BlackRock Greater Europe Investment Trust NAV per share returned 49.4%, outperforming FTSE World Europe ex UK Index

Blackrock Greater Europe Investment Trust plc (LON:BRGE) has announced its Annual Report and Financial Statements 31 August 2021.


As at 
31 August 
As at 
31 August 
Net assets (£’000)1651,731 387,861 
Net asset value per ordinary share (pence)678.49 459.97 
Ordinary share price (mid-market) (pence)692.00 447.00 
Premium/(discount) to cum income net asset value22.0% (2.8%)
FTSE World Europe ex UK Index1869.96 1467.97 
======== ======== 

For the year 
31 August 
For the year 
31 August 
Performance (with dividends reinvested)
Net asset value per share249.4% 16.9% 
Ordinary share price256.8% 18.0% 
FTSE World Europe ex UK Index27.4% 0.7% 
======== ======== 

For the year 
31 August 
For the year 
31 August 

Net profit after taxation (£’000)3,595 5,776 -37.8 
Revenue profit per ordinary share (pence)4.13 6.85 -39.7 
Dividends (pence)
Interim dividend1.75 1.75 – 
Final dividend4.55 4.40 2.4 
————– ————– ————– 
Total dividends paid/payable6.30 6.15 3.4 
======== ======== ======== 

Source: BlackRock.

1     The change in net assets reflects new ordinary shares issued, shares reissued from treasury, market movements and dividends paid.
2     Alternative Performance Measures, see Glossary in the Annual Report and Financial Statements.


The past year has been a very successful one for your Company both with regard to excellent absolute returns and also relative to our reference index. This has resulted in significant demand for our shares and, since the end of January this year, we have either reissued shares from treasury or issued new shares at a premium to the net asset value (NAV) per share to the aggregate value of £89,004,000 up to 2 November 2021. This is very pleasing.

After the COVID-19 pandemic outbreak and subsequent ramifications in 2020, the restart of economic activity has gathered pace and 2021 looks set to be one of the best years for growth in decades, albeit from a low base. The success of vaccinations in Europe, together with fiscal stimulus and easy monetary support, have provided a bridge through the pandemic and allowed many economies to recover more quickly than expected.

Against this backdrop, it is very pleasing to report that over the year ended 31 August 2021 the Company’s NAV per share returned 49.4%, outperforming its reference index, the FTSE World Europe ex UK Index, which returned 27.4%. The Company’s share price returned 56.8% over the same period (all percentages calculated in sterling terms with dividends reinvested).

Since the financial year end and up to close of business on 2 November 2021, the Company’s NAV has increased by 2.3% compared with a rise in the FTSE World Europe ex UK Index of 1.3% over the same period.

The Company’s revenue return per share for the year ended 31 August 2021 amounted to 4.13p per share, which compares with 6.85p per share for the previous year, a decrease of 39.7%. In the previous year the revenue return had been enhanced by taxation recoveries in some of the jurisdictions in which we invest. In April the Board declared an interim dividend of 1.75p per share (2020: 1.75p) and the Board is proposing the payment of a final dividend of 4.55p per share for the year (2020: 4.40p). This, together with the interim dividend, makes a total dividend for the year of 6.30p per share (2020: 6.15p), a rise of 2.4%. The dividend will be funded primarily from dividend income received in the year, supported by a payment from revenue reserves. We are fortunate in having strong revenue reserves with which to fund this.

Subject to shareholder approval, the dividend will be paid on 17 December 2021 to shareholders on the Company’s register on 19 November 2021, the ex-dividend date being 18 November 2021.

Over the year to 31 August 2021, the Company’s shares have traded at an average premium of 0.1% and within a range of a 7.4% discount to a 4.1% premium. The Company did not buy back any shares during the year but has reissued 8,432,310 ordinary shares from treasury at a premium to NAV at an average price of 595.33p per share for a net consideration of £50,200,000. In addition, the Company allotted a total of 3,300,000 new ordinary shares during the year at an average price of 674.61p per share for a net consideration of £22,262,000. Since the year end up to 2 November 2021, a further 2,400,000 ordinary shares have been allotted at an average price of 689.12p per share for a total consideration of £16,542,000. These shares have been issued at an average premium over NAV of 2.1% (excluding costs).

As reported in the Half Yearly Financial Report, the Directors exercised their discretion not to operate the half yearly tender offers in November 2020 and May 2021. It was also announced on 30 September 2021 that the Board had decided not to implement a semi-annual tender offer in November 2021. Over the six-month period to 31 August 2021, the average premium to NAV (cum income) was 1.9%. The Board therefore concluded that it was not in the interests of shareholders, as a whole, to implement the latest semi-annual tender offer.

The Directors recognise the importance to investors that the market price of the Company’s shares should not trade at a significant premium or discount to the underlying NAV. Accordingly, in normal market conditions, the Board may use the Company’s share buy back and share issue powers, or operate six monthly tender offers, to ensure that the share price does not go to an excessive discount or premium to the underlying NAV. Resolutions to renew the Company’s semi-annual tender offers and the authorities to issue and buy back shares will be put to shareholders at the forthcoming Annual General Meeting.

The outlook for Europe is positive as vaccination rates rise and retail sales and consumer demand point to a strengthening economic recovery. Valuations of European stocks remain attractive relative to historical earnings multiples and are also significantly lower compared with either US stocks or European bonds. Additionally, investors remain significantly underweight in Europe in their portfolios and investor inflows are only just starting to pick up. All of this leads us to a positive view of the future.

Inflation remains the greatest concern and a key factor is the response by global central banks to inflation numbers. For now, the European Central Bank has not signalled any intention to increase rates, as it continues to preserve favourable financing conditions. We see recent market strength for European equities persisting and a focus on fundamentals and active management will be critical for our Portfolio Managers to identify potential winners as the recovery strengthens.

The AGM of the Company will be held at 12 Throgmorton Avenue, London EC2N 2DL (the venue) on Thursday, 9 December 2021 at 12 noon. In light of the ongoing COVID-19 pandemic, shareholders are strongly encouraged to submit a proxy vote in advance of the AGM, either by completing the hard copy Form of Proxy or online by following the instructions set out in the Notice of Annual General Meeting.

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

The Company may impose entry restrictions on persons wishing to attend the AGM (including, if required, refusing entry) in order to secure the orderly conduct of the AGM and the safety of the attendees. All shareholders intending to attend should either be fully vaccinated or obtain a negative COVID test result before entering the venue. Negative test results must be obtained no earlier than one day before entering the venue and fully vaccinated shareholders are also strongly encouraged to get tested. Attendees will also be required to wear a face covering at all times within the venue except when seated in the relevant meeting room. Shareholders are also requested not to attend the AGM if they have tested positive for COVID-19 in the 10 days prior to the AGM, are experiencing new or worsening COVID-19 related symptoms, have been in close contact with anyone who is experiencing symptoms or has contracted COVID-19 during the 14 days prior to the AGM, or are required to self isolate pursuant to UK Government guidance.

