Blackrock Smaller Companies Trust NAV per share rose by 27.7%, significantly outperforming the benchmark index

Blackrock Smaller Companies Trust plc (LON:BRSC) has announced its half yearly financial results in respect of the six months ended 31 August 2021.


Six months 
31 August 2021 
Six months 
31 August 2020 

Year ended 
28 February 2021 
Net asset value per share (debt at par value)1,22,278.01p 1,435.96p 1,784.35p 
Movement1+27.7% -8.7% +13.5% 
Net asset value per share (debt at par value, capital only)1,22,257.97p 1,431.39p 1,777.63p 
Movement1+27.0% -7.6% +14.8% 
Net asset value per share (debt at fair value)1,2,32,266.31p 1,418.95p 1,774.71p 
Movement1,3+27.7% -8.8% +14.0% 
Numis Smaller Companies plus AIM (excluding Investment Companies) Index17,326.65 5,045.05 6,350.94 
Movement1+15.4% -2.2% +23.1% 
Ordinary share price12,150.00p 1,230.00p 1,698.00p 
Movement1+26.6% -17.1% +14.4% 
————— ————— ————— 
Revenue and dividends
Revenue return per share20.05p 4.57p 13.36p 
Interim dividend per share13.00p 12.80p 12.80p 
Final dividend per share20.50p 
Change in interim dividend+1.6% – – 
Change in total dividends+2.5% 
————— ————— ————— 
Total assets less current liabilities (£’000)1,191,983 770,761 960,900 
Equity shareholders’ funds (£’000)1,112,349 701,174 871,296 
Ongoing charges ratio2,40.8% 0.7% 0.8% 
Dividend yield21.6% 2.6% 2.0% 
Gearing26.9% 4.1% 8.9% 

1     Without income reinvested.
2     Alternative performance measures, see Glossary contained within the Half Yearly Financial Report.
     The basis of calculation for the fair value of the debt is disclosed in note 9 below and the calculation of net asset value per share (debt at fair value) is included in the Glossary contained within the Half Yearly Financial Report.
     AIC methodology is based on annual operating charges; the operating charges ratio shown for the six month period to 31 August is based on estimated full year expenses at the half year end date and is subject to change to the extent that actual operating expenses incurred in the full year vary from these estimates.

Sources: BlackRock and Datastream.

To learn more about the BlackRock Smaller Companies Trust plc please follow this link:


Dear Shareholder

I am pleased to present to shareholders the half yearly report for the six months ended 31 August 2021.

The first six months of the Company’s financial year have been characterised by renewed market optimism as post-lockdown economic performance has gathered pace, buoyed by the success of vaccination programmes and fiscal stimulus. So-called value shares broadly outpaced growth during this period but overall results have been pleasing for our portfolio. The resolution of many Brexit uncertainties has provided a boost for some domestic UK businesses. 2021 saw a sharp rise in M&A and IPO activity, which attracted significant interest from overseas corporates and private equity investors taking advantage of the attractive UK stock valuations. Over the period under review the Company’s net asset value (NAV) increased by 27.7%1,2 to 2,278.01p per share, outperforming the Company’s benchmark, the Numis Smaller Companies plus AIM Index (excluding Investment Companies), which rose by 15.4%1 over the same period. The Company’s share price rose by 26.6%1 to 2,150.00p per share over the same period. Performance relative to the benchmark was driven mainly by stock selection, details of which are given in the Investment Manager’s report below.

Looking at the broader market environment, the FTSE 100 Index rose by 9.8%1 over the period, the FTSE 250 Index rose by 15.3%1 and the FTSE AIM All Share Index rose by 9.3%1.

Since the period end, and up until the close of business on 29 October 2021, the Company’s NAV per share fell by 4.8%1,2 and the share price decreased by 7.5%1, whilst the benchmark fell by 3.3%1.

The performance of both the NAV and share price over the longer term are illustrated in the table below.

