BlackRock Energy and Resources Income Trust Plc - Half-year Report
LEI: 54930040ALEAVPMMDC31
Half Yearly Financial Report
Performance record
As at As at
31 May 30 November
2024
2023
Net assets (£’000)1 172,233 162,362
Net asset value per ordinary share (pence) 138.24 123.58
Ordinary share price (mid-market) (pence) 121.50 110.40
Discount to net asset value2 12.1% 10.7%
========= =========
For the For the
six months year
ended ended
31 May 30 November
2024 2023
Performance (with dividends reinvested)
Net asset value per share2 13.8% (11.8)%
Ordinary share price2 12.3% (15.2)%
--------------- ---------------
Performance since inception (with dividends
reinvested)
Net asset value per share2 255.3% 212.2%
Ordinary share price2 213.7% 179.4%
========= =========
For the For the
six months six months
ended ended
31 May 31 May Change
2024 2023 %
Revenue
Net profit on ordinary
activities after taxation 2,334 3,209 -27.3
(£’000)
Revenue earnings per ordinary 1.83 2.37 -22.7
share (pence)3
--------------- --------------- ---------------
Interim dividends (pence)
1st interim 1.125 1.10 2.3
2nd interim4 1.125 1.10 2.3
--------------- --------------- ---------------
Total dividends payable/paid 2.250 2.20 2.3
========= ========= =========
1 The change in net assets reflects portfolio movements, the buyback of shares and dividends paid during the period.
2 Alternative Performance Measures, see Glossary within the Half Yearly Financial Report.
3 Further details are given in the Glossary within the Half Yearly Financial Report.
4
Paid on
Chairman’s Statement
Dear Shareholder
I am pleased to report that our portfolio has performed well during the six months to
Market overview
At the start of the Company’s financial year on
Performance
During the six months ended
As noted above, the Board does not formally benchmark the Company’s performance against Mining and Energy sector indices because meeting a specific dividend target is not within the scope of these indices and also because no index appropriately reflects the Company’s blended exposure to the Energy (including the Energy Transition) and Mining sectors. For internal monitoring purposes, however, the Board compares the performance of the portfolio against a bespoke internal Mining and Energy composite index. The neutral sector weightings of this bespoke index are 40% Mining, 30% Traditional Energy and 30% Energy Transition.
Further information on investment performance is given in the Investment Managers’ Report.
Revenue return and dividends
The Company’s revenue return per share for the six-month period was
The first quarterly interim dividend of
The Company may write options to generate revenue return, although the portfolio managers’ focus is on investing the portfolio to generate an optimal level of total return without striving to meet an annual income target from option writing. Consequently, they will only enter into option transactions with the intention that the overall contribution is beneficial to total return.
Gearing
The Company operates a flexible gearing policy which depends on prevailing market conditions. It is not intended that gearing will exceed 20% of the gross assets of the Company. The maximum gearing used during the period was 14.8%, and the level of gearing at
Management of share rating
The Directors recognise the importance to investors that the Company’s share price should not trade at a significant premium or discount to NAV, and therefore, in normal market conditions, may use the Company’s share buyback, sale of shares from treasury and share issuance powers to ensure that the share price is broadly in line with the underlying NAV.
The Board seeks to balance this aim, and to control discount volatility, against its desire to avoid excessive buybacks which impact the size of the Company and hence the liquidity of its shares and the Ongoing Charges Ratio.
During the period under review, the discounts on Investment Trusts in general have remained at close to historically high levels- the average discount for the Investment Trusts sector (ex 3i Group) has been 15.5% - and in this context, your Company
’
s shares have been trading at a discount between 8.0% and 14.1% over the period under review with an average discount of 11.2%. The Company has therefore actively intervened to control the discount and has bought back 6,800,000 shares for costs of £7,684,000, representing an average discount of 12.6%. All shares were bought back at a discount to NAV, delivering an uplift to the NAV per share of 0.5% for continuing shareholders for the period under review. Since
Market outlook & portfolio positioning
Despite the current political uncertainty, the ongoing drive by governments to address climate change and decarbonise the energy supply chain remains an important backdrop for the Company’s three pillars, of Traditional Energy, Mining and Metals and Energy Transition. The Board considers that all three sectors have an important role to play as the energy system transitions to a lower carbon economy. Traditional energy is needed to support base load energy to continue to power economies during the transition. The Metals and Mining sector provides the material supply chain for low carbon technologies from steel for wind turbines to lithium for electric cars. The path to a lower carbon economy is also expected to disrupt many industries and business models with scope for the Company to invest directly in opportunities in the Energy Transition space. Against this backdrop, the flexibility of the Company’s investment mandate with the ability to shift exposure between Traditional Energy, Energy Transition and Mining sectors, means that it is uniquely positioned to serve investors as these sectors evolve.
The Board is confident that the Company remains well-placed to benefit from these key investment trends over the long term.
Chairman
Investment Managers’ Report
Market overview
The first six months of 2024 saw strong momentum in the broader equity markets carry over from 2023. Whilst the Company’s net asset value per share (NAV) saw a positive return, it again lagged the overall equity market as all three sectors the Company invests in lagged broader markets, which were once again driven in a narrow fashion by the spectacular performance of a small group of technology and artificial intelligence (AI) related companies. See Figure 1 within the Half Yearly Financial Report.
Whilst the market excitement about AI has naturally focused on the relevant technology companies and associated industrial companies that will benefit from the step change in demand for cooling etc., there has been less attention paid to the energy and materials side of the equation. Just like the energy transition, the growth in AI is going to be materials and energy intensive as well as compounding some of the bottlenecks faced by the energy transition. We see some exciting opportunities associated with grid spending that is required to cope with the electricity demand growth as well as the upgrades to the grids. These investments are critical to cope with the rising complexity of grid management resulting from the higher proportion of intermittent generation from sources such as solar and wind.
Although the market has been pre-occupied with the timing and pace of interest rate cuts in the major economies, we have not viewed delays in rate cut expectations as a concern. The higher for longer scenario that now faces the market is a result of stronger than expected economic data in the US, which we view as positive for many of the companies held or potential investment opportunities for the portfolio. The resurgent US manufacturing industry, fuelled by the triple forces of reshoring driven geopolitics, the investments funded by the Inflation Reduction Act of 2022 and the AI/datacentre boom, are all energy and materials intensive forms of growth, that more than offset the costs of higher interest rates for many of the companies in the portfolio.