Finally, most of our Board meetings during the year were held virtually but happily, during the summer, physical meetings were able to resume. I would like to thank my colleagues and our advisers for the versatility that they have shown throughout the pandemic in adapting to the circumstances and to welcome a return to a more normal modus of operation.

4 November 2021


The Company enjoyed positive performance over the year with a share price total return of +56.8% and underlying NAV total return of +49.4% in the twelve months to 31 August 2021. By way of comparison, the FTSE World Europe ex UK Index gained +27.4% over the same period. (All percentages are calculated in sterling terms with dividends reinvested.)

Our approach to active investing is predicated on our view that returns are a function of direct actions you take on the portfolio, as much as the actions you actively decline to take. The interconnected, almost hyperactive nature of our modern world means there is always something to worry about and investors are typically faced with a prevailing macro narrative that asks them to change the composition of their portfolio. Markets ultimately like to challenge investors taking the longer term and high conviction view. Success befalls those who clearly understand why the earnings stream in which they are invested offers duration and the potential for long-term value creation.

In last year’s Annual Report, we explained how the COVID-19 pandemic posed a severe test to any investor’s investment philosophy. It required a heightened focus on maintaining a long-term approach to investing, while resisting any distraction from short-term market gyrations. We had to lean heavily on our well-defined investment process: focusing on owning exceptional businesses with clearly articulated strategies, high returns on capital, strong free cash-flow generation and options to deploy capital into growth projects at attractive returns. This approach served our shareholders well during a turbulent 2020.

While the global economy and European markets have shown impressive progress over the course of 2021, our investment approach was again challenged, this time by a shift in market leadership that saw old economy sectors propelling markets higher. Positive vaccine efficacy data released in November 2020 fuelled a powerful top-down narrative revolving around the reopening of economies, vaccine rollouts, inflationary pressures and rising interest rates. This led to cyclical, operationally levered parts of the market – less represented in this Company – such as banks, airlines, auto manufacturers and energy companies seeing significant share price rallies during the first four months of 2021.

As has now become a common occurrence, we were again presented with an eloquent thesis from a broad range of market strategists suggesting permanent regime change and that companies and sectors that had outperformed in the last ten years could not continue to do so. We had shared the optimism around the global economic recovery and been constructive on the outlook for corporate earnings since May last year but, equally, we had been consistent with our view that the post-COVID-19 world would unlikely look very different from the pre-COVID-19 environment. We felt that many of the effects we were seeing in the early part of the recovery were likely to be transitory in nature, which is a view around which markets have increasingly coalesced.

With this in mind, we are pleased to report that the overall shape of the portfolio has changed very little and shares in our Company have continued to deliver for shareholders despite all these significant events influencing markets over the course of last year. This adds credence to our approach of ignoring macro narratives and instead focusing on long duration growth in earnings and cashflows to drive returns for our shareholders.

One segment of the portfolio that exemplifies long duration value creation are our holdings in the European semiconductor industry including ASML, BE Semiconductor and VAT Group – all amongst our top performers over the period under review. These companies service different parts of the semiconductor value chain and are dominating their respective niches, affording them a healthy degree of pricing power. As is now well documented, the strength in demand for semiconductor components has left many end users in short supply. In fact, one of the reasons we were attracted to these companies in the first place was that the equipment they produce ultimately serve a broad range of end markets that should lend themselves to high, sustainable and value accretive growth. More specifically, demand is coming from areas like high performance computing, artificial intelligence, smartphones, 5G rollouts, gaming and accelerated servers, as well as the continued build-out of data centres and cloud infrastructure.

In addition, the semiconductor content in electric vehicles (EV) is five to six times larger than in traditional combustion engine cars which makes decarbonisation of transport another important driver of demand. In the first instance, semiconductor components are required for the interconnectivity in cars and ensure efficient power management of battery stacks. On top of the electric drivetrain, there is also higher semiconductor content coming from solutions like ADAS (Advanced Driver Assistance Systems – applications such as Lidar, Radar and other safety features) and Infotainment (wireless internet, Bluetooth, touchscreens etc.). Lastly, the semiconductor industry will benefit from continued innovation in the auto industry, like the nascent development of autonomous driving. As a simple rule of thumb, we can say that the more sophisticated and customised the car, the higher the content of semiconductor chips and sensors. Whilst traditional European car manufacturers rarely meet our investment criteria, we can gain exposure to the accelerated adoption of EVs via companies that ultimately act as enablers of one of the largest industrial transformations we are likely to experience in our careers. The good news here is that this process has only just begun and has a long way to run. In this context, we would note that semiconductor stocks are still only 4% of global market capitalisation whilst energy – a sector disadvantaged by the energy transition – still accounts for more than 5%, again pointing to the potential for long duration value creation.

Long duration value creation also often resides within organisations that are founder led, with an entrepreneurial culture, large addressable markets and a product offering that enables disruption and change. One of the best aspects of our jobs as stock pickers is to find those hidden gems early and to grow with them over long periods of time. An example of such a company is Danish-listed IT service provider Netcompany Group. This business helps both public and private sector clients to digitise their operations across four main markets in Denmark, Norway, the UK and the Netherlands. While digital transformation of our economies was a process well under way even before the pandemic, developments in 2020 forced many of Netcompany Group’s clients to accelerate investment into information technology (IT) infrastructure that helped connect businesses with employees and clients alike. Its services have applications as diverse as a customs office looking to develop more efficient ways to collect taxes, helping local authorities to manage schools, or making Copenhagen airport one of the most technologically advanced in the world. Private sector clients also provide many different use cases for its services. In the financial services, logistics and utilities industries, Netcompany Group helps clients to modernise their IT stack with data analytics or to move their IT infrastructure into the cloud. Overall, this is a capital light business model generating high margins and attractive returns on invested capital which combined with high growth – even in 2020 this business grew 20% organically – makes for a powerful recipe for value creation.

Another key investment that has been generating value for our shareholders over prolonged periods of time is Swiss listed Sika, a global leader in construction and industrial chemicals and one of the Company’s top performers over the past year.

The company provides solutions for sealing, insulating, bonding and protecting load-bearing building structures, which are typically used in large infrastructure projects. We see Sika as an innovation powerhouse with a diversified and innovative product portfolio, as well as a well-invested distribution network across the 100+ countries in which it operates. In other parts of the group, Sika also holds a leading position in the supply of noise dampening material and high strength bonding agents used in the manufacture of EVs. With 50% of group sales coming from refurbishment and modernisation spend, Sika appears well positioned to capture some of the post pandemic global infrastructure spending, including investment initiatives coming out of the European Green Deal and the European Union (EU) Recovery Fund. Sika’s management team has an excellent long-term track record in creating shareholder value and we expect them to continue to deploy capital in a way that allows for further margin expansion and for return on invested capital to move higher over the coming years. Finally, adopting a blue-sky mindset, we are keenly monitoring Sika’s research and development initiatives in developing a process to recycle concrete – one of the most carbon intensive industrial processes – which provides further potential upside to an already strong stand-alone investment thesis.