Performance to 31 August 2021
6 Months 
1 Year 
3 Years 
5 Years 
10 Years 
Net asset value per share1,2+27.7 +58.6 +40.3 +113.0 +316.0 
Share price1+26.6 +74.8 +44.8 +140.1 +351.7 
Benchmark1+15.4 +45.2 +24.8 +53.1 +121.5 
Net asset value per share (with income reinvested)2+29.0 +61.6 +49.3 +134.3 +393.3 
Share price (with income reinvested)+28.0 +78.2 +54.5 +166.2 +445.0 
Benchmark (with income reinvested)+16.5 +47.6 +33.1 +71.9 +183.3 

1.    Percentages in sterling terms without income reinvested.
2.    Debt at par value.

It is reassuring to see the recovery in dividends for our portfolio as operating conditions improve and more investee companies resume dividend payments. The Company’s revenue return per share for the six months ended 31 August 2021 amounted to 20.05p per share compared with a meagre 4.57p per share for the six months to 31 August 2020 as portfolio companies reduced or cancelled dividends in response to the impact of the pandemic. To give greater context, the current period revenue return is only 9.7% behind that for the more comparable ‘pre-COVID’ six-month period to 31 August 2019 of 22.20p per share. After adjusting for the impact of special dividends received, which amounted to 2.51p per share (31 August 2019: 2.00p per share), regular dividend income from portfolio companies decreased by a modest 6.8% compared to 2019 levels and a marked improvement over what many had feared might be the case.

The Board is mindful of the importance of yield to shareholders. This is particularly true in the current environment where low interest rates are likely to persist for some time and investors are struggling to maintain income levels. The Board is also cognisant of the benefits of the Company’s investment trust structure which enables it to retain up to 15% of total revenue each year to build up reserves which may be carried forward and used to pay dividends during leaner times. The Company has substantial distributable reserves (£1,045.9 million as at 31 August 2021, including revenue reserves of £15.3 million). To put this into context, the current level of annual dividend distribution based on dividends declared in respect of the year ended 28 February 2021 amounts to £16.3 million. Accordingly, the Board is pleased to declare an interim dividend of 13.00p per share (2020: 12.80p per share) representing an increase of 1.6% over the previous interim dividend. The interim dividend will be paid on 2 December 2021 to shareholders on the Company’s register on 12 November 2021.

In June this year shareholders voted by an overwhelming majority to approve changes to the Company’s investment policy to remove the limit on the level of AIM investments that could be held in the portfolio. This change was prompted by the strong performance of the Company’s AIM holdings over recent years which had resulted in an increase in the portfolio’s aggregate exposure to AIM to just under the previous limit of 50% of the portfolio by value. The Board did not consider it to be in the best interests of stakeholders for the Manager to be required to dispose of these AIM stocks solely as a result of movements in market value and was keen to ensure that the Company had access to a full range of investment opportunities. More information in respect of the Board’s views and the rationale for the change can be found on pages 7 and 31 to 32 of the Company’s Annual Report for the year ended 28 February 2021. As at 31 August 2021, 43.1% of the Company’s portfolio by value was invested in AIM-listed investments.

The Company has traditionally maintained a range of borrowings and facilities to provide balance between longer-term and short-term maturities and between fixed and floating rates of interest. On 16 September 2021 this range was expanded when the Company issued £25 million in senior unsecured fixed rate private placement notes at a coupon of 2.47% maturing in 2046. The net proceeds from the issuance, as well as being in place to provide refinancing for the £15 million debenture which is due to expire in 2022, will also be used for additional investment in the market within the Company’s existing gearing limits and will give the Investment Manager more scope to take advantage of suitable investment opportunities. The Board considers that obtaining such Sterling denominated financing on an unsecured basis at this price level and at a 25-year term to be highly attractive.

The Company now has in place fixed rate funding consisting of the Company’s existing £15 million debenture, £25 million senior unsecured fixed rate private placement notes issued in May 2017 at a coupon of 2.74% maturing in 2037, £20 million senior unsecured fixed rate private placement notes issued in December 2019 at a coupon of 2.41% maturing in 2044, and the new notes maturing in 2046 as described above. Shorter-term variable rate funding consists of a £35 million three-year revolving loan facility with SMBC Bank International plc (formerly Sumitomo Mitsui Banking Corporation Europe Limited) (expiring in November 2022) and an uncommitted overdraft facility of £10 million with The Bank of New York Mellon (International) Limited.

It continues to be the Board’s intention that net gearing will not exceed 15% of the net assets of the Company at the time of the drawdown of the relevant borrowings. Under normal operating conditions it is envisaged that gearing will be within a range of 0%-15% of net assets. The Company’s net gearing stands at 6.2% of net assets as at 29 October 2021.

