BLACKROCK INCOME AND GROWTH INVESTMENT TRUST PLC
BlackRock Income and Growth Investment Trust plc
Annual Results Announcement for the year ended 31 October 2014
Performance record
Financial Summary
As As Change
at 31 at 31 %
October October
2014 2013
Assets
Net asset value per ordinary share 170.68p 166.03p +2.8
-------- -------- --------
- with income reinvested +6.3
-------- -------- --------
Ordinary share price (mid-market) 167.25p 164.50p +1.7
-------- -------- --------
- with income reinvested +5.2
-------- -------- --------
FTSE All-Share Index (total return) 5,380.70 5,325.80 +1.0
-------- -------- --------
Net assets(1) (£'000) 45,194 45,491 -0.7
-------- -------- --------
Discount to net asset value 2.0% 0.9%
-------- --------
1) The change in net assets reflects market movements during the year and the
purchase of the Company's own shares.
Year Year Change
ended ended %
31 31
October October
2014 2013
Revenue
Revenue return per ordinary share 5.66p 5.63p +0.5
-------- -------- --------
Net revenue return after taxation (£'000) 1,524 1,576 -3.3
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Dividends
Interim 2.20p 2.00p +10.0
-------- -------- -------
Final 3.50p 3.50p -
-------- -------- --------
Total dividends paid and payable 5.70p 5.50p +3.6
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Chairman's statement
I am pleased to present the annual report to shareholders of BlackRock Income
and Growth Investment Trust plc for the year ended 31 October 2014.
Performance
During the period the Company's net asset value per share (NAV) returned 6.3%
and the share price returned 5.2%. By comparison, the FTSE All-Share Index
returned 1.0% (all percentages with income reinvested).
The NAV outperformance relative to the FTSE All-Share Index during the year was
due principally to stock selection. Further details of the factors which have
contributed to performance are set out in the Investment Manager's Report.
Since the year end the Company's NAV has risen by 1.7% compared with a fall in
the benchmark of 1.6% over the same period.
Revenue return and dividends
The Company's revenue return per share for the year amounted to 5.66 pence
compared with 5.63 pence for the previous year, representing an increase of
0.5%. 2.20 pence per share has already been distributed to shareholders
during the year by way of an interim dividend. This represented an increase of
10% compared to the interim dividend paid in respect of the year ended 31
October 2013.
The Directors are mindful of shareholders' desire for income in addition to
capital growth and are proposing a final dividend per share of 3.50 pence
(2013: 3.50 pence) giving a total for the year of 5.70 pence per share.
This represents a 3.6% increase over the prior year (2013: 5.50 pence per
share). The final dividend is payable on 6 March 2015 to shareholders on the
Company's register at the close of business on 13 February 2015 (ex dividend
date is 12 February 2015).
Policy on share price discount
The Directors recognise the importance to shareholders that the Company's
shares should not trade at a significant discount to the underlying net asset
value and, in normal market conditions, will therefore use the Company's share
buy back, sale of shares from treasury and share issue powers to ensure that
the share price is broadly in line with the underlying NAV per share. The
existing authority to buy back up to 14.99% of the Company's issued share
capital (excluding treasury shares) will expire at the conclusion of the 2015
Annual General Meeting and a resolution will be put to shareholders to renew
the authority at that meeting.
The Directors believe there are a number of advantages to shareholders arising
from increasing the current size of the Company including improving the
liquidity of the Company's shares and spreading fixed costs over a larger asset
base.
Accordingly, to provide the Directors with greater flexibility, should the
appropriate opportunity arise, it is proposed to increase the existing
authority to allot new shares or sell shares out of treasury. Currently, 5% of
the Company's issued share capital can be allotted as new shares or sold from
treasury. It is proposed that at the 2015 Annual General Meeting authority will
be sought to allot as new shares or sell from treasury up to 35% of the
Company's share capital.
920,000 ordinary shares were purchased and placed in treasury during the year
for a total consideration of £1,532,000 (excluding costs).At the date of this report,
19.6% of the Company's issued share capital is held in treasury.
Gearing
The Company operates a flexible gearing policy which depends on prevailing
market conditions and is subject to a maximum level of 20% of net assets at the
time of investment. The maximum gearing used during the year was 2.6% and at
31 October 2014 net cash was 1.6%.
During the year the Company had in place an unsecured sterling revolving credit
facility of £5 million with ING Bank N.V., which matured on 31 October 2014 and
was replaced with a £4 million, two year, single currency unsecured revolving
facility agreement with Scotiabank (Ireland) Limited.
Annual General Meeting
The Company's Annual General Meeting will be held on Wednesday, 25 February
2015 at 12 noon 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 on pages 60 to 63 of the Annual Report. The Portfolio
Managers will make a presentation to shareholders on the Company's progress and
the outlook for the year ahead.
Alternative Investment Fund Managers' Directive (AIFMD)
Following a change in regulations, BlackRock Fund Managers Limited (BFM) was
appointed as the Company's Alternative Investment Fund Manager (AIFM or
Manager) on 2 July 2014. The Board has also appointed BNY Mellon Trust &
Depositary (UK) Limited to act as the Company's Depositary. In complying with
its new regulatory obligations, the Board continues to act independently of the
AIFM and the arrangements in respect of the management fee remain unchanged.
BlackRock Investment Management (UK) Limited (BIM (UK)) continues to act as the
Company's Investment Manager under a delegation agreement with BFM.
Outlook
Economic growth prospects in the world have shown market variation in recent months.
Whilst the US and UK have shown relatively strong growth, activity in the Eurozone,
together with China and other emerging markets has slowed. The recent precipitous fall
in oil and gas prices is likely to provide a boost to businesses with high energy costs.
However, for producers such as Russia, which is already facing significant recessionary
pressures, the negative impact will be severe. The subdued outlook for inflation and the
lacklustre/negative growth in many parts of the Eurozone can be expected to prolong the
current period of extraordinarily low Interest rates.
Given the extent of overseas earnings for most UK listed companies, these
global factors will continue to drive sentiment as much as more local concerns,
including the forthcoming UK general election. It is therefore prudent to
anticipate greater market volatility in 2015. In this environment your
managers will continue to focus on companies with the capacity to grow their
dividends, either through strong product and market positioning, or through
`self-help' in addressing their business structures and cost bases.
Notwithstanding the significant uncertainties created by global events, your Board believes
that the Company can benefit from the investment strategy which has been put in place and
deliver an attractive return for shareholders over the long term.
Jonathan Cartwright
Chairman
8 January 2015
Strategic report
The Directors present the Strategic Report of the Company for the year ended
31 October 2014.
Principal activity
The Company carries on business as an investment trust and its principal
activity is portfolio investment.
Objective
The Company's objective is to provide growth in capital and income over the
long term through investment in a diversified portfolio of principally UK
listed equities.