H1 2024 on
H1 2023
31 May 30 November Average Price %
Commodity 2024 2023 % change
Change1
Base Metals
(US$/tonne)
Aluminium 2,607 2,156 20.9 -2.3
Copper 9,913 8,388 18.2 2.4
Lead 2,216 2,092 5.9 -2.1
Nickel 19,456 16,438 18.4 -32.0
Tin 32,775 22,984 42.6 9.1
Zinc 2,915 2,467 18.2 -12.4
--------------- --------------- --------------- ---------------
Precious Metals
(US$/ounce)
Gold 2,330.7 2,037.8 14.4 13.2
Silver 30.3 25.3 20.0 8.0
Platinum 1,048.0 937.0 11.8 -7.5
Palladium 949.0 1,025.0 -7.4 -36.8
--------------- --------------- --------------- ---------------
Energy
Oil (WTI) 78.0 75.6 3.1 3.2
(US$/barrel)
Oil (Brent) 79.4 81.7 -2.8 2.8
(US$/barrel)
Natural Gas
(US$/Metric
Million British 1.8 2.8 -35.3 -27.5
Thermal Unit
(mmbtu))
--------------- --------------- --------------- ---------------
Bulk Commodities
(US$/tonne)
Iron ore 117.0 132.5 -11.7 4.7
Coking coal 220.5 285.0 -22.6 -4.2
Thermal coal 142.4 129.0 10.4 -47.9
--------------- --------------- --------------- ---------------
Equity Indices
MSCI ACWI2
Metals & Mining 643.7 578.7 11.2 1.4
Index (US$)
MSCI ACWI Metals
& Mining Index 505.6 457.2 10.6 -1.7
(£)
MSCI3 World
Energy Index 507.6 459.9 10.4 8.5
(US$) MSCI World 398.7 363.3 9.7 1.8
Energy Index (£)
S&P Clean Energy 1,279.0 1,205.7 6.1 -27.0
Index (US$)
S&P Clean Energy 822.3 779.7 5.5 -29.3
Index (£)
========= ========= ========= =========
Source: LSEG Datastream,
1
Average of
2 Morgan Stanley Capital International All Country Weighted Index.
3
Portfolio activity & investment performance
The Company’s portfolio delivered a total NAV return of 13.8% during the period driven by positive performance within all three sectors of the Company.
The most notable top down change in the portfolio during the first half was to add to our Energy Transition exposure (see Figure 2 within the Half Yearly Financial Report) as the valuations continue to move lower compared to broader equity markets, a trend we noted in the 2023 annual report too. This change was still relatively modest in size as whilst valuations have become more attractive, we do not think that broad based positive earnings momentum is imminent, given that areas like electric vehicles are still seeing shorter term sales estimates being revised downwards.
Within the three sectors we made some notable changes both to the industry/sub-sector exposures and the stock specific exposures (see Figure 3 within the Half Yeary Financial Report). While we think that nuclear has a strong role to play in the energy transition, we exited our only uranium holding because both the spot price of uranium and the valuation of this particular company had got well ahead of fundamentals.
On the Traditional Energy side we added several new positions across the infrastructure, services and production segments. The infrastructure companies we now own are focused on natural gas so should see good volume growth to drive earnings and also benefit if there are unexpected reduction in rates. These purchases were funded by exiting a refining company (Valero) and an Exploration and Production (E&P) company (EOG Resources).
On the Energy Transition side we added a new holding in a US wind turbine manufacturer that looks to be a beneficiary from the ongoing fiscal support provided by the Inflation Reduction Act of 2022 and we initiated a position in a leading cable manufacturer, Prysmian. It should see its order books well supported by the array of investments needed in transmission and the grid.
Income
The Company paid a total of 2.250p in dividends for the first half of the year, split between the two quarterly payments.
The underlying dividend trends in the portfolio over the first six months of the year were a mixed picture. This is less as a result of companies deciding to make reductions to their dividend payments but more as a function of the changes we have made to the stock selection in the portfolio. The decisions to reduce Vale, TotalEnergies and BHP had negative implications for the ongoing income generation in the portfolio. However, we have conviction that the investments made with the proceeds offer a more attractive total return prospect to offset the income foregone.
We did make an investment in a new convertible bond issue that came with an attractive coupon as well as an equity upside. This was in a leading lithium producer where despite the near-term headwinds, the convertible bond offers a better risk-adjusted return with the added benefit of enhancing the portfolio’s income.
We also note that Pound Sterling has strengthened over 7% from its
Traditional Energy
Oil prices remained relatively range-bound (see Figure 4 within the Half Yearly Financial Report) in the period consistent with our view that Oil and Petroleum Exporting Countries (OPEC) plus countries continue to act in a disciplined fashion in balancing supply and demand. Our thesis remains supported by oil futures firmly in backwardation despite market concerns of oversupply following OPEC’s June announcement to gradually phase out cuts to production.
Excluding COVID-19, US natural gas prices (
Although the Company’s Traditional Energy holdings contributed positively to overall performance in the period, the underlying sub-sector performance was more mixed. Underweight positions in
On a more positive note, we made several changes within our Traditional Energy holdings during the period. We exited our position in EOG Resources to help fund new holdings in Targa Resources, Permian Resources and Saipem. The first two holdings reflect an overall positive view on the long-term growth outlook for the world-class
Our holding in Saipem reflects an overall pivot within the Traditional Energy value-chain towards international oilfield services where we see a strong pipeline of new projects and improving margins. This follows new holdings initiated last year in TechnipFMC and
Energy Transition
Over the trailing 12-month period (see Figure 6 within the Half Yearly Financial Report), Energy Transition-related stocks (S&P Clean Energy Index) have generally struggled against the Mining and Traditional Energy sectors, albeit with a strong step-up, particularly in the month of May (see Figure 7 within the Half Yearly Financial Report). This was partly driven by strong performance from a handful of renewable development companies that were subject to premium acquisitions including Encavis AG and Neoen SA. This precipitated a broader re-rating of renewables-focused stocks in the period which underpinned strong active return contributions from key holdings in NextEra Energy and First Solar.
Elsewhere, manufacturing spend continued to broaden in
Excitement around AI/datacentre build-outs in
The Company’s investments in renewables-focused utility companies in
Mining
The mining sector saw a fairly strong first half performance for both mining companies and commodities. However there was significant dispersion in performance which was more pronounced for commodities than related equities explained further below.
The main differences came between steel related commodities (iron ore and coking coal), which both saw heavy price falls in the six months, and base metals (such a copper and aluminium) that posted strong double digit price gains. The real estate sector in
As shown in Figure 9 in the Half Yearly Financial Report, steel margins were negative in
Despite the challenging iron ore market, the major producers of iron ore, such as BHP and Rio Tinto, held up quite well (Rio Tinto total return 5.6%, BHP 0.0%; GBP). This performance relative to the underlying commodity implies a noticeable increase in valuation multiple associated with the companies – in many ways we think this is deserved given the greater resilience and discipline of these businesses compared to previous cycles. However, despite this re-rating, they did lag their peers that have a more diversified commodity mix with another one of our portfolio companies, Teck Resources delivering substantially better returns for the six month period.
