Annual Financial Report

BlackRock Income and Growth Investment Trust plc Annual Results Announcement for the year ended 31 October 2013 Performance Record Financial Summary As at As at Change 31 October 31 October % 2013 2012 Assets Net assets1 (£'000) 45,491 41,947 +8.4 Net asset value per ordinary share 166.03p 147.81p +12.3 - with income reinvested +16.2 Ordinary share price (mid-market) 164.50p 137.00p +20.1 - with income reinvested +24.3 FTSE All-Share Index (total return) 5,325.80 4,338.32 +22.8 Discount to net asset value 0.9% 7.3% ======== ======== ======== Year ended Year ended Change 31 October 31 October % 2013 2012 Revenue Net revenue return after taxation (£'000) 1,576 1,290 +22.2 Revenue return per ordinary share2 5.63p 4.52p +24.6 Dividends Interim 2.00p 1.80p +11.1 Final 3.50p 3.45p +1.4 -------- -------- -------- Total dividends paid and payable 5.50p 5.25p +4.8 -------- -------- -------- 1 The change in net assets reflects market movements during the year and the purchase of the Company's own shares. 2 Further details are given in note 10 to the Financial Statements on page 47 of the Annual Report. Chairman's Statement Performance Over the twelve months ended 31 October 2013, the Company's net asset value per share ("NAV") returned 16.2% and the share price returned 24.3%. By comparison, the FTSE All-Share Index returned 22.8% (all percentages with income reinvested). Since the year end the Company's NAV has fallen by 1.1% compared with the fall in the benchmark of 2.7% over the same period. Your Board is focused on delivering improved performance for Shareholders and is liaising closely with the Investment Manager to achieve this. Details of the factors which have contributed to performance are set out in the Investment Manager's Report. Revenue return and dividends The Company's revenue return per share for the year amounted to 5.63 pence compared with 4.52 pence for the previous year, representing an increase of 24.6%. The Directors are mindful of shareholders' desire for income in addition to capital growth and are therefore proposing an increased final dividend per share of 3.50 pence (2012: 3.45 pence) giving a total for the year of 5.50 pence per share. This represents a 4.8% increase over the prior year (2012:5.25 pence) and reflects an uplift in revenue retuen compared with the comparative period. The final dividend is payable on 7 March 2014 to shareholders on the Company's register at the close of business on 14 February 2014 (ex dividend date is 12 February 2014). Policy on share price discount The Directors recognise the importance to shareholders that the market price of the Company's shares in the stock market should not trade at a significant discount to the underlying net asset value. Therefore, on 29 January 2013 the Board announced that the Company's share buy back and share issuance powers would, in normal market conditions, be used to ensure that the share price should be broadly in line with the underlying NAV per share. The existing policy of not buying back shares to hold in treasury at a discount of less than 4% was also amended to enable the Company to buy shares at any discount to the estimated NAV. Any shares repurchased by the Company may be held in treasury, and subsequently be reissued to satisfy market demand, but only at a premium to the estimated NAV at the time of issue. The Directors have the authority from shareholders to buy back up to 14.99% of the Company's issued share capital. This authority to buy back shares expires at the conclusion of the 2014 Annual General Meeting, and a resolution will be put to shareholders to renew it. The policy and parameters for purchasing shares in the market are set by the Board and are reviewed at regular intervals. 980,000 ordinary shares were purchased and placed in treasury during the year for a total consideration of £1,545,000 (excluding costs). Since the year end a further 195,000 ordinary shares have been purchased and placed in treasury for a total consideration of £314,000 (excluding costs). 17.4% of the Company's issued share capital is currently held in treasury. Gearing The Company operates a flexible gearing policy which depends on prevailing conditions and is subject to a maximum level of 20% of net assets at the time of investment. The maximum gearing used during the year was 9.3% and at 31 October 2013 net cash was 0.8%. The Company currently has an unsecured sterling revolving credit facility of £5 million with ING Bank N.V., with a maturity date of 31 October 2014. Portfolio Manager Following the Board's announcement in April that Nick McLeod-Clarke, co-manager of the portfolio, had taken long-term leave from BlackRock Investment Management (UK) Limited, the Board were pleased to welcome Mark Wharrier, as co-manager alongside Adam Avigdori with effect from 24 September 2013. Mark has over 19 years' investment experience and joined BlackRock from NewSmith Asset Management, where he was a portfolio manager in the UK Equity team. Annual General Meeting The Company's Annual General Meeting will be held on Tuesday, 11 February 2014 at 12 noon at the offices of BlackRock at 12 Throgmorton Avenue, London EC2N 2DL. Details of the business of the meeting are set out in the Notice of Annual General Meeting on pages 60 and 61 of the Annual Report. The Investment Manager will make a presentation to shareholders on the Company's progress and the outlook for the year ahead. Alternative Investment Fund Managers' Directive The Alternative Investment Fund Managers' Directive ("the Directive") is a European directive which seeks to reduce systemic risk by regulating alternative investment fund managers ("AIFMs"). AIFMs are responsible for investment products that fall within the category of Alternative Investment Funds ("AIFs") and investment trusts are included in this. The Directive was implemented on 22 July 2013 although the Financial Conduct Authority ("FCA") has permitted a transitional period of one year within which UK AIFMs must seek authorisation. The Board is taking independent advice on the full consequences for the Company of the implementation of the Directive; but it has been able to decide in principle that BlackRock will be appointed as its AIFM before the end of the transitional period on 22 July 2014. New reporting requirements For companies with a financial year ending on, or after, 30 September 2013 there have been a number of changes to the framework for reporting to shareholders. These changes are intended to increase the quality and structure of reporting and include the introduction of a Strategic Report which replaces the Business Review, previously part of the Directors' Report. There have also been changes to the regime for reporting on Directors' remuneration which require the Directors' Remuneration Report to be prepared in two parts; an annual report on remuneration which will be subject to an annual advisory shareholder vote and a Directors' remuneration policy which will be the subject of a triennial binding shareholder vote. Further information in respect of the resolutions to be proposed at the Annual General Meeting is provided in the Directors' Report section of the Annual Report. A separate report has been included relating to the work and responsibilities of the Company's Audit Committee, and the format of the report of the Auditor, Deloitte LLP has also changed. The audit report now includes an overview of the scope of the audit and describes the risks that had the greatest effect on the overall audit strategy and the allocation of resources during the audit. Continuation vote Following a recent review of the Company's Articles of Association it became apparent that a resolution that the Company should continue as an investment trust should have been put to shareholders at the 2013 Annual General Meeting. The Board regrets this oversight and accordingly, after consultation with the Company's legal advisers, this resolution will now be included in the business to be considered at the forthcoming Annual General Meeting. The Board unanimously recommends that shareholders vote in favour of the continuation of the Company in its current form. The