained and onshored in the UK), the UK Listing Rules and the Disclosure Guidance and Transparency Rules.

Mitigation/ControlThe Company Secretary and the Company’s professional advisers monitor developments in relevant laws and regulations and provide regular reports to the Board in respect of the Company’s compliance.

The Market Abuse Regulation came into force across the EU on 3 July 2016 and has been retained and onshored in the UK following Brexit. The Board has taken steps to ensure that individual Directors (and their Persons Closely Associated) are aware of their obligations under the regulation and has updated internal processes, where necessary, to ensure the risk of non-compliance is effectively mitigated.

COUNTERPARTY

Principal riskThe potential loss that the Company could incur if a counterparty is unable (or unwilling) to perform on its commitments. The Company’s investment policy also permits the use of both exchange-traded and over-the-counter derivatives (including contracts for difference).

Mitigation/ControlDue diligence is undertaken before contracts are entered into and exposures are diversified across a number of counterparties. The Board reviews the controls put in place by the Investment Manager to monitor and to minimise counterparty exposure, which include intra-day monitoring of exposures to ensure that these are within set limits.

The Depositary is liable for restitution for the loss of financial instruments held in custody, unless it is able to demonstrate that the loss was due to an event beyond its reasonable control.

VIABILITY STATEMENT The Directors have assessed the prospects of the Company over a longer period than the 12 months referred to by the “Going Concern” guidelines.

The Board conducted this review for the period up to the AGM in 2029, being a five-year period from the date that this Annual Report will be approved by shareholders. This is generally the investment holding period investors consider while investing in the smaller companies’ sector. The Board is cognisant of the uncertainty surrounding the potential duration of the Russia/Ukraine conflict and the hostilities in the Middle East, their impact on the global economy, and the prospects for the Company’s portfolio holdings. In making its assessment the Board has also considered the following factors:

· the Company’s principal risks as set out above;

· the impact of a significant fall in UK equity markets on the value of the Company’s investment portfolio in the light of the heightened volatility resulting from the ongoing Russia/Ukraine conflict, the hostilities in the Middle East, and any potential impact on the global economy, and the path of inflation and interest rates in the UK;

· the ongoing relevance of the Company’s investment objective; and

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

The Directors have also considered the Company’s revenue and expense forecasts and the fact that expenses and liabilities are relatively stable. The Company also has a portfolio of investments which provides a level of cash receipts in the form of dividends and which are considered to be relatively realisable if required.

The Directors reviewed the assumptions and considerations underpinning the Company’s existing going concern assertion (please see the disclosure in the Directors’ Report contained within the Annual Report and Accounts), which are based on:

· processes for monitoring costs;

· key financial ratios;

· evaluation of risk management and controls;

· compliance with the investment objective;

· the Company’s ability to meet its liabilities as they fall due;

· portfolio risk profile;

· share price discount to NAV;

· gearing;

· counterparty exposure and liquidity risk;

· 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; and

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

The Company has a relatively liquid portfolio and largely fixed overheads (excluding any applicable performance fees) which comprise a very small percentage of net assets 0.54% excluding performance fees, 0.87% including performance fees in 2023. The effective performance fee cap in the event that the NAV return exceeds the Benchmark Index return over the performance period is circa 0.90% of the average gross assets over the two years and the applicable percentage to be applied to the outperformance of the NAV total return over the Benchmark Index return is 15%. In addition, the maximum cap on total management and performance fees is 1.25% of average gross assets (measured over a rolling two-year period). Therefore, the Board has concluded that the Company would be able to meet its ongoing operating costs as they fall due.

The Directors have also considered the impact of potential changes in law, regulation and taxation and the matter of foreign exchange risk. They have determined that although there are a number of potential risks associated with the legal, fiscal and regulatory landscape they do not believe that this represents a material threat to the Company’s strategy and business model, nor do they believe that the Investment Manager will be materially impeded in achieving the Company’s investment objective.

Based on the results of their analysis, the Directors have 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 THROGMORTON TRUST PLC

The Companies (Miscellaneous Reporting) Regulations 2018 require directors to explain more fully 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 and the key service providers (being the Manager and Investment Manager, the Custodian, Depositary, Registrar and Broker). The reasons for this determination, and the Board’s overarching approach to engagement, are set out in the table below:

STAKEHOLDERS

ShareholdersContinued shareholder support and engagement are critical to the continued existence of the Company and the successful delivery of its long-term strategy. The Board is focused on fostering good working relationships with shareholders and on understanding the views of shareholders in order to incorporate them into the Board’s strategy and objectives in delivering long-term growth and income.

