Final Results

BlackRock Greater Europe Investment Trust plc

Annual results announcement
For the year ended 31 August 2015

Financial Highlights

Attributable to ordinary shareholders	As at  31 August 2015	As at  31 August 2014	Change  %
Assets
Net asset value per ordinary share – undiluted	250.66p	237.98p	+5.3
– with income reinvested**			+7.5
Net asset value per ordinary share – diluted	250.22p	237.98p	+5.1
– with income reinvested**			+7.3
Net assets (£’000)*	261,459	258,987	+1.0
Ordinary share price (mid-market)	244.00p	228.50p	+6.8
– with income reinvested**			+9.1
Subscription share price (mid-market)	12.63p	10.00p	+26.3
	=======	=======	======

	For the year ended  31 August 2015	For the year ended  31 August 2014	Change  %
Revenue
Net revenue return after taxation (£’000)	5,609	4,964	+13.0
Revenue return per ordinary share – basic and diluted	5.28p	4.59p	+15.0
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Dividends:
– Interim	1.65p	1.50p
– Final	3.35p	3.20p
	-------	-------	-------
Total dividends paid and payable	5.00p	4.70p	+6.4
	-------	-------	-------
*        The change in net assets reflects the tender offers implemented in the year, market movements and the exercise of subscription shares. **       Net asset value and share price performance include the dividend reinvestments.

Chairman’s statement

Overview
European equities have performed strongly since the beginning of the year as investor sentiment continued to be buoyed by the European Central Bank’s (ECB’s) commitment to Quantitative Easing, recovering economic momentum and a stabilising political backdrop. The depreciation of the Euro, the weaker oil price and lower commodity prices also proved a net benefit to the market as European companies reported an acceleration in earnings growth in the second quarter reporting season.

Although momentum remained strong in Europe, markets continued to be volatile as the possibility of a Greek exit from the Eurozone dominated headlines. Towards the end of the period under review, investors grew increasingly nervous about a slowdown in China and other emerging markets, prompting European equities to sell off, although they subsequently rallied.

Performance
Over the twelve months to 31 August 2015, the Company’s undiluted net asset value (NAV) per share increased by 7.5%, compared with a rise of 1.3% in the FTSE World Europe ex UK Index. The share price rose by 9.1% over the same period. All percentages are calculated in Sterling terms with income reinvested.

Since the period end to 19 October 2015, the Company’s undiluted NAV per share has increased by 0.7% compared with a rise in the FTSE World Europe ex UK Index of 0.5% over the same period.

Revenue earnings and dividends
The Company’s revenue return per share for the year to 31 August 2015 was 5.28p per share compared with 4.59p per share for the previous year, representing an increase of 15.0%.

The Board recommends the payment of a final dividend of 3.35p per share for the year (2014: 3.20p) which, together with the interim dividend of 1.65p per share (2014: 1.50p), makes a total dividend of 5.00p per share (2014: 4.70p). The dividend will be paid on 18 December 2015 to shareholders on the Company’s register on 6 November 2015. The ex-dividend date is 5 November 2015.

Discount Control
The Board has the option to implement a tender in order to assist in controlling the discount to NAV at which the shares are traded. In addition, it will consider buying back shares between tenders when it is considered to be in the interests of shareholders to do so.

Tender Offers
The Directors exercised their discretion to operate the half yearly tender offer on 1 June 2015, being the succeeding business day to 31 May 2015. The offer was for up to 20% of the ordinary shares in issue (excluding treasury shares) at the prevailing fully diluted NAV less 2%. Valid tenders for 1,454,802 ordinary shares were received at a price of 256.66p per ordinary share, representing 1.38% of the ordinary shares in issue. All shares tendered were purchased by the Company and cancelled. In addition, 72,755 ordinary shares held in treasury were cancelled to maintain the 5% limit on treasury shares previously set by the Board.

It was announced on 21 September 2015 that the next semi-annual tender offer will take place on 30 November 2015. The tender offer will be for up to 20% of the ordinary shares in issue (excluding treasury shares) at the prevailing fully diluted NAV per share subject to a discount of 2%. A Circular relating to the tender offer is enclosed with this Annual Report. The Circular will be available on the BlackRock website at blackrock.co.uk/brge, and additional copies may be requested from the Company’s registered office c/o The Secretary, BlackRock Greater Europe Investment Trust plc, 12 Throgmorton Avenue, London EC2N 2DL.

Resolutions to renew the Company’s semi-annual tender authorities will be put to shareholders at the forthcoming Annual General Meeting.

Subscription shares
In the year under review, the Company has issued a total of 102,670 ordinary shares following the conversion of subscription shares into ordinary shares. Total proceeds amounted to £255,000. The Company currently has 104,309,663 ordinary shares (excluding treasury shares) and 20,545,178 subscription shares in issue.

Subscription shareholders have three further opportunities (31 October 2015, 31 January 2016 and 30 April 2016) to subscribe for all or any of the ordinary shares to which their subscription shares relate at a price of 248p per ordinary share.

Audit services
During October, the Company conducted a formal tender process for its external audit services. The incumbent audit firm Ernst & Young LLP (EY) was asked to participate in the process along with three other firms.

EY has acted as the external auditor since the Company’s launch in 2004. The Audit and Management Engagement Committee therefore considered that it was an appropriate time to conduct a tender process in keeping with its commitment to best practices in corporate governance and reporting and following the approval of new EU regulations on mandatory auditor rotation which will require the Company to put its audit out to tender every ten years with mandatory rotation after twenty years.

Following presentations and interviews, it was agreed that the reappointment of EY was in the best interests of the Company.

Management fee
In April, the Board announced that the Company and the Manager had agreed revisions to the fees payable to the Manager under the Investment Management Agreement. Effective 1 September 2015, the performance fee was removed and the previous arrangements replaced with a base fee of 0.85% of net asset value.

The Board
After serving as a Director since the launch of the Company, Gerald Holtham will be retiring at the conclusion of the forthcoming Annual General Meeting. I would like to take this opportunity on behalf of your Board to thank Gerald for his wise counsel and contribution over this period and wish him every success in the future.

Outlook
Stock markets globally remain caught between concerns about a Chinese economic slowdown on the one hand, and fears about the path of U.S. interest rates on the other. Our Managers do not believe, however, that the current slowdown in China will prompt the start of a global economic recession and the resulting onset of a bear market.

European equities remain attractive in a global context, given the competitive position of many exporters after the weakness of the Euro in recent years. Shares are more reasonably rated than their U.S. counterparts and the ECB’s policy remains accommodating. Whilst numerous challenges remain, not least the political and economic strains of coping with growing numbers of refugees, the likely path of the region’s economy overall remains one of continuing growth, helped by lower energy costs and the favourable exchange rate. Our Portfolio Managers will continue to focus on selecting attractive growth opportunities in the wider region, recognising that the volatility of recent months may well persist.

Annual General Meeting
The Annual General Meeting of the Company will be held at the offices of BlackRock at 12 Throgmorton Avenue, London EC2N 2DL on Thursday, 10 December 2015 at 12 noon. As in previous years, the Portfolio Managers will make a presentation to shareholders on the Company’s performance and the outlook for the year ahead.