next continuation vote following the 2014 Annual General Meeting will be held in 2018. New Articles of Association At the Annual General Meeting, shareholders will also be asked to approve new Articles of Association. The Company's current Articles of Association were adopted following the introduction of the Companies Act 2006 but prior to all of that Act's provisions coming into force. Additionally, the Board is proposing to include amendments in response to the advent of the AIFMD regulations. Outlook The extent to which recent stock market strength has resulted from extremely accommodative monetary policy rather than the improving economic environment is unclear. It was instructive to observe the market's nervous reaction to hints that the Federal Reserve's bond buying programme would be scaled back, or 'tapered' in May, although the recent slight reduction in buying was taken calmly by equity markets. A return to more normal levels of interest rates will most likely result in higher levels of market volatility but, provided economic recovery translates into higher earnings, which our managers believe will occur, there remains further scope for positive returns from equities. The Board believes that the Company's portfolio is well placed to benefit from an improving economic background as it comprises both well managed cash generative companies with the prospect of growing dividends, alongside exposure to others with sustainable growth opportunities. The combination of these factors should feed through into positive returns to shareholders. Jonathan Cartwright Chairman 20 December 2013 Strategic Report The Directors present the Strategic Report of the Company for the year ended 31 October 2013. Principal activity The Company carries on business as an investment trust and its principal activity is portfolio investment. Objective The objective of the Company is to provide growth in capital and income over the long-term through investment in a diversified portfolio of principally UK listed equities. Strategy The Company seeks to achieve this objective by investing principally in UK listed equities, such equities to consist of the shares of FTSE 100 companies, but may also include the shares of medium sized and smaller companies. Other investments, such as fixed interest and unquoted securities, may from time to time form part of the portfolio. Business model and investment policy The Company’s policy is that the portfolio will usually consist of approximately 30 – 60 securities and will only invest in UK securities which include the shares of companies listed, domiciled or carrying out the majority of their business in the UK. The Company may hold a maximum of 10% of the issued ordinary share capital of any company. No more than 15% of the gross asset value of the Company may be invested in the securities of any one issuer, calculated at the time of any relevant investment. Cash or non-benchmark stocks may not exceed 10% of the net asset value of the Company. Each stock held is subject to a lower limit of 0% and an upper limit of plus 4 percentage points against its weighting in the FTSE All-Share Index (total return) on an ongoing basis, subject to an absolute sector weighting upper limit of 20% of the Company’s net assets at any time. The Company may deal in derivatives, including options, futures and contracts for difference and derivatives not traded on or under the rules of a recognised or designated investment exchange for the purpose of efficient portfolio management. Derivatives and exchange traded funds may be dealt in with the prior consent of the Board. The performance of the Company is measured by reference to the FTSE All-Share Index on a total return basis. The Company achieves an appropriate spread of risk by investing in a diversified portfolio of securities. No material change will be made to the investment policy without the approval of shareholders by ordinary resolution. Gearing policy The Investment Manager believes that tactical use of gearing can add value and the Company may, from time to time, use borrowings to gear its investment policy. This gearing typically is in the form of an overdraft or short-term facility. Gearing, including borrowings and gearing through the use of derivatives, (which requires prior Board approval) when aggregated with underwriting participations, will not exceed 20% of the net asset value at the time of investment, drawdown or participation. Share rating and share buy backs The Board announced on 29 January 2013 that it had decided to use its share buy back powers with the objective of ensuring that the Company’s share price tracks at or around NAV in normal market conditions. In addition, and in order to facilitate the new buy back policy, the policy of not buying back shares to hold in treasury at a discount of less than 4% was amended to enable the Company to buy shares at any discount to the estimated NAV. Any shares repurchased by the Company may be held in treasury, and might subsequently be reissued to satisfy market demand, but only at a premium to the estimated NAV at the time of issue. The Directors have the authority to buy back up to 14.99% of the Company’s issued share capital. During the year under review, 980,000 ordinary shares were purchased and placed in treasury for a total consideration of £1,545,000 (excluding costs). Since the year end a further 195,000 ordinary shares have been purchased and placed in treasury for a total consideration of £314,000 (excluding costs). At the date of this report, the Company has in issue 27,204,268 ordinary shares of 1 pence each excluding 5,729,664 shares held in treasury. A resolution to renew the authority to buy back shares will be put to shareholders at the 2014 Annual General Meeting. Portfolio analysis A detailed analysis of the portfolio has been provided in this announcement and on pages 9 to 11 of the Annual Report. Performance In the year to 31 October 2013, the Company’s NAV per share returned 16.2%, compared with a rise in the FTSE All-Share Index on a total return basis of 22.8%. The share price returned 24.3%, all percentages calculated in sterling terms with income reinvested. The Investment Manager’s report in this announcement and on pages 6 and 7 of the Annual Report includes a review of the main developments during the year, together with information on investment activity within the Company’s portfolio. Results and dividends The results for the Company are set out in the Income Statement in this announcement and on page 37 of the Annual Report. The total return for the year, after taxation, was £6,633,000 (2012: £3,689,000) of which the revenue return amounted to £1,576,000 (2012: £1,290,000). An interim dividend of 2.00 pence (2012: 1.80 pence) per share was paid on 6 September 2013. The Directors recommend the payment of a final dividend of 3.50 pence (2012: 3.45 pence) per share. Subject to approval at the forthcoming Annual General Meeting, the dividend will be paid on 7 March 2014 to shareholders on the register of members at the close of business on 14 February 2014. Key performance indicators At each Board meeting, the Directors consider a number of performance measures to assess the Company’s success in achieving its objectives. The key performance indicators used to measure the progress and performance of the Company over time and which are comparable to those reported by other investment trusts are set out below. Year ended Year ended 31 October 31 October 2013 2012 Net asset value per share1 166.03p 147.81p Share price2 164.50p 137.00p Benchmark index3 22.8% 9.8% Discount to net asset value 0.9% 7.3% Revenue return per share 5.63p 4.52p Ongoing charges4 1.1% 1.2% 1 Calculated in accordance with AIC guidelines. 2 Calculated on a mid to mid basis. 3 FTSE All-Share Index (total return). 