In turn, portfolio holdings are ultimately shareholders’ assets, and the Board recognises the importance of good stewardship and communication with investee companies in meeting the Company’s investment objective and strategy.

Manager and Investment ManagerThe Board’s main working relationship is with the Manager, who is responsible for the Company’s portfolio management (including asset allocation, stock and sector selection) and risk management, as well as ancillary functions such as administration, secretarial, accounting and marketing services. The Manager has sub-delegated portfolio management to the Investment Manager. Successful management of shareholders’ assets by the Investment Manager is critical for the Company to successfully deliver its investment strategy and meet its objective. The Company is also reliant on the Manager as AIFM to provide support in meeting relevant regulatory obligations under the AIFMD and other relevant legislation.

Other key service providersIn order for the Company to function as an investment trust with a listing on the premium segment of the official list of the FCA and trade on the London Stock Exchange’s (LSE) main market for listed securities, the Board relies on a diverse range of advisors for support in meeting relevant obligations and safeguarding the Company’s assets. For this reason, the Board considers the Company’s Custodian, Depositary, Registrar and Broker to be stakeholders. The Board, either directly or through the Manager, maintains regular contact with its key external providers and receives regular reporting from them through the Board and Committee meetings, as well as outside of the regular meeting cycle.

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.

INVESTMENT MANDATE AND OBJECTIVE

IssueThe Board is committed to promoting the role and success of the Company in delivering on its investment mandate to shareholders over the long-term. The Board also has responsibility to shareholders to ensure that the Company’s portfolio of assets is invested in line with the stated investment objective and in a way that ensures an appropriate balance between spread of risk and portfolio returns.

EngagementThe Board works closely with the Investment Manager throughout the year in further developing our investment strategy and underlying policies, not simply for the purpose of achieving the Company’s investment objective but in the interests of shareholders and future investors.

The Board is kept advised in respect of the Manager’s consideration of ESG factors as part of the investment process; a summary of BlackRock’s approach to ESG matters is set out within the Annual Report and Accounts.

ImpactDetails regarding the Company’s NAV and share price performance can be found in the Chairman’s Statement and in the Strategic Report above.

The portfolio activities undertaken by the Manager can be found in the Investment Manager’s Report above.

MANAGEMENT OF THE SHARE RATING

IssueThe Board believes that the best way of addressing the discount over the longer term is to continue to generate good performance and to create demand for the Company’s shares in the secondary market through broadening awareness of the Company’s unique structure. The Board believes that it is in shareholders’ interests that the share price does not trade at an excessive premium or discount to NAV. Therefore, where deemed to be in shareholders’ long-term interests, it may exercise its powers to issue shares or buy back shares with the objective of ensuring that an excessive premium or discount does not arise.

EngagementThe Manager reports total return performance statistics to the Board on a regular basis, along with the portfolio yield and the impact of dividends paid on brought forward distributable reserves.

The Board reviews the Company’s discount/premium to NAV on a regular basis and holds regular discussions with the Manager and the Company’s broker regarding the discount/premium level.

The Board believes that the best way of maintaining the share rating at an optimal level over the long-term is to create demand for the shares in the secondary market. To this end the Investment Manager is devoting considerable effort to broadening the awareness of the Company, particularly to wealth managers and to the wider retail shareholder market.

The Manager provides the Board with feedback and key performance statistics regarding the success of the Company’s marketing initiatives.

ImpactThe average discount for the year to 30 November 2023 was 5.2%. During the year the Company’s share price has traded between a discount of 9.2% and 1.0%.

SERVICE LEVELS OF THIRD PARTY PROVIDERS

IssueThe Board acknowledges the importance of ensuring that the Company’s principal suppliers are providing a suitable level of service including: the Manager in respect of investment performance and delivering on the Company’s investment mandate; the Depositary in respect of its duties towards safeguarding the Company’s assets; the Registrar in its maintenance of the Company’s share register and dealing with investor queries and the Company’s Brokers in respect of the provision of advice and acting as a market maker for the Company’s shares.

EngagementThe Manager reports to the Board on the Company’s performance on a regular basis. The Board carries out a robust annual evaluation of the Manager’s performance, their commitment and available resources.

The Board performs an annual review of the service levels of all third party service providers and concludes on their suitability to continue in their role.

The Board has received updates in respect of business continuity planning from the Company’s Manager, Depositary, Fund Administrator, Brokers, Registrar and Printers, and is confident that arrangements are in place to ensure that a good level of service will continue to be provided.