We, the Directors of your Company, regard the Annual General Meeting as the most important meeting of the year and we encourage you to come along. We have considered the resolutions proposed in the Notice of the Annual General Meeting and believe that all are in the interests of shareholders as a whole. We therefore recommend that you vote in favour of each resolution.

Carol Ferguson
22 October 2015

Strategic report

The Directors present the Strategic Report of the Company for the year ended 31 August 2015.

Principal Activity
The Company carries on business as an investment trust and its principal activity is portfolio investment.

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

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

As at 31 August 2015, the Company held 53 investments and 3.5% of the portfolio was invested in developing Europe. The Company had no unquoted investments.

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

The Company also has the flexibility to invest up to 20% of the portfolio in debt securities, such as convertible bonds and corporate bonds. No bonds were held at 31 August 2015. The use of any derivative instruments such as financial futures, options and warrants and the entering into of stock lending arrangements will only be for the purposes of efficient portfolio management.

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

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

The Investment Manager believes that appropriate use of gearing can add value over time. This gearing typically is in the form of an overdraft facility which can be repaid at any time. The level and benefit of any gearing is discussed and agreed regularly by the Board. The Investment Manager generally aims to be fully invested and it is anticipated that gearing will not exceed 15% of net asset value (NAV) at the time of draw down of the relevant borrowings. At the balance sheet date the Company did not have any net gearing (2014: nil).

The Directors recognise that it is in the long term interests of shareholders that shares do not trade at a significant discount to their prevailing NAV. The Board believes that this may be achieved through the use of regular tender offers and the use of share buy back powers. In the year to 31 August 2015, the Company’s share price discount to NAV ranged from 1.3% to 6.8% calculated on an undiluted cum income basis (diluted NAV: from a discount of 0.4% to a discount of 6.5% respectively).

Performance
In the year to 31 August 2015, the Company’s undiluted NAV per share returned +7.5% (compared with a return in the FTSE World Europe ex UK Index of +1.3%) and the share price returned +9.1% (all percentages calculated in Sterling terms with income reinvested).

The Investment Manager’s Report includes a review of the main developments during the year, together with information on investment activity within the Company’s portfolio.

Results and dividends
The results for the Company are set out in the Income Statement. The total profit for the year, after taxation, was £18,958,000 (2014: £11,696,000). The revenue return amounted to £5,609,000 (2014: £4,964,000).

As explained in the Company’s Half Yearly Financial Report, the Directors declared an interim dividend of 1.65p per share (2014: 1.50p). The Directors recommend the payment of a final dividend of 3.35p per share making a total dividend of 5.00p per share (2014: 4.70p). Subject to approval at the forthcoming Annual General Meeting, the dividend will be paid on 18 December 2015 to shareholders on the register of members at the close of business on 6 November 2015.

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

	As at  31 August 2015	As at  31 August 2014
Net asset value per share – undiluted	250.66p	237.98p
Net asset value per share – diluted	250.22p	237.98p
Share price	244.00p	228.50p
Discount to net asset value – undiluted	2.7%	4.0%
Discount to net asset value – diluted	2.5%	4.0%
	=======	=======
	Year ended  31 August 2015	Year ended  31 August 2014
Revenue return per share – undiluted	5.28p	4.59p
Ongoing charges*	0.89%	0.94%
Ongoing charges#	1.22%	0.94%
	---------	---------
*      Ongoing charges (excluding interest costs and any performance fees, after any relief for taxation) as a % of average shareholders’ funds. #     Ongoing charges (including any performance fees but excluding interest costs, after any relief for taxation) as a % of average shareholders’ funds.

The Board monitors the above KPIs on a regular basis. Additionally, it regularly reviews a number of indices and ratios to understand the impact on the Company’s relative performance of the various components such as asset allocation and stock selection. The Board also assesses the Company’s performance against its peer group of investment trusts with similar investment objectives.

Principal risks
The key risks faced by the Company are set out below. The Board regularly reviews and agrees policies for managing each risk, as summarised below.

•  Performance risk – The Board is responsible for deciding the investment strategy to fulfil the Company’s objective and monitoring the performance of the Investment Manager. An inappropriate strategy may lead to underperformance against the reference index and the Company’s peer group. To manage this risk the Investment Manager provides an explanation of significant stock selection decisions and the rationale for the composition of the investment portfolio. The Board monitors and mandates an adequate spread of investments, in order to minimise the risks associated with particular countries or factors specific to particular sectors, based on the diversification requirements inherent in the Company’s investment policy. The Board also receives and reviews regular reports showing an analysis of the Company’s performance against the FTSE World Europe ex UK Index and other similar indices. Past performance is not necessarily a guide to future performance and the value of your investment in the Company and the income from it can fluctuate as the value of the underlying investments fluctuate.

•  Income/dividend risk – The amount of dividends and future dividend growth will depend on the Company’s underlying portfolio. Any change in the tax treatment of the dividends or interest received by the Company (including as a result of withholding taxes or exchange controls imposed by jurisdictions in which the Company invests) may reduce the level of dividends received by shareholders. The Board monitors this risk through the receipt of detailed income forecasts and considers the level of income at each meeting.

•  Regulatory risk – The Company operates as an investment trust in accordance with the requirements of Chapter 4 of Part 24 of the Corporation Tax Act 2010. As such, the Company is exempt from capital gains tax on the sale of its investments. The Investment Manager monitors investment movements, the level of forecast income and expenditure and the amount of proposed dividends to ensure that the provisions of Chapter 4 of Part 24 of the Corporation Tax Act 2010 are not breached and the results are reported to the Board. Following authorisation under the Alternative Investment Fund Managers’ Directive (AIFMD), the Company and its appointed Alternative Investment Fund Manager (AIFM) are subject to the risks that the requirements of this Directive are not correctly complied with. The Board and the Manager also monitor changes in government policy and legislation which may have an impact on the Company.

•  Operational risk – In common with most other investment trust companies, the Company has no employees. The Company therefore relies upon the services provided by third parties and is dependent on the control systems of the Manager, BNY Mellon Trust & Depositary (UK) Limited (the Depositary) and the Bank of New York Mellon (International) Limited (the administrator), who maintain the Company’s accounting records. The security of the Company’s assets, dealing procedures, accounting records and maintenance of regulatory and legal requirements, depend on the effective operation of these systems. These have been regularly tested and monitored throughout the period which is evidenced through their Service Organisation Control (SOC 1) Reports to provide assurance regarding the effective operation of internal controls which are reported on by their service auditors and give assurance regarding the design and effective operation of controls. The Board also considers succession arrangements for key employees of the Manager and the business continuity arrangements for the Company’s key service providers.

•  Market risk – Market risk arises from volatility in the prices of the Company’s investments. It represents the potential loss the Company might suffer through holding investments in the face of negative market movements. In addition, it should be noted that emerging markets tend to be more volatile than more established stock markets and therefore present a greater degree of risk. Changes in general economic and market conditions in certain countries, such as interest rates, exchange rates, rates of inflation, industry conditions, competition, political events and trends, tax laws, national and international conflicts, economic sanctions and other factors can also substantially and adversely affect the securities and, as a consequence, the Company’s prospects and share price. The Board considers asset allocation, stock selection, unquoted investments and levels of gearing on a regular basis and has set investment restrictions and guidelines which are monitored and reported on by the Investment Manager. The Board monitors the implementation and results of the investment process with the Investment Manager.