Strategy, business model and investment policy
The Company seeks to achieve its objective by investing principally in UK
listed equities, such equities to consist of the shares of FTSE 100 companies,
but may also include the shares of medium sized and smaller companies. Other
investments, such as fixed interest and unquoted securities, may from time to
time form part of the portfolio.
The Company's policy is that the portfolio will usually consist of
approximately 30-60 securities and will only invest in UK securities which
include the shares of companies listed, domiciled or carrying out the majority
of their business in the UK.
The Company may hold a maximum of 10% of the issued ordinary share capital of
any company. No more than 15% of the gross asset value of the Company may be
invested in the securities of any one issuer, calculated at the time of any
relevant investment. Cash or non-benchmark stocks may not exceed 10% of the net
asset value of the Company. Each stock held is subject to a lower limit of 0%
and an upper limit of plus 4 percentage points against its weighting in the
FTSE All-Share Index (total return) on an ongoing basis, subject to an absolute
sector weighting upper limit of 20% of the Company's net assets at any time.
The Company may deal in derivatives, including options, futures and contracts
for difference and derivatives not traded on or under the rules of a recognised
or designated investment exchange for the purpose of efficient portfolio
management. Derivatives and exchange traded funds may be dealt in only with the
prior consent of the Board.
The performance of the Company is measured by reference to the FTSE All-Share
Index on a total return basis.
The Company achieves an appropriate spread of risk by investing in a
diversified portfolio of securities.
No material change will be made to the investment policy without the approval
of shareholders by ordinary resolution.
In constructing the portfolio the Investment Manager focuses on three areas:
* `high free cash flow' companies that can sustain cash generation and pay a
growing dividend whilst aiming to deliver a double digit total return;
* `growth' companies that have significant barriers to entry or unique products
or intellectual property that enable them to grow consistently; and
* `turnarounds', which represent those companies that are significantly out of
favour with the market, facing temporary challenges with high yields/very low
valuations, but with recovery potential.
Appropriate use of gearing can add value over time. This gearing is typically
in the form of a revolving facility. With effect from 31 October 2014, the
Company entered into a new two year unsecured revolving facility agreement with
Scotiabank (Ireland) Limited. The Company also has an overdraft facility with
The Bank of New York Mellon (International) Limited.
The level of and benefit from any gearing is discussed and agreed regularly by
the Board. The Manager generally aims to be fully invested and gearing,
including borrowings and gearing through the use of derivatives, (which
requires prior Board approval) when aggregated with underwriting
participations, will not exceed 20% of the net asset value at the time of
investment, drawdown or participation.
The Directors recognise that it is in the long term interests of shareholders
that shares do not trade at a significant discount to their prevailing NAV. The
Board believes that this may be achieved through the use of the zero discount
policy adopted in January 2013. In the year to 31 October 2014, the Company's
share price to NAV traded in the range of a premium of 2.7% to a discount of
3.6% on a cum income basis.
Portfolio analysis
A detailed analysis of the portfolio is provided on pages 12 to 14 of the
Annual Report.
Performance
In the year to 31 October 2014, the Company's undiluted NAV per share returned
6.3% (compared with a rise in the FTSE All-Share Index on a total return basis
of 1.0%). The share price returned 5.2% (all percentages calculated in sterling
terms with income reinvested).
The Investment Manager's report on pages 9 and 10 of the Annual Report 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 Income Statement. The
total return for the year, after taxation, was £2,782,000 (2013: £6,633,000) of
which the revenue return amounted to £1,524,000 (2013: £1,576,000). An interim
dividend of 2.20p (2013: 2.00p) per share was paid on 5 September 2014. The
Directors recommend the payment of a final dividend of 3.50p (2013: 3.50p)
per share. Subject to approval at the forthcoming Annual General Meeting, the
dividend will be paid on 6 March 2015 to shareholders on the register of
members at the close of business on 13 February 2015.
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 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 below.
Year Year
ended ended
31 31
October October
2014 2013
Net asset value per share(1) 170.68p 166.03p
Share price(2) 167.25p 164.50p
Change in benchmark index(3) 1.0% 22.8%
Discount to net asset value 2.0% 0.9%
Revenue return per share 5.66p 5.63p
Ongoing charges(4) 1.2% 1.1%
(1) Calculated in accordance with AIC guidelines.
(2) Calculated on a mid to mid basis.
(3) FTSE All-Share Index (total return).
(4) Calculated as a percentage of average net assets and including expenses,
interest costs and taxation.
The Board also regularly reviews a number of indices and ratios in order to
understand the impact on the Company's relative performance of the various
components such as asset allocation and stock selection. The Board also
assesses the Company's performance against its peer group of investment trusts
with similar investment objectives.
Principal risks
The key risks faced by the Company are set out below. The Board regularly
reviews and agrees policies for managing each risk, as summarised below:
* Performance risk - The Board is responsible for deciding the investment
strategy to fulfil the Company's objective and for monitoring the
performance of the Investment Manager and the implementation of the
strategy adopted. An inappropriate strategy may lead to poor performance
compared to the Index and the Company's peer group. To manage this risk the
Board regularly reviews:
- the Company's investment mandate and long-term strategy;
- 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 these are within set limits;
- reports showing an analysis of the Company's performance against the FTSE
All-Share Index (total return) and its peer group;
- the Investment Manager's explanation of significant stock selection
decisions, the rationale for the composition of the investment portfolio and
any movement in the level of gearing; and
- the spread of investments in order to minimise the risks associated with
particular countries or factors specific to particular sectors, based on the
diversification requirements inherent in the Company's investment policy.
* Income/dividend risk - The amount of dividends and future dividend growth
will depend on the performance of the underlying portfolio. Any change in
the tax treatment of the dividends or interest received by the Company
(including as a result of withholding taxes or exchange controls imposed by
jurisdictions in which the Company invests) may reduce the level of
dividends received by shareholders. The Board monitors this risk through
the receipt of detailed income forecasts and considers the level of income
at each meeting.
* Regulatory risk - The Company 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. The Investment Manager monitors the shareholder
profile, investment movements, the level and type 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. The
Board and Investment Manager also monitor changes in government policy and
legislation which may have an impact on the Company.
* Operational risk - In common with most other investment trust companies,
the Company has no employees. The Company therefore relies upon the
services provided by third parties and is dependent on the control systems
of the Manager, BNY Mellon Trust & Depositary (UK) Limited (the Depositary)
and the Bank of New York Mellon (International) Limited, who maintain the
Company's accounting records. 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. These are
regularly tested and monitored throughout the year which is evidenced
through their Service Organisation Control (SOC) reports to provide
assurance regarding the effective operation of internal controls which are
reported on by their reporting accountants and give assurance regarding the
effective operation of controls. The Board also considers succession
arrangements for key employees of the Investment Manager and the business
continuity arrangements for the Company's key service providers.