ImpactPerformance evaluations were performed on a timely basis and the Board concluded that all third party service providers, including the Manager, Depositary and Fund Administrator were operating effectively and providing a good level of service.

BOARD COMPOSITION

IssueThe Board is committed to ensuring that its own composition brings an appropriate balance of knowledge, experience and skills, and that it is compliant with best corporate governance practice under the UK Corporate Governance Code, including guidance on tenure and the composition of the Board’s committees.

EngagementDuring the year the Board undertook a review of succession planning arrangements and identified the need for action to ensure that the composition of the Board remained appropriate and that there was an ongoing process of refreshment, bringing in new ideas and different perspectives. The Board, through its Nomination Committee, agreed the selection criteria and the method of selection, recruitment and appointment. Board diversity, including factors such as age, ethnicity, and gender, was taken into account when establishing the criteria.

All Directors are subject to a formal evaluation process on an annual basis (more details and the conclusions in respect of the 2023 evaluation process are given within the Annual Report and Accounts). All Directors stand for re-election by shareholders annually. Shareholders may attend the AGM and raise any queries in respect of Board composition or individual Directors in person or may contact the Company Secretary or the Chairman using the details provided within the Annual Report and Accounts if they wish to raise any issues.

ImpactThe Directors are not aware of any issues that have been raised directly by shareholders in respect of Board composition in 2023. Details for the proxy voting results in favour and against individual Directors’ re-election at the 2023 AGM are given on the Company’s website at www.blackrock.com/uk/thrg.

SHAREHOLDERS

IssueContinued shareholder support and engagement are critical to the continued existence of the Company and the successful delivery of its long-term strategy.

The dividend is funded out of current year revenue and, where deemed appropriate, may be supported from revenue reserves if current year revenue is insufficient. The Company does not have a policy of seeking income, however, the portfolio has, to date, continued to deliver a level of income such that the Board is able to pay an attractive dividend.

EngagementThe Board is committed to maintaining open channels of communication and to engaging with shareholders and welcomes and encourages attendance and participation from shareholders at its Annual General Meetings. Shareholders therefore have the opportunity to meet the Directors and Investment Manager and to address questions to them directly. The Chairman and Senior Independent Director also meet directly with shareholders providing a forum for canvassing their views and enabling the Board to be aware of any issues of concern.

The Annual Report and Half Yearly financial report are available on the BlackRock website and are also circulated to shareholders either in printed copy or via electronic communications. In addition, regular updates on performance, monthly factsheets, the daily NAV and other information are also published on the website at www.blackrock.com/uk/thrg.

The Board also works closely with the Manager to develop the Company’s marketing strategy, with the aim of ensuring effective communication with shareholders in respect of the investment mandate and objective. Unlike trading companies, shareholder meetings usually take the form of a meeting with the Investment Manager as opposed to members of the Board. As well as attending regular investor meetings the Investment Manager holds regular discussions with wealth management desks and offices to build on the case for, and understanding of, long-term investment opportunities in the UK smaller companies’ sector.

However, the Board is ultimately responsible for communication with shareholders and all substantive matters arising from such communication are referred to the Board.

The Manager also coordinates public relations activity, including meetings between the Investment Manager and relevant industry publications to set out their vision for the portfolio strategy and outlook for the UK equity market. The Manager releases the daily NAV and monthly portfolio updates to the market to ensure that investors are kept up to date in respect of performance and other portfolio developments and maintains a website on behalf of the Company that contains relevant information in respect of the Company’s investment mandate and objective. If shareholders wish to raise issues or concerns with the Board, they are welcome to do so at any time.

The Chairman is available to meet directly with shareholders periodically to understand their views on governance and the Company’s performance where they wish to do so. He may be contacted via the Company Secretary whose details are given within the Annual Report and Accounts.

ImpactThe Board values any feedback and questions from shareholders ahead of and during Annual General Meetings in order to gain an understanding of their views and will take action when and as appropriate. Feedback and questions will also help the Company evolve its reporting, aiming to make reports more transparent and understandable.

Feedback from all substantive meetings between the Investment Manager and shareholders will be shared with the Board. The Directors will also receive updates from the Company’s broker on any feedback from shareholders, as well as share trading activity, share price performance and an update from the Investment Manager.

The Investment Manager attended professional investor meetings and held discussions with a range of different wealth management desks and offices in respect of the Company during the year under review. Investors were also impressed with the wide pool of resource available through BlackRock’s Emerging Companies team, and the rigorous ‘bottom-up’ investment approach.