4 Calculated as a percentage of average net assets and using expenses, excluding performance fees, interest costs and taxation. The Board also regularly reviews a number of indices and ratios in order to understand the impact on the Company’s relative performance of the various components such as asset allocation and stock selection. The Board also assesses the Company’s performance against its peer group of investment trusts with similar investment objectives. Principal risks The key risks faced by the Company are set out below. The Board regularly reviews and agrees policies for managing each risk, as summarised below: - Performance risk – The Board is responsible for deciding the investment strategy to fulfil the Company’s objective and for monitoring the performance of the Company’s investment manager (“Investment Manager”) and the implementation of the strategy adopted. An inappropriate strategy may lead to poor performance compared to the Index and the Company’s peer group and dissatisfied shareholders. To manage this risk the Board regularly reviews: – the Company’s investment mandate and long-term strategy; – the controls put in place by the Investment Manager to monitor and to minimise counterparty exposure, which include intra-day monitoring of exposures to ensure these are within set limits; – reports showing an analysis of the Company’s performance against the FTSE All-Share Index (total return) and its peer group; and – the Investment Manager’s explanation of significant stock selection decisions, the rationale for the composition of the investment portfolio and any movement in the level of gearing. - Income/dividend risk – The amount of dividends and future dividend growth will depend on the performance of 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 Chapter 4 of Part 24 of the Corporation Tax Act 2010. As such, the Company is exempt from capital gains tax on the profits realised from the sale of its investments. The Investment Manager monitors investment movements, the level and type of forecast income and expenditure and the amount of proposed dividends, if any, to ensure that the provisions of Chapter 4 of Part 24 of the Corporation Tax Act 2010 are not breached and the results are reported to the Board at each meeting. The Board and Investment Manager also monitor changes in government policy and legislation which may have an impact on the Company. - Operational risk – In common with most other investment trust companies, the Company has no employees. The Company therefore relies upon the services provided by third parties and is dependent on the control systems of the Investment Manager and the Company’s other service providers. The security, for example, of the Company’s assets, dealing procedures, accounting records and maintenance of regulatory and legal requirements, depend on the effective operation of these systems. These are regularly tested and monitored and an internal controls report, which includes an assessment of risks together with procedures to mitigate such risks, is prepared by the Investment Manager and reviewed by the Audit Committee at least twice a year. The Investment Manager and Custodian, Bank of New York Mellon (International) Limited also produce Service Organisation Controls Reports (SOC 01), which are reviewed by their reporting accountants and give assurance regarding the effective operation of controls. The Board also considers succession arrangements for key employees of the Investment Manager and the business continuity arrangements for the Company’s key service providers. - Market risk – Market risk arises from volatility in the prices of the Company’s investments. It represents the potential loss the Company might suffer through realising investments in the face of negative market movements. The Board considers asset allocation, stock selection and levels of gearing on a regular basis and has set investment restrictions and guidelines which are monitored and reported on by the Investment Manager. The Board monitors the implementation and results of the investment process with the Investment Manager. - Financial risk – The Company’s investment activities expose it to a variety of financial risks which include market price risk, liquidity risk, credit risk and interest rate risk. Further details are disclosed in note 18 to the Financial Statements, together with a summary of the policies for managing these risks. - Gearing risk – The use of gearing increases the Company’s performance risk. Gearing provides an opportunity for greater returns but, at the same time, increases the Company’s exposure to capital risk and interest costs. Any investment income and gains earned on investments made through the use of gearing that are in excess of the associated costs will cause the Company’s NAV to increase further and more rapidly than would otherwise be the case. Conversely, where investments depreciate, the Company’s NAV will decrease further and more rapidly than would otherwise be the case. Gearing costs also decrease gains and income and increase losses and costs. The use of gearing in making investments increases the Company’s exposure to market fluctuations and creates the possibility that where the investment depreciates the Company’s overall loss may be greater than the sum invested. Future prospects The Board’s main focus is on the achievement of capital growth and the future of the Company is dependent upon the success of the investment strategy. The outlook for the Company is discussed in this announcement in the Chairman’s Statement and in the Investment Manager’s Report and on pages 5 and 7 of the Annual Report respectively. Social, community and human rights issues As an investment trust, the Company has no direct social or community responsibilities. However, the Company believes that it is in shareholders’ interests to consider human rights issues, environmental, social and governance factors when selecting and retaining investments. Details of the Company’s policy on socially responsible investment are set out on page 28 of the Annual Report. Directors and employees The Directors of the Company on 31 October 2013, all of whom held office throughout the year, are set out in the Directors’ biographies on page 12 of the Annual Report. The Board consists of four male directors. The Company does not have any employees. By order of the Board BlackRock Investment Management (UK) Limited Secretary 20 December 2013 Related Party Transactions BlackRock Investment Management (UK) Limited, the manager, is considered to be a related party of the Company. Transactions and relationship details are set out on page 16 of the Annual Report. The investment management fee for the year under review was £256,000 as disclosed in note 4 to the Financial Statements. The Board consists of four non-executive Directors, all of whom are considered to be independent of the Investment Manager by the Board. None of the Directors has a service contract with the Company. For the years ended 31 October 2013 and 2012, the Chairman received an annual fee of £25,000, the Chairman of the Audit Committee received an annual fee of £19,500 and each of the other Directors received an annual fee of £17,000. Mr Luckraft does not receive any benefit from his fees which are payable to AXA Investment Managers Limited. At 31 October 2013, the Directors’ interests in the Company’s Ordinary Shares were as follows: 2013 2012 J H Cartwright (Chairman) 20,000 20,000 N R Gold 20,000 20,000 G M Luckraft - - C R Worsley 487,539* 487,539* * Including a non-beneficial interest in 155,000 shares Statement of Directors’ Responsibilities The Directors are responsible for preparing the annual report, the Directors’ Remuneration Report and the financial statements in accordance with applicable United Kingdom law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to: - present fairly the financial position, financial performance and cash flows of the Company; - select suitable accounting policies and apply them consistently; - present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; - make judgements and accounting estimates that are reasonable and prudent; - state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; - provide additional disclosures when compliance with UK Accounting Standards is insufficient to enable users to understand the impact of particular transactions, other events and conclusions on the Company’s financial position and financial performance; and - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are