* Market risk - Market risk arises from volatility in the prices of the
Company's investments. It represents the potential loss the Company might
suffer through realising investments in the face of negative market
movements. The Board considers asset allocation, stock selection 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.
* Financial risk - The Company's investment activities expose it to a variety
of financial risks that include market price risk, liquidity risk, credit
risk and interest rate risk. Further details are disclosed in note 18 to
the Financial Statements, together with a summary of the policies for
managing these risks.
* Gearing risk - The use of gearing increases the Company's performance risk.
Gearing provides an opportunity for greater returns but, at the same time
increases the Company's exposure to capital risk and interest costs. Any
investment income and gains earned on investments made through the use of
gearing that are in excess of the associated costs will cause the Company's
NAV to increase further and more rapidly than would otherwise be the case.
Conversely, where investments depreciate, the Company's NAV will decrease
further and more rapidly than would otherwise be the case.
Future prospects
The Board's main focus is on the achievement of income and capital growth. The
future performance 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.
Social, community and human rights issues
As 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, environmental, social and governance
factors when selecting and retaining investments. Details of the Company's
policy on socially responsible investment are set out on page 26 of the Annual
Report.
Directors and employees
The Directors of the Company on 31 October 2014, all of whom held office
throughout the year, are set out in the Governance Structure and Directors'
biographies on page 15 of the Annual Report. The Board currently consists of four
male Directors.
The information set out on pages 9 to 14 of the Annual Report, including the
Investment Manager's Report, forms part of the Strategic Report.
The Strategic Report was approved by the Board at its meeting on 8 January 2015.
By order of the Board
BlackRock Investment Management (UK) Limited
Company Secretary
8 January 2015
Investment manager's report
Performance
The Investment Manager reports that for the twelve month period ended 31
October 2014 the Company's NAV per share returned 6.3% and the share price
5.2%. Over the same period, the FTSE All-Share Index (the Index) and the peer
group as measured by the IMA UK Income sector returned 1.0% and 1.8%
respectively. (All percentages are in sterling with income reinvested).
Investment approach and process
In assembling the Company's investment portfolio we adopt a relatively
concentrated approach to investment, to ensure that our best ideas contribute
significantly to returns. We believe it is the role of the portfolio overall to
achieve a premium level of yield rather than every individual company within
it. This gives us increased flexibility to invest where returns are most
attractive. This relatively concentrated approach results in a portfolio which
differs substantially from the Index and in any individual year, such as the
one under review, the returns will vary, sometimes significantly from those of
the Index. Over longer periods our objective is to achieve returns greater than
the Index, but with lower volatility.
The foundation of the portfolio is in high free cash flow companies that can
sustain cash generation and pay a growing dividend whilst aiming to deliver a
double digit total return. Additionally, we look to identify `growth' companies
that have significant barriers to entry or unique products or intellectual
property that enable them to grow consistently. We also look for `turnarounds',
at around 10% of portfolio value, which represent those companies that are
significantly out of favour with the market, facing temporary challenges with
high yields/low valuations, but with recovery potential. The expected return
from this segment, although relatively small, is expected to contribute
meaningfully to returns over time.
Market comment
UK equities performance was volatile during the reporting period, in contrast
to the strong increase over the preceding reporting year. The headline market
return masks a sharp reversal in share price momentum that began in March 2014,
whereby many of the previously best performing shares in the market became the
worst performers. Central bankers played a part with evolving messages over
interest rate policy and the deterioration of the security situation in Iraq
and Ukraine also unsettled investors causing a flight to safety. Economic data
were mixed with strength, for the most part, in the US offset by weakness in
Europe. This divergence in growth led to differences in central bank policy
with the US Federal Reserve ending its stimulus program, whilst the European
Central Bank and Bank of Japan increased asset purchases.
Market highlights included the large number of IPOs, however signs of
indigestion emerged as a number of shares traded below their issue price. Large
cap M & A surfaced with approaches by Pfizer for AstraZeneca, and subsequently
for Shire by Abbvie. Both appeared to have cross border tax savings between the
USA and the UK as a significant motivator and both failed to complete. More
defensive sectors generally performed well with the pharmaceutical, tobacco,
utility and real estate sectors outperforming mining and oil & gas, which
suffered as commodity prices fell. The banking sector suffered from further
provisioning for PPI claims and fines for past rule breaches and Tesco led the
food retail sector lower, where competition from the discount retailers is
impacting profitability.
Contributors to performance
Portfolio performance over the year has been strong in relative terms
significantly outperforming both the benchmark and the IMA UK Income sector.
Performance was driven by good stockpicking across a wide range of sectors and
industries. Many of the strongest contributors, such as Shire and Ashtead, are
not typical income portfolio investments given their low starting dividend
yields, but were chosen for their capital return prospects. The Company also
benefited in relative terms by not holding some of the larger companies that
fell such as Tesco, Standard Chartered and Experian.
The largest contribution to returns came from Shire, which rose strongly
following a takeover approach from US pharmaceutical company Abbvie having
delivered on its strategy of increasing sales of its attention deficit
hyperactivity disorder (ADHD) business, whilst diversifying its sources of
revenue by developing its rare diseases franchise. Although Shire's share price
fell back following Abbvie's withdrawal of its bid, citing uncertainty and
change to the US tax treatment of such deals, the Company had exited the
position to crystallise the gain.
Plant hire business Ashtead Group, which is based mainly in the US, rose
strongly over the year. As one of the market leaders in a fragmented market
they have had the capital to expand unlike many of the smaller competitors. The
company has been delivering strong results for some time and continues to
report good progress.
Dixons Carphone has performed strongly as shareholders approved the merger
between Carphone Warehouse and Dixons Group. The group has highlighted the
opportunity for earnings enhancement from the strategic tie-up and subsequently
released a reassuring trading update.
In the free cash flow portion of the portfolio that accounts for 70% of the
Company's investments, holdings in Reed Elsevier, Compass Group, British American
Tobacco, Legal & General Group and Reckitt Benckiser Group all outperformed and
provided examples of companies which are able to grow their dividend following
positive earnings growth. We believe these are attractive and valuable
attributes in a world where interest rates and inflation remain at historically
low levels.
In the turnaround part of the portfolio, Rentokil Initial contributed
positively as management have begun to improve cash flow, restructure the
business and reduce costs. In particular the US business continues to perform
well, although growth in the European businesses remains weak due to the poor
economic growth in France and Belgium.
The main detractors from performance included electronic control and process
product manufacturer Spectris, following earnings disappointment, due to
weakness in demand from the mining sector combined with sterling strength. Tate
& Lyle fell following greater price competition in its Splenda sweetener
business coupled with an announcement that supply problems at a Singapore
factory would also impact earnings.
Portfolio Activity
During the year the Company added exposure to high quality franchise companies
with new purchases in Prudential, AstraZeneca and Next and added to the holding
in Reckitt Benckiser Group, Compass Group, Unilever and Reed Elsevier. In an
environment where global economic growth remains modest, rather than
positioning the portfolio for a particular macroeconomic scenario, we have been
keen to build positions in companies with credible self-help potential. This is
the rationale behind our recent purchases of Carnival, Burberry Group, Direct Line
Insurance and Friends Life.