Elsewhere within industrials, the Company enjoyed a strong performance contribution from logistics and transport group DSV Panalpina (DSV). DSV did an excellent job integrating the Panalpina business acquired in 2019, which helped the company grow volumes and earnings with little net additions in costs. Furthermore, DSV announced its next acquisition, buying Kuwait-based Agility’s logistics business in a US$4.1 billion deal in March this year, becoming the third largest freight forwarder globally. Agility is roughly 25% of the size in volume of DSV and we expect this deal to be highly earnings accretive post synergies.

The Company also benefited from strong stock selection within the health care sector where long-term holding Novo Nordisk, a global leader in diabetes care, contributed strongly once again. Shares moved higher following US Food and Drug Administration (FDA) approval for its weight management drug Wegovy. At present, 80% of Novo Nordisk’s business relates to diabetes drugs and we see the potential for its obesity franchise at only 6% of group sales to deliver high margin and long duration growth for many years to come. In addition to sector leading growth, Novo Nordisk offers high returns and best in class cash flow conversion, with any excess in capital being returned to shareholders. Dental implant manufacturer Straumann also traded strongly; in this case we see upside to market expectations stemming from their opportunity to take market share in China which remains a largely under-penetrated market.

The largest relative detractor was German software group SAP. Depressed business spending and delayed decision making by major clients led the company to publish weaker than expected results, as well as a cut to its revenue and profit forecasts. In this context, SAP updated its medium-term targets, essentially pushing out a long-awaited improvement in operating margins by up to two years. We had expected the management team to potentially update its strategic targets in light of COVID-19, however, we were left surprised by the extent of revisions to forecasts. Having reviewed the investment case in detail, we decided to exit the position.

Similar to 2020, some of our travel related holdings including Amadeus IT Group and Safran were amongst the bottom performers for the year. This was the result of weakness in air traffic volumes, with the timing of a more sustained recovery in air travel remaining uncertain. Whilst markets had hoped for travel to recover more quickly, we do not expect a structural change in consumer behaviour over the medium term and believe travel will recover strongly once restrictions are removed.

As mentioned above, overall portfolio changes were limited, with turnover for the period of 20% pointing to an average holding period of five years. Dislocations in markets, whatever form they might take, afford the patient investor opportunities to add to existing holdings, or at times create entry points in exceptional businesses at sharply reduced valuations. In the early part of 2021, a severe rotation in markets created such an opportunity to add to one of our long-term favourites, Swiss listed Lonza Group (Lonza), as its shares lagged the cyclical value rally materialising at the time. We used this share price weakness to top up our position as we remained confident that from an operational perspective the business was firing on all cylinders. As a contract manufacturer of high-end drugs, Lonza operates in a highly attractive market niche, holding the dominant market position globally. If anything, the predictability of this business’ earnings and cashflows materially improved over the course of the first half of the year, as Lonza disposed of its more cyclical specialty ingredients operations. The remaining part of the group enjoys exceptionally strong demand fundamentals, creating multiple opportunities to redeploy cash at returns on capital close to 30%, a compelling proposition. Lonza’s competitive advantages stem from the complexity of the production process, where few peers can match its offering. This is cemented by high barriers to entry given that all production facilities have to be certified by the FDA. Overall, we expect Lonza’s biologics business to grow in the mid-teens every year for the next ten years, with positive pricing given the shortage of capacity in the market.

Other notable changes included additions to existing holdings in Hermès, Kering, Amadeus IT Group and DSV. Equally, we used the strength in financials during the early part of the year to take profits in Sberbank, Alpha Bank and KBC, all of which had enjoyed strong share price performances on the back of vaccine induced recovery euphoria. Overall, we remain very selective in financials as the banking industry remains dogged by the persistence of the low rate environment, as well as fierce competition, leading to a generally tough operating environment.

With strong investment performance and significant share issuance, the Company is much bigger than it was a year ago. The additional funds have been invested in existing holdings and in a small number of new holdings. The number of companies in which we now invest is 44 compared to 38 a year ago.

As stated earlier, when it comes to the outlook for the region our base case remains largely unchanged and the likely post-COVID-19 world will not look very different from the pre-COVID-19 environment. We expect nominal global gross domestic product growth to remain in a range of 3% to 6% and for interest rates to stay low for a prolonged period of time caused by secular factors like the high level of indebtedness in the developed world, ageing demographics, as well as the deflationary impact of automation and digitalisation on our economies. What makes Europe more appealing near term is the fact that its recovery has lagged regions such as the US and China. Key European economies such as France, Germany and Spain are still in the process of regaining output lost during 2020. Furthermore, with more fiscal stimulus coming from the EU Recovery Fund as well as spending from individual countries, European equities appear well set to continue recovering into 2022 and beyond.

Beyond 2021, select companies will continue to grow quickly whilst others are likely to struggle with tougher comparatives, mediocre growth and the same structural challenges that plagued old economy industries pre-pandemic. To us, this simply highlights the importance of taking an active approach to investing in European equities. As fundamental stock pickers we will continue to focus all of our research hours on identifying end markets and income streams that lend themselves to value creation on a duration basis. We aim to continue behaving like owners of businesses rather than traders of shares. With these principles rooted in our philosophy, process and daily activities, we aim to continue delivering on the Company’s investment objective of providing long-term growth in capital to clients.

4 November 2021

To discover more about the BlackRock Greater Europe Investment Trust click here. 


1 + ASML (2020: 2nd)
Technology company
Market value: £53,214,000
Share of investments: 7.8%

A Dutch company which specialises in the supply of photolithography systems for the semiconductor industry. The company is at the forefront of technological change, investing in leading research and development to capture the structural growth opportunity coming from growth in mobile devices and microchip components. High barriers to entry within the industry give ASML a protected position with strong pricing power allowing growth in margins whilst they continue to innovate. The company is run by an exceptional management team which aims to create long-term value whilst returning excess cash to shareholders.

2 + Lonza Group (2020: 4th)
Health Care company
Market value: £39,463,000
Share of investments: 5.8%

A Swiss biotechnology and speciality chemicals company. Lonza has established itself as one of the leading contract manufacturers of high-end biological drugs, as well as cell and gene therapy. Lonza’s competitive advantages stem from the complexity of the production process – where few peers can match its offering. This is cemented by high barriers to entry given that all production facilities are required to be certified by the FDA. Overall, we expect Lonza’s biologics business to grow in the mid-teens every year for the next ten years with positive pricing, as there is generally a shortage of capacity in the market.