During the period, the Company’s shares traded at an average discount to NAV (with debt at fair value) of 4.8%. The discount ranged between 7.0% and 1.6% and ended the period at 5.1%. The Company’s shares were trading at a discount of 7.8% to NAV (with debt at fair value) as at close of business on 29 October 2021.

In previous Chairman’s Statements I have noted that the Board has adopted a policy of limiting directors’ tenure to nine years (or twelve years in the case of the Chairman), with a phased implementation over time to ensure an orderly Board refreshment process. As part of this process and as previously announced, Mr Peacock (whose tenure would have exceeded nine years in July 2021) retired from the Board on 11 June 2021. The Board wishes to thank Mr Peacock for his wise counsel and invaluable contribution to the Company over his tenure as a Director and Chairman of the Audit Committee. Mr Peacock was replaced as Audit Committee Chairman by Mr Little who joined the Board in October 2020.

The Board continued its refreshment/recruitment efforts into 2021, and in June 2021 was delighted to announce the appointment of Mr James Barnes as a non-executive Director with effect from 31 July 2021 and the appointment of Ms Helen Sinclair as a non-executive Director with effect from 1 March 2022. Mr Barnes brings to the Board a wealth of experience, especially in the UK smaller companies sector. He began his career in corporate finance and investment banking. He was formerly a director of Dobbies Garden Centres plc and was instrumental in growing the business and leading its sale to Tesco in 2003. He was also previously a Director and Chairman of Dunedin Smaller Companies Investment Trust plc (now Standard Life UK Smaller Companies plc) and currently holds a number of other non-executive roles in other businesses. Ms Sinclair began her career in investment banking and spent nearly eight years at 3i plc focusing on management buy-outs and growth capital investments. She later co-founded Matrix Private Equity (now Mobeus Equity Partners) in early 2000 and subsequently became Managing Director of Matrix Private Equity before moving to take on a number of non-executive director roles.

The only Director remaining on the Board with tenure in excess of nine years is Ms Burton. The Board has requested that she remain as a Director until Ms Sinclair has joined in early 2022 to provide continuity of experience and knowledge. It is envisaged that Ms Burton will not seek re-election at the Company’s Annual General Meeting in 2022, at which point the new tenure policy will have been fully implemented.

Despite renewed market optimism in 2021 as the impact of COVID-19 recedes and the world adjusts to living with the virus, the longer term implications of social and economic disruption will continue to challenge markets. Logistics problems, supply chain disconnects, labour shortages and inflation all present economic headwinds that will create a drag on growth and prosperity for some time to come. Aside from post-pandemic issues, energy costs are set to rise dramatically as the world attempts to contain climate change and ESG (Environmental, Social and Governance) policies continue to drive a shift to green energy supply. The global macro-economic climate is also subject to significant geo-political uncertainty. Against this backdrop it is important to focus on the fact that as the world emerges from COVID-19, many UK businesses are attractively valued and corporate activity is strong. Our portfolio management team remains focussed on financially robust, high quality and market-leading global businesses which are operating in attractive end markets and run by experienced management teams. Our portfolio managers are confident that the Company’s investment strategy of focusing on these quality growth investment opportunities in smaller companies means that the portfolio is well placed to cope with the diverse challenges that the coming year is likely to bring.


2 November 2021

1.    Percentages in sterling terms without income reinvested
2.    Debt at par value.


The first six months of the Company’s financial year could not have been more different from the previous year. 2020 was characterised by the outbreak of the COVID-19 pandemic and lockdowns, while 2021 has been far more upbeat as vaccination programmes and stimulus have buoyed optimism, overwhelming many concerns around potential setbacks from the COVID-19 virus. But it has not all been plain sailing, with company statements now featuring commentary regarding component shortages, staffing issues, Brexit confusion and the spectre of inflation.

Within the UK, domestic business continued to perform well, helped by the removal of the Brexit overhang late last year. Meanwhile the combination of brighter prospects for the UK economy and attractive valuations of UK companies saw a sharp increase in M&A activity, particularly from overseas corporates and private equity, looking to take advantage of the relative value of UK plc. After high levels of equity issuance in 2020, principally for liquidity-related needs, this year the capital markets have focused on IPOs as confidence in the market returned.