In the free cash flow portion of the portfolio the Company sold Vodafone, Tate
& Lyle, National Grid and reduced the holding in Legal & General Group whilst
in the growth portion the Company, sold Barclays, Hargreaves Lansdown, Ryanair
and Betfair and reduced Dixons Carphone, 3I Group and Spectris.
Outlook/Strategy
While the outlook for the global economy has improved in recent years, it
remains fragile. Eurozone economic activity remains subdued despite an
increasingly supportive policy response from the European Central Bank, whilst
in the US the ending of quantitative easing is contributing to uncertainty.
We continue to focus more on the specific drivers of individual companies and
the ability to determine their future rather than relying on a specific macro
outcome. Given that the outlook for both economic growth and interest rates
remains uncertain, we seek those companies that can drive returns through
self-help and have a clear strategy to deploy the cash flow they generate.
The portfolio is primarily invested in high free cash flow companies that can
sustain cash generation and pay a growing dividend, but also has exposure to
companies with sustainable growth franchises and turnaround situations.
Adam Avigdori and Mark Wharrier
BlackRock Investment Management (UK) Limited
8 January 2015
Ten largest equity investments as at 31 October 2014
Royal Dutch Shell `B': 6.8% (2013: 5.1%) is one of the world's largest
independent oil and gas companies. Its upstream operations are engaged in
searching for and recovering crude oil and natural gas, the liquefaction and
transportation of gas, and the extraction of bitumen from oil sands. The
downstream businesses are engaged in manufacturing; distribution and marketing
activities for oil products and chemicals, in alternative energy and carbon
dioxide management.
British American Tobacco: 6.3% (2013: 5.2%) is one of the world's leading
tobacco groups, with more than 200 brands in its portfolio selling in
approximately 180 markets worldwide. It also has a significant interest in
tobacco leaf growing, working with thousands of farmers internationally.
HSBC Holdings: 6.3% (2013: 6.0%) is one of the world's largest banking and
financial services organisations. Its principal businesses are commercial
banking, global banking and markets, private banking and personal financial
services. Its international network covers 81 countries and territories
worldwide, across Europe, Asia-Pacific, North America, Latin America, the
Middle East and North Africa.
AstraZeneca: 5.3% (2013: nil) is a global pharmaceutical company, operating
in the research, development, manufacture and marketing of pharmaceutical
products, including cardiovascular and metabolic disease, oncology,
and respiratory, inflammation and autoimmunity.
Reed Elsevier: 4.3% (2013: 3.3%) is a global provider of professional
information solutions that includes publication of scientific, medical,
technical and legal journals. Reed Elsevier is also the leading exhibitions
and events business globally.
GlaxoSmithKline: 4.2% (2013: 5.7%) is a global healthcare group, operating in
the research, development, manufacture and marketing of pharmaceutical
products, including vaccines, over-the-counter medicines and health related
consumer products.
Wolseley: 4.1% (2013: 3.3%) is the world's largest trade distributor of
plumbing and heating products and a leading supplier of building materials.
It has businesses in the US, Nordics, UK and Europe.
Imperial Tobacco Group: 3.9% (2013: 3.0%) is a leading international tobacco
company that operates in over 160 countries worldwide. It manufactures,
markets, and sells a portfolio of brands and products across all tobacco
categories.
Prudential: 3.7% (2013: nil) is a global life insurance company with businesses
in the UK, US and Asia. Their businesses include the provision of health and
protection insurance products in Asia, retirement products in the US, life and
pensions products in the UK and an investment management business (M&G).
Rio Tinto: 3.7% (2013: 3.1%) is one of the world's leading mining companies,
supplying iron ore, aluminium, copper, diamonds, thermal and metallurgical
coal, uranium, gold and industrial minerals (borax, titanium dioxide and salt).
The group operate in over 40 countries with significant operations in
Australia, South America and Africa.
All percentages reflect the value of the holding as a percentage of total
investments.
Percentages in brackets represent the value of the holding as at 31 October
2013.
Together, the ten largest investments represent 48.6% of the Company's
portfolio (31 October 2013: 44.4%).
Distribution of investments as at 31 October 2014
ANALYSIS OF PORTFOLIO BY SECTOR
% %
Benchmark of
investments
1 Pharmaceuticals & Biotechnology 7.8 10.3
2 Tobacco 4.5 10.2
3 Oil & Gas Producers 13.5 9.9
4 Support Services 4.5 9.8
5 Life Insurance 4.5 8.8
6 Travel & Leisure 3.7 6.5
7 Banks 11.4 6.3
8 Cash and Cash Equivalents 0.0 6.2
9 Household Goods & Home Construction 2.7 5.0
10 General Retailers 2.2 4.8
11 Media 3.2 4.3
12 Nonlife Insurance 1.1 4.0
13 Mining 6.7 3.7
14 Food Producers 0.8 3.3
15 Electronic & Electrical Equipment 0.5 2.2
16 Beverages 4.2 2.0
17 Financial Services 2.3 1.4
18 Personal Goods 1.9 1.3
Total 100.0
INVESTMENT SIZE
Number %
of Investments of Portfolio
Below £1m 20 29.4
£1m to £2m 10 35.5
£2m to £3m 5 28.3
£3m to £4m 1 6.8
Total 36 100.0
Source: BlackRock
Investments as at 31 October 2014
Market % of
value investments
£'000
Pharmaceuticals & Biotechnology
AstraZeneca 2,503 5.3
GlaxoSmithKline 1,999 4.2
Shire 387 0.8
-------- --------
4,889 10.3
-------- --------
Tobacco
British American Tobacco 2,988 6.3
Imperial Tobacco Group 1,843 3.9
-------- --------
4,831 10.2
-------- --------
Oil & Gas Producers
Royal Dutch Shell `B' 3,233 6.8
BP Group 1,441 3.1
-------- --------
4,674 9.9
-------- --------
Support Services
Wolseley 1,963 4.1
Rentokil Initial 964 2.0
Essentra 958 2.0
Howden Joinery Group 773 1.7
-------- --------
4,658 9.8
-------- --------
Life Insurance
Prudential 1,774 3.7
Legal & General Group 1,443 3.0
Friends Life 948 2.1
-------- --------
4,165 8.8
-------- --------
Travel & Leisure
Compass Group 1,277 2.7
Carnival 935 2.0
Cineworld Group 521 1.1
Patisserie Holdings 339 0.7
-------- --------
3,072 6.5
-------- --------
Banks
HSBC Holdings 2,964 6.3
-------- --------
2,964 6.3
-------- --------
Household Goods & Home Construction
Reckitt Benckiser Group 1,768 3.7
Berkeley Group Holdings 613 1.3
-------- --------
2,381 5.0
-------- --------
General Retailers
Next 953 2.0
Dixons Carphone 742 1.6
Marks & Spencer Group 561 1.2
-------- --------
2,256 4.8
-------- --------
Media
Reed Elsevier 2,023 4.3
-------- --------
2,023 4.3
-------- --------
Non-life Insurance
Direct Line Insurance 820 1.7
esure 687 1.4
Admiral Group 402 0.9
-------- --------
1,909 4.0
-------- --------
Mining
Rio Tinto 1,773 3.7
-------- --------
1,773 3.7
-------- --------
Food Producers
Unilever 1,566 3.3
-------- --------
1,566 3.3
-------- --------
Electronic & Electrical Equipment
Domino Printing Sciences 533 1.1
Spectris 498 1.1
-------- --------
1,031 2.2
Beverages 926 2.0
Diageo -------- --------
926 2.0
-------- --------
Financial Services
3i Group 727 1.4
-------- --------
727 1.4
-------- --------
Personal Goods
Burberry Group 621 1.3
-------- --------
621 1.3
-------- --------
44,466 93.8
-------- --------
Cash and Cash Equivalents
BlackRock's Institutional Cash Fund 2,953 6.2
-------- --------
2,953 6.2
-------- --------
Total Value of Securities 47,419 100.0
======== ========
All investments are in ordinary shares unless otherwise stated.