A key thematic to surface in the period was a “buy or build” question in the copper space. This is something that we have described in the past when talking about the incentive price to bring new projects online being substantially higher than current prices and that existing copper production capacity used to trade at lower implied copper prices than that incentive price. We saw significant corporate activity to emphasise this point with BHP making several approaches to Anglo American to try to get a deal agreed. The prize that BHP were seeking was clearly the South American copper portfolio of Anglo, which has several long life and high quality assets. In the end, they could not agree a deal due to the complexities of Anglo’s South African assets but other copper orientated companies saw strong share price appreciation as a result of the approach, with portfolio holdings such as Ivanhoe Mines notable performers.
Whilst our enthusiasm for copper longer-term remains, it should be noted that in the short-term there are some clouds on the horizon. Inventories, although low in terms of numbers of days of use at around 7 weeks, have been rising steadily during the first half of the year, as shown in Figure 11 within the Half Yearly Financial Report. Investor sentiment towards copper though has remained very positive, as shown by the long positions and overall net length in copper futures in Figure 12 within the Half Yearly Financial Report. If physical markets do not see near-term improvements, there is every chance the “hot money” in futures will look to deploy elsewhere and cause a copper price pullback. Given our longer-term structural positive view, it is likely we would use such an opportunity to increase the portfolio’s exposure.
Market outlook and portfolio positioning
Looking back at the 2023 annual report we flagged “an abnormally high level of uncertainty for the year ahead”. Part of this reflected a record spate of elections in 2024 as well as persistent tensions between
AI and datacentre demand will be additive to prior estimates of baseload power demand which we see as supportive not just for renewables, but critically for natural gas and nuclear. Further, as technology companies seek to drive rapid build out of these energy intensive assets the demand for traditional investments will drive further bottlenecks on the supply side.
As we look into the second half of the year we are also closely monitoring the outcome of Federal-level elections and their potential impact on energy and climate policy. The
TOM HOLL AND
Distribution of investments as at
Asset allocation – Geography
____________________ |Global |52.2%| |______________|_____| |United States |20.6%| |______________|_____| |Canada |9.4% | |______________|_____| |Africa |2.7% | |______________|_____| |Germany |2.6% | |______________|_____| |United Kingdom|2.5% | |______________|_____| |Latin America1|2.5% | |______________|_____| |Australia |2.3% | |______________|_____| |France |1.8% | |______________|_____| |Brazil |1.5% | |______________|_____| |Italy |1.3% | |______________|_____| |Ireland |0.6% | |______________|_____|
1 Latin America represents A rgentina.
Source: BlackRock.
Asset allocation – Commodity/sub-sectors
________________________ |Mining |45.4%| |__________________|_____| |Traditional Energy|28.3%| |__________________|_____| |Energy Transition |26.3%| |__________________|_____|
Energy Transition (26.3%)
______________________ |Energy Efficiency|9.4%| |_________________|____| |Electrification |7.1%| |_________________|____| |Renewables |5.5%| |_________________|____| |Transport |3.0%| |_________________|____| |Storage |1.3%| |_________________|____|
Traditional Energy (28.3%)
_________________________________ |Exploration & Production |12.2%| |___________________________|_____| |Integrated |8.4% | |___________________________|_____| |Distribution |3.3% | |___________________________|_____| |Oil Services |2.2% | |___________________________|_____| |Oil, Gas & Consumable Fuels|1.4% | |___________________________|_____| |Refining & Marketing |0.8% | |___________________________|_____|
Mining (45.4%)
_________________________ |Diversified |23.4%| |___________________|_____| |Copper |7.9% | |___________________|_____| |Steel |3.7% | |___________________|_____| |Industrial Minerals|2.9% | |___________________|_____| |Gold |2.5% | |___________________|_____| |Aluminium |1.8% | |___________________|_____| |Metals & Mining |1.8% | |___________________|_____| |Nickel |1.4% | |___________________|_____|
Source: BlackRock.
Ten largest investments
Together, the ten largest investments represent 31.7% of the Company’s portfolio as at
1
+
Anglo American
(2023: 65th)
Diversified mining group
Market value: £8,817,000
Share of investments: 4.7%
1
(2023: 0.4%)
A global mining group. The group’s mining portfolio includes bulk commodities including iron ore, manganese, metallurgical coal, base metals including copper and nickel and precious metals and minerals including platinum and diamonds. Anglo American has mining operations globally, with significant assets in
2
+
Rio Tinto
(2023: 4th)
Diversified mining group
Market value: £8,757,000
Share of investments: 4.6%
(2023: 4.4%)
One of the world’s leading mining companies. The group’s primary product is iron ore, but it also produces aluminium, copper, diamonds, gold, industrial minerals and energy products.
3
+
Teck Resources
(2023: 14th)
Diversified mining group
Market value: £7,951,000
Share of investments: 4.2%
(2023: 2.1%)
A diversified mining group headquartered in
4
-
Glencore
(2023: 1st)
Diversified mining group
Market value: £6,450,000
Share of investments: 3.4%
(2023: 4.8%)
One of the world’s largest globally diversified natural resources groups. The group’s operations include approximately 150 mining and metallurgical sites and oil production assets. Glencore’s mined commodity exposure includes copper, cobalt, nickel, zinc, lead, ferroalloys, aluminium, iron ore gold and silver.
5
=
Shell
(2023: 5th)
Integrated oil group
Market value: £6,147,000
Share of investments: 3.3%
(2023: 3.8%)
Shell is one of the largest integrated energy companies globally with five main operating segments:
6
+
Copper mining group
Market value: £4,802,000
Share of investments: 2.5%
(2023: 2.2%)
7
=
NextEra Energy
(2023: 7th)
Electrification
Market value: £4,610,000
Share of investments: 2.4%
(2023: 2.7%)
NextEra Energy is America’s premier clean energy leader and the world’s largest producer of wind and solar energy. The company has a dominant market share in a structurally growing renewables market.
8
-
BHP
(2023: 2nd)
Diversified mining group
Market value: £4,291,000
Share of investments: 2.3%
(2023: 4.7%)
The world’s largest diversified mining group by market capitalisation. The group is an important global player in a number of commodities including iron ore, copper, thermal and metallurgical coal, manganese, nickel, silver and diamonds. BHP also has significant interests in oil, gas and liquefied natural gas.