also responsible for preparing the Strategic Report, the Directors’ Report, the Directors’ Remuneration Report, the Audit Committee Report and the Corporate Governance Statement in accordance with the Companies Act 2006 and applicable regulations, including the requirements of the Listing Rules and the Disclosure and Transparency Rules. The Directors have delegated responsibility to the Investment Manager for the maintenance and integrity of the Company’s corporate and financial information included on the Investment Manager’s 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 12 of the Annual Report, confirm to the best of their knowledge that: - the financial statements, which have been prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and net return of the Company; and - the annual report 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 also requires Directors to ensure that the Annual Report and Financial Statements are fair, balanced and understandable. In order to reach a conclusion on this matter, the Board has requested that the Audit Committee advise on whether it considers that the Annual Report and Financial Statements fulfils these requirements. The process by which the Audit Committee has reached these conclusions are set out in the Audit Committee’s report on pages 31 to 33 of the Annual Report. As a result, the Board has concluded that the Annual Report for the year ended 31 October 2013, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s performance, business model and strategy. For and on behalf of the Board Jonathan Cartwright Chairman 20 December 2013 Investment Manager's Report Performance Portfolio performance, although positive in absolute terms was disappointing relative to the benchmark during the year under review. Investment approach and process In selecting the Company's investment portfolio we adopt a relatively concentrated approach to ensure that our best ideas contribute significantly to returns. We also believe it is the role of the portfolio overall to achieve a premium level of yield rather than every individual company within it, giving the Company increased flexibility to invest where returns are most attractive. A relatively concentrated approach results in a portfolio which differs substantially from the Index and in any individual year, such as the one under review, the returns will vary sometimes significantly from those of the Index. Over longer periods our objective is to achieve returns greater than the Index, but with lower volatility. The foundation of the portfolio is in high free cash flow companies that can sustain cash generation and pay a growing yield whilst aiming to deliver a double digit total return. Additionally, we look to identify `growth' companies that have significant barriers to entry or unique products or intellectual property that enable them to grow consistently. We also look for `turnarounds', which represent those companies that are significantly out of favour, facing temporary challenges with high yields/very low valuations, but with recovery potential. This segment, although relatively small at around 10% of the overall portfolio, is expected to contribute meaningfully to returns over time. Market review UK equities rose in the financial year under review, supported by a highly accommodative monetary policy which overshadowed the headwinds of US sequestration, the UK debt downgrade and the bailout of Cyprus. In July, the new Governor of the Bank of England indicated that interest rates were unlikely to be raised in the near term and in September the Federal Reserve surprised the markets with a delay to the `tapering' of quantitative easing. A notable feature has been the return of new issues to the market which will test the appetite for equity issuance in the coming months. The mobile telecommunications sector rose strongly as Vodafone Group announced the disposal of its 45% stake in its US mobile business to its majority partner, Verizon. Financials also rose strongly from a low base during the year, in particular UK domestic banks and the life insurance sector. Economically sensitive sectors such as media, travel and leisure and general retail generally outperformed defensive sectors, including utilities, tobacco, and beverages. The oil and gas and mining sectors performed poorly as profits continue to come under pressure from large capital expenditure costs and falling commodity prices. Contributors to performance Our holdings in the banks and oil and gas sectors have both had a significant impact on performance. Tullow Oil has not delivered good returns over the past twelve months as its previous, strong exploration record has been eroded following a series of poor results. The company's shares previously enjoyed a premium rating following a long string of successes, notably in Ghana and Uganda, but now trade closer to net asset value. The company has exploration exposure to Kenya where drilling results have been positive so far. We continue to hold a reduced position and believe that the company will once again create value for shareholders through exploration and portfolio management. Within the banking sector, given our concerns around capital requirements, the rebalancing of loan books and liquidity in the banking system at the start of the year, we did not hold Barclays, Lloyds Banking Group or The Royal Bank of Scotland Group, instead favouring the better capitalised banks of HSBC and Standard Chartered. This detracted from relative performance as domestic UK banks rallied strongly as the perceived risks reduced. Other detractors included British American Tobacco, which lagged the market rise alongside other defensive stocks partly due to weakness in emerging market currencies. Motor insurer esure reduced its volume growth outlook in the light of a weaker than anticipated motor insurance market and Antofagasta fell along with the mining sector, as production costs increased. On the positive side, the shares of online gaming software specialist Playtech rose following a strong rise in first half revenues and earnings, benefiting from progress in new markets and in the expansion of products. The group also signed an agreement with Ladbrokes to provide software that was well received by the market. Other significant contributors to performance included; Shire, which performed well after resolving a number of patent issues as sales exceeded market forecasts; Carphone Warehouse, which rose strongly after announcing the buyout of its joint venture partner, Best Buy in the first half of the year; and Capital & Counties, which rose as the company is successfully improving the rental base at Covent Garden whilst also working towards a residential housing development at Earls Court. During the year the Company added exposure to high quality growth companies such as Unilever, Reed Elsevier, Reckitt Benckiser and Compass. These companies generate strong free cash flow that should enable them to sustain growth in both earnings and dividends. As the US and UK economies begin to recover we have added companies well placed to benefit from a recovery in housebuilding and construction including Wolseley, Ashtead Group and Howden Joinery Group. Exposure to mining companies was reduced through the sale of Antofagasta as lower emerging market growth rates combined with rising costs led to earnings uncertainty. Other notable sales included AstraZeneca, where we became concerned about the impact of patent expiries on forward earnings following relatively strong share price returns, and UBM, where additional costs reduced the positive effects of growth in the events business. Portfolio turnover was higher than we would normally expect, partly arising from previously announced changes in the portfolio management team and partly in response to the divergence of economic growth expectations between the developing and developed world economies referred to above. Outlook Equity valuations have been lifted by strong liquidity levels and the perception that extreme risks to the financial system have subsided in 2013. Although equities have risen, valuations compared to other