The total number of holdings as at 31 October 2014 was 36 (31 October 2013: 39).
At 31 October 2014 the Company did not hold any equity interests comprising
more than 3% of any company's share capital.
Related party transactions
BlackRock Investment Management (UK) Ltd (BIM (UK)) provided management and
administrative services to the Company under a contract which was terminated
with effect from 2 July 2014. BlackRock Fund Managers Limited (BFM) was appointed
as the Company's AIFM with effect from 2 July 2014. BFM has (with the Company’s consent)
delegated certain portfolio and risk management services, and other ancillary
services to BIM (UK). Details of the fees payable to BIM (UK) up to 1 July 2014
and to BFM with effect from 2 July 2014 are set out in note 4. Transactions and
relationship details are set out in the Directors’ Report on page 16 of the
Annual Report.
With effect from 1 July 2014 the Company is no longer subject to a performance
related fee. Previously a performance fee was payable for the financial period
based on the Company's net asset value outperformance of the benchmark. The
performance fee was calculated by applying 15% of the annualised excess return
for a performance period to the performance fee net asset value. The benchmark
index, which the Company uses for the calculation of the performance fee is the
FTSE All-Share Index measured on a total return basis. Further information on
this fee arrangement is described in the Directors' Report on page 16 of the
Annual Report.
At the year end, £200,000 was outstanding in respect of the management fee
(2013: £133,000). The investment management fee was, until 1 July 2014, paid to
BIM (UK) and thereafter to BFM. No performance fee has been accrued in respect of
the year ended 31 October 2014 (2013: nil).
In addition to the above services, with effect from 1 November 2013, BIM (UK)
has provided the Company with marketing services. The total fees paid or
payable for these services for the year ended 31 October 2014 amounted to
£32,000 excluding VAT (2013: nil), of which £32,000 (2013: nil) was outstanding
at 31 October 2014.
The Board consists of four non-executive Directors, all of whom are considered
to be independent of the Investment Manager by the Board. None of the Directors
has a service contract with the Company. For the years ended 31 October 2014
and 2013, the Chairman received an annual fee of £25,000, the Chairman of the
Audit Committee received an annual fee of £19,500 and each of the other
Directors received an annual fee of £17,000. With effect from 1 November 2014,
the remuneration of th Chairman increased to £28,000, the Chairman of the Audit
Committee increased to £22,500 and the other Directors to £19,000.
At 31 October 2014, the Directors’ interests in the Company’s Ordinary Shares were
as follows:
2014 2013
J H Cartwright (Chairman) 20,000 20,000
N R Gold 20,000 20,000
G M Luckraft - -
C R Worsley 487,539* 487,539*
* Including a non-beneficial interest in 155,500 shares.
Statement of Directors' Responsibilities in respect of the Annual Report and
Financial Statements
The Directors are responsible for preparing the Annual Report, the Directors'
Remuneration Report and the Financial Statements in accordance with applicable
United Kingdom law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have elected to prepare the
financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and applicable law).
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 and 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 applicable UK Accounting Standards have been followed,
subject to any material departures disclosed and explained in the financial
statements;
* provide additional disclosures when compliance with UK Accounting Standards
is insufficient to enable users to understand the impact of particular
transactions, other events and conclusions 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, the Corporate Governance
Statement and the Report of the Audit Committee in accordance with the
Companies Act 2006 and applicable regulations, including the requirements of
the Listing Rules and the Disclosure and Transparency Rules. The Directors have
delegated responsibility to the Investment Manager for the maintenance and
integrity of the Company's corporate and financial information included on the
BlackRock website. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation in other
jurisdictions.
Each of the Directors, whose names are listed on page 15 of the Annual Report,
confirm to the best of their knowledge that:
* the financial statements, prepared in accordance with applicable accounting
standards, give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company; and
* the Strategic Report contained in the Annual Report and Financial
Statements includes 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 2012 UK Corporate Governance Code 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 fulfils these requirements. The process by which the Audit
Committee has reached these conclusions is set out in the Audit Committee's
report on pages 28 to 30 of the Annual Report. As a result, the Board has concluded
that the Annual Report for the year ended 31 October 2014, taken as a whole, is fair,
balanced and understandable and provides the information necessary for shareholders to
assess the Company's performance, business model and strategy.
For and on behalf of the Board
Jonathan Cartwright
Chairman
8 January 2015
Financial statements
Income statement for the year ended 31 October 2014
Notes Revenue Revenue Capital Capital Total Total
2014 2013 2014 2013 2014 2013
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments
at fair value through
profit or loss - - 1,485 5,297 1,485 5,297
Income from investments
at fair value through
profit or loss 3 1,881 1,880 - - 1,881 1,880
Investment management
fee 4 (67) (64) (201) (192) (268) (256)
Other operating
expenses 5 (283) (229) (4) (16) (287) (245)
Net return before
finance costs and
taxation 1,531 1,587 1,280 5,089 2,811 6,676
-------- -------- -------- -------- -------- --------
Finance costs 6 (7) (11) (22) (32) (29) (43)
Return on ordinary
activities before
taxation 1,524 1,576 1,258 5,057 2,782 6,633
-------- -------- -------- -------- -------- --------
Taxation - - - - - -
======== ======== ======== ======== ======== ========
Return on ordinary
activities after
taxation 8 1,524 1,576 1,258 5,057 2,782 6,633
======== ======== ======== ======== ======== ========
Return per ordinary
share 8 5.66p 5.63p 4.67p 18.09p 10.33p 23.72p
======== ======== ======== ======== ======== ========
The total column of this statement represents the Income Statement of the
Company. The supplementary revenue and capital columns are both prepared under
guidance published by the Association of Investment Companies (AIC). The
Company had no recognised gains or losses other than those disclosed in the
Income Statement. All items in the above statement derive from continuing
operations. No operations were acquired or discontinued during the year.