9
+
Schneider Electric
(2023: 21st)
Energy efficiency
Market value: £4,137,000
Share of investments: 2.2%
(2023: 1.8%)
Schneider Electric is a French multinational company specialising in digital automation and energy management and addresses homes, buildings, data centres, infrastructure and industries, by combining energy technologies,real-time automation, software and services
10
=
Exploration & Production
Market value: £3,995,000
Share of investments: 2.1%
(2023: 2.4%)
An American global independent energy company, involved in the exploration and production of crude oil and natural gas.
All percentages reflect the value of the holding as a percentage of total investments.
The symbols indicate the change in relative ranking of the position in the portfolio compared to its ranking as at
Percentages in brackets represent the value of the holding as at
Investment
Main Market % of
geographic value investments
exposure £’000
Mining
Diversified
Anglo American Global 8,822
} 4.7
Anglo American Put Option Global (5)
21/06/24
Rio Tinto Global 8,757 4.6
Teck Resources Global 7,951 4.2
Glencore Global 6,449 3.4
BHP Global 4,291 2.3
Abaxx Technologies Global 3,334 1.8
Vale Debentures* Brazil 2,162
} 1.5
Vale Brazil 750
Trident Global 1,629 0.9
--------------- ---------------
44,140 23.4
========= =========
Copper
Filo Corp. Latin America 4,802 2.5
First Quantum Minerals Global 1,616
6.875% 15/10/27 }
First Quantum Minerals Global 1,200 1.6
Foran Mining Canada 2,018 1.1
Metals Acquisition Australia 1,981 1.0
Freeport-McMoRan United States 1,619 0.9
Ivanhoe Electric United States 1,219 0.6
Develop Global Australia 414 0.2
--------------- ---------------
14,869 7.9
========= =========
Steel
Steel Dynamics United States 2,424 1.3
ArcelorMittal Global 2,354 1.2
Stelco Canada 2,291 1.2
--------------- ---------------
7,069 3.7
========= =========
Industrial Minerals
Albemarle Global 2,431 1.3
Bunge Global 1,061 0.6
Nutrien United States 988 0.5
Lynas Corporation Australia 919 0.5
CF Industries United States 47 –
--------------- ---------------
5,446 2.9
========= =========
Gold
Allied Gold Corporation Africa 1,728 0.9
8.75% 07/09/2028
Wheaton Precious Metals Global 1,603 0.8
Barrick Gold Global 1,419 0.8
--------------- ---------------
4,750 2.5
========= =========
Metals & Mining
Ivanhoe Mines Africa 3,441 1.8
--------------- ---------------
3,441 1.8
========= =========
Aluminium
Norsk Hydro Global 3,310 1.8
--------------- ---------------
3,310 1.8
========= =========
Nickel
Nickel Mines Australia 1,138 0.6
Lifezone Metals Global 1,590 0.8
--------------- ---------------
2,728 1.4
========= =========
Total Mining 85,753 45.4
========= =========
Traditional Energy
Exploration & Production
Hess Global 3,995 2.1
Canadian Natural Resources Canada 3,889 2.1
ConocoPhillips Global 3,540 1.9
Permian Resources United States 2,920 1.5
Tourmaline Oil Canada 2,417 1.3
Arc Resources Canada 2,284 1.2
Diamondback Energy United States 2,231 1.2
Kosmos Energy United States 1,688 0.9
--------------- ---------------
22,964 12.2
========= =========
Integrated
Shell Global 6,147 3.3
ExxonMobil Global 3,985 2.1
BP Global 3,564 1.9
Cenovus Energy Canada 2,188 1.1
Gazprom** Russian Federation – –
--------------- ---------------
15,884 8.4
========= =========
Distribution
Targa Resources United States 3,887 2.1
Cheniere Energy United States 2,334 1.2
--------------- ---------------
6,221 3.3
========= =========
Oil Services
TechnipFMC Global 2,072 1.1
Weatherford International Global 1,228 0.6
Saipem Global 898 0.5
--------------- ---------------
4,198 2.2
========= =========
Oil, Gas & Consumable Fuels
Pembina Pipeline Canada 2,703 1.4
--------------- ---------------
2,703 1.4
========= =========
Refining & Marketing
Marathon Petroleum United States 1,519 0.8
Corporation
--------------- ---------------
1,519 0.8
========= =========
Total Traditional Energy 53,489 28.3
========= =========
Energy Transition
Energy Efficiency
Schneider Electric Global 4,137 2.2
Ingersoll-Rand United States 3,610 1.9
Analog Devices Global 3,422 1.8
Trane Technologies United States 2,964 1.6
Regal Rexnord United States 1,683 0.9
Kingspan Group Ireland 1,087 0.6
Nidec Corp Global 809 0.4
--------------- ---------------
17,712 9.4
========= =========
Electrification
NextEra Energy United States 4,610 2.4
RWE Germany 3,607 1.9
National Grid United Kingdom 2,916
} 1.7
National Grid Rights United Kingdom 161
11/06/2024
Sempra Energy United States 1,975 1.1
EDP Renováveis Global 42 –
--------------- ---------------
13,311 7.1
========= =========
Renewables
First Solar Global 3,721 2.0
GE Vernova United States 3,106 1.6
Vestas Wind Global 1,852 1.0
SSE United Kingdom 1,660 0.9
--------------- ---------------
10,339 5.5
========= =========
Transport
STMicroelectronics France 3,365 1.8
Infineon Technologies Germany 1,333 0.7
Samsung SDI Global 967 0.5
--------------- ---------------
5,665 3.0
========= =========
Storage
Prysmian Spa Italy 2,420 1.3
--------------- ---------------
2,420 1.3
========= =========
Total Energy Transition 49,447 26.3
========= =========
Total Portfolio 188,689 100.0
========= =========
Comprising
Equity and debt investments 188,694 100.0
Derivative financial (5) –
instruments – futures
--------------- ---------------
188,689 100.0
========= =========
*
The investment in the Vale debentures is illiquid and has been valued using secondary market pricing information provided by the
**
The investment in Gazprom has been valued at a nominal value of
All investments are ordinary shares unless otherwise stated. The total number of holdings (including options) at
There was one open option as at
The equity and fixed income investment total of £188,694,000 (
As at
Interim Management Report and Responsibility Statement
The Chairman’s Statement and the Investment Managers’ Report above give details of the important events which have occurred during the period and their impact on the financial statements.
Principal risks and uncertainties
The principal risks faced by the Company can be divided into various areas as follows:
· Investment performance;
· Income/dividend;
· Gearing;
· Legal and regulatory compliance;
· Operational;
· Market; and
· Financial.