3 – Sika (2020: 1st)
Industrial company
Market value: £34,795,000
Share of investments: 5.1%

A speciality chemical company with a leading position in both construction chemicals and bonding agents for the automotive industry. Sika has proprietary technology within adhesives, which has an increasing array of applications as technology advances. The company benefits from structural drivers of urbanisation and has exposure to multiple points in the construction cycle including new infrastructure projects, as well as maintenance or refurbishment of existing buildings. It is also likely to benefit from the EU Recovery Fund and the EU Green Deal, channelling funds towards sustainable infrastructure projects. Sika’s decentralised structure of subsidiaries and strong culture of new product innovation continues to drive pricing power.

4 + Kering (2020: 5th)
Consumer Discretionary company
Market value: £33,051,000
Share of investments: 4.8%

A French luxury group owning brands such as Gucci, Yves Saint Laurent and Bottega Veneta. We believe Kering is one of the winners in a ‘winner takes all’ market given the strength and resilience of its brands. This position is cemented by its best in class e-commerce offering, which in combination with a rejuvenated product portfolio, has enabled Kering to capture the imagination of global millennials. We believe Kering remains an extremely well-positioned company with a strong balance sheet that offers optionality for both increased shareholder returns as well as value accretive deals. In the near term, we think the brand can benefit from new collection launches around its 100th anniversary later this year.

5 + DSV Panalpina (2020: 8th)
Industrial company
Market value: £31,546,000
Share of investments: 4.6%

A Danish freight forwarding and logistics company run by an excellent management team with a strong track record in creating value through acquisitions and by instilling a best in class culture in its organisation. Their success in making acquisitions has been facilitated by a strong technology platform which drives operational efficiencies leading to high conversion margins. In 2019, DSV took over Swiss peer Panalpina in its largest ever acquisition which they have been integrating successfully. More recently, DSV announced the purchase of Kuwait-based Agility’s logistics business in a US$4.1 billion deal, becoming the third largest freight forwarder globally.

6 = Novo Nordisk (2020: 6th)
Health Care company
Market value: £30,702,000
Share of investments: 4.5%

A Danish multinational pharmaceutical company which is a leader in diabetes care. We expect Novo Nordisk to post strong growth in earnings and cashflows driven by demand for ‘Ozempic’ which treats type 2 diabetes, as well as by its weight management drug Wegovy, for which Novo Nordisk recently received FDA approval. Overall, we believe Novo Nordisk offers attractive long-term growth potential at high returns, and sector leading cash flow conversion with any excess in cash being returned to shareholders.

7 + RELX (2020: 9th)
Consumer Discretionary company
Market value: £27,359,000
Share of investments: 4.0%

A multinational information and analytics company which has high barriers to entry in most of its divisions, including scientific publishing. This capital light business model allows for a high rate of cash flow conversion with repeatable revenues built on subscription-based models. The business also benefits from the structurally increasing usage of data globally, which supports their data analytics business.

8 – Royal Unibrew (2020: 7th)
Consumer Staples company
Market value: £24,605,000
Share of investments: 3.6%

A brewing and beverage company based in Denmark. Through a number of well-timed acquisitions, the group has transformed itself into a multi-beverage company offering attractive growth in soft drink niches at high returns, with significant potential to export their brands with strong European heritage into international markets.

9 + Netcompany Group (2020: 13th)
Technology company
Market value: £22,199,000
Share of investments: 3.3%

A Danish IT Services provider with operations in Denmark, Norway, the Netherlands and the UK. Netcompany Group’s services help clients with digital transformation, building IT platforms for both public sector and private clients. Its unique business model and large addressable market allows for attractive growth at sector leading margins. Given the capital light nature of the business, Netcompany Group generates high returns which should allow for significant value creation over time.

10 = Hexagon (2020: 10th)
Technology company
Market value: £21,751,000
Share of investments: 3.2%

An industrial and software conglomerate. The business specialises in the provision of geo-mapping and monitoring software and sensors, as well as plant management and automation systems. Its products have applications in diverse end markets including smart phones, mining automation, construction surveying and agriculture optimisation.

All percentages reflect the value of the holding as a percentage of total investments.

Together, the ten largest investments represent 46.7% of the Company’s portfolio (31 August 2020: 50.5%).


Country of 
% of 
ASMLNetherlands 53,214 7.8 
Netcompany GroupDenmark 22,199 3.3 
HexagonSweden 21,751 3.2 
BE SemiconductorNetherlands 17,326 2.5 
Logitech InternationalSwitzerland 14,475 2.1 
Amadeus IT GroupSpain 12,328 1.8 
Dassault SystèmesFrance 9,501 1.4 
AllegroPoland 8,273 1.2 
ASM InternationalNetherlands 6,666 1.0 
————— ————— 
165,733 24.3 
========= ========= 
SikaSwitzerland 34,795 5.1 
DSV PanalpinaDenmark 31,546 4.6 
AdyenNetherlands 20,883 3.0 
SafranFrance 14,520 2.1 
VAT GroupSwitzerland 14,075 2.1 
Atlas CopcoSweden 12,868 1.9 
KingspanIreland 11,609 1.7 
MarelNetherlands 6,579 1.0 
ALDFrance 6,135 0.9 
EpirocSweden 5,673 0.8 
————— ————— 
158,683 23.2 
========= ========= 
Health Care
Lonza GroupSwitzerland 39,463 5.8 
Novo NordiskDenmark 30,702 4.5 
StraumannSwitzerland 17,748 2.6 
DiaSorinItaly 12,209 1.8 
ChemometecDenmark 9,299 1.3 
PolyPeptide GroupSwitzerland 3,243 0.5 
————— ————— 
112,664 16.5 
========= ========= 
Consumer Discretionary
KeringFrance 33,051 4.8 
RELXUnited Kingdom 27,359 4.0 
HermèsFrance 14,797 2.2 
Ozon HoldingsRussia 10,730 1.6 
FerrariItaly 8,768 1.3 
Fix Price GroupRussia 6,104 0.9 
AdidasGermany 5,573 0.8 
————— ————— 
106,382 15.6 
========= ========= 
Partners GroupSwitzerland 11,833 1.7 
FinecoBankItaly 11,028 1.6 
Avanza Bank HoldingSweden 10,116 1.5 
Allfunds GroupUnited Kingdom 9,538 1.4 
National Bank of GreeceGreece 6,762 1.0 
Bank PekaoPoland 6,389 0.9 
————— ————— 
55,666 8.1 
========= ========= 
Consumer Staples
Royal UnibrewDenmark 24,605 3.6 
LindtSwitzerland 6,962 1.0 
————— ————— 
31,567 4.6 
========= ========= 
Basic Materials
IMCDNetherlands 19,455 2.9 
ICL GroupIsrael 7,694 1.1 
————— ————— 
27,149 4.0 
========= ========= 
NesteFinland 14,462 2.1 
LukoilRussia 10,468 1.6 
————— ————— 
24,930 3.7 
========= ========= 
Total investments682,774 100.0 
========= ========= 

All investments are in ordinary shares unless otherwise stated. The total number of investments held at 31 August 2021 was 44 (31 August 2020: 38).