Financial statements
Reconciliation of movements in shareholders' funds for the year ended 31
October 2014
Notes Called-up Share Capital Special Capital Revenue Total
share premium redemption reserve reserves reserve £'000
capital account reserve £'000 £'000 £'000
£'000 £'000 £'000
For the year ended
31 October 2014
At 31 October 2013 329 14,819 220 24,846 3,140 2,137 45,491
Return for the year - - - - 1,258 1,524 2,782
Shares purchased to
be held in treasury - - - (1,540) - - (1,540)
Dividends paid* 7 - - - - - (1,539) (1,539)
-------- -------- -------- -------- -------- -------- --------
At 31 October 2014 329 14,819 220 23,306 4,398 2,122 45,194
-------- -------- -------- -------- -------- -------- --------
For the year ended
31 October 2013
At 31 October 2012 329 14,819 220 26,401 (1,917) 2,095 41,947
Return for the year - - - - 5,057 1,576 6,633
Shares purchased to
be held in treasury - - - (1,555) - - (1,555)
Dividends paid** 7 - - - - - (1,534) (1,534)
-------- -------- -------- -------- -------- -------- --------
At 31 October 2013 329 14,819 220 24,846 3,140 2,137 45,491
======== ======== ======== ======== ======== ======== ========
* Final dividend of 3.50p per share for the year ended 31 October 2013,
declared on 20 December 2013 and paid on 7 March 2014, and the interim dividend
of 2.20p per share for the six months ended 30 April 2014, declared on 25 June
2014 and paid on 5 September 2014.
** Final dividend of 3.45p per share for the year ended 31 October 2012,
declared on 18 December 2012 and paid on 8 March 2013, and the interim dividend
of 2.00p per share for the six months ended 30 April 2013, declared on 20 June
2013 and paid on 6 September 2013.
Balance sheet as at 31 October 2014
Notes 2014 2013
£'000 £'000
Fixed assets
Investments held at fair value through profit or
loss 47,419 46,396
-------- --------
Current assets
Debtors 103 2,322
Cash at bank 110 278
-------- --------
213 2,600
-------- --------
Creditors - amounts falling due within one year
Bank loan (2,000) (2,000)
-------- --------
Other creditors (438) (1,505)
-------- --------
(2,438) (3,505)
-------- --------
Net current liabilities (2,225) (905)
-------- --------
Net assets 45,194 45,491
======== ========
Capital and reserves
Called-up share capital 9 329 329
Share premium account 10 14,819 14,819
Capital redemption reserve 10 220 220
Special reserve 23,306 24,846
Capital reserves 10 4,398 3,140
Revenue reserve 2,122 2,137
-------- --------
Total equity shareholders' funds 8 45,194 45,491
======== ========
Net asset value per ordinary share 8 170.68p 166.03p
======== ========
Cash flow statement for the year ended 31 October 2014
Notes 2014 2013
£'000 £'000
Net cash inflow from operating activities 5(b) 1,220 1,683
Returns on investment and servicing of finance
-------- --------
Interest paid (29) (56)
Capital expenditure and financial investment
Purchases of investments (50,125) (61,831)
Proceeds from sales of investments 51,845 63,470
-------- --------
Net cash inflow from capital expenditure and
financial investment 1,720 1,639
Equity dividends paid 7 (1,539) (1,534)
-------- --------
Net cash inflow before financing 1,372 1,732
Financing
Repurchase of ordinary shares (1,540) (1,555)
Repayment of bank loan (2,000) (2,000)
Drawdown of bank loan 2,000 2,000
-------- --------
Net cash outflow from financing (1,540) (1,555)
======== ========
(Decrease)/increase in cash in the year (168) 177
======== ========
Notes to the financial statements
1. Principal Activity
The Company conducts its business so as to qualify as an investment trust
company within the meaning of sub-section 1158 of the Corporation Tax Act 2010.
2. Accounting policies
(a) Basis of preparation
The Company's financial statements have been prepared under the historical cost
convention, modified to include the revaluation of investments, and in
accordance with the United Kingdom law and United Kingdom Generally Accepted
Accounting Practice (UK GAAP) and the Statement of Recommended Practice -
`Financial Statements of Investment Trust Companies and Venture Capital Trusts'
(SORP) issued in January 2009 by the Association of Investment Companies (AIC).
The principal accounting policies adopted by the Company are set out below. All
of the Company's operations are of a continuing nature.
The Company's financial statements are presented in sterling, which is the
currency of the primary economic environment in which the Company operates. All
values are rounded to the nearest thousand pounds (£'000) except where
otherwise indicated.
(b) Presentation of Income Statement
In order to reflect better the activities of an investment trust company and in
accordance with guidance issued by the AIC, supplementary information which
analyses the Income Statement between items of a revenue and capital nature has
been presented alongside the Income Statement. In accordance with the Company's
status as a UK investment trust company under sections 833 and 834 of the
Companies Act 2006, and section 1158 of the Corporation Tax Act 2010, net
capital returns may not be distributed by way of dividend.
(c) Going concern
The Directors believe that it is appropriate to continue to adopt the going
concern basis in preparing the financial statements as the assets of the
Company consist mainly of securities which are readily realisable and
accordingly, that the Company has adequate financial resources to continue in
operational existence for the foreseeable future. The Company's business, the
principal risks and uncertainties it faces, together with the factors likely to
affect its future prospects, performance and position are set out in the
Strategic Report on pages 6 to 8 of the Annual Report. As a consequence, the
Directors believe that the Company is well placed to manage its business risks
successfully. Thus they continue to adopt the going concern basis of accounting
in preparing the annual financial statements.
(d) Segmental reporting
The Directors are of the opinion that the Company is engaged in a single
segment of business being investment business.
(e) Income
Dividends receivable on equity shares are accounted for on an ex-dividend
basis. Where no ex-dividend date is available, dividends receivable on or
before the year end are treated as revenue for the year. UK dividends are shown
net of tax credits. Income from convertible securities having an element of
equity is recognised on an accruals basis. Provisions are made for dividends
not expected to be received. Fixed returns on non-equity shares and debt
securities are recognised on a time apportionment basis so as to reflect the
effective yield on the investment.
Special dividends are recognised on an ex-dividend basis and treated as a
capital or revenue item depending on the facts and circumstances of each
dividend.
Where the Company has elected to receive its dividends in the form of
additional shares rather than in cash, the cash equivalent of the dividend is
recognised as income. Any excess in the value of the shares received over the
amount of the cash dividend is recognised in capital reserves.