The Board reported on the principal risks and uncertainties faced by the Company in the Annual Report and Financial Statements for the year ended
The Board and the Investment Manager continue to monitor investment performance in line with the Company’s investment objectives, and the operations of the Company and the publication of net asset values are continuing.
In the view of the Board, there have not been any changes to the fundamental nature of the principal risks and uncertainties since the previous report and these are equally applicable to the remaining six months of the financial year as they were to the six months under review.
Going concern
The Board is mindful of the risk that unforeseen or unprecedented events including (but not limited to) heightened geopolitical tensions such as the wars in
The Company has a portfolio of investments which are considered to be readily realisable and is able to meet all of its liabilities from its assets and income generated from these assets. Borrowings under the overdraft facility shall be lower of £40.0 million or 20% of the Company’s net assets (calculated at the time of draw down) and this covenant was complied with during the period. Ongoing charges (excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation, prior year expenses written back and certain non recurring charges) have been capped by the Manager at 1.25% of average daily net assets with effect from
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.
Related party disclosure and transactions with the Investment Manager
Directors’ responsibility statement
The Disclosure Guidance and Transparency Rules (DTR) of the
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 International Accounting Standard 34 Interim Financial Reporting; and
· the Interim Management Report together with the Chairman’s Statement and Investment Managers’ 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.
This Half Yearly Financial Report has not been audited or reviewed by the Company’s Auditor.
The Half Yearly Financial Report was approved by the Board on
For and on behalf of the Board
Consolidated Statement of Comprehensive Income for the six months ended
Six months ended Six months ended Year ended
31 May 2024 31 May 2023 30 November 2023
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Notes £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Income from
investments held
at fair value 3 2,700 – 2,700 3,411 101 3,512 6,258 79 6,337
through profit
or loss
Other income 3 428 – 428 652 – 652 1,218 – 1,218
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total revenue 3,128 – 3,128 4,063 101 4,164 7,476 79 7,555
========= ========= ========= ========= ========= ========= ========= ========= =========
Net profit/
(loss) on
investments and
derivatives held – 19,011 19,011 – (29,497) (29,497) -- (27,606) (27,606)
at fair value
through profit
or loss
Net
(loss)/profit on – (1) (1) – (35) (35) – 6 6
foreign exchange
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total 3,128 19,010 22,138 4,063 (29,431) (25,368) 7,476 (27,521) (20,045)
========= ========= ========= ========= ========= ========= ========= ========= =========
Expenses
Investment 4 (181) (543) (724) (202) (606) (808) (387) (1,162) (1,549)
management fee
Other operating 5 (240) (4) (244) (232) (13) (245) (535) (16) (551)
expenses
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total operating (421) (547) (968) (434) (619) (1,053) (922) (1,178) (2,100)
expenses
========= ========= ========= ========= ========= ========= ========= ========= =========
Net profit/
(loss) on
ordinary
activities 2,707 18,463 21,170 3,629 (30,050) (26,421) 6,554 (28,699) (22,145)
before finance
costs and
taxation
Finance costs 6 (128) (385) (513) (93) (279) (372) (196) (588) (784)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net profit/
(loss) on
ordinary 2,579 18,078 20,657 3,536 (30,329) (26,793) 6,358 (29,287) (22,929)
activities
before taxation
Taxation (245) 34 (211) (327) 54 (273) (584) 117 (467)
(expense)/credit
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net profit/
(loss) on
ordinary 8 2,334 18,112 20,446 3,209 (30,275) (27,066) 5,774 (29,170) (23,396)
activities after
taxation
========= ========= ========= ========= ========= ========= ========= ========= =========
Earnings/(loss)
per ordinary 8 1.83 14.17 16.00 2.37 (22.40) (20.03) 4.39 (22.17) (17.78)
share (pence)
========= ========= ========= ========= ========= ========= ========= ========= =========
The total columns of this statement represent the Group’s Statement of Comprehensive Income, prepared in accordance with UK–adopted International Accounting Standards (IAS). The supplementary revenue and capital accounts are both prepared under guidance published by the
The Group does not have any other comprehensive income/(loss) (
Consolidated Statement of Changes in Equity for the six months ended
Called Share
up share premium Special Capital Revenue
capital account reserve reserves reserve Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
For the six
months ended
31 May 2024
(unaudited)
At 30 November 1,356 69,980 66,100 18,660 6,266 162,362
2023
Total
comprehensive
income
Net profit for – – – 18,112 2,334 20,446
the period
Transaction
with owners,
recorded
directly to
equity:
Ordinary
shares bought 9 – – (7,631) – – (7,631)
back into
treasury
Share buyback – – (53) – – (53)
costs
Dividends 7 – – – – (2,891) (2,891)
paid1
--------------- --------------- --------------- --------------- --------------- ---------------
At 31 May 2024 1,356 69,980 58,416 36,772 5,709 172,233
========= ========= ========= ========= ========= =========
For the six
months ended
31 May 2023
(unaudited)
At 30 November 1,344 68,203 70,937 47,803 6,421 194,708
2022
Total
comprehensive
(loss)/income:
Net
(loss)/profit – – – (30,275) 3,209 (27,066)
for the period
Transactions
with owners,
recorded
directly to
equity:
Ordinary share 12 1,781 – – – 1,793
issues
Share issue – (4) – – – (4)
costs
Share reissue
costs written – – – 28 – 28
back
Dividends 7 – – – – (2,969) (2,969)
paid2
--------------- --------------- --------------- --------------- --------------- ---------------
At 31 May 2023 1,356 69,980 70,937 17,556 6,661 166,490
========= ========= ========= ========= ========= =========
For the year
ended 30
November 2023
(audited)
At 30 November 1,344 68,203 70,937 47,803 6,421 194,708
2022
Total
comprehensive
(loss)/income:
Net
(loss)/profit – – – (29,170) 5,774 (23,396)
for the year
Transactions
with owners,
recorded
directly to
equity:
Ordinary share 12 1,781 – – – 1,793
issues
Share issue – (4) – – – (4)
costs
Ordinary
shares bought – – (4,802) – – (4,802)
back into
treasury
Share buyback – – (35) – – (35)
costs
Share reissue
costs written – – – 27 – 27
back
Dividends 7 – – – – (5,929) (5,929)
paid3
--------------- --------------- --------------- --------------- --------------- ---------------
At 30 November 1,356 69,980 66,100 18,660 6,266 162,362
2023
========= ========= ========= ========= ========= =========
1
4th interim dividend of 1.125p per share for the year ended
2
4th interim dividend of 1.100p per share for the year ended
3
4th interim dividend of 1.100p per share for the year ended
For information on the Company’s distributable reserves, please refer to note 10 below