Industry classifications in the table above are based on the Industrial Classification Benchmark standard for categorisation of companies by industry and sector.

As at 31 August 2021, the Company did not hold any equity interests comprising more than 3% of any company’s share capital.



% of Portfolio
€1bn to €10bn26.0
€10bn to €20bn9.9
€20bn to €50bn25.7
> €50bn38.4


Number of investments% of Portfolio
£3m to £5m10.5
£5m to £10m1516.0
> £10m2883.5


Health Care16.5
Consumer Discretionary15.6
Consumer Staples4.6
Basic Materials4.0

Source: BlackRock


The Directors present the Strategic Report of the Company for the year ended 31 August 2021. The aim of the Strategic Report is to provide shareholders with the information to assess how the Directors have performed their duty to promote the success of the Company for the collective benefit of shareholders.

The Chairman’s Statement together with the Investment Manager’s Report form part of this Strategic Report. The Strategic Report was approved by the Board at its meeting on 4 November 2021.

The Company carries on business as an investment trust and has a premium listing on the London Stock Exchange. Its principal activity is portfolio investment. Investment trusts are pooled investment vehicles which allow exposure to a diversified range of assets through a single investment, thus spreading investment risk.

The Company’s objective is the achievement of capital growth, primarily through investment in a focused portfolio constructed from a combination of the securities of large, mid and small capitalisation European companies, together with some investment in the developing markets of Europe. The Company also has the flexibility to invest in any country included in the FTSE World Europe ex UK Index, as well as the freedom to invest in developing countries not included in the Index but considered by the Manager and the Directors as part of greater Europe.


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 BlackRock Fund Managers Limited (the Manager). Matters reserved for the Board include setting the Company’s strategy, including its investment objective and policy, setting limits on gearing, capital structure, governance, and appointing and monitoring of performance of service providers, including the Manager.

Business model
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. In accordance with the Alternative Investment Fund Managers’ Directive (AIFMD) the Company is an Alternative Investment Fund (AIF). BlackRock Fund Managers Limited is the Company’s Alternative Investment Fund Manager.

The management of the investment portfolio and the administration of the Company have been contractually delegated to the Manager who in turn (with the permission of the Company) has delegated certain investment management and other ancillary services to BlackRock Investment Management (UK) Limited (BIM (UK) or the Investment Manager). 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.

The Company delegates fund accounting services to BIM (UK), which in turn sub-delegates these services to The Bank of New York Mellon (International) Limited (BNYM). Other service providers include the Depositary (also BNYM) and the Registrar, Computershare Investor Services PLC. Details of the contractual terms with the Manager and the Depositary and more details of arrangements in place governing custody services are set out in the Directors’ Report in the Annual Report and Financial Statements.

Investment policy
The Company’s policy is that the portfolio should consist of approximately 30-70 securities and the majority of the portfolio will be invested in larger capitalisation companies, being companies with a market capitalisation of over €5 billion. Up to 25% of the portfolio may be invested in companies in developing Europe. The Company may also invest up to 5% of the portfolio in unquoted investments. However, overall exposure to developing European companies and unquoted investments will not in aggregate exceed 25% of the Company’s portfolio.

As at 31 August 2021, the Company held 44 investments and 4.2% of the portfolio was invested in developing Europe. The Company had no unquoted investments.

Investment in developing European securities may be either direct or through other funds, including those managed by BlackRock Fund Managers Limited, subject to a maximum of 15% of the portfolio. Direct investment in Russia is limited to 10% of the Company’s assets. Investments may also include depositary receipts or similar instruments representing underlying securities.

The Company also has the flexibility to invest up to 20% of the portfolio in debt securities, such as convertible bonds and corporate bonds. No bonds were held at 31 August 2021. The use of any derivative instruments such as financial futures, options and warrants and the entering into of stock lending arrangements will only be for the purposes of efficient portfolio management.

While the Company may hold shares in other investment companies (including investment trusts), the Board has agreed that the Company will not invest more than 15%, in aggregate, of its gross assets in other listed closed-ended investment funds (save to the extent that such closed-ended investment funds have published investment policies to invest no more than 15% of their total assets in such other listed closed-ended investment funds).

The Company achieves an appropriate spread of risk by investing in a diversified portfolio of securities.

The Investment Manager believes that appropriate use of gearing can add value over time. This gearing typically is in the form of an overdraft facility which can be repaid at any time. The level and benefit of any gearing is discussed and agreed regularly by the Board. The Investment Manager generally aims to be fully invested and it is anticipated that gearing will not exceed 15% of net asset value (NAV) at the time of drawdown of the relevant borrowings. At the balance sheet date, the Company had net gearing of 4.8% (2020: 5.7%).

In the year to 31 August 2021, the Company’s NAV per share returned 49.4% (compared with a return in the FTSE World Europe ex UK Index of 27.4%) and the share price returned 56.8% (all percentages calculated in sterling terms with dividends reinvested). 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.

The results for the Company are set out in the Income Statement in the Financial Statements. The total profit for the year, after taxation, was £196,575,000 (2020: £55,862,000) which is reflected in the increase in the net asset value of the Company. The revenue return amounted to £3,595,000 (2020: £5,776,000) and relates to net revenue earnings from dividends received during the year after adjusting for expenses, as well as the positive outcome on a tax ruling relating to overseas dividends.

As explained in the Company’s Half Yearly Financial Report, the Directors declared an interim dividend of 1.75p per share (2020: 1.75p). The Directors recommend the payment of a final dividend of 4.55p per share, making a total dividend of 6.30p per share (2020: 6.15p). Subject to approval at the forthcoming Annual General Meeting, the dividend will be paid on 17 December 2021 to shareholders on the register of members at the close of business on 19 November 2021.

The Board’s main focus is to achieve capital growth. The future performance of the Company is dependent upon the success of the investment strategy and, to a large extent, on the performance of financial markets. The outlook for the Company is discussed in both the Chairman’s Statement and Investment Manager’s Report above.

As an investment trust with no employees, the Company has no direct social or community responsibilities or impact on the environment. However, the Directors believe that it is important and in shareholders’ interests to consider human rights issues and environmental, social and governance factors when selecting and retaining investments. Details of the Company’s policy on socially responsible investment are set out on pages 56 and 57 of the Annual Report and Financial Statements.