•  Financial risk – The Company’s investment activities expose it to a variety of financial risks that include market risk, currency risk, interest rate risk, market price risk, liquidity risk and credit risk. Further details are disclosed in note 18 on pages 47 to 53 of the Annual Report, together with a summary of the policies for managing these risks.

•  Gearing risk – The Company has the power to borrow money (gearing) and does so when the Investment Manager is confident that market conditions and opportunities exist to enhance investment returns. However, if the investments fall in value, any borrowings will magnify the extent of this loss. All borrowings require the approval of the Board and gearing levels are reviewed regularly by the Board and the Investment Manager.

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

Social, community and human rights issues
As an investment trust with no employees, the Company has no direct social or community responsibilities or impact on the environment. However, the Company believes that it is in shareholders’ interests to consider human rights issues and environmental, social and governance factors when selecting and retaining investments. Details of the Company’s policy on socially responsible investment are set out on page 27 of the Annual Report.

Directors, gender representation and employees
The Directors of the Company on 31 August 2015 are set out in the Governance Structure and Directors’ Biographies on page 15 of the Annual Report. The Board currently consists of three male Directors and two female Directors. The Company does not have any employees.

The information set out on pages 9 to 14 of the Annual Report, including the Investment Manager’s Report, forms part of the Strategic Report. The Strategic Report was approved by the Board at its meeting on 22 October 2015.

By order of the Board
BlackRock Investment Management (UK) Limited
Company Secretary
22 October 2015

Related party transactions
BlackRock Fund Managers Limited (BFM) was appointed as the Company’s AIFM with effect from 2 July 2014, having been authorised as an AIFM by the FCA on 1 May 2014. The management contract is terminable by either party on six months’ notice.

BlackRock Investment Management (UK) Limited (BIM (UK)) continues to act as the Company’s Investment Manager under a delegation agreement with BFM. BIM (UK) also acted as the Secretary of the Company throughout the year. Up to and including 31 August 2015, BFM received an annual fee of 0.70% of market value plus a performance fee of 15% of any outperformance of the FTSE World Europe ex UK Index, up to a maximum total investment management fee of 1.15% of performance fee market value. With effect from 1 September 2015, the arrangements have been replaced with a base fee of 0.85% of net asset value.

Where the Company invests in other investment or cash funds managed by BIM (UK), any underlying fee charged is rebated. Fees are adjusted by adding all dividends declared during the period.

The Company held an investment in BlackRock’s Institutional Cash Fund – Euro Assets Liquidity of £2,325,000 at 31 August 2015 (2014: £1,023,000).

The Company contributes to a focused investment trust sales and marketing initiative operated by BIM (UK) on behalf of the investment trusts under its management. The Company’s contribution to the consortium element of the initiative, which enables the trusts to achieve efficiencies by combining certain sales and marketing activities, represents a budget of up to 0.03% per annum of its net assets (£246.5 million) as at 31 December 2014 and this contribution is matched by BIM (UK). In addition, a budget has been allocated for Company specific sales and marketing activity. Total fees paid or payable for these services for the year ended 31 August 2015 amounted to £48,000 (excluding VAT) (2014: £113,000). The purpose of the programme overall is to ensure effective communication with existing shareholders and to attract new shareholders to the Company. This has the benefit of improving liquidity in the Company’s shares and helps sustain the stock market rating of the Company.

The Board consists of five non-executive Directors, all of whom are considered to be independent by the Board. None of the Directors has a service contract with the Company. The Chairman receives an annual fee of £33,000, the Chairman of the Audit and Management Engagement Committee receives an annual fee of £27,500 and each other Director receives an annual fee of £23,000. Three members of the Board hold shares in the Company. Carol Ferguson holds 57,600 ordinary shares, Gerald Holtham holds 13,320 ordinary shares and Eric Sanderson holds 4,000 ordinary shares. Davina Curling and Peter Baxter do not hold any shares in the Company.

As at 31 August 2015, fees of £11,000 (2014: £9,000) were outstanding to Directors in respect of their annual fees.

Statement of Directors’ Responsibilities in respect of the Annual Report and Financial Statements

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company as at the end of each financial year and of the profit or loss of the Company for that period.

In preparing those financial statements, the Directors are required to:

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

•  select suitable accounting policies in accordance with United Kingdom Generally Accepted Accounting Practice and then apply them consistently;

•  present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

•  make judgements and estimates that are reasonable and prudent;

•  state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

•  prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are also responsible for preparing the Strategic Report, the Directors’ Report, the Directors’ Remuneration Report, the Corporate Governance Statement and the Report of the Audit and Management Engagement Committee in accordance with the Companies Act 2006 and applicable regulations, including the requirements of the Listing Rules and the Disclosure and Transparency Rules. The Directors have delegated responsibility to the Manager for the maintenance and integrity of the Company’s corporate and financial information included on the BlackRock website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors, whose names are listed on page 15 of the Annual Report, confirm to the best of their knowledge that:

•  the financial statements, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

•  the Strategic Report contained in the Annual Report and Financial Statements includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

The 2012 UK Corporate Governance Code requires Directors to ensure that the Annual Report and Financial Statements are fair, balanced and understandable. In order to reach a conclusion on this matter, the Board has requested that the Audit and Management Engagement Committee advise on whether it considers that the Annual Report and Financial Statements fulfils these requirements. The process by which the Committee has reached these conclusions is set out in the Audit and Management Engagement Committee’s Report on pages 29 to 31 of the Annual Report. As a result, the Board has concluded that the Annual Report for the year ended 31 August 2015, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s performance, business model and strategy.

For and on behalf of the Board
Carol Ferguson
Chairman
22 October 2015

Investment manager’s report

Market overview
The Company’s net asset value (NAV) and share price both increased over the last twelve months to 31 August 2015. During the period, the Company’s undiluted NAV returned +7.5% and the share price +9.1%. By way of comparison, the FTSE World Europe ex UK Index gained +1.3%.

The Europe ex-UK equity markets enjoyed a positive return over the year, but the overall return in Sterling terms was limited by a weak Euro (worth 79 pence at the beginning of the period but only 73 pence by the end). The most significant driver of markets over the period proved to be the European Central Bank’s announcement of ‘Quantitative Easing’ in January via purchases of €60 billion of fixed income purchases per month from March onwards and lasting until September 2016. This was officially instigated to stave off fears of deflation but led to both a rise in equity markets and a weakening of the currency in anticipation of the increase in the Eurozone money supply. Indeed, by the end of the first quarter of 2015, the Euro had its largest six month depreciation against the U.S. Dollar since its creation (the U.S. Dollar being the most significant cross-exchange rate for the Euro).