Consolidated Statements of Financial Position as at
31 May 31 May 30 November
2024 2023 2023
(unaudited) (unaudited) (audited)
Notes £’000 £’000 £’000
Non current assets
Investments held at fair
value through profit or 12 188,694 175,627 175,540
loss
--------------- --------------- ---------------
Current assets
Other receivables 484 835 618
Current tax asset 195 134 130
Cash collateral pledged 343 1,086 1,538
with brokers
Cash and cash equivalents 73 194 5,276
--------------- --------------- ---------------
Total current assets 1,095 2,249 7,562
--------------- --------------- ---------------
Total assets 189,789 177,876 183,102
========= ========= =========
Current liabilities
Other payables (2,338) (1,463) (1,988)
Derivative financial
liabilities held at fair 12 (5) (559) (890)
value through profit or
loss
Bank overdraft (15,213) (9,364) (17,862)
--------------- --------------- ---------------
Total current liabilities (17,556) (11,386) (20,740)
--------------- --------------- ---------------
Net assets 172,233 166,490 162,362
========= ========= =========
Equity attributable to
equity holders
Called up share capital 10 1,356 1,356 1,356
Share premium account 69,980 69,980 69,980
Special reserve 58,416 70,937 66,100
Capital reserves 36,772 17,556 18,660
Revenue reserve 5,709 6,661 6,266
--------------- --------------- ---------------
Total shareholders’ funds 172,233 166,490 162,362
========= ========= =========
Net asset value per 8 138.24 122.79 123.58
ordinary share (pence)
========= ========= =========
Consolidated Cash Flow Statement for the six months ended
Six months Six months Year
ended ended ended
31 May 31 May 30 November
2024 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Operating activities:
Net profit/(loss) on ordinary 20,657 (26,793) (22,929)
activities before taxation
Add back finance costs 513 372 784
Net (profit)/loss on investments
and derivatives held at fair (19,011) 29,497 27,606
value through profit or loss
(including transaction costs)
Net amount for capital special – (86) –
dividends received
Net loss/(profit) on foreign 1 35 (6)
exchange
Sales of investments held at
fair value through profit or 61,484 53,133 97,330
loss
Purchases of investments held at
fair value through profit or (56,512) (51,272) (93,247)
loss
Decrease/(increase) in other 204 44 (134)
receivables
Increase in other payables 253 515 471
(Increase)/decrease in amounts (70) 1,100 1,496
due from brokers
Increase/(decrease) in amounts 23 (4,838) (4,269)
due to brokers
Net movement in cash collateral 1,195 (801) (1,253)
held with brokers
--------------- --------------- ---------------
Net cash inflow from operating 8,737 906 5,849
activities before taxation
Taxation on investment income (276) (304) (494)
included within gross income
--------------- --------------- ---------------
Net cash inflow from operating 8,461 602 5,355
activities
========= ========= =========
Financing activities
Interest paid (513) (372) (784)
Receipts from share issues – 1,793 1,793
Share issue costs paid – (58) (59)
Shares bought back into treasury (7,557) – (4,802)
Share buyback costs (53) – (35)
Dividends paid (2,891) (2,969) (5,929)
--------------- --------------- ---------------
Net cash outflow from financing (11,014) (1,606) (9,816)
activities
========= ========= =========
Decrease in cash and cash (2,553) (1,004) (4,461)
equivalents
Effect of foreign exchange rate (1) (35) 6
changes
--------------- --------------- ---------------
Change in cash and cash (2,554) (1,039) (4,455)
equivalents
========= ========= =========
Cash and cash equivalents at (12,586) (8,131) (8,131)
start of period/year
--------------- --------------- ---------------
Cash and cash equivalents at end (15,140) (9,170) (12,586)
of period/year
========= ========= =========
Comprised of:
Cash at bank 73 194 5,276
Bank overdraft (15,213) (9,364) (17,862)
--------------- --------------- ---------------
(15,140) (9,170) (12,586)
========= ========= =========
Notes to the financial statements for the six months ended
1. Principal activity
The principal activity of the Company is that of an investment trust company within the meaning of Section 1158 of the Corporation Tax Act 2010.
The principal activity of the subsidiary,
2. Basis of preparation
The half yearly financial statements for the period ended
Insofar as the Statement of Recommended Practice (SORP) for investment trust companies and venture capital trusts, issued by the
Adoption of new and amended International Accounting Standards and interpretations:
IFRS 17 – Insurance contracts
(effective
This standard did not have any impact on the Company as it has no insurance contracts.
IAS 12 - Deferred tax related to assets and liabilities arising from a single transaction
(effective
The amendment of this standard did not have any significant impact on the Company.
IAS 8 – Definition of accounting estimates
(effective
IAS 1 and IFRS Practice Statement 2 – Disclosure of accounting policies
(effective
IAS 12 – International Tax Reform Pillar Two Model Rules
(effective
Relevant International Accounting Standards that have yet to be adopted:
IAS 1 – Classification of liabilities as current or non current
(effective
IAS 1 - Non current liabilities with covenants
(effective
None of the standards that have been issued but are not yet effective are expected to have a material impact on the Group.
3. Income
Six months Six months Year
ended ended ended
31 May 31 May 30 November
2024 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Investment income:
UK dividends 654 329 608
Fixed income 332 227 453
Overseas dividends 1,560 2,055 4,578
Overseas special dividends 154 800 619
--------------- --------------- ---------------
Total investment income 2,700 3,411 6,258
========= ========= =========
Other income:
Bank interest 2 – 2
Interest on collateral received 8 – 7
Option premium income 418 652 1,209
--------------- --------------- ---------------
428 652 1,218
========= ========= =========
Total income 3,128 4,063 7,476
========= ========= =========
During the period, the Group received option premium income in cash totalling £418,000 (six months ended
Option premium income is amortised evenly over the life of the option contract and accordingly, during the period, option premiums of £418,000 (six months ended
At
Dividends and interest received in cash during the period amounted to £2,374,000 and £287,000 (six months ended
Special dividends of £nil have been recognised in capital during the period (six months ended
4. Investment management fee
Six months ended Six months ended Year ended
31 May 2024 31 May 2023 30 November 2023
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Investment
management 181 543 724 202 606 808 387 1,162 1,549
fee
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total 181 543 724 202 606 808 387 1,162 1,549
========= ========= ========= ========= ========= ========= ========= ========= =========
The investment management fee is levied at 0.80% of gross assets per annum. Gross assets for the purposes of calculating the management fee equate to the value of the portfolio’s gross assets held on the relevant date as valued on the basis of applicable accounting policies, less the value of any investments in in-house funds.