As an investment vehicle, the Company does not provide goods or services in the normal course of business and does not have customers. The Investment Manager considers modern slavery as part of supply chains and labour management within the investment process. Accordingly, the Directors consider that the Company is not required to make any slavery or human trafficking statement under the Modern Slavery Act 2015. In any event, the Board considers the Company’s supply chains, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter.

The Directors of the Company on 31 August 2021, all of whom held office throughout the year, are set out in the Directors’ Biographies on pages 27 and 28 of the Annual Report and Financial Statements. The Board consists of two male Directors and two female Directors. The Company’s policy on diversity is set out on page 54 of the Annual Report and Financial Statements. The Company does not have any executive employees.

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 other investment trusts are set out below. As indicated in the footnote to the table below, some of these KPIs fall within the definition of ‘Alternative Performance Measures’ 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 in the Annual Report and Financial Statements.

Additionally, the Board regularly reviews the performance of the portfolio, as well as the net asset value and share price of the Company and compares this against various companies and indices. The Company does not have a benchmark. However, the Board reviews performance and ongoing charges against a peer group of European investment trusts and open-ended funds, as well as the FTSE World Europe ex UK Index.

As at 
31 August 
As at 
31 August 
Net asset value per share678.49p 459.97p 
Net asset value total return1,2+49.4% +16.9% 
Share price692.00p 447.00p 
Share price total return1,2+56.8% +18.0% 
Premium/(discount) to net asset value22.0% (2.8)% 
Revenue return per share4.13p 6.85p 
Ongoing charges2,31.02% 1.01% 
========= ========= 

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 in the Annual Report and Financial Statements.
3     Ongoing charges represent the management fee and all other operating expenses, excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain non-recurring items, as a % of average daily net assets.

The Company is exposed to a variety of risks and uncertainties. As required by the 2018 UK Corporate Governance Code (the UK Code), the Board has put in place a robust ongoing process to identify, assess and monitor the principal risks and emerging risks facing the Company. A core element of this process is the Company’s risk register which identifies the risks facing the Company and assesses the likelihood and potential impact of each risk and the quality of controls operating to mitigate it. A residual risk rating is then calculated for each risk based on the outcome of the assessment.

The risk register, its method of preparation and the operation of key controls in BlackRock’s and third-party service providers’ systems of internal control, are reviewed on a regular basis by the Audit and Management Engagement Committee. In order to gain a more comprehensive understanding of BlackRock’s and other third-party service providers’ risk management processes and how these apply to the Company’s business, BlackRock’s internal audit department provides an annual presentation to the Audit Committee chairmen of the BlackRock investment trusts setting out the results of testing performed in relation to BlackRock’s internal control processes. The Audit and Management Engagement Committee also periodically receives and reviews internal control reports from BlackRock and the Company’s service providers.

The Board has undertaken a robust assessment of both the principal and emerging risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. The COVID-19 pandemic has given rise to unprecedented challenges for businesses across the globe and the Board has taken into consideration the risks posed to the Company by the crisis and incorporated these into the Company’s risk register. The threat of climate change has also reinforced the importance of more sustainable practices and environmental responsibility.

Emerging risks are considered by the Board as they come into view and are incorporated into the existing review of the Company’s risk register. They were also considered as part of the evaluation process. Additionally, the Manager considers emerging risks in numerous forums and the Risk and Quantitative Analysis team produces an annual risk survey. Any material risks of relevance to the Company identified through the annual risk survey will be communicated to the Board.

The Board will continue to assess these risks on an ongoing basis. In relation to the UK Code, the Board is confident that the procedures that the Company has put in place are sufficient to ensure that the necessary monitoring of risks and controls has been carried out throughout the reporting period.

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

Principal riskMitigation/Control
The potential loss that the Company could incur if a counterparty is unable (or unwilling) to perform on its commitments.

Due diligence is undertaken before contracts are entered into and exposures are diversified across a number of counterparties.

The Depositary is liable for restitution for the loss of financial instruments held in custody unless able to demonstrate the loss was a result of an event beyond its reasonable control.
Investment performance
The returns achieved are reliant primarily upon the performance of the portfolio.

The Board is responsible for:

·        deciding the investment strategy to fulfil the Company’s objective; and
·        monitoring the performance of the Investment Manager and the implementation of the investment strategy.

An inappropriate investment policy may lead to:

·        underperformance compared to the reference index;
·        a reduction or permanent loss of capital; and
·        dissatisfied shareholders and reputational damage.

To manage this risk the Board:

·        regularly reviews the Company’s investment mandate and long-term strategy;
·        has set investment restrictions and guidelines which the Investment Manager monitors and regularly reports on;
·        receives from the Investment Manager a regular explanation of stock selection decisions, portfolio exposure, gearing and any changes in gearing and the rationale for the composition of the investment portfolio;
·        monitors and maintains an adequate 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 investment policy;
·        receives and reviews regular reports showing an analysis of the Company’s performance against the FTSE World Europe ex UK Index and other similar indices; and
·        has been assured that the Investment Manager has training and development programmes in place for its employees and its recruitment and remuneration packages are developed in order to retain key staff.
Legal & Regulatory Compliance
The 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 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.

Amongst other relevant laws, the Company is required to comply with the provisions of the Companies Act 2006, the Alternative Investment Fund Managers’ Directive, the UK Listing Rules, Disclosure Guidance and Transparency Rules and Market Abuse Regulation.

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

Compliance with the accounting rules affecting investment trusts are also carefully and regularly monitored.

The Company Secretary, Manager and the Company’s professional advisers provide regular reports to the Board in respect of compliance with all applicable rules and regulations. The Board and the Manager also monitor changes in government policy and legislation which may have an impact on the Company.
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.

Changes in general economic and market conditions, such as currency exchange rates, interest rates, rates of inflation, industry conditions, tax laws and political events can also substantially and adversely affect the securities and, as a consequence, the Company’s prospects and share price.

Market risk includes the potential impact of events which are outside the Company’s control, such as the COVID-19 pandemic.

Companies operating in the sectors in which the Company invests may be impacted by new legislation governing climate change and environmental issues, which may have a negative impact on their valuation and share price.

The Board considers the diversification of the portfolio, 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.

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. 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 Portfolio Managers 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.

The Portfolio Managers spend a considerable amount of time understanding the environmental, social and governance (ESG) risks and opportunities facing companies and industries in the portfolio. They use ESG information when conducting research and due diligence on new investments and again when monitoring investments in the portfolio.
In common with most other investment trust companies, the Company has no employees. The Company therefore relies on the services provided by third parties and is dependent on the control systems of the Manager and BNYM (the Depositary, Custodian and Fund Accountant) which maintains the Company’s assets, dealing procedures and accounting records.

The security of the Company’s assets, dealing procedures, accounting records and adherence to regulatory and legal requirements depend on the effective operation of the systems of these other third-party service providers. There is a risk that a major disaster, such as floods, fire, a global pandemic, or terrorist activity, renders the Company’s service providers unable to conduct business at normal operating effectiveness.