RESPONSIBLE INVESTING

IssueConsideration of material Environmental, Social and Governance (ESG) information and sustainability risks are considered when making investment decisions. Sustainbility-related risks, including climate-related risks, are becoming a defining factor in companies’ long-term prospects across the investment spectrum, with significant and lasting implications for economic growth and prosperity.

EngagementThe Board believes that responsible investment and sustainability are integral to the longer-term delivery of the Company’s success. The Board works closely with the Investment Manager to regularly review the Company’s performance, investment strategy and underlying policies to ensure that the Company’s investment objective continues to be met in an effective, responsible and sustainable way in the interests of shareholders and future investors.

The Investment Manager’s approach to the consideration of ESG factors in respect of the Company’s information and consideration of sustainability risks are kept under review by the Board.

The Investment Manager reports to the Board in respect of its consideration of sustainability risks and these are integrated into the investment process; a summary of BlackRock’s approach to ESG integration is set out within the Annual Report and Accounts. The Investment Manager’s engagement and voting policy is detailed within the Annual Report and Accounts.

ImpactThe Investment Manager believes there is often a positive correlation between good ESG practices on the part of portfolio companies and investment performance. Details of the Company’s performance in the year are given in the Chairman’s Statement above and the Performance Record contained within the Annual Report and Accounts.

THE BOARD’S APPROACH TO ESG

Environmental, Social and Governance (ESG) issues can present both opportunities and risks to long-term investment performance. The Company does not have an ESG mandate (and accordingly does not have an ESG or impact focused investment strategy and has not adopted any exclusionary screens) but our Investment Manager does take ESG factors into account as part of the investment process as these elements can significantly influence a company’s valuation. These ESG issues are a key focus of the Board, and the Board is committed to a diligent oversight of the activities of the Manager in these areas. The Board is aware of the Company’s long-term underweight position in extractive industries, where innovative and disruptive business models are rare and the non-participation in some capital raises where ESG factors have been a concern.

The Board believes multi-year engagement and dialogue with management is, in most cases, the most constructive way of building understanding of an investee company's approach to addressing material business risks and opportunities. This is particularly true for our Manager given the extent of BlackRock's shareholder engagement. Further detail of how our Manager has voted and engaged with the companies in our portfolio can be found within the Annual Report and Accounts.

As well as the understanding afforded by its sheer scale, the Board believes that BlackRock is well placed as Manager to fulfil these requirements due to its approach to ESG integration and its application of this to the Company’s investment processes, the emphasis it places on sustainability, its investment stewardship approach 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 approach to sustainability and investment stewardship is set out within the Annual Report and Accounts.

Future prospectsThe Board’s main focus is on the achievement of capital growth and the future of the Company is dependent upon the success of the investment strategy. The outlook for the Company is discussed in the Chairman’s Statement and in the Investment Manager’s Report above.

Social, community and human rights issuesAs an investment trust, the Company has no direct social or community responsibilities. However, the Company believes that it is in shareholders’ interests to consider human rights issues, and environmental, social and governance factors when selecting and retaining investments. Details of the Company’s approach to socially responsible investment is set out above and within the Annual Report and Accounts.

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, gender representation and employeesThe Directors of the Company on 30 November 2023, all of whom held office throughout the year, are set out within the Annual Report and Accounts. The Board recognises the importance of having a range of experienced Directors who, both individually and collectively, possess a suitable balance of skills, knowledge, independence and diversity to enable it to fulfil its obligations. As at 30 November 2023, the Board consisted of three men and three women, resulting in 50% female representation. The Company has no employees, and all of its Directors are non-executive. Therefore, there are no disclosures to be made in respect of employees.

The Chairman’s Statement and the Investment Manager’s Report above form part of this Strategic Report.

The Strategic Report was approved by the Board at its meeting on 2 February 2024.

BY ORDER OF THE BOARDKEVIN MAYGERFOR AND ON BEHALF OFBLACKROCK INVESTMENT MANAGEMENT (UK) LIMITEDCompany Secretary2 February 2024

RELATED PARTY AND TRANSACTIONS WITH THE INVESTMENT MANAGER AND AIFM BlackRock Fund Managers Limited (BFM) provides management and administration services to the Company under a contract which is terminable on six months’ notice. BFM has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services, to BlackRock Investment Management (UK) Limited (BIM (UK)). Further details of the investment management contract are disclosed in the Directors’ Report contained within the Annual Report and Accounts.