The Company’s NAV per share (debt at par) rose by 27.7% during the first half of our financial year, significantly outperforming the benchmark index which rose by 15.4% over the same period. For comparison the large cap FTSE 100 Index rose 9.8% during the period (all percentages stated without income reinvested).

The period started with a rally in value shares, but despite this early headwind, the Company significantly outperformed, helped by positive earnings across a broad range of industries. Whether it has been strong contributions from innovative companies that we have purchased at IPO, nimble retailers that have adapted to new ways of working, or high-quality businesses leading in structurally growing markets, the key theme has been that bottom-up company specific drivers have been the key to year-to-date outperformance.

The largest positive contributor during the period was Auction Technology Group (ATG), a business that we purchased at IPO earlier in the year. ATG operates digital platforms that connect auctioneers and bidders in the traditional art and antique markets as well as the newer opportunity in industrial equipment. The industry is shifting rapidly as auctioneers realise that on-line platforms grant access to a vastly larger pool of bidders and often provide more efficient price discovery for the items listed. This trend has only been accelerated through COVID-19. We increased our position materially in a fund-raise as ATG bought LiveAuctioneers, the leading player in the US Art & Antiques market, a deal with compelling financial and operational synergies, which further extends ATG’s lead in the sector. Shares in Watches of Switzerland, the luxury watch retailer, rose as the company once again delivered profits ahead of expectations. Their April 2021 numbers encapsulated a period when UK stores were forced to shut for 26 weeks, the US saw vastly reduced footfall and the historically lucrative sales in airports were significantly interrupted. Nevertheless, revenue grew 12%, and operating profit by 70%, comfortably surpassing pre-COVID-19 expectations. This is testament to the positive dynamics of the market they operate in and management’s strong execution. It is a perfect illustration of our belief that great businesses and management teams can react to rapidly changing circumstances and still deliver growth despite significant challenges. Alongside the full year results the company announced a strategic plan for the next five years which included further expansion in its existing markets of the UK and US, as well as the intent to enter the EU where it sees a similar opportunity to consolidate a fragmented and un-sophisticated distribution network. If the company achieves its aims, then profitability will roughly triple from current levels. Impax Asset Management, which focuses on sustainable investment strategies, continued to deliver impressive growth in assets under management. This growth looks well set to continue given the strength of their franchise, market leading investment performance and the structural growth in sustainability which underpins the company’s investment philosophy.

In addition to positive trading from a number of our holdings during the period, the Company also benefitted from the surge of M&A activity. Stock Spirits Group, a premium spirits producer focused on Eastern Europe, accepted a £767 million takeover approach from a private equity group, whilst video game developer Sumo Group received an offer from Chinese gaming giant Tencent.

Given the strong outperformance during the period and impressive trading that we have continued to see across our core holdings, stock specific detractors have been limited. The largest detractor was Moonpig which reported good financial year results that were ahead of consensus with upgrades to forecasts, however the shares fell in response to a lack of upgrades to next year. We believe that guidance seems too conservative and that the opportunity for Moonpig to grow customers, order frequency and basket size remains as attractive as ever. Shares in Avon Protection have been weak as the company has reported delays to expected orders, which it attributed to a combination of COVID-19 and supply chain disruptions. While the delays are disappointing, our view is that this is a short-term issue and ultimately these contracts will come through. We continue to believe in the long-term attractions of the business and the steps taken through the sale of its dairy business last year, to increase focus on the protection markets. Other detractors included pub operator Fuller Smith & Turner and cinema operator Everyman Media which both underperformed as the market became concerned about the presence of the Delta variant of COVID-19 and the impact that this would have on leisure related businesses.

Over the last six months we have reduced the number of holdings in the portfolio from 122 in February, to 116 at the end of August and net gearing has been steadily increasing and is now around 107%.

We purchased a holding in fund administration business Sanne. Increasing complexity of operations and regulatory burden is driving more asset managers to outsource back-office operations, and Sanne is well placed to capture this growth. The long-term nature of its client contracts provides high visibility of earnings whilst the increasing regulatory demands, particularly within the alternatives space where Sanne is focused, provide further revenue growth opportunities from cross-selling additional services. This view was clearly shared by others, as Sanne subsequently received competing bids, before finally recommending the offer from industry peer Apex Group.