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 (including cyber security risk) could prevent the accurate reporting and monitoring of the Company’s financial position.

Due diligence is undertaken before contracts are entered into with third-party service providers. Thereafter, the performance of the provider is subject to regular review and reported to the Board.

The Board reviews on a regular basis an assessment of the fraud risks that the Company could potentially be exposed to and also a summary of the controls put in place by the Manager, Depositary, Custodian, Fund Accountant and Registrar specifically to mitigate these risks.

Most third-party service providers produce internal control reports to provide assurance regarding the effective operation of internal controls as reported on by their reporting accountants. These reports are provided to the Audit and Management Engagement Committee for review. The Committee would seek further representations from service providers if not satisfied with the effectiveness of their control environment.

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 financial instruments of an identical type or the corresponding amount, unless able to demonstrate the loss was a result of an event beyond its reasonable control.

The Board reviews the overall performance of the Manager, Investment Manager and all other third-party service providers on a regular basis and compliance with the Investment Management Agreement annually.

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 and emerging 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 Company’s investment activities expose it to a variety of financial risks which include market risk, counterparty credit risk, liquidity risk and the valuation of financial instruments.

Details of these risks are disclosed in note 15 to the Financial Statements in the Annual Report and Financial Statements, together with a summary of the policies for managing these risks.
Marketing efforts are inadequate or do not comply with relevant regulatory requirements. There is a failure to communicate adequately with shareholders or reach out to potential new shareholders resulting in reduced demand for the Company’s shares and a widening of the discount.

The Board reviews marketing strategy and initiatives and the Manager is required to provide regular updates on progress. BlackRock has a dedicated investment trust sales team visiting both existing and potential clients on a regular basis. Data on client meetings and issues raised are provided to the Board on a regular basis.

All investment trust marketing documents are subject to appropriate review and authorisation.

In accordance with provision 31 of the 2018 UK Corporate Governance Code, the Directors have assessed the prospects of the Company over a longer period than the twelve months referred to by the ‘Going Concern’ guidelines. The Company is an investment trust with the objective of achieving capital growth. The Directors expect the Company to continue for the foreseeable future and have conducted this review for the period up to the Annual General Meeting in 2026. The Directors believe that five years is an appropriate investment horizon to assess the viability of the Company. This is based on the Company’s long-term mandate, the low turnover in the portfolio and the investment holding period investors generally consider while investing in the European sector.

In making an assessment on the viability of the Company, the Board has considered the following:

·        the impact of a significant fall in European equity markets on the value of the Company’s investment portfolio;

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

·        the principal and emerging risks and uncertainties, as set out above, and their potential impact;

·        the level of ongoing demand for the Company’s shares;

·        the Company’s share price discount/premium to NAV;

·        the liquidity of the Company’s portfolio; and

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

The Company’s performance has been strong for the five-year reporting period to 31 August 2021 with an undiluted NAV total return of 155.1% and a share price total return of 175.8%, versus a reference index total return of 71.8%. The Directors have concluded that there is a reasonable expectation that the Company will continue in operation and meet its liabilities as they fall due over the period of their assessment based on the following considerations:

·        the Investment Manager’s compliance with the investment objective and policy, its investment strategy and asset allocation;

·        the portfolio mainly comprises readily realisable assets which can be sold to meet funding requirements if necessary. As at 2 November 2021, 98.2% of the portfolio was estimated as being capable of being liquidated within three days;

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

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

·        the ongoing processes for monitoring operating costs and income which are considered to be reasonable in comparison to the Company’s total assets;

·        the Board’s discount management policy; and

·        the Company is a closed-end investment company and therefore does not suffer from the liquidity issues arising from unexpected redemptions.

In addition, the Board’s assessment of the Company’s ability to operate in the foreseeable future is included in the Going Concern Statement which can be found on page 43 in the Directors’ Report in the Annual Report and Financial Statements.

The Companies (Miscellaneous Reporting) Regulations 2018 require directors of large companies 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 includes the likely consequences of their decisions in the longer term and how they have taken wider stakeholders’ needs into account.

The disclosure that follows 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. The Board considers the main stakeholders in the Company to be the Manager, Investment Manager and the shareholders. In addition to this, the Board considers investee companies and key service providers of the Company to be stakeholders; the latter comprise the Company’s Custodian, Depositary, Registrar and Broker.


Manager and
Investment Manager
key service providers

Investee companies
Continued 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 capital growth.The 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.In 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 maintains regular contact with its key external service providers and receives regular reporting from them through the Board and committee meetings, as well as outside of the regular meeting cycle.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. The Board monitors the Manager’s stewardship arrangements and receives regular feedback from the Manager in respect of meetings with the management of portfolio companies.

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.

Area of



Investment mandate and objectiveThe Board 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.The Board worked closely with the Investment Manager throughout the year in further developing 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 portfolio activities undertaken by the Investment Manager can be found in their Report above. The Investment Manager aims to construct a portfolio that is high conviction and concentrated in nature but diversified by end market exposures. Outperformance of the reference index in the year has reflected this.

Details regarding the Company’s NAV and share price performance can be found in the Chairman’s Statement and in this Strategic Report above.
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 committed to maintaining open channels of communication and to engage with shareholders. The Company welcomes and encourages attendance and participation from shareholders at its Annual General Meetings. Shareholders will have the opportunity to meet the Directors and Investment Manager and to address questions to them directly. The Investment Manager will also provide a presentation on the Company’s performance and the outlook.

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 Manager’s website at

Unlike trading companies, one-to-one shareholder meetings normally take the form of a meeting with the Investment Manager as opposed to members of the Board. The Company’s willingness to enter into discussions with institutional shareholders is also demonstrated by the programmes of institutional presentations by the Investment Manager.

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 on page 101 of the Annual Report and Financial Statements.
The 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 portfolio management team attended a number of professional investor meetings and held discussions with a number of wealth management desks and offices in respect of the Company during the year under review.

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. The Board monitors the Manager’s stewardship arrangements and receives regular feedback from the Investment Manager in respect of meetings with the management of portfolio companies.
Responsible investingMore than ever, the importance of good governance and consideration of sustainable investment are key factors in making investment decisions. Climate change is becoming a defining factor in companies’ long-term prospects across the investment spectrum, with significant and lasting implications for economic growth and prosperity.The Board believes that responsible investment is 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 and responsible 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 portfolio, as well as the Investment Manager’s engagement with investee companies to encourage the adoption of sustainable business practices which support long-term value creation, are kept under review by the Board. The Board also expects to be informed by the Manager of any sensitive voting issues involving the Company’s investments.