The investment management fee due for the year ended 30 November 2023 amounted to £2,518,000 (2022: £3,025,000). At the year end, £1,864,000 was outstanding in respect of management fees.

For the year ended 30 November 2023, there was no performance fee payable (2022: £nil). The total accrual of performance fee for all rolling two year performance periods amounted to £2,014,000 (2022: £nil;), calculated as follows:

• For the annualised rolling two-year performance period to 30 November 2023, the Company has underperformed the benchmark by 5.9% as at 30 November 2023. No performance fee relating to this performance period has been accrued at the date of this report.

• For the annualised rolling two-year performance period to 30 November 2024, the Company has outperformed the benchmark by 1.9% as at 30 November 2023. A performance fee of £2,014,000 relating to this performance period has been accrued at the date of this report.

In addition to the above services, BIM (UK) has provided marketing services. The total fees paid or payable for these services for the year ended 30 November 2023 amounted to £149,000 excluding VAT (2022: £153,000). Marketing fees of £269,000 (2022: £120,000) were outstanding at the year end.

The Company has an investment in the BlackRock Institutional Cash Series plc - Sterling Liquid Environmentally Aware Fund of £24,328,000 (2022: £58,690,000) which for the year ended 30 November 2023 and 30 November 2022 has been presented in the financial statements as a cash equivalent.

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

As at 30 November 2022, the Board consisted of six non-executive Directors, all of whom were considered to be independent by the Board*. None of the Directors has a service contract with the Company. For the year ended 30 November 2023, the Chairman received an annual fee of £46,700, the Chairman of the Audit and Management Engagement Committee received an annual fee of £35,359 and each other Director received an annual fee of £31,700. With effect from 1 December 2023 the Chairman will receive an annual fee of £48,800, the Chairman of the Audit and Management Engagement Committee will receive an annual fee of £38,700, the Senior Independent Director will receive an annual fee of £34,100 and each other Director will receive an annual fee of £33,100.

As at 30 November 2023, all members of the Board held shares in the Company. Christopher Samuel held 65,606 ordinary shares, Louise Nash held 3,900 ordinary shares, Angela Lane held 11,673 ordinary shares, Nigel Burton held 16,570 ordinary shares, Merryn Somerset Webb held 3,727 ordinary shares and Glen Suarez held 4,800 ordinary shares.

All of the holdings of the Directors are beneficial. Since the year end there have been no further changes to the Directors’ share interests.

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

The Directors are responsible for preparing the Annual Report and Financial Statements, (including the Directors’ Remuneration Report) 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 are required to prepare the financial statements in accordance with international accounting standards in conformity with the requirements of 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 Company and of the profit or loss of the Company for that period.

In preparing these Financial Statements, the Directors are required to:

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

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

· state whether the Financial Statements have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006, subject to any material departures disclosed and explained in the Financial Statements;

· provide additional disclosures when compliance with the specific requirements in international accounting standards in conformity with the requirements of the Companies Act 2006, is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company’s financial position and financial performance; and

· prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of 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 Company and hence 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 and the Corporate Governance Statement 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 Investment Manager and the AIFM for the maintenance and integrity of the Company’s corporate and financial information included on BlackRock’s 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 within the Annual Report and Accounts, confirms to the best of his or her knowledge that:

· the Financial Statements, which have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006, give a true and fair view of the assets, liabilities, financial position and net loss of the Company; 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, 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 Committee advise on whether it considers that the Annual Report and Financial Statements fulfil these requirements. The process by which the Committee has reached these conclusions is set out in the Audit Committee’s report contained within the Annual Report and Accounts. As a result, the Board has concluded that the Annual Report and Financial Statements for the year ended 30 November 2023, taken as a whole, are fair, balanced and understandable and provided the information necessary for shareholders to assess the Company’s position, performance, business model and strategy.

FOR AND ON BEHALF OF THE BOARDCHRISTOPHER SAMUELChairman2 February 2024

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 NOVEMBER 2023

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

The Company does not have any other comprehensive income/(loss) (2022: £nil). The net profit/(loss) for the year disclosed above represents the Company’s total comprehensive income/(loss).

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 NOVEMBER 2023

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

2 Final dividend of 8.00p per share for the year ended 30 November 2021, declared on 7 February 2022 and paid on 31 March 2022 and interim dividend of 2.60p per share for the year ended 30 November 2022, declared on 20 July 2022 and paid on 26 August 2022.

For information on the Company’s distributable reserves please refer to note 15 contained within the Annual Report and Accounts.

STATEMENT OF FINANCIAL POSITION AS AT 30 NOVEMBER 2023