We purchased a new holding in construction materials group SigmaRoc, in the equity raise that accompanied the transformational deal to acquire Nordkalk, a privately owned Scandinavian business. This strategic and highly accretive acquisition transforms SigmaRoc by significantly increasing their European footprint whilst diversifying their end market exposure away from construction. The management team of SigmaRoc has developed a strong track record in acquiring and improving the financial performance of UK and European based heavy side material assets, and we see strong potential for underlying improvements in revenues, profits and cash generation. We are very excited about the future prospects for this company on an organic and inorganic basis.

Having reduced during the pandemic, we have been adding back to our holding in Johnson Service Group, the supplier of linen to the hospitality and catering industries. As lockdown restrictions in the UK are eased this is a business that should benefit from the reopening of both restaurants and hotels, as well as a trend for more staycations as UK holidaymakers continue to be put off by the challenges with travelling overseas. We expect demand to resume to levels that will ensure high levels of utilisation, which will see profits and cashflows for Johnson Service Group recover quickly.

We also took the opportunity to add a new holding in Restaurant Group, the owner of a number of restaurant chains across the UK such as Frankie & Benny’s and Wagamama. This is an example of where COVID-19 has re-shaped an industry and has led us to re-assess the investment case. Historically we were significant holders of the company, but worries over the un-bridled supply growth of the restaurant sector, and the liability held in long term property leases resulted in us exiting the position. What followed was a crippling industry fall out. Post COVID-19 the backdrop is much more supportive for the company, with industry capacity back to 2012 levels due to the bankruptcies and closures brought about by the pandemic. Also, many of the small players who were driving the growth of fast and casual dining are capital constrained, with many months of back rent, lockdown costs and unpaid taxes weighing on their ability to invest and grow. Restaurant Group on the other hand has transformed its market position via the acquisition of Wagamama, and has significantly reduced its total lease liability.

For the first time in many years the largest overweight in the portfolio is in the Retail sector. We have historically maintained an underweight position as the sector struggled under the ever-present pressure of the internet on the top line, and structural cost pressures through rent and rates. But COVID-19 has changed some of this; successful retailers have had to shift to true multi-channel retailing, and bankruptcy of others has resulted in significant property vacancies and a seismic shift in property costs. Businesses like Watches of Switzerland and Pets at Home have shown the impact that entrepreneurial management teams can have, pivoting operations quickly to counter enforced store closures, making changes that will endure.

The industrial space has been buffeted by trade wars, Brexit, and now COVID-19. Companies are having to reassess supply chains. Shortages in some areas, such as the very public semi-conductor market, will lead to re-evaluation of inventory requirements, whilst COVID-19 saw a focus on working capital leading to reduced levels of inventory that will need to be rebuilt to meet demand. The component constraints mean supply will fall significantly short of demand in many areas this year; anyone looking to buy a car or a Playstation5 will appreciate the disappointment and frustration, but this also means the recovery will be prolonged. With the prospect of a longer demand cycle and inventory rebuild, the outlook for the industrial sector in the medium term is positive. Oxford Instruments, discoverIE, Chemring and Porvair are all high IP businesses that should benefit from these trends.

Whilst the disruption of COVID-19 has spurred change and innovation in some areas, it has also wrought havoc in others. We remain underweight to the leisure sector where so many companies have had to raise equity to support balance sheets, leading to significant dilution to equity holders. Valuations are generally high, recovery extended and uncertain, leading to a wide range of possible outcomes. Specific opportunities exist, the freehold balance sheets of Youngs and City Pub Company, the COVID-19 beneficiaries of Team17 and Games Workshop, or the market share opportunities of being last man standing that Restaurant Group will see. But generally, we struggle with the outlook and valuations in the sector.