The Investment Manager reports to the Board in respect of its ESG policies and how these are integrated into the investment process; a summary of BlackRock’s approach to ESG and sustainability is set out on pages 39 and 40 of the Annual Report and Financial Statements. The Investment Manager’s engagement and voting policy is detailed on pages 42 and 43 of the Annual Report and Financial Statements and on the BlackRock website.
The Investment Manager believes there is likely to be a positive correlation between strong ESG practices and investment performance over time.
Discount managementThe Board recognises that it is in the long-term interests of shareholders that shares do not trade at a significant discount or premium to their prevailing NAV. The Board believes this may be achieved in two ways: the use of regular tender offers and the active use of share buy back powers.The Board monitors the Company’s share rating on an ongoing basis and receives regular updates from the Manager and the Company’s Broker regarding the level of discount or premium. 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 market.

In addition, the Board has worked closely with the Manager to develop the Company’s marketing strategy, with the aim of ensuring effective communication with existing shareholders and to attract new shareholders to the Company in order to improve liquidity in the Company’s shares and to sustain the share rating of the Company.
The Board will continue to monitor the Company’s premium/discount to NAV and will look to issue, buy back shares and/or operate six monthly tender offers if it is deemed to be in the interests of shareholders as a whole.

The Board decided not to implement a semi-annual tender offer in November 2021 as, over the six months to 31 August 2021, the average premium to net asset value (cum income) (NAV) was 1.9%. It also decided not to implement the May 2021 semi-annual tender offer, as over the six months to 28 February 2021, the average discount to net asset value (cum income) (NAV) was 1.7%. During the financial year the Company did not buy back any shares.

The Company’s average premium for the year to 31 August 2021 was 0.1% and the premium at 2 November 2021 stood at 2.0%.
Service levels of third-party providersThe 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 Custodian and Depositary in respect of their 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 Broker in respect of the provision of advice and acting as a market maker for the Company’s shares.The 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 receives regular updates from the AIFM, Depositary, Registrar and Broker on an ongoing basis.

In light of the challenges presented by the COVID-19 pandemic to the operation of businesses across the globe, the Board has worked closely with the Manager to gain comfort that relevant business continuity plans are operating effectively for all of the Company’s key service providers.
All performance evaluations were performed on a timely basis and the Board concluded that all key third-party service providers, including the Manager were operating effectively and providing a good level of service.

The Board has received updates in respect of business continuity planning from the Company’s Manager, Custodian, Depositary, Fund Accountant, Registrar, Printer and Broker and is confident that arrangements are in place to ensure a good level of service will continue to be provided despite the impact of the COVID-19 pandemic.
Board compositionThe 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 Code, including guidance on tenure and the composition of the Board’s committees.All Directors are subject to a formal evaluation process on an annual basis (more details and the conclusions of the 2021 evaluation process are given on page 55 of the Annual Report and Financial Statements). All Directors stand for re-election by shareholders annually.

Shareholders may attend the Annual General Meeting 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 on page 101 of the Annual Report and Financial Statements with any issues.

The Board is currently undertaking a review of succession planning arrangements having identified the need for a new Director. The services of an external search consultant, Trust Associates, is being used to identify potential candidates.
As at the date of this report, the Board was comprised of two men and two women. One Director, Ms Curling, has a tenure in excess of nine years.

Details of each Directors’ contribution to the success and promotion of the Company are set out in the Directors’ Report on pages 45 and 46 of the Annual Report and Financial Statements and details of Directors’ biographies can be found on pages 27 and 28 in the Annual Report and Financial Statements.

The Directors are not aware of any issues that have been raised directly by shareholders in respect of Board composition in the year under review. Details for the proxy voting results in favour and against individual Directors’ re-election at the 2020 Annual General Meeting are given on the Manager’s website at

The Board believes that responsible investment is 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 and responsible way in the interests of shareholders and future investors.

Sustainability is BlackRock’s standard for investing. It is our conviction that sustainability risk – including climate risk – is investment risk and that investors can build more resilient portfolios that achieve better long term, risk-adjusted returns by integrating sustainability into their standard for investing. Climate change specifically is viewed as a factor with significant lasting impact on economic growth and prosperity. BlackRock believes that every company’s business model will be profoundly affected by climate change and that how a company manages the associated risks in its business model will be a defining factor in a company’s long-term value proposition. More information about the actions taken by BlackRock in 2020 on making sustainability the new standard for investing can be found at

Environmental, Social and Governance (ESG) investing is often used interchangeably with the term “sustainable investing.” BlackRock has identified sustainable investing as being the overall framework and ESG as a data toolkit for identifying and informing its solutions. BlackRock has defined ESG Integration as the practice of incorporating material ESG information and consideration of sustainability risks into investment decisions in order to enhance risk-adjusted returns. BlackRock recognises the relevance of material ESG information across all asset classes and styles of portfolio management. ESG information and sustainability risks are included as a consideration in investment research, portfolio construction, portfolio review and investment stewardship processes. The Investment Manager considers ESG insights and data, including sustainability risks, within the total set of information in its research process and makes a determination as to the materiality of such information in its investment process. ESG insights are not the sole consideration when making investment decisions. The Investment Manager’s evaluation of ESG data may be subjective and could change over time in light of emerging sustainability risks or changing market conditions. This approach is consistent with the Investment Manager’s regulatory duty to manage the Company in accordance with its investment objective and policy and in the best interests of the Company’s investors. The Investment Manager’s Risk and Quantitative Analysis group will review portfolios to ensure that sustainability risks are considered regularly alongside traditional financial risks, that investment decisions are taken in light of relevant sustainability risks and that decisions exposing portfolios to sustainability risks are deliberate, and the risks diversified and scaled according to the investment objectives of the Company.

BlackRock’s approach to ESG integration is to broaden the total amount of information the Investment Manager considers with the aim of improving investment analysis and understanding the likely impact of sustainability risks on the Company’s investments. The Investment Manager assesses a variety of economic and financial indicators, which may include ESG data and insights, to make investment decisions appropriate for the Company’s objective. This can include relevant third-party insights or data, internal research or engagement commentary and input from BlackRock Investment Stewardship.

ESG integration does not change the Company’s investment objective or constrain the Investment Manager’s investable universe and does not mean that an ESG investment strategy or exclusionary screens has been or will be adopted by the Company. Similarly, ESG integration does not determine the extent to which the Company may be impacted by sustainability risks.

BlackRock Investment Stewardship’s (BIS) activities are integral to BlackRock’s fiduciary responsibility to clients as it is how we use our voice as an investor on behalf of clients to promote sound corporate governance and sustainable business models that support long-term value creation. BIS is positioned as an investment function and undertakes all its activities – primarily engaging with companies and proxy voting – with the goal of advancing clients’ long-term economic interests. BIS’ engagement with companies aims to encourage the enhancement of their risk management processes to better identify and manage material environmental, social, and governance (ESG) risks and opportunities that may impact their operational resilience. For further details on BIS please refer to the website


Company Secretary
4 November 2021

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