asset classes remain attractive, which should continue to support equities. The companies in the portfolio continue to be exposed to both the developed and developing world. Economic indicators in the developed world have improved in recent months, particularly in the UK. The UK economy is showing promising signs of growth helped by low interest rates, improving consumer confidence and a recovering housing market. Whilst economic indicators in the developing world have slowed during the year, it is worth noting that growth rates in many regions remain higher than those in the developed world driven by demographic drivers. The portfolio is primarily invested in high free cash flow companies that can sustain cash generation and pay growing dividends, but it also retains exposure to companies with sustainable growth franchises and turnaround situations. Adam Avigdori and Mark Wharrier BlackRock Investment Management (UK) Limited 20 December 2013 Ten Largest Investments 31 October 2013 Vodafone Group: 6.1% (2012: 5.6%, www.vodafone.com) is a global mobile communications company providing a range of communications services including voice, messaging, data and fixed-line solutions. It operates in Europe, Africa, Asia-Pacific and the Middle East, and in the United States has agreed to sell its Verizon Wireless stake to US telecommunications group Verizon. HSBC Holdings: 6.0% (2012: 7.4%, www.hsbc.com) is one of the world's largest banking and financial services organisations. Its principal businesses are commercial banking, global banking and markets, private banking and personal financial services. Its international network covers 81 countries and territories worldwide, across Europe, Asia-Pacific, North America, Latin America and the Middle East and North Africa. GlaxoSmithKline: 5.7% (2012: 3.5%, www.gsk.com) is a global healthcare group, operating in the research, development, manufacture and marketing of pharmaceutical products, including vaccines, over-the-counter medicines and health-related consumer products. British American Tobacco: 5.2% (2012: 5.0%, www.bat.com) is one of the world's leading tobacco groups, with more than 200 brands in its portfolio selling in approximately 180 markets worldwide. It also has a significant interest in tobacco leaf growing, working with thousands of farmers internationally. Royal Dutch Shell `B': 5.1% (2012: 7.8%, www.shell.com) is one of the world's largest independent oil and gas companies. Its upstream operations are engaged in searching for and recovering crude oil and natural gas, the liquefaction and transportation of gas, and the extraction of bitumen from oil sands. The downstream businesses are engaged in manufacturing; distribution and marketing activities for oil products and chemicals, in alternative energy and carbon dioxide management. Barclays: 3.3% (2012: nil, www.barclays.co.uk) is a global financial services provider engaged in retail banking, credit cards, wholesale banking, investment banking, wealth management and investment management services. The firm operates in over 50 countries with a presence in Europe, the Americas, Africa and Asia. Wolseley: 3.3% (2012: 2.9%, www.wolseley.co.uk) is the world's largest trade distributor of plumbing and heating products and a leading supplier of building materials. It has businesses in the US, Nordics, UK and Europe. Reed Elsevier: 3.3% (2012: nil, www.reedelsevier.com) is a global provider of professional information solutions that includes publication of scientific, medical, technical and legal journals. The company is also the leading exhibitions and events business globally. Legal & General: 3.2% (2012: nil, www.legalandgeneral.com) is a leading UK financial services company. Their businesses include insurance, individual protection and annuities, a savings business and an investment management business. There is also an international business that operates in the US, France and the Netherlands. Unilever: 3.2% (2012: nil, www.unilever.co.uk) is a global consumer goods company with leading brands across home care (Comfort, Cif), personal care (Sure, Dove, Simple), foods (Knorr, Flora) and refreshment (Magnum and Ben & Jerry's ice cream). The group's products are sold in over 190 countries with approximately 55% of sales coming from emerging markets. All percentages reflect the value of the holding as a percentage of total investments. The percentages in brackets represent the value of the holding as at 31 October 2012. Together, the ten largest investments represents 44.4% of total investments (ten largest investments as at 31 October 2012: 47.1%). Distribution of Investments as at 31 October 2013 Analysis of portfolio by sector % of Benchmark Portfolio Banks 11.7 11.7 Oil and Gas Producers 9.4 13.7 Tobacco 8.2 4.2 Pharmaceuticals & Biotechnology 8.1 6.8 Travel and Leisure 6.8 3.2 Support Services 6.2 4.5 Mobile Telecommunications 6.1 5.4 Media 5.2 3.2 Food Producers 5.0 2.2 Non-Life Insurance 4.7 1.0 Life Insurance 4.5 4.2 Mining 4.4 7.1 Financial Services 4.0 2.0 Electronic and Electrical Equipment 3.0 0.5 General Retailers 2.7 2.0 Household Goods & Home Construction 2.6 2.4 Gas, Water and Multiutilities 2.3 2.8 Fixed Line Telecommunications 2.3 1.6 Cash and Cash Equivalents 2.8 - Source: BlackRock and Datastream. Investment Size Number of Investments % of Portfolio less than £1m 18 27.1 £1m to £2m 16 44.9 £2m to £3m 5 28.0 Source: BlackRock Investments as at 31 October 2013 Market % value of £'000 Investments Banks HSBC Holdings 2,770 6.0 Barclays 1,546 3.3 Standard Chartered 1,112 2.4 -------- -------- 5,428 11.7 -------- -------- Oil & Gas Producers Royal Dutch Shell `B' 2,359 5.1 BG Group 1,259 2.7 Tullow Oil 746 1.6 -------- -------- 4,364 9.4 -------- -------- Tobacco British American Tobacco 2,424 5.2 Imperial Tobacco Group 1,374 3.0 -------- -------- 3,798 8.2 -------- -------- Pharmaceuticals & Biotechnology GlaxoSmithKline 2,623 5.7 Shire 1,115 2.4 -------- -------- 3,738 8.1 -------- -------- Travel & Leisure Compass 915 2.0 Stagecoach Group 742 1.6 Betfair 741 1.6 Ladbrokes 402 0.8 Domino's Pizza 363 0.8 -------- -------- 3,163 6.8 -------- -------- Support Services Wolseley 1,534 3.3 Howden Joinery Group 728 1.6 Ashtead Group 626 1.3 -------- -------- 2,888 6.2 -------- -------- Mobile Telecommunications Vodafone Group 2,813 6.1 -------- -------- 2,813 6.1 -------- -------- Media Reed Elsevier 1,518 3.3 British Sky Broadcasting Group 891 1.9 -------- -------- 2,409 5.2 -------- -------- Food Producers Unilever 1,471 3.2 Tate & Lyle 845 1.8 -------- -------- 2,316 5.0 -------- -------- Non-life Insurance Admiral Group 916 1.9 esure 652 1.4 Lancashire Holdings 650 1.4 -------- -------- 2,218 4.7 -------- -------- Life Insurance Legal & General Group 1,496 3.2 Phoenix Group 610 1.3 -------- -------- 2,106 4.5 -------- -------- Mining Rio Tinto 1,455 3.1 BHP Billiton 573 1.3 -------- -------- 2,028 4.4 -------- -------- Financial Services 3i Group 1,074 2.3 Hargreaves Lansdown 781 1.7 -------- -------- 1,855 4.0 -------- -------- Electronic & Electrical Equipment Spectris 928 2.0 Oxford Instruments 485 1.0 -------- -------- 1,413 3.0 -------- -------- General Retailers Carphone Warehouse 1,248 2.7 -------- -------- 1,248 2.7 -------- -------- Household Goods & Home Construction Reckitt Benckiser 1,187 2.6 -------- -------- 1,187 2.6 -------- -------- Gas, Water & Multiutilities National Grid 1,087 2.3 -------- -------- 1,087 2.3 -------- -------- Fixed Line Telecommunications BT Group 1,055 2.3 -------- -------- 1,055 2.3 -------- -------- 45,114 97.2 -------- -------- Cash and Cash Equivalents BlackRock Institutional Cash Fund 1,282 2.8 -------- -------- 1,282 2.8 -------- -------- TOTAL VALUE OF SECURITIES 46,396 100.0 -------- -------- All investments are in ordinary shares unless otherwise stated. The total number of holdings as at 31 October 2013 was 39 (31 October 2012: 39) Income Statement for the year ended 31 October 2013 Notes Revenue Revenue Capital Capital Total Total 2013 2012 2013 2012 2013 2012 £'000 £'000 £'000 £'000 £'000 £'000 Gains on investments held at fair value through profit or loss - - 5,297 2,788 5,297 2,788 Income from investments at fair value through profit or loss 3 1,880 1,658 - - 1,880 1,658 Investment management and performance fees 4 (64) (89) (192) (203) (256) (292) Other operating expenses 5 (229) (265) (16) (145) (245) (410) -------- -------- -------- -------- -------- -------- Net return before finance costs and taxation 1,587 1,304 5,089 2,440 6,676 3,744 Finance costs 7 (11) (14) (32) (41) (43) (55) -------- -------- -------- -------- -------- -------- Return on ordinary activities before taxation 1,576 1,290 5,057 2,399 6,633 3,689 Taxation - - - - - - -------- -------- -------- -------- -------- -------- Return on ordinary activities after taxation 9 1,576 1,290 5,057 2,399 6,633 3,689 ======== ======== ======== ======== ======== ======== Return per ordinary share (basic and diluted) 9 5.63p 4.52p 18.09p 8.41p 23.72p 12.93p ======== ======== ======== ======== ======== ======== The total column of this statement represents the Income Statement of the Company. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies ("AIC"). The Company had no recognised gains or losses other than those disclosed in the Income Statement and the Reconciliation of Movements in Shareholders' 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 October 2013 Note Called-up Share Capital Special Capital Revenue Total share premium redemption reserve reserves reserve £'000 capital account reserve £'000 £'000 £'000 £'000 £'000 £'000 For the year ended 31 October 2013 At 31 October 2012 329 14,819 220 26,401 (1,917) 2,095 41,947 Return for the year - - - - 5,057 1,576 6,633 Cancellation of shares held in treasury - - - (1,555) - - (1,555) Dividends paid* 8 - - - - - (1,534) (1,534) -------- -------- -------- -------- -------- -------- -------- At 31 October 2013 329 14,819 220 24,846 3,140 2,137 45,491 -------- -------- -------- -------- -------- -------- -------- For the year ended 31 October 2012 At 31 October 2011 342 14,819 207 27,379 (4,316) 2,256 40,687 Return for the year - - - - 2,399 1,290 3,689 Shares purchased (8) - 8 (978) - - (978) Cancellation of shares held in treasury (5) - 5 - - - - Dividends paid** 8 - - - - - (1,451) (1,451) -------- -------- -------- -------- -------- -------- -------- At 31 October 2012 329 14,819 220 26,401 (1,917) 2,095 41,947 -------- -------- -------- -------- -------- -------- -------- * Final dividend of 3.45p per share for the year ended 31 October 2012, declared on 18 December 2012 and paid on 8 March 2013, and the interim dividend of 2.00p per share for the six months ended 30 April 2013, declared on 20 June 2013 and paid on 6 September 2013. ** Final dividend of 3.30p per share for the year ended 31 October 2011, declared on 23 December 2011 and paid on 3 March 2012, and the interim dividend of 1.80p per share for the six months ended 30 April 2012, declared on 15 June 2012 and paid on 7 September 2012. Balance Sheet as at 31 October 2013 Notes 2013 2012 £'000 £'000 Fixed assets Investments held at fair value through profit or loss 46,396 44,495 -------- -------- Current assets Debtors 2,322 108 Cash at bank 278 101 -------- -------- 2,600 209 Creditors - Amounts falling due within one year Bank loan (2,000) (2,000) Other creditors (1,505) (757) -------- -------- (3,505) (2,757) -------- -------- Net current liabilities (905) (2,548) -------- -------- Net assets 45,491 41,947 ======== ======== Capital and reserves Called-up share capital 10 329 329 Share premium account 11 14,819 14,819 Capital redemption reserve 11 220 220 Special reserve 12 24,846 26,401 Capital reserves 11 3,140 (1,917) Revenue reserve 12 2,137 2,095 -------- -------- Total equity shareholders' funds 9 45,491 41,947 ======== ======== Net asset value per ordinary share - basic and diluted 9 166.03p 147.81p ======== ======== Cash Flow Statement for the year ended 31 October 2013 Notes 2013 2012 £'000 £'000 Net cash inflow from operating activities 5(b) 1,683 1,158 Returns on investment and servicing of finance Interest paid (56) (43) Capital expenditure and financial investment Purchases of investments (61,831) (52,113) Proceeds from sales of investments 63,470 51,369 -------- -------- Net cash inflow/(outflow) from capital expenditure and financial investment 1,639 (744) -------- -------- Equity dividends paid 8 (1,534) (1,451) -------- -------- Net cash inflow/(outflow) before financing 1,732 (1,080) Financing Repurchase of ordinary shares (1,555) (978) Repayment of bank loan (2,000) (2,000) Drawdown of bank loan 2,000 2,000 -------- -------- Net cash outflow from financing (1,555) (978) -------- -------- Increase/(decrease) in cash in the year 177 (2,058) ======== ======== Notes to the Financial Statements for the year ended 31 October 2013 1. Principal activities The Company conducts its business so as to qualify as an investment trust company within the meaning of sub-section 1158 of the Corporation Tax Act 2010. 2. Accounting policies (a) Basis of preparation The Company's financial statements have been prepared under the historical cost convention, modified to include the revaluation of investments, and in accordance with the United Kingdom law and United Kingdom Generally Accepted Accounting Practice (UK GAAP) and the Statement of Recommended Practice - 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' ("SORP") issued in January 2009 by the Association of Investment Companies ("AIC"). The principal accounting policies adopted by the Company are set out below. All of the Company's operations are of a continuing nature. The Company's financial statements are presented in sterling, which is the currency of the primary economic environment in which the Company operates. All values are rounded to the nearest thousand pounds (£'000) except where otherwise indicated. (b) Presentation of Income Statement In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. In accordance with the Company's status as a UK investment trust company under sections 833 and 834 of the Companies Act 2006, and section 1158 of the Corporation Tax Act 2010, net capital returns may not be distributed by way of dividend. The accounting policies adopted in preparing the current year's financial statements are consistent with those of previous years. (c) Going concern The Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the financial statements as the assets of the Company consist mainly of securities which are readily realisable and accordingly, that the Company has adequate financial resources to continue in operational existence for the foreseeable future. The Company's business, the principal risks and uncertainties it faces, together with the factors likely to affect its future prospects, performance and position are set out in the Strategic Report in this announcement and on pages 13 to 15 of the Annual Report. As a consequence, the Directors believe that the Company is well placed to manage its business risks successfully. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements. (d) Segmental reporting The Directors are of the opinion that the Company is engaged in a single segment of business being investment business. (e) Income Dividends receivable on equity shares are accounted for on an ex-dividend basis. Where no ex-dividend date is available, dividends receivable on or before the year end are treated as revenue for the year. UK dividends are shown net of tax credits. Income from convertible securities having an element of equity is recognised on an accruals basis. Provisions are made for dividends not expected to be received. Fixed returns on non-equity shares and debt securities are recognised on a time apportionment basis so as to reflect the effective yield on the investment. Special dividends are recognised on an ex-dividend basis and treated as a capital or revenue item depending on the facts and circumstances of each dividend. Where the Company has elected to receive its dividends in the form of additional shares rather than in cash, the cash equivalent of the dividend is recognised as income. Any excess in the value of the shares received over the amount of the cash dividend is recognised in capital reserves. Deposit interest receivable is accounted for on an accruals basis. Underwriting