The fee is allocated 25% to the revenue account and 75% to the capital account of the Consolidated Statement of Comprehensive Income. There is no additional fee for company secretarial and administration services.
The Company is entitled to a rebate from the investment management fee charged by the Manager in the event the Company’s ongoing charges exceed the cap of 1.25% per annum of average daily net assets. The amount of rebate accrued for the six months ended
5. Other operating expenses
Six months Six months Year
ended ended ended
31 May 31 May 30 November
2024 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Allocated to revenue:
Custody fee 4 5 9
Auditor’s remuneration – audit 28 24 48
services1
Registrar’s fee 17 18 35
Directors’ emoluments 75 66 133
Broker fees 13 12 24
Depositary fees 8 9 17
Marketing fees 15 21 84
Printing and postage fees 21 19 39
Legal and professional fees 12 13 26
Directors’ search fees – 6 38
Bank charges 7 7 14
Stock exchange listings fees 5 9 14
Other administration costs 35 42 75
Write back of prior year expense – (19) (21)
accruals2
--------------- --------------- ---------------
240 232 535
========= ========= =========
Allocated to capital:
Custody transaction costs3 4 13 16
--------------- --------------- ---------------
244 245 551
========= ========= =========
1
No non-audit services were provided by the Company’s auditors in the six months ended
2
No expenses were written back during the period (six months ended
3
For the six months ended
The transaction costs incurred on the acquisition of investments amounted to £99,000 for the six months ended
6. Finance costs
Six months ended Six months ended Year ended
31 May 2024 31 May 2023 30 November 2023
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Interest
payable – 128 385 513 93 279 372 196 588 784
bank
overdraft
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total 128 385 513 93 279 372 196 588 784
========= ========= ========= ========= ========= ========= ========= ========= =========
Finance costs for the Company are charged 25% to the revenue account and 75% to the capital account of the Consolidated Statement of Comprehensive Income. Subsidiary finance costs are charged 100% to the revenue account of the Consolidated Statement of Comprehensive Income.
At
7. Dividends
The Board’s current dividend target is to declare quarterly dividends of
A first interim dividend for the year ending
The Directors have declared a second interim dividend for the year ending
The third and fourth interim dividends will be declared in
Dividends on equity shares paid during the period were:
Six months Six months Year
ended ended ended
31 May 31 May 30 November
2024 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
2nd interim dividend of 1.100p
per share for the year ended 30 – – 1,478
November 2023 (2022: 1.100p)
3rd interim dividend of 1.100p
per share for the year ended 30 – – 1,491
November 2023 (2022: 1.100p)
4th interim dividend of 1.125p
per share for the year ended 30 1,468 1,478 1,491
November 2023 (2022: 1.100p)
1st interim dividend of 1.125p
per share for the year ending 30 1,423 1,491 1,469
November 2024 (2023: 1.100p)
--------------- --------------- ---------------
2,891 2,969 5,929
========= ========= =========
8. Consolidated earnings and net asset value per ordinary share
Revenue, capital earnings/(loss) and net asset value per ordinary share are shown below and have been calculated using the following:
Six months Six months Year
ended ended ended
31 May 31 May 30 November
2024 2023 2023
(unaudited) (unaudited) (audited)
Net revenue profit attributable 2,334 3,209 5,774
to ordinary shareholders (£’000)
Net capital profit/(loss)
attributable to ordinary 18,112 (30,275) (29,170)
shareholders (£’000)
--------------- --------------- ---------------
Total profit/(loss) attributable 20,446 (27,066) (23,396)
to ordinary shareholders (£’000)
========= ========= =========
Equity shareholders’ funds 172,233 166,490 162,362
(£'000)
The weighted average number of
ordinary shares in issue during
each period on which the 127,790,523 135,151,964 131,610,148
earnings per ordinary share was
calculated was:
The actual number of ordinary
shares in issue at the period
end on which the net asset value 124,586,194 135,586,194 131,386,194
per ordinary share was
calculated was:
--------------- --------------- ---------------
Earnings per share
Revenue earnings per share 1.83 2.37 4.39
(pence) - basic and diluted
Capital earnings/(loss) per
share (pence) – basic and 14.17 (22.40) (22.17)
diluted
--------------- --------------- ---------------
Total earnings/(loss) per share 16.00 (20.03) (17.78)
(pence ) – basic and diluted
========= ========= =========
As at As at As at
31 May 31 May 30 November
2024 2023
(unaudited) (unaudited) 2023
(audited)
Net asset value per ordinary share (pence) 138.24 122.79 123.58
Ordinary share price (pence) 121.50 111.60 110.40
========= ========= =========
There were no dilutive securities at the period end (six months ended
9. Reconciliation of liabilities arising from financing activities
Six months Six months Year
ended ended ended
31 May 31 May 30 November
2024 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Bank overdraft at beginning of 17,862 14,345 14,345
period/year
Cash flows:
Movement in overdraft (2,649) 4,981 3,517
--------------- --------------- ---------------
Bank overdraft at end of 15,213 9,364 17,862
period/year
========= ========= =========
10. Called up share capital
Ordinary Treasury Total Nominal
shares shares shares value
(unaudited) number number number £’000
Allotted, called
up and fully
paid share
capital
comprised:
Ordinary shares
of 1 pence each:
At 30 November 131,386,194 4,200,000 135,586,194 1,356
2023
Ordinary shares
repurchased into (6,800,000) 6,800,000 – –
treasury
--------------- --------------- --------------- ---------------
At 31 May 2024 124,586,194 11,000,000 135,586,194 1,356
========= ========= ========= =========
During the period ended
During the period ended
Since
Since
11. Reserves
The share premium account and capital redemption reserve are not distributable reserves under the Companies Act 2006. In accordance with ICAEW Technical Release 02/17BL on Guidance on Realised and Distributable Profits under the Companies Act 2006, the special reserve and capital reserve of the Parent Company may be used as distributable reserves for all purposes and, in particular, the repurchase by the Parent Company of its ordinary shares and for payments such as dividends. In accordance with the Company’s Articles of Association, the special reserve, capital reserves and revenue reserve may be distributed by way of dividend. The Parent Company’s gain on the capital reserve arising on the revaluation of investments of £32,843,000 (
12. Financial risks and valuation of financial instruments
The Company’s investment activities expose it to the various types of risk which are associated with the financial instruments and markets in which it invests. The risks are substantially consistent with those disclosed in the previous annual financial statements with the exception of those outlined below.
Market risk arising from price risk
Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk) whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting similar financial instruments traded in the market. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, recessions, climate change or other events could have a significant impact on the Group and the market price of its investments and could result in increased premiums or discounts to the Company’s net asset value.