The combination of lower oil prices, a cheaper currency, lower lending rates and early signs of economic recovery in the Eurozone (such as an improvement in new car sales) supported company earnings, with European earnings announcements for both the first and second quarters of 2015 proving stronger than those seen in recent years. However, the year was punctuated by periods of market volatility, especially from April onwards. The weak oil price (falling by more than 15% in the fourth quarter of 2014) created significant underperformance for the energy sector for much of the year, excepting a short-lived rally early in 2015. In southern Europe, the rise to power of Syriza in Greece led to worries of a Greek exit from the Eurozone – fears which appeared concerning to many market commentators but which we felt had little impact on company cash flows in the European market overall. Finally, towards the end of the year, fears of Chinese growth being weaker than expected led to an 8% market fall in August and greater falls in commodity–related industries. Overall, therefore, the year was positive both for markets and for corporate earnings in Europe but a combination of extraneous factors and political uncertainty limited the equity market gains.

Portfolio activity
In this environment, stock selection proved to be a very strong driver of the portfolio’s performance when compared with the broader market. The top contributor to performance during the year, relative to the reference index, was Irish airline Ryanair which returned 64%. The company increased its full-year net profit guidance by around 20% after experiencing strong passenger growth in the latter half of the year. The firm has effectively revamped its offer to attract customers back and is starting to tackle the business market by offering an attractively priced business ticket with flexible fares. Despite external shocks to the travel industry during the year, ‘Grexit’ fears and the tragic events in Tunisia, the company saw bookings for the summer 4% ahead of the previous year. 2016 forward guidance posted by the company in May suggests a likely continuation of these positive trends.

Anima Holding was an exceptionally strong performer during the year, with the share price rising by 92%. The Italian asset manager has been a beneficiary of the growing contingent of Italian investors who face historically low yields on traditional income investments. In this context, Anima has seen strong asset inflows and increases in management fee margins. They also stand to benefit from a strategic alliance with Poste Italiane to distribute their funds into the wider Italian savings market.

Novo Nordisk, a leading franchise for diabetes treatment, also contributed positively to performance over the year with a share price return of 33%. The company rallied in March after resubmitting applications for a key drug in the U.S., suggesting the likelihood of approval and improved market positioning against competitors. Additionally, the company is placed to revolutionise the GLP-1 market with a drug which can help individuals with type 2 diabetes achieve both good glycaemic control and, potentially, a reduction in the associated weight gain.

The Company’s sector allocation detracted from performance over the year. Specifically, the decision to have lower exposure to consumer goods and a higher exposure to industrials caused performance to suffer somewhat when compared with the broader market. However, the lower exposure to both the utilities and oil & gas sectors proved positive for performance, as both sectors have seen negative returns over the year.

Investments in companies based in Turkey and Russia proved the weakest overall during the year. The largest detractor from performance in the twelve months was Halk Bank, falling by 43%. The Turkish market was weak, particularly towards the end of the year, as negotiations to form a new government have failed. The election has been rescheduled for November, increasing political uncertainty. Halk Bank, as well as its Turkish competitor Garanti Bank, suffered in this sell-off despite the companies’ consistent record of generating high returns on equity.

Sberbank of Russia also fell heavily, along with all Russian assets at the end of 2014, returning -29% in the period. Investors were concerned about the impact of the conflict in Ukraine, the sliding oil price and its impact on the wider economy. Even though the stock has seen some recovery during the first half of 2015, it has yet to recoup all of its losses despite announcing results that were ahead of market expectations.

At the end of the year the portfolio was particularly weighted towards positions in the financial, technology, consumer services and industrials sectors. Exposure to the financial sector increased throughout as the prospects for selected banks and other diversified financials improved. The portfolio maintained lower levels of exposure to oil & gas, materials, utilities and consumer goods during the year, although investment in the consumer goods sector increased during the first half of 2015. In general, the portfolio had a focus on businesses that are able to deliver attractive growth in a low growth environment, selected income opportunities (especially as dividend yields in insurance and real estate businesses became attractive) and areas of attractive value such as a domestic infrastructure business and a travel operator.

Information regarding the Company’s investment exposures is contained within the investment listing on pages 12 and 13 of the Annual Report and the investment size, market capitalisation and distribution of investment charts on page 14 of the Annual Report.

Outlook
Despite recent market volatility, we remain positive on the prospects for the broader European equity market given that the macroeconomic momentum remains positive and monetary policies remain supportive. The recent correction has made investors somewhat fearful of global growth prospects, but for companies with more domestic exposure, European equity earnings momentum remains robust. The ECB’s programme of Quantitative Easing remains in place and is having a positive impact on the credit cycle and European GDP growth. After five years in crisis, economic growth is recovering across the European region and, with supportive monetary policy, should continue to improve over the next twelve months in our view. Over the long term we continue to believe that the corporate earnings and cash generation of companies are the key drivers of equity returns – we therefore continue to focus on fundamental analysis when assessing opportunities.

Vincent Devlin and Sam Vecht
BlackRock Investment Management (UK) Limited
22 October 2015

Ten largest investments as at 31 August 2015

Novartis: 5.4% (2014: nil) is a Swiss multinational pharmaceutical company which ranked number one in sales among the world-wide industry in 2013. The management team is looking to rationalise the business in 2015 with emphasis being placed on cost savings. The company also recently announced the approval in the U.S. of a new heart failure drug, which could propel sales growth in the near future.

Novo Nordisk: 4.8% (2014: 4.6%) is a Danish pharmaceuticals company and the dominant global franchise in diabetes treatment. The company has a very strong pipeline of new drugs and is able to access the long term growth in diabetes treatment through its high market shares globally. We believe that the company has significant potential to continue its strong track record of delivering double-digit earnings growth per year for the foreseeable future.

Bayer: 3.9% (2014: 4.2%) is a German company with divisions in health care, nutrition and high-tech materials. The company offers strong growth over the next 3 to 5 years, especially within its pharmaceuticals and crop science businesses fuelled by new products coming to market. We see good value in the company and it has a superior growth rate for the sector.

KBC Groep: 3.9% (2014: 2.5%) is a Belgian bank which is involved in multiple businesses including retail and merchant banking. KBC is one of the largest banks in Europe and has a significant presence in central and eastern Europe. It remains one of our top picks in the sector due to its exposure to higher returning and less competitive markets.

AXA: 2.9% (2014: nil) is a French-based company engaged in the business of financial protection, insurance and asset management. The insurance business can weather a low yield environment due to its strong balance sheet. There is value in this business relative to its sector and the business is set to continue its track record of solid earnings growth.

Zurich Insurance Group: 2.8% (2014: 3.3%) is Switzerland’s largest insurance company. The insurer has a strong capital position and disciplined cost saving programme. This allows it to have an attractive dividend yield at around 5%. There is also potential for share buy backs given excess capital. The company is weathering the low yield environment better than peers due to their geographic exposures and lower exposure to long-duration life liabilities.

LVMH Moët Hennessy: 2.7% (2014: nil) is a French multinational luxury goods company. The company has a broad geographic mix with the key brand of Louis Vuitton, but Sephora and Bulgari are strong anchor brands for their respective divisions also. It is focused more towards retail with less wholesale exposure; this is attractive given the risk of destocking pressure in China. The company has low levels of gearing and exhibits value relative to its sector and its own history.