commission is recognised when the issue underwritten closes. (f) Expenses All expenses are accounted for on an accruals basis. Expenses have been treated as revenue except as follows: - expenses including finance costs which are incidental to the acquisition or disposal of investments are included within the cost of the investments. Details of transaction costs on the purchases and sales of investments are disclosed in note 11 on page 47 of the Annual Report. - the investment management fee has been allocated 75% to the capital column and 25% to the revenue column of the Income Statement in line with the Board's expected long term split of returns, in the form of capital gains and income respectively, from the investment portfolio. - Legal and professional fees incurred in connection with the change of investment manager were allocated 75% to capital and 25% to revenue. - performance fees have been allocated 100% to the capital column of the Income Statement, as performance has been predominantly generated through capital returns of the investment portfolio. (g) Finance costs Finance costs are accounted for on an accruals basis. Finance costs are allocated, insofar as they relate to the financing of the Company's investments, 75% to the capital column and 25% to the revenue column of the Income Statement, in line with the Board's expected long term split of returns, in the form of capital gains and income respectively, from the investment portfolio. (h) Investments held at fair value through profit or loss As the Company's business is investing in financial assets with a view to profiting from their total return in the form of increases in fair value, financial assets are designated as held at fair value through profit or loss in accordance with FRS 26 `Financial Instruments: Recognition and Measurement'. The Company manages and evaluates the performance of these investments on a fair value basis in accordance with its investment strategy, and information about the investments is provided on this basis to the Board of Directors. Investments held at fair value through profit or loss are initially recognised at fair value. After initial recognition, these continue to be measured at fair value, which for quoted investments is either the bid price or the last traded price depending on the convention of the exchange on which the investment is listed. Purchases and sales of financial assets are recognised on the trade date, being the date which the Company commits to purchase or sell the assets. Investment holding gains or losses reflect differences between book value and book cost. Net gains or losses arising on realisation of investments are taken to capital reserve. (i) Taxation Where expenses are allocated between capital and revenue, any tax relief obtained in respect of those expenses is allocated between capital and revenue on the marginal basis using the Company's effective rate of corporation tax for the accounting period. Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date, where transactions or events that result in an obligation to pay more tax or a right to pay less tax in the future have occurred. Timing differences are differences between the Company's taxable profits and its results as stated in the financial statements. A deferred tax asset is recognised when it is more likely than not that the asset will be recoverable. Deferred tax is measured on a non-discounted basis at the rate of corporation tax that is expected to apply when the timing differences are expected to reverse. (j) Foreign currency translation Foreign currency - in accordance with FRS 23 `The Effect of changes in Foreign Currency Exchange Rates', the Company is required to nominate a functional currency, being the currency in which Company predominately operates. The functional and reporting currency is sterling, reflecting the primary economic environment in which the Company operates. Transactions in foreign currencies are translated into sterling at the rates of exchange ruling on the date of the transaction. Foreign currency monetary assets and liabilities are translated into sterling at the rates of exchange ruling at the Balance Sheet date. Profits and losses thereon are recognised in the capital column of the Income Statement and taken to the capital reserve. (k) Dividends payable In accordance with FRS 21 `Events After Balance Sheet Date', the final dividend proposed on ordinary shares is recognised as a liability when approved by shareholders. Interim dividends are recognised only when paid. (l) Share repurchases Shares repurchased and subsequently cancelled - share capital is reduced by the nominal value of the shares repurchased, and the capital redemption reserve is correspondingly increased in accordance with section 733 Companies Act 2006. The full cost of the repurchase is charged to the special reserve. Shares repurchased and held in treasury - The full cost of the repurchase is charged to the special reserve. Where treasury shares are subsequently reissued, any surplus is taken to the share premium account. 3. Income 2013 2012 £'000 £'000 Investment income: Franked UK listed dividends 1,778 1,550 Unfranked equity income from UK investments 66 - Scrip dividends from UK investments - 19 Overseas listed dividends 36 89 -------- -------- Total income 1,880 1,658 ======== ======== 4. Investment management and performance fees 2013 2012 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Investment management fees 64 192 256 89 165 254 Performance fees - - - - 38 38 -------- -------- -------- -------- -------- -------- 64 192 256 89 203 292 ======== ======== ======== ======== ======== ======== BlackRock Investment Management (UK) Limited ("BlackRock") was appointed as Investment Manager and Company Secretary on 1 April 2012. Under the terms of the investment management agreement, BlackRock are entitled to a base fee of 0.6% per annum of the Company's market capitalisation. There was no additional fee for company secretarial and administration services. Under the investment management agreement with BlackRock, a performance fee is payable for the financial period based on the Company's net assets value outperformance of the benchmark. The performance fee is calculated by applying 15% of the annualised excess return for a performance period to the performance fee net asset value. The benchmark index, which the Company use for the calculation of the performance fee is the FTSE All-Share Index measured on a total return basis. Further information on this fee arrangement is described in the Directors' Report on page 16 of the Annual Report. Performance fees have been wholly allocated to the capital column of the Income Statement. No performance fee has been accrued for the year ended 31 October 2013 (31 October 2012: £38,000). In accordance with the investment management agreement with RCM (UK) Limited, the previous Investment Manager, a base management fee of 0.5% was payable, together with the pro rata administration and secretarial fee until 4 July 2012 inclusive, which was charged in full to the revenue account. 5. Operating activities 2013 2012 £'000 £'000 (a) Operating expenses Custody fee 2 2 Auditor's remuneration: - statutory audit 17 17 - other audit services* - 2 - VAT on auditor's remuneration 4 4 Directors' emoluments 79 79 Other operating expenses 127 161 -------- -------- 229 265 ======== ======== In addition to the above, custodian handling charges of £16,000 (2012: £4,000) were charged to capital. During 2012, legal and professional fees of £188,000 were incurred in connection with the change of Investment Manager during the year, allocated 75% to capital and 25% to the revenue account. The Company's ongoing charge ratios, calculated as a percentage of average net assets and using expenses, excluding performance fees and interest costs, after relief for any taxation was: 1.1% 1.2% -------- -------- * Other audit services relate to the review of the half yearly financial statements in 2012. 