The world is still in a difficult place; vaccines are reducing the impact of COVID-19, but the second order impacts are going to be here for some time. Logistics, supply chains, labour shortages, inflation are all front and centre of current investor discussions, and clearly it is right we address these concerns, many of which are interlinked. As a summary we expect many of these issues to pass over time. The end of the furlough scheme in the UK will lead to unemployment in some areas but will also bring potential candidates to fill many of the vacancies. Manufacturing firms will eventually invest to bring increased volume into tight markets. Supply chains will adapt, HGV drivers will be found, the logistics issues will become a thing of the past. But it will take time, these are complicated issues that will not be fixed immediately, however anything that is an issue is also an opportunity for those prepared to invest. Inflation is a complicated question, with the transient vs permanent debate seemingly never ending. There is still excess capacity in the UK, we have not yet recovered to pre-pandemic GDP levels, the ability to serve demand is there. The labour market is tight and wage inflation in some areas is higher than normal, but the labour market has also not returned to “normal” with the distortion of the highly successful furlough scheme still being felt. Energy costs are clearly rising, and this may be an on-going issue; we have seen a substantial reduction in greenfield energy investment leading to tight oil and gas markets. But renewable and green energy is becoming a bigger part of supply and will continue to do so. The geo-political environment continues to see seismic changes; the US presidency moving from Trump to Biden, Brexit, and changing priorities in China are all driving sentiment.

So how should we, as bottom-up investors, factor this into our decision-making process? Our approach is to do this in the same way we have always done, by focusing on identifying businesses which match our criteria that can seize on these opportunities. We focus on those businesses with market-leading positions and pricing power, which can pass on inflation through price increases; businesses at an early stage of their development cycle where the upside from successfully developing market share opportunities is much greater than the potential fall out of temporary market dislocations and businesses with strong balance sheets that can continue to invest in product development rather than having to cut costs and preserve cash. Ultimately for all the difficulties we could focus on, we should not ignore the obvious positives; we are slowly emerging from COVID-19, consumers and corporates have been spared the worst of the downturn and are financially strong, the UK is still attractively valued and corporate activity is high. We remain as confident in the mid-to-long term development of the portfolio as we ever have been.


2 November 2021



Business activity
% of 
Watches of SwitzerlandRetailer of luxury watches29,761 2.5 
Impax Asset ManagementAsset management25,445 2.1 
TreattDevelopment and manufacture of ingredients for the flavour and fragrance industry23,320 2.0 
CVS GroupOperator of veterinary surgeries22,036 1.9 
ErgomedProvider of pharmaceuticals services21,915 1.8 
Auction Technology GroupOperator of marketplaces for curated online auctions21,789 1.8 
Stock Spirits GroupDevelopment and manufacture of branded spirits mainly in Eastern Europe21,659 1.8 
IntegraFinInvestment platform for financial advisers21,655 1.8 
Oxford InstrumentsDesigner and manufacturer of tools and systems for industry and research21,443 1.8 
Gamma CommunicationsProvider of communication services to UK businesses20,565 1.7 
BreedonConstruction materials20,137 1.7 
YouGovSurvey data specialist data analytics19,656 1.7 
Pets at HomePet supplies retailer18,644 1.6 
Learning TechnologiesE-learning services18,059 1.5 
4imprint GroupPromotional merchandise in the US17,763 1.5 
discoverIESpecialist components for electronics applications17,404 1.5 
Qinetiq GroupBritish multi-national defence technology company16,626 1.4 
Grafton GroupBuilders merchants in the UK, Ireland and Netherlands16,577 1.4 
Liontrust Asset ManagementAsset management15,946 1.4 
Central Asia MetalsMining operations in Kazakhstan and Macedonia15,940 1.3 
————— ————— 
Twenty largest investments406,340 34.2 
————— ————— 
Remaining investments783,178 65.8 
————— ————— 
Total1,189,518 100.0 
========= ========= 

Details of the full portfolio are available on the Company’s website at


Investment size as at 31 August 2021

Number of investments
Market value of investments as % of portfolio
£1m to £2m10.10
£2m to £3m40.90
£3m to £4m82.40
£4m to £5m52.00
£5m to £6m115.00
£6m to £7m116.10
£7m to £8m95.60
£8m to £9m139.20
£9m to £10m64.80
£10m to £11m76.10
£11m to £12m65.80
£12m to £13m22.10
£13m to £14m66.80
£14m to £15m44.90
£15m to £16m56.60
£16m to £17m22.80
£17m to £18m23.00
£18m to £19m23.10
£19m to £20m11.70
£20m to £21m23.40
£21m to £22m59.10
£22m to £23m11.90
£23m to £24m12.00
£25m to £26m12.10
£29m to £30m12.50

Source: BlackRock.

Analysis of portfolio value by sector

(Numis Smaller Companies, plus AIM
(ex Investment Companies) Index)
Basic Materials5.06.7
Consumer Staples4.34.4
Health Care4.17.7
Consumer Discretionary25.420.1
Real Estate4.46.1

Source: BlackRock and Datastream.