Ryanair: 2.6% (2014: 2.4%) is an Irish airline company. The firm has effectively revamped their offer to attract leisure customers back and is also starting to tackle the business market by offering an attractively priced business ticket with flexible fares. In the next five years the focus of management is to grow passengers boarded, with a clear shift to both higher yielding airports and passengers. Given the company’s single largest cost is fuel, they have been a strong beneficiary of the fall in oil price. We believe the change in corporate strategy will help Ryanair grow despite the decline in capacity of the European airline industry.

Intesa Sanpaolo: 2.5% (2014: 1.6%) is a banking group based in Italy. The stock benefits from the positive lending trends environment in Italy, but more importantly the bank offers a solid dividend yield and a strong balance sheet. The bank has focused on growing fees and commissions, as opposed to lending, allowing it a strong return on equity position.

Unibail-Rodamco: 2.5% (2014: 1.8%) is the largest commercial real estate company in Europe. The company has a strong portfolio of assets, consistently growing rents above indexation and can create value through the development of its portfolio. The company also offers an attractive dividend yield in today’s environment.

All percentages reflect the value of the holding as a percentage of total investments.
Percentages in brackets represent the value of the holding as at 31 August 2014.
Together, the ten largest investments represent 34.0% of the Company’s portfolio (31 August 2014: 34.4%).

Investments
as at 31 August 2015

	Country of  operation	Market value  £’000	% of  investments
Financials
KBC Groep	Belgium	10,181	3.9
AXA	France	7,688	2.9
Zurich Insurance Group	Switzerland	7,476	2.8
Intesa Sanpaolo	Italy	6,603	2.5
Unibail-Rodamco	France	6,576	2.5
Bank of Ireland	Ireland	5,548	2.1
Julius Baer	Switzerland	5,486	2.1
Anima	Italy	5,349	2.0
Sampo Oyj	Finland	4,406	1.7
Helvetia	Switzerland	3,843	1.5
Nordea Bank	Sweden	3,669	1.4
Halk Bank	Turkey	3,544	1.3
Azimut	Italy	3,362	1.3
Sberbank	Russia	3,247	1.2
Avanza Bank	Sweden	3,066	1.2
Garanti Bank	Turkey	2,536	1.0
BlackRock's Institutional Cash Fund – Euro Assets Liquidity	Ireland	2,325	0.9
		---------	--------
		84,905	32.3
		---------	--------
Industrials
Ferrovial	Spain	5,027	1.9
Thales	France	4,926	1.9
Assa Abloy	Sweden	4,700	1.8
Kingspan	Ireland	4,383	1.7
Hexagon	Sweden	4,063	1.5
Geberit	Switzerland	3,722	1.4
Dassault Aviation	France	3,365	1.3
Atlantia	Italy	3,232	1.2
Aeroports de Paris	France	2,861	1.1
Saft Groupe	France	1,913	0.7
Cargotec	Finland	1,870	0.7
		---------	--------
		40,062	15.2
		---------	--------
Health Care
Novartis	Switzerland	14,271	5.4
Novo Nordisk	Denmark	12,716	4.8
Straumann	Switzerland	3,072	1.2
Roche	Switzerland	2,698	1.0
		---------	--------
		32,757	12.4
		---------	--------
Consumer Goods
LVMH Moët Hennessy	France	7,211	2.7
Heineken	Netherlands	6,482	2.5
Unilever	Netherlands	5,285	2.0
Pernod Ricard	France	4,692	1.8
Luxottica	Italy	4,434	1.7
Pandora	Denmark	2,639	1.0
		---------	--------
		30,743	11.7
		---------	--------
Consumer Services
Ryanair	Ireland	6,804	2.6
RELX	Netherlands	6,094	2.3
TUI	Germany	3,995	1.5
ProSieben	Germany	3,130	1.2
Television Francaise	France	1,946	0.7
JCDecaux	France	1,747	0.7
		---------	--------
		23,716	9.0
		---------	--------
Technology
Capgemini	France	6,382	2.4
ASML	Netherlands	6,127	2.3
Yandex	Netherlands	3,341	1.3
United Internet	Germany	2,994	1.2
		---------	--------
		18,844	7.2
		---------	--------
Basic Materials
Bayer	Germany	10,310	3.9
		---------	--------
		10,310	3.9
		---------	--------
Telecommunications
Deutsche Telekom	Germany	6,525	2.5
Koninklijke	Netherlands	3,603	1.4
		---------	--------
		10,128	3.9
		---------	--------
Utilities
Enel	Italy	6,476	2.5
		---------	--------
		6,476	2.5
		---------	--------
Oil & Gas
Lundin Petroleum	Sweden	4,891	1.9
		---------	--------
		4,891	1.9
		---------	--------
Total Investments		262,832	100.00
		=======	======

All investments are in ordinary shares unless otherwise stated. The total number of investments held at 31 August 2015 was 53 (31 August 2014: 55).
As at 31 August 2015, the Company did not hold any equity interests comprising more than 3% of any company’s share capital.

Investment exposure

Market Capitalisation as at 31 August 2015

	% of Portfolio	% of Index
<€1bn	0.7	0.1
€1bn to €10bn	23.7	16.4
€10bn to €20bn	22.3	14.5
€20bn to €50bn	24.1	27.4
>€50bn	29.2	41.6

Investment Size as at 31 August 2015

	Number of Investments	% of Portfolio
< £1m	0	0.0
£1m to £3m	10	8.9
£3m to £5m	22	32.2
£5m to £10m	17	40.8
> £10m	4	18.1

Distribution of Investments as at 31 August 2015

Financials	32.3
Industrials	15.2
Health Care	12.4
Consumer Goods	11.7
Consumer Services	9.0
Technology	7.2
Basic Materials	3.9
Telecommunications	3.9
Utilities	2.5
Oil & Gas	1.9

Source: BlackRock.

Income statement
for the year ended 31 August 2015

	Notes	Revenue  2015  £’000	Revenue  2014  £’000	Capital  2015  £’000	Capital  2014  £’000	Total  2015  £’000	Total  2014  £’000
Gains on investments held at fair value through profit or loss		–	–	15,822	8,253	15,822	8,253
Income from investments held at fair value through profit or loss	3	6,931	6,873	–	–	6,931	6,873
Other income	3	195	42	–	–	195	42
Investment management and performance fees	4	(358)	(364)	(2,306)	(1,454)	(2,664)	(1,818)
Operating expenses	5	(561)	(678)	(18)	(19)	(579)	(697)
		--------	--------	--------	--------	--------	--------
Net return before finance costs and taxation		6,207	5,873	13,498	6,780	19,705	12,653
Finance costs		(17)	(151)	(34)	(48)	(51)	(199)
		--------	--------	--------	--------	--------	--------
Return on ordinary activities before taxation		6,190	5,722	13,464	6,732	19,654	12,454
Taxation on ordinary activities		(581)	(758)	(115)	–	(696)	(758)
		--------	--------	--------	--------	--------	--------
Return on ordinary activities after taxation	7	5,609	4,964	13,349	6,732	18,958	11,696
		======	======	======	======	======	======
Return per ordinary share – basic and diluted	7	5.28p	4.59p	12.57p	6.22p	17.85p	10.81p
		======	======	======	======	======	======

The total column of this statement represents the profit or loss of the Company. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies. The Company had no recognised profits or losses other than those disclosed in the Income Statement Funds. All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year.