2013 2012 £'000 £'000 (b) Reconciliation of net return before finance costs and taxation to net cash flow from operating activities Net return before finance costs and taxation 6,676 3,744 Capital return before finance cost and taxation (5,089) (2,440) -------- -------- Net revenue return before finance costs and taxation 1,587 1,304 Expenses charged to capital (208) (348) Special dividends credited to capital 38 10 Decrease in debtors 52 29 Increase in creditors 214 163 -------- -------- Net cash inflow from operating activities 1,683 1,158 ======== ======== 6. Directors' emoluments The aggregate emoluments of the Directors, excluding VAT, where applicable, for the year ended 31 October 2013 were £78,500 (2012: £78,500). The emoluments of the Chairman, who was also the highest paid Director were £25,000 (2012: £25,000). The Company does not have a share option scheme or any incentive scheme. No pension contributions were made in respect of the Directors. The Company has no employees. 7. Finance costs 2013 2012 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Interest payable - bank overdraft 1 - 1 - - - Interest payable - sterling bank loan 10 32 42 14 41 55 -------- -------- -------- -------- -------- -------- 11 32 43 14 41 55 ======== ======== ======== ======== ======== ======== 8. Dividends on ordinary shares 2013 2012 £'000 £'000 Dividend payable on equity shares: Final dividend of 3.45p per ordinary share paid 8 March 2013 (2012: 3.30p - 1 March 2012) 979 940 Interim dividend of 2.00p per ordinary share paid 6 September 2013 (2012: 1.80p - 7 September 2012) 555 511 -------- -------- 1,534 1,451 ======== ======== The Directors have proposed a final dividend of 3.50p per share in respect of the year ended 31 October 2013. The proposed final dividend will be paid, subject to shareholders' approval, on 7 March 2014 to shareholders on the Company's register on 14 February 2014. The final dividend has not been included as a liability in these financial statements as final dividends are only recognised in the financial statements when they have been approved by shareholders, or in the case of interim dividends, recognised when paid to shareholders. The total dividends payable in respect of the year which form the basis of determining retained income for the purposes of section 1158 of the Corporation Tax Act 2010 and section 833 of the Companies Act 2006, and the amounts proposed, meet the relevant requirements as set out in the legislation. 2013 2012 £'000 £'000 Dividends paid or proposed on equity shares: Interim paid 2.00p per ordinary share paid on 6 September 2013 (2012: 1.80p) 555 511 Final proposed 3.50p* payable on 7 March 2014 (2013: 3.45p) 952 979 -------- -------- 1,507 1,490 -------- -------- * Based upon 27,204,268 ordinary shares (excluding treasury shares) in issue on 19 December 2013. The proposed final dividend is based on the number of shares in issue at the year end. However, the dividend payable will be based on the number of shares in issue on the record date and will reflect any purchases and cancellations of shares by the Company settled subsequent to the year end. Ordinary dividends paid by the Company carry a tax credit at a rate of 10%. The credit discharges the tax liability of shareholders subject to income tax at less than the higher rate. Shareholders liable to pay tax at the higher rate will have further tax to pay. 9. Return per ordinary share Revenue and capital returns per share are shown below and have been calculated using the following: 2013 2012 Net revenue return attributable to ordinary shareholders 1,576 1,290 (£'000) Net capital return attributable to ordinary shareholders 5,057 2,399 (£'000) -------- -------- Total return (£'000) 6,633 3,689 -------- -------- Equity shareholders' funds (£'000) 45,491 41,947 -------- -------- The weighted average number of ordinary shares in issue during each year, on which the return per ordinary share was calculated, was: 27,958,747 28,525,965 ---------- ---------- The actual number of ordinary shares in issue at the end of each year, on which the net asset value was calculated, was: 27,399,268 28,379,268 ========== ========== 2013 2012 Revenue Capital Total Revenue Capital Total p p p p p p Return per share Calculated on weighted average number of shares 5.63 18.09 23.72 4.52 8.41 12.93 -------- -------- -------- -------- -------- -------- Net asset value per share (debt at par value) 166.03* 147.81** -------- -------- Ordinary share price 164.50 137.00 -------- -------- * The net asset value is based on 27,399,268 ordinary shares in issue. An additional 5,534,664 shares were held in treasury. ** The net asset value is based on 28,379,268 ordinary shares in issue. An additional 4,554,664 shares were held in treasury. 10. Called up share capital Ordinary Treasury Total Nominal shares shares shares value number number £'000 Allotted, called up and fully paid share capital comprised: Ordinary shares of 1p each At 31 October 2012 28,379,268 4,554,664 32,933,932 329 Shares purchased and cancelled - - - - Shares purchased and held in treasury (980,000) 980,000 - - Sale of shares out of treasury - - - - -------- -------- -------- -------- At 31 October 2013 27,399,268 5,534,664 32,933,932 329 ======== ======== ======== ======== During the year 980,000 ordinary shares were purchased and held in treasury (2012: 761,552 purchased and cancelled). No shares were cancelled from treasury during the year. (2012: 500,000 cancelled from treasury). 11. Share premium account and reserves Share Capital Capital Capital premium redemption reserves reserves account reserve arising on arising on £'000 £'000 investments revaluation of sold investments £'000 held £'000 At 1 November 2012 Movement during the year: 14,819 220 (2,799) 882 Gains on realisation of investments - - 2,791 - Change in investment holding gains - - - 2,468 Special dividends taken to capital - - 38 - Finance costs, investment management and performance fees charged to capital after taxation - - (240) - -------- -------- -------- -------- At 31 October 2013 14,819 220 (210) 3,350 ======== ======== ======== ======== 12. Distributable reserves Special reserve £'000 At 1 November 2012 26,401 Purchase and cancellation of ordinary shares (1,555) -------- At 31 October 2013 24,846 ======== Revenue reserve £'000 At 1 November 2012 2,095 Return for the year 1,576 Dividends paid (1,534) -------- At 31 October 2013 2,137 ======== 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 2013 annual report and financial statements will be filed with the Registrar of Companies shortly. The comparative figures are extracts from the audited financial statements of BlackRock Income and Growth Investment Trust plc for the year ended 31 October 2013, which have been filed with the Registrar of Companies. The report of the Auditor on those accounts contained no qualification or statement under section 498 of the Companies Act. This announcement was approved by the Board of Directors on 20 December 2013. Annual Report Members will be notified that the annual report is available shortly or if a hard copy has been requested this will be sent shortly. It will also be available from the registered office, c/o The Company Secretary, BlackRock Income and Growth Investment Trust plc, 12 Throgmorton Avenue, London EC2N 2DL. Annual General Meeting The Annual General Meeting of the Company will be held at 12 Throgmorton Avenue, London EC2N 2DL on Tuesday, 11 February 2014 at 12 noon. The Annual Report will also be available on the BlackRock Investment Management website at http://www.blackrock.co.uk/intermediaries/literature/annual-report/ blackrock-income-and-growth-investment-trust-plc-annual-report-2013.pdf. Neither the contents of the Manager's website nor the contents of any website accessible from hyperlinks on the Manager's website (or any other website) is incorporated into, or forms part of, this announcement. For further information, please contact: Simon White, Managing Director, Investment Companies, BlackRock Investment Management (UK) Limited Tel: 020 7743 5284 Alexandra Ring, Media & Communication, BlackRock Investment Management (UK) Limited Tel: 020 7743 3583 20 December 2013 12 Throgmorton Avenue London EC2N 2DL

Companies

Blackrock Income And Growth Investment Trust (BRIG)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today