Deposit interest receivable is accounted for on an accruals basis. Underwriting
commission is recognised when the issue underwritten closes.
(f) Expenses
All expenses are accounted for on an accruals basis. Expenses have been treated
as revenue except as follows:
* expenses including finance costs which are incidental to the acquisition or
disposal of investments are included within the cost of the investments.
Details of transaction costs on the purchases and sales of investments are
disclosed in note 11 on page 46 of the Annual Report;
* the investment management fee has been allocated 75% to the capital column
and 25% to the revenue column of the Income Statement in line with the
Board's expected long term split of returns, in the form of capital gains
and income respectively, from the investment portfolio;
* legal and professional fees incurred in connection with the change of
investment manager were allocated 75% to capital and 25% to revenue; and
* prior to 1 July 2014, performance fees were allocated 100% to the capital
column of the Income Statement, as performance was predominantly generated
through capital returns from the investment portfolio.
(g) Finance costs
Finance costs are accounted for on an accruals basis. Finance costs are
allocated, insofar as they relate to the financing of the Company's
investments, 75% to the capital column and 25% to the revenue column of the
Income Statement, in line with the Board's expected long term split of returns,
in the form of capital gains and income respectively, from the investment
portfolio.
(h) Investments held at fair value through profit or loss
As the Company's business is investing in financial assets with a view to
profiting from their total return in the form of increases in fair value,
financial assets are designated as held at fair value through profit or loss in
accordance with FRS 26 `Financial Instruments: Recognition and Measurement'.
The Company manages and evaluates the performance of these investments on a
fair value basis in accordance with its investment strategy, and information
about the investments is provided on this basis to the Board of Directors.
Investments held at fair value through profit or loss are initially recognised
at fair value. After initial recognition, these continue to be measured at fair
value, which for quoted investments is either the bid price or the last traded
price depending on the convention of the exchange on which the investment is
listed. Purchases and sales of financial assets are recognised on the trade
date, being the date which the Company commits to purchase or sell the assets.
Investment holding gains or losses reflect differences between book value and
book cost. Net gains or losses arising on realisation of investments are taken
to capital reserve.
(i) Taxation
Where expenses are allocated between capital and revenue, any tax relief
obtained in respect of those expenses is allocated between capital and revenue
on the marginal basis using the Company's effective rate of corporation tax for
the accounting period.
Deferred taxation is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date, where transactions or
events that result in an obligation to pay more tax or a right to pay less tax
in the future have occurred. Timing differences are differences between the
Company's taxable profits and its results as stated in the financial statements.
A deferred tax asset is recognised when it is more likely than not that the
asset will be recoverable. Deferred tax is measured on a nondiscounted basis at
the rate of corporation tax that is expected to apply when the timing
differences are expected to reverse.
(j) Foreign currency translation
Foreign currency - in accordance with FRS 23 `The Effect of Changes in Foreign
Currency Exchange Rates', the Company is required to nominate a functional
currency, being the currency in which the Company predominately operates. The
functional and reporting currency is sterling, reflecting the primary economic
environment in which the Company operates. Transactions in foreign currencies
are translated into sterling at the rates of exchange ruling on the date of the
transaction. Foreign currency monetary assets and liabilities are translated
into sterling at the rates of exchange ruling at the Balance Sheet date.
Profits and losses thereon are recognised in the capital column of the Income
Statement and taken to the capital reserve.
(k) Dividends payable
In accordance with FRS 21 `Events After Balance Sheet Date', the final dividend
proposed on ordinary shares is recognised as a liability when approved by
shareholders. Interim dividends are recognised only when paid.
(l) Share repurchases
Shares repurchased and subsequently cancelled - share capital is reduced by the
nominal value of the shares repurchased, and the capital redemption reserve is
correspondingly increased in accordance with Section 733 of the Companies Act 2006.
The full cost of the repurchase is charged to the special reserve.
Shares repurchased and held in treasury - the full cost of the repurchase is
charged to the special reserve. Where treasury shares are subsequently
reissued, any surplus is taken to the share premium account.
3. INCOME
2014 2013
£'000 £'000
Investment income:
Franked UK listed dividends 1,841 1,778
-------- --------
Unfranked equity income from UK investments - 66
-------- --------
Overseas listed dividends 18 36
-------- --------
Underwriting commission 22 -
-------- --------
Total income 1,881 1,880
======== ========
4. Investment management and performance fees
2014 2013
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment management
fee 67 201 268 64 192 256
-------- -------- -------- -------- -------- --------
67 201 268 64 192 256
======== ======== ======== ======== ======== ========
BlackRock Investment Management (UK) Limited (BIM (UK)) was appointed as
Investment Manager and Company Secretary on 1 April 2012.
BIM (UK) provided management and administrative services to the Company under
a contract which was terminated with effect from 2 July 2014. BlackRock Fund
Managers Limited (BFM) was appointed as the Company’s AIFM with effect from 2
July 2014. BIM (UK) continues to act as the Company’s Investment Manager under
a delegation agreement with BFM.
Under the terms of the investment management agreement with BFM, BFM is entitled
to a base fee of 0.60% per annum of the Company’s market capitalisation. There is
no additional fee for company secretarial and administration services.
With effect from 1 July 2014 the Company is no longer subject to a performance related
fee. Previously a performance fee was payable for the financial period based on the
Company’s net asset value outperformance of the benchmark. The performance fee was
calculated by applying 15% of the annualised excess return for a performance period
to the performance fee net asset value. The benchmark index, which the Company uses
for the calculation of the performance fee is the FTSE All-Share Index measured on a
total return basis. Further information on this fee arrangement is described in the
Directors’ Report on page 16 of the Annual Report.
At the year end, £200,000 was outstanding in respect of the management fee (2013: £133,000).
The investment management fee was, until 1 July 2014, paid to BIM (UK) and thereafter to BFM.
No performance fee has been accrued in respect of the year ended 31 October 2014 (2013: nil).
In addition to the above services, with effect from 1 November 2013, BIM (UK) has provided
the Company with marketing services. The total fees paid or payable for these services for
the year ended 31 October 2014 amounted to £32,000 excluding VAT (2013: nil), of which £32,000
(2013: nil) was outstanding at 31 October 2014.
5. Other operating expenses
2014 2013
£'000 £'000
(a) Operating expenses
Custody fee 1 2
Auditor's remuneration:
- statutory audit 21 21
Depositary fee 2 -
Directors' emoluments 79 79
Other operating expenses 180 127
-------- --------
283 229
In addition to the above, custodian handling charges of £4,000 (2013: £16,000)
were charged to capital.