Reconciliation of movements in shareholders’ funds
for the year ended 31 August 2015

	Note	Share  capital  £’000	Share  premium  account  £’000	Capital  redemption  reserve  £’000	Capital  reserves  £’000	Special  reserve  £’000	Revenue  reserve  £’000	Total  £’000
For the year ended 31 August 2015
At 31 August 2014		135	61,644	105	165,611	21,630	9,862	258,987
Return for the year		–	–	–	13,349	–	5,609	18,958
Exercise of subscription shares		–	255	–	–	–	–	255
Ordinary shares purchased into treasury		–	–	–	–	(317)	–	(317)
Ordinary shares purchased and cancelled		(5)	–	5	–	(11,043)	–	(11,043)
Share purchase costs		–	–	–	–	(155)	–	(155)
Dividends paid*	6	–	–	–	–	–	(5,226)	(5,226)
		-------	---------	-------	----------	--------	--------	----------
At 31 August 2015		130	61,899	110	178,960	10,115	10,245	261,459
		-------	---------	--------	----------	--------	--------	----------
For the year ended 31 August 2014
At 31 August 2013		138	55,672	102	158,879	27,660	12,490	254,941
Return for the year		–	–	–	6,732	–	4,964	11,696
Issue of ordinary shares held in treasury		–	60	–	–	439	–	499
Ordinary shares purchased into treasury		(3)	–	3	–	(6,313)	–	(6,313)
Exercise of subscription shares		–	5,912	–	–	–	–	5,912
Share issue and share purchase costs		–	–	–	–	(156)	–	(156)
Dividends paid**	6	–	–	–	–	–	(7,592)	(7,592)
		-------	---------	--------	----------	---------	-------	----------
At 31 August 2014		135	61,644	105	165,611	21,630	9,862	258,987
		-------	---------	--------	----------	----------	-------	----------
*     Interim dividend paid in respect of the year ended 31 August 2015 of 1.65p per share was declared on 23 April 2015 and paid on 29 May 2015. Final dividend paid in respect of the year ended 31 August 2014 of 3.20p per share was declared on 21 October 2014 and paid on 12 December 2014. **    Interim dividend paid in respect of the year ended 31 August 2014 of 1.50p per share was declared on 17 April 2014 and paid on 30 May 2014. Final dividend paid in respect of the year ended 31 August 2013 of 4.50p per share was recommended on 21 October 2013 and paid on 13 December 2013 and special dividend paid in respect of the year ended 31 August 2013 of 1.00p per share was declared on 21 October 2013 and paid on 13 December 2013.

Balance sheet
as at 31 August 2015

	Notes	2015  £’000	2014  £’000
Fixed assets
Investments held at fair value through profit or loss		262,832	256,083
		-----------	-----------
Current assets
Debtors		2,206	5,585
Cash		95	88
		--------	--------
		2,301	5,673
		--------	--------
Creditors – amounts falling due within one year
Bank overdraft		–	(4)
Other creditors		(3,674)	(2,765)
		--------	--------
		(3,674)	(2,769)
		--------	--------
Net current (liabilities)/assets		(1,373)	2,904
		--------	--------
Net assets		261,459	258,987
		=======	=======
Capital and reserves
Called-up share capital	8	130	135
Share premium account		61,899	61,644
Capital redemption reserve		110	105
Capital reserves		178,960	165,611
Special reserve		10,115	21,630
Revenue reserve		10,245	9,862
		---------	---------
Total equity shareholders’ funds		261,459	258,987
		=======	=======
Net asset value per ordinary share – undiluted	7	250.66p	237.98p
		=======	=======
Net asset value per ordinary share – diluted	7	250.22p	237.98p
		=======	=======

Cash flow statement
for year ended 31 August 2015

	Note	2015  £’000	2014  £’000
Net cash inflow from operating activities	5(b)	3,915	1,550
Servicing of finance		(42)	(60)
Taxation recovered		1,183	526
		--------	--------
Capital expenditure and financial investment
Purchase of investments		(315,260)	(349,819)
Proceeds from sale of investments		325,997	366,341
Realised losses on foreign currency transactions		673	422
		--------	--------
Net cash inflow from capital expenditure and financial investment		11,410	16,944
		---------	---------
Equity dividends paid		(5,226)	(7,592)
		---------	---------
Net cash inflow before financing		11,240	11,368
		---------	---------
Financing
Purchase of ordinary shares		(11,360)	(6,313)
Share issue and purchase costs paid		(124)	(578)
Proceeds from issue of ordinary shares out of treasury		–	499
Proceeds from issue of subscription shares		255	5,912
Proceeds arising from the acquisition of portfolio assets of Charter European Trust plc		–	36
		----------	--------
Net cash outflow from financing		(11,229)	(444)
		----------	--------
Increase in cash in the year		11	10,924
		======	======

Notes to the financial statements

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.

2. Accounting policies
(a) Basis of preparation
The Company’s financial statements have been prepared in accordance with UK Generally Accepted Accounting Practice (UK GAAP) and with the Statement of Recommended Practice ‘Financial Statements of Investment Trust Companies’ (SORP) revised in January 2009. The principal accounting policies adopted by the Company are set out below. All of the Company’s operations are of a continuing nature.

The Company’s financial statements are presented in Sterling, which is the currency of the primary economic environment in which the Company operates. All values are rounded to the nearest thousand pounds (£’000) except where otherwise indicated.

(b) Presentation of the Income Statement
In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the Association of Investment Companies (AIC), supplementary information which analyses the Income Statement between items of a revenue and a capital nature has been presented alongside the Income Statement.

(c) Segmental reporting
The Directors are of the opinion that the Company is engaged in a single segment of business being investment business.

(d) Income
Dividends receivable on equity shares are treated as revenue for the year on an ex-dividend basis gross of withholding taxes. Where no ex-dividend date is available, dividends receivable on or before the year end are treated as revenue for the year. Provisions are made for dividends not expected to be received. Fixed returns on debt securities are recognised on a time apportionment basis. Interest income and expenses are accounted for on an accruals basis.

(e) Expenses
All expenses are accounted for on an accruals basis. Expenses have been treated as revenue except as follows:

•  expenses which are incidental to the acquisition or disposal of an investment are included within the cost of the investment. Details of transaction costs on the purchases and sales of investments are disclosed in note 11 on pages 44 and 45 of the Annual Report;

•  the investment management fee has been allocated 80% to capital reserves and 20% to the revenue account in line with the Board’s expected long term split of returns, in the form of capital gains and income respectively, from the investment portfolio;

•  performance fees are allocated 100% to capital reserves, as performance has been predominantly generated through capital returns of the investment portfolio.

(f) Finance costs
Finance costs are accounted for on an accruals basis. Finance costs are allocated, insofar as they relate to the financing of the Company’s investments, 80% to capital and 20% to the revenue account, in line with the Board’s expected long term split of returns, in the form of capital gains and income respectively, from the investment portfolio.

(g) Taxation
Deferred taxation is recognised in respect of all timing differences at the balance sheet date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the balance sheet date. This is subject to deferred taxation assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the timing differences can be deducted.