Valuation of financial instruments
Financial assets and financial liabilities are either carried in the Consolidated Statement of Financial Position at their fair value (investments and derivatives) or at an amount which is a reasonable approximation of fair value (due from brokers, dividends and interest receivable, due to brokers, accruals, cash at bank and bank overdrafts). IFRS 13 requires the Group to classify fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The valuation techniques used by the Group are explained in the accounting policies note 2(h) as set out on page 100 of the Group’s Annual Report and Financial Statements for the year ended
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset.
The fair value hierarchy has the following levels:
Level 1 – Quoted market price for identical instruments in active markets
A financial instrument is regarded as quoted in an active market if quoted prices are readily available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The Group does not adjust the quoted price for these instruments.
Level 2 – Valuation techniques using observable inputs
This category includes instruments valued using quoted prices for similar instruments in markets that are considered less than active, or other valuation techniques where all significant inputs are directly or indirectly observable from market data.
Valuation techniques used for non-standardised financial instruments such as options, currency swaps and other over-the-counter derivatives include the use of comparable recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants making the maximum use of market inputs and relying as little as possible on entity specific inputs.
Over-the-counter derivative option contracts have been classified as Level 2 investments as their valuation has been based on market observable inputs represented by the underlying quoted securities to which these contracts expose the Group.
Level 3 – Valuation techniques using significant unobservable inputs
This category includes all instruments where the valuation technique includes inputs not based on market data and these inputs could have a significant impact on the instrument’s valuation.
This category also includes instruments that are valued based on quoted prices for similar instruments where significant entity determined adjustments or assumptions are required to reflect differences between the instruments and instruments for which there is no active market. The Investment Manager considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary and provided by independent sources that are actively involved in the relevant market.
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement.
Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability including an assessment of the relevant risks including but not limited to credit risk, market risk, liquidity risk, business risk and sustainability risk. The determination of what constitutes ‘observable’ inputs requires significant judgement by the Investment Manager and these risks are adequately captured in the assumptions and inputs used in measurement of Level 3 assets or liabilities.
Fair values of financial assets and financial liabilities
The table below sets out fair value measurements using the IFRS 13 fair value hierarchy.
Financial
assets/
(liabilities) at Level 1 Level 2 Level 3 Total
fair value £’000 £’000 £’000 £’000
through profit
or loss at 31
May 2024
(unaudited)
Assets:
Equity 186,532 – – 186,532
investments
Fixed income – 2,162 – 2,162
investments
--------------- --------------- --------------- ---------------
Liabilities:
Derivative
financial (5) – – (5)
instruments –
written options
--------------- --------------- --------------- ---------------
186,527 2,162 – 188,689
========= ========= ========= =========
Financial
assets/
(liabilities) at Level 1 Level 2 Level 3 Total
fair value £’000 £’000 £’000 £’000
through profit
or loss at 31
May 2023
(unaudited)
Assets:
Equity 170,896 – – 170,896
investments
Fixed income 2,714 2,017 – 4,731
investments
--------------- --------------- --------------- ---------------
Liabilities:
Derivative
financial
instruments – (559) – – (559)
commodity
futures
--------------- --------------- --------------- ---------------
173,051 2,017 – 175,068
========= ========= ========= =========
Financial
assets/
(liabilities) at Level 1 Level 2 Level 3 Total
fair value £’000 £’000 £’000 £’000
through profit
or loss at 30
November 2023
(audited)
Assets:
Equity 169,171 – – 169,171
investments
Fixed income 4,022 2,347 – 6,369
investments
--------------- --------------- --------------- ---------------
Liabilities:
Derivative
financial (110) – – (110)
instruments –
written options
Derivative
financial
instruments – (780) – – (780)
commodity
futures
--------------- --------------- --------------- ---------------
172,303 2,347 – 174,650
========= ========= ========= =========
The investment in Vale debentures has been classified as Level 2 in the tables above for all periods as these are priced using secondary market pricing information provided by the
As at
For exchange listed equity investments, the quoted price is the bid price. Substantially, all investments are valued based on unadjusted quoted market prices. Where such quoted prices are readily available in an active market, such prices are not required to be assessed or adjusted for any business risks, including climate change risk, in accordance with the fair value related requirements of the Company’s financial reporting framework.
The Company may invest no more than 10% of its net asset value in investments held through Stock Connect as set out on page 122 of the Group’s Annual Report and Financial Statements for the year ended
13. Related party disclosure
Directors’ emoluments
The Board consists of four non-executive Directors, all of whom are considered to be independent of the Manager by the Board. None of the Directors has a service contract with the Company. The Chairman receives an annual fee of £42,000, the Chairman of the
As at
At the period end, interests of the Directors in the ordinary shares of the Company are as set out below:
31 May 31 May 30 November
2024 2023
2023
Mr Adrian Brown (Chairman) 35,000 35,000 35,000
Mr Andrew Robson 35,000 35,000 35,000
Mrs Anne Marie Cannon1 15,000 n/a n/a
Mrs Carole Ferguson 14,505 10,000 14,505
Dr Carol Bell2 n/a 44,000 50,800
========= ========= =========
1
2
Dr
Since the period end and up to the date of this report there have been no changes in Directors’ holdings.
The following investors are:
a.
funds managed by the
b.
investors (other than those listed in (a) above) who held more than 20% of the voting shares in issue in the Company and are as a result, considered to be related parties to the Company (
Total % of shares
held by Significant Number of
Investors Significant Investors
Total % of shares who are not who are not affiliates
affiliates of of
held by Related BlackRock Group or BlackRock Group or
BlackRock Funds BlackRock, Inc. BlackRock, Inc.
As at 31 May 2024 0.75 n/a n/a
As at 30 November 0.70 n/a n/a
2023
As at 31 May 2023 0.95 n/a n/a
========= ========= =========
14. Transactions with the Investment Manager and AIFM
The investment management fee due for the six months ended
The Company is entitled to a rebate from the investment management fee charged by the Manager in the event the Company’s ongoing charges exceed the cap of 1.25% per annum of average daily net assets. The amount of rebate accrued to
In addition to the above services, BIM (
The ultimate holding company of the Manager and the Investment Manager is BlackRock, Inc., a company incorporated in
15. Capital commitments and contingent liabilities
The Group had no capital commitments at
16. Publication of non-statutory accounts
The financial information contained in this Half Yearly Financial Report does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006. The financial information for the six months ended
The information for the year ended
17. Annual results
The Board expects to announce the annual results for the year ending
Copies of the annual results announcement can be obtained from the Secretary on 020 7743 3000 or at
cosec@blackrock.co
m
. The Annual Report and Financial Statements should be available at the beginning of