The Company's ongoing charges, calculated as a percentage of
average net assets and using expenses, excluding performance
fees and interest costs, after relief for any taxation was: 1.2% 1.1%
2014 2013
£'000 £'000
(b) Reconciliation of net return before finance costs and
taxation to net cash flow from operating activities
Net return before finance costs and taxation 2,811 6,676
Capital return before finance costs and taxation (1,280) (5,089)
Net revenue return before finance costs and taxation 1,531 1,587
Expenses charged to capital (205) (208)
Special dividends credited to capital - 38
(Increase)/decrease in debtors (47) 52
(Decrease)/increase in creditors (59) 214
-------- --------
Net cash inflow from operating activites 1,220 1,683
6. Finance costs
2014 2013
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Interest payable -
bank overdraft - - - 1 - 1
Interest payable -
sterling bank loan 7 22 29 10 32 42
-------- -------- -------- -------- -------- --------
7 22 29 11 32 43
======== ======== ======== ======== ======== =========
7. Dividends on ordinary shares
Dividends paid on equity shares: 2014 2013
£'000 £'000
Final dividend of 3.50p per ordinary share paid 7 March
2014 (2013: 3.45p paid 8 March 2013) 952 979
Interim dividend of 2.20p per ordinary share paid 5
September 2014 (2013: 2.00p paid 6 September 2013) 587 555
-------- --------
1,539 1,534
======== ========
The Directors have proposed a final dividend of 3.50 p per share in respect
of the year ended 31 October 2014. The proposed final dividend will be paid,
subject to shareholders' approval, on 6 March 2015 to shareholders on the
Company's register on 13 February 2015. The final dividend has not been
included as a liability in these financial statements as final dividends are
only recognised in the financial statements when they have been approved by
shareholders, or in the case of interim dividends, recognised when paid to
shareholders.
The total dividends payable in respect of the year which form the basis of
determining retained income for the purposes of Section 1158 of the Corporation
Tax Act 2010 and Section 833 of the Companies Act 2006, and the amounts
proposed, meet the relevant requirements as set out in the legislation.
Dividends paid or proposed on equity shares: 2014 2013
£'000 £'000
Interim paid 2.20p per ordinary share paid 6 September 2014
(2013: 2.00p) 587 555
Final proposed 3.50 p* payable 6 March 2015 (2014: 3.50p) 927 952
-------- --------
1,514 1,507
======== ========
* Based upon 26,479,268 ordinary shares (excluding treasury shares) in
issue on 8 January 2015.
The proposed final dividend is based on the number of shares in issue at the
year end. However, the dividend payable will be based on the number of shares
in issue on the record date and will reflect any purchases and cancellations of
shares by the Company settled subsequent to the year end.
Ordinary dividends paid by the Company carry a tax credit at a rate of 10%. The
credit discharges the tax liability of shareholders subject to income tax at
less than the higher rate. Shareholders liable to pay tax at the higher rate
will have further tax to pay.
8. Return per ordinary share
Revenue and capital returns per share are shown below and have been calculated
using the following:
2014 2013
Net revenue return attributable to ordinary
shareholders (£'000) 1,524 1,576
Net capital return attributable to ordinary
shareholders(£'000) 1,258 5,057
-------- --------
Total return (£'000) 2,782 6,633
-------- --------
Equity shareholders' funds (£'000) 45,194 45,491
-------- --------
The weighted average number of ordinary shares in issue
during each year, on which the return per ordinary share
was calculated was: 26,924,569 27,958,747
========== ==========
The actual number of ordinary shares in issue at the end
of each year, on which the net asset value was calculated
was: 26,479,268 27,399,268
========== ==========
2014 2013
Revenue Capital Total Revenue Capital Total
p p p p p p
Return per share
Calculated on
weighted average
number of shares 5.66 4.67 10.33 5.63 18.09 23.72
Net asset value per
share (debt at par
value) 170.68* 166.03**
-------- --------
Ordinary share price 167.25 164.50
======== ========
* The net asset value is based on 26,479,268 ordinary shares in issue. An
additional 6,454,664 shares were held in treasury.
** The net asset value is based on 27,399,268 ordinary shares in issue. An
additional 5,534,664 shares were held in treasury.
9. Called-up share capital
Ordinary Treasury Total Nominal
shares shares shares value
number number £'000
Allotted, called-up and fully paid
share capital comprised:
Ordinary shares of 1p each
At 31 October 2013 27,399,268 5,534,664 32,933,932 329
Shares purchased and held in treasury (920,000) 920,000 - -
-------- -------- -------- --------
At 31 October 2014 26,479,268 6,454,664 32,933,932 329
======== ======== ======== ========
During the year 920,000 ordinary shares were purchased and placed in treasury
(2013: 980,000 were purchased and placed in treasury) for a total consideration
of £1,540,000. No shares were cancelled from treasury during the year. (2013:nil).
10. Share premium account and reserves
Capital
reserves
Share Capital arising arising
premium redemption on on
account reserve investments revaluation
£'000 £'000 sold of
£'000 investments
held
£'000
At 1 November 2013 14,819 220 (210) 3,350
-------- -------- -------- --------
Movement during the year:
-------- -------- -------- --------
Gains on realisation of investments - - 2,190 -
-------- -------- -------- --------
Movement in investment holding gains - - - (705)
-------- -------- -------- --------
Finance costs, investment management
and performance fees charged
to capital after taxation - - (227) -
-------- -------- -------- --------
At 31 October 2014 14,819 220 1,753 2,645
======== ======== ======== ========
11. CONTINGENT LIABILITIES
There were no contingent liabilities at 31 October 2014 (2013: nil).
12.PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information contained in this announcement does not constitute
statutory accounts as defined in the Companies Act 2006. The 2014 Annual Report
and Financial Statements will be filed with the Registrar of Companies shortly.
The report of the auditor for the year ended 31 October 2014 contains no
qualification or statement under Section 498(2) or (3) of the Companies Act
2006.
This announcement was approved by the Board of Directors on 8 January 2015.
13. Annual Report
Copies of the Annual Report will be sent to members shortly and will be
available from the registered office c/o The Company Secretary, BlackRock
Income & Growth Investment Trust plc, 12 Throgmorton Avenue, London EC2N 2DL.
14. Annual General Meeting
The Annual General Meeting of the Company will be held at 12 Thorgmorton
Avenue, London EC2N 2DL on Wednesday, 25 February 2015 at 12.00 noon.
ENDS
The Annual Report will also be available on the BlackRock website at
blackrock.co.uk/brig. Neither the contents of the Manager's website nor the
contents of any website accessible from hyperlinks on the Manager's website (or
any other website) is incorporated into, or forms part of, this announcement.
For further information, please contact:
Simon White, Managing Director, Investment Companies, BlackRock Investment Management (UK) Limited
Tel: 020 7743 5284
Julia Wennstrom, Media Relations, BlackRock Investment Management (UK) Limited
Tel: 020 7743 4142
8 January 2015
12 Throgmorton Avenue
London
EC2N 2DLBlackrock Income & Growth Invt : AND GROWTH INVESTMENT TRUST PLC - Annual Financial Report
January 08, 2015 at 07:53 am
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