(h) Investments held at fair value through profit or loss
The Company’s investments are classified as held at fair value through profit or loss in accordance with FRS 26 – ‘Financial Instruments: Recognition and Measurement’ and are managed and evaluated on a fair value basis in accordance with its investment strategy. All investments are designated upon initial recognition as held at fair value through profit or loss.

The purchase and sales of assets are recognised at the trade date of the transaction. Disposals will be measured at fair value which will be regarded as the proceeds of sale less any transaction costs.

The investments are measured on initial recognition and subsequently at fair value. Changes in the value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Income Statement as ‘Gains or losses on investments held at fair value through profit or loss’. Also included within this heading are transaction costs in relation to the purchase or sale of investments.

The fair value of the financial instruments is based on their quoted bid price at the balance sheet date, without deduction for the estimated future selling costs. Unquoted investments are valued by the Directors at fair value using International Private Equity and Venture Capital Association Guidelines. This policy applies to all current and fixed asset investments of the Company.

(i) Dividends payable
Under FRS 21, final dividends should not be accrued in the financial statements unless they have been approved by shareholders before the balance sheet date. Dividends payable to equity shareholders are recognised in the Reconciliation of Movements in Shareholders’ Funds when they have been approved by shareholders and become a liability of the Company.

(j) Foreign currency translation
All transactions in foreign currencies are translated into Sterling at the rates of exchange ruling on the dates of such transactions. Foreign currency assets and liabilities at the balance sheet date are translated into Sterling at the exchange rates ruling at that date. Exchange differences arising on the revaluation of investments held as fixed assets are included in capital reserves. Exchange differences arising on the translation of foreign currency assets and liabilities are taken to capital reserves.

3. Income

	2015  £’000	2014  £’000
Investment income:
Overseas dividends	6,931	6,873
	--------	--------
	6,931	6,873
	--------	--------
Other income:
Bank interest	10	1
Interest on WHT reclaims	185	41
	--------	--------
	195	42
	--------	--------
Total	7,126	6,915
	=====	=====

4. Investment management and performance fees

	2015			2014
	Revenue  £’000	Capital  £’000	Total  £’000	Revenue  £’000	Capital  £’000	Total  £’000
Investment management fee	358	1,434	1,792	364	1,454	1,818
Performance fee	–	872	872	–	–	–
	--------	--------	--------	--------	--------	--------
Total	358	2,306	2,664	364	1,454	1,818
	=====	=====	=====	=====	=====	=====

The investment management fee is payable quarterly in arrears, calculated at a pro rata rate of 0.70% of the market capitalisation of the Company’s ordinary shares on the last day of each month. A performance fee is payable at 15% of the outperformance of the Company’s share price relative to the FTSE World Europe ex UK Index on a total return basis. The performance fee is based on the outperformance of the Index over a three year rolling period. The aggregate of the investment management fee and performance fee is capped up to a maximum of 1.15% of performance fee market value.

5. Operating activities

	2015  £’000	2014  £’000
(a) Operating expenses
Custody fee	26	33
Auditor’s remuneration:
– statutory audit	25	25
Depositary fees	36	7
Directors’ emoluments	118	115
Marketing fees	48	113
Registrar’s fees and other operating expenses	308	385
	--------	--------
	561	678
	--------	--------
Transaction costs – capital	18	19
	--------	--------
The Company’s ongoing charges, calculated as a percentage of average net assets and using expenses, excluding performance fees and finance costs, after relief for any taxation were:	0.89%	0.94%
	----------	----------
The Company’s ongoing charges, calculated as a percentage of average net assets and using expenses, including performance fees but excluding finance costs, after relief for any taxation were:	1.22%	0.94%
	======	======
	2015  £’000	2014  £’000
(b) Reconciliation of net return before finance costs and taxation to net cash flow from operating activities
Net return before finance costs and taxation	19,705	12,653
Less capital return before finance costs and taxation	(13,498)	(6,780)
	----------	----------
Net revenue return before finance costs and taxation	6,207	5,873
Expenses charged to capital	(2,324)	(1,473)
Decrease in prepayments and accrued income	86	2
Increase/(decrease) in accrued expenditure	1,156	(1,767)
Tax on investment income included within gross income	(1,210)	(1,085)
	----------	----------
Net cash inflow from operating activities	3,915	1,550
	======	======

6. Dividends

	Record  date	Payment  date	2015  £’000	2014  £’000
2013 Final dividend of 4.50p	4 December 2013	13 December 2013	–	4,893
2013 Special dividend of 1.00p	4 December 2013	13 December 2013	–	1,087
2014 Interim dividend of 1.50p	2 May 2014	30 May 2014	–	1,612
2014 Final dividend of 3.20p	31 October 2014	12 December 2014	3,482	–
2015 Interim dividend paid of 1.65p	1 May 2015	29 May 2015	1,744	–
			--------	--------
			5,226	7,592
			======	======

The Directors have proposed a final dividend of 3.35p (2014: 3.20p) per share in respect of the year ended 31 August 2015. The dividend will be paid on 18 December 2015, subject to shareholders’ approval on 10 December 2015, to shareholders on the Company’s register on 6 November 2015. The proposed final dividend has not been included as a liability in these financial statements, as final dividends are only recognised in the financial statements when they have been approved by shareholders, or in the case of special dividends not recognised until they are paid.

The dividends disclosed in the note below have been considered in view of the requirements of section 1158 of the Corporation Tax Act 2010 and section 833 of the Companies Act 2006, and the amount proposed for the year ended 31 August 2015 meets the relevant requirements as set out in this legislation.
 

	2015  £’000	2014  £’000
Dividends paid or proposed on equity shares:
Interim paid of 1.65p (2014: 1.50p)	1,744	1,612
Final proposed of 3.35p* per ordinary share (2014: 3.20p)	3,494	3,482
	--------	--------
	5,238	5,094
	--------	--------
*     Based on 104,309,663 ordinary shares in issue on 22 October 2015.

7. Return and net asset value per ordinary share
Revenue and capital returns per share are shown below and have been calculated using the following:
 