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

The principal risks faced by the Company can be divided into various areas as follows:

  • Investment performance risk;
  • Market risk;
  • Income/dividend risk;
  • Legal & compliance risk;
  • Operational risk;
  • Financial risk; and
  • Marketing risk.

The Board reported on the principal risks and uncertainties faced by the Company in the Annual Report and Financial Statements for the year ended 28 February 2021. A detailed explanation can be found in the Strategic Report on pages 34 to 37 and note 17 on pages 94 to 102 of the Annual Report and Financial Statements which is available on the website maintained by BlackRock at

The infectious respiratory illness caused by a coronavirus known as COVID-19, first detected in China in December 2019 and which has developed into a global pandemic, has caused unprecedented global economic and social upheaval. The coronavirus pandemic has resulted in travel restrictions, closed international borders, enhanced health screenings at ports of entry and elsewhere, disruption of and delays in healthcare service preparation and delivery, prolonged quarantines, cancellations, supply chain disruptions, and lower consumer demand, as well as general concern and uncertainty. The impact of COVID-19 has adversely affected the entire global economy, individual issuers and capital markets, and could continue to an extent that cannot necessarily be foreseen. Public health crises caused by the COVID-19 outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally. Despite the success of vaccination programmes, new variants of concern continue to evolve and the duration of the COVID-19 outbreak and its effects cannot be determined with certainty.

In the view of the Board, there have not been any changes to the fundamental nature of the risks set out in the Annual Report and Financial Statements and these principal risks and uncertainties are equally applicable to the remaining six months of the financial year as they were to the six months under review. The Board recognises the benefits of a closed-end structure in extremely volatile markets such as those experienced during 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 the closed-end structure to remain invested for the long term enables the portfolio manager to adhere to disciplined fundamental analysis from a bottom-up perspective and be ready to respond to dislocations in the market as opportunities present themselves.

The Board is mindful of the uncertainty surrounding the potential duration of the COVID-19 pandemic and its impact on the global economy, the Company’s assets and the potential for the level of revenue derived from the portfolio to reduce versus the prior year. The portfolio manager will continue to review the composition of the Company’s portfolio and to be pro-active in taking investment decisions as necessary. The Directors, having considered the nature and liquidity of the portfolio, the Company’s investment objective and the Company’s projected income and expenditure, are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future and is financially sound. The Board believes that the Company and its key third party service providers have in place appropriate business continuity plans and these services have continued to be supplied without interruption throughout the COVID-19 pandemic.

The Company has a portfolio of investments which are predominantly readily realisable and is able to meet all of its liabilities from its assets and income generated from these assets. Accounting revenue and expense forecasts are maintained and reported to the Board regularly and it is expected that the Company will be able to meet all its obligations. The Company has in place a range of borrowings (the majority of which are represented by long-term fixed rate debt) and debt facilities (details of which are set out in note 9 below) and despite the market volatility seen over the period under review, the Company has remained compliant with all financial covenants and has maintained ample headroom above the relevant thresholds throughout the period under review. Ongoing charges (excluding finance costs, direct transaction costs, custody transaction charges, non-recurring charges and taxation) for the year ended 28 February 2021 were approximately 0.8% of net assets. Based on the above, the Board is satisfied that it is appropriate to continue to adopt the going concern basis in preparing the financial statements.

BlackRock Fund Managers Limited (BFM) was appointed as the Company’s Alternative Investment Fund Manager (AIFM) with effect from 2 July 2014. BFM has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services, to BlackRock Investment Management (UK) Limited (BIM (UK)). Both BFM and BIM (UK) are regarded as related parties under the Listing Rules. Details of the management and marketing fees payable are set out in notes 4, 5 and 14 below. The related party transactions with the Directors are set out in note 15 below.

The Disclosure Guidance and Transparency Rules (DTR) of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Interim Management Report and Financial Statements.

The Directors confirm to the best of their knowledge that:

·        the condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with applicable Financial Reporting Council’s Standard, FRS 104 ‘Interim Financial Reporting’; and

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

The half yearly financial report has not been audited or reviewed by the Company’s Auditors.

The half yearly financial report was approved by the Board on 2 November 2021 and the above responsibility statement was signed on its behalf by the Chairman.


2 November 2021

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