Undiluted					2015	2014
Net revenue return attributable to ordinary shareholders (£’000)					5,609	4,964
Net capital return attributable to ordinary shareholders (£’000)					13,349	6,732
					--------	--------
Total return (£’000)					18,958	11,696
					======	======
Equity shareholders’ funds (£’000)					261,459	258,987
					-----------	-----------
The weighted average number of ordinary shares in issue during the year, on which the return per ordinary share was calculated was:					106,194,950	108,236,562
					-----------------	-----------------
The actual number of ordinary shares in issue at the year end, on which the net asset value was calculated was:					104,309,663	108,828,058
					-----------------	-----------------
The number of ordinary shares in issue, including treasury shares, at the year end was:					109,798,561	114,257,734
					==========	==========
	2015			2014
	Revenue  p	Capital  p	Total  p	Revenue  p	Capital  p	Total  p
Return per share
Calculated on weighted average number of shares	5.28	12.57	17.85	4.59	6.22	10.81
Calculated on actual number of shares in issue at year end	5.38	12.80	18.18	4.56	6.19	10.75
	--------	--------	--------	--------	--------	--------
Net asset value per share			250.66			237.98
			======			======
Ordinary share price			244.00			228.50
Subscription share price			12.63			10.00
			======			======
Diluted					2015	2014
Net revenue return attributable to ordinary shareholders (£’000)					5,609	4,964
Net capital return attributable to ordinary shareholders (£’000)					13,349	6,732
					--------	--------
Total return (£’000)					18,958	11,696
					======	======
Equity shareholders’ funds* (£’000)					312,411	258,987
					-----------	-----------
The weighted average number of ordinary shares in issue during the year, on which the diluted return per ordinary share was calculated was:					106,194,950	108,236,562
					-----------------	----------------
The actual number of ordinary shares and subscription shares, at the year end on which the fully diluted net asset value was calculated was:					124,854,841	129,475,906
					==========	==========
	2015			2014
	Revenue  p	Capital  p	Total  p	Revenue  p	Capital  p	Total  p
Return per share
Calculated on weighted average number of shares**	5.28	12.57	17.85	4.59	6.22	10.81
	--------	--------	--------	--------	--------	--------
Net asset value per share*			250.22			237.98
			----------			----------
*           In accordance with the AIC SORP, to the extent that the Company’s NAV is in excess of the exercise price, the subscription shares are considered to be dilutive for the calculation of the NAV per share. The diluted NAV per share at 31 August 2015 is calculated by adjusting equity shareholders’ funds for consideration receivable on the exercise of 20,545,178 subscription shares, at the exercise price of 248 pence per share, and dividing by the total number of shares that would have been in issue at 31 August 2015 had all the subscription shares been exercised. As the Company’s NAV was not in excess of the exercise price at 31 August 2014, no dilutive price was calculated for 2014.
**          In accordance with FRS 22 ‘Earnings per share’, there is no dilutive impact on the return per share for the year ended 31 August 2015 as the average mid-market price of the ordinary shares for the year of 239.20p is below the exercise price of the subscription shares of 248p per share.

8. Share capital

	Ordinary  shares  number	Treasury  shares  number	Subscription  shares  number	Total  shares	£
Allotted, called up and fully paid share capital comprised:
Ordinary shares of 0.1p each
At 31 August 2014	108,828,058	5,429,676	–	114,257,734	114,257
Shares repurchased and cancelled pursuant to tender offers during the year	(4,489,088)	–	–	(4,489,088)	(4,489)
Cancellation of treasury shares	–	(72,755)	–	(72,755)	(73)
Shares repurchased and held in treasury pursuant to the tender offers held during the year	(131,977)	131,977	–	–	–
	---------------	--------------	----------	---------------	----------
	104,206,993	5,488,898	–	109,695,891	109,695
Subscription shares of 0.1p each
At 31 August 2014	–	–	20,647,848	20,647,848	20,648
Conversion of subscription shares into ordinary shares	102,670	–	(102,670)	–	–
	---------------	-------------	---------------	---------------	----------
At 31 August 2015	104,309,663	5,488,898	20,545,178	130,343,739	130,343
	=========	========	========	=========	=======

During the year 4,489,088 ordinary shares were repurchased and cancelled and 131,977 were held in treasury (2014: 2,627,623) for a total consideration, including expenses, of £11,515,000 (2014: £6,445,000). The number of ordinary shares in issue at the year end was 109,798,561 (2014: 114,257,734) of which 5,488,898 were held in treasury (2014: 5,429,676) and the number of subscription shares in issue was 20,545,178 (2014: 20,647,848). The number of treasury shares cancelled during the year was 72,755 (2014: 88,677) and the number of shares issued from treasury was nil (2014: 200,000) for total proceeds (before broker’s commission) of nil (2014: £499,000). As a result of the conversion of 102,670 subscription shares (2014: 2,536,470), new ordinary shares were issued for a total consideration of £255,000 (2014: £5,912,000).

9. Related party disclosure: Directors’ emoluments
The related party transactions with Directors are set out in the Directors’ Remuneration Report on pages 23 and 24 of the Annual Report. At 31 August 2015, £11,000 (2014: £9,000) was outstanding in respect of Directors’ fees.

10. Transactions with Investment Manager and AIFM
BlackRock Fund Managers Limited (BFM) was appointed as the Company’s AIFM with effect from 2 July 2014. BFM provides management and administration services to the Company under a contract which is terminable on six months’ notice. BFM has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services, to BlackRock Investment Management (UK) Limited (BIM (UK)). Further details of the investment management contract are disclosed in the Directors’ Report on pages 16 and 17 of the Annual Report.

The investment management fee is levied quarterly, based on the market capitalisation of the Company’s ordinary shares on the last day of each month. The investment management fee due for the year ended 31 August 2015 amounted to £1,792,000 (2014: £1,818,000). A performance fee of £872,000 was accrued for the year ended 31 August 2015 (2014: nil). At the year end, £927,000 was outstanding in respect of the management fee (2014: £440,000) and £872,000 (2014: nil) in respect of the performance fee.

The Company held an investment in BlackRock’s Institutional Cash Fund – Euro Assets Liquidity of £2,325,000 at 31 August 2015 (2014: £1,023,000).

In addition to the above services, with effect from 1 November 2013, BIM (UK) has provided the Company with marketing services. The total fees paid or payable for these services for the year ended 31 August 2015 amounted to £48,000 excluding VAT (2014: £113,000). Marketing fees of £161,000 excluding VAT were outstanding at 31 August 2015 (2014: £113,000).

11. Contingent liabilities
There were no contingent liabilities at 31 August 2015 (2014: nil).

12. Publication of non-statutory accounts
The financial information contained in this announcement does not constitute statutory accounts as defined in the Companies Act 2006.  The Annual Report and Financial Statements for the year ended 31 August 2015 will be filed with the Registrar of Companies after the Annual General Meeting.

The figures set out above have been reported upon by the auditor, whose report for the year ended 31 August 2015 contains no qualification or statement under section 498(2) or (3) of the Companies Act 2006.

The comparative figures are extracts from the audited financial statements of BlackRock Greater Europe Investment Trust plc for the year ended 31 August 2014, which have been filed with the Registrar of Companies.  The report of the auditor on those financial statements contained no qualification or statement under section 498 of the Companies Act.

13. Annual Report
Copies of the Annual Report will be published shortly and will be available from the registered office, c/o The Company Secretary, BlackRock Greater Europe Investment Trust plc, 12 Throgmorton Avenue, London EC2N 2DL.

14. Annual General Meeting
The Annual General Meeting of the Company will be held at the offices of BlackRock, 12 Throgmorton Avenue, London EC2N 2DL on Thursday, 10 December 2015 at 12.00 noon.

ENDS

The Annual Report will also be available on the BlackRock website at blackrock.co.uk/brge.  Neither the contents of the Manager’s website nor the contents of any website accessible from hyperlinks on the Manager’s website (or any other website) is incorporated into, or forms part of, this announcement.

For further information please contact:

Simon White, Investment Trusts	-	020 7743 5284
Vincent Devlin, Fund Manager	-	020 7743 3000
Emma Phillips, Media & Communications	-	020 7743 2922
BlackRock Investment Management (UK) Ltd

12 Throgmorton Avenue
London
EC2N 2DL
22 October 2015