Annual Financial Report

BlackRock Income and Growth Investment Trust plc Annual Results Announcement for the year ended 31 October 2014 Performance record Financial Summary As As Change at 31 at 31 % October October 2014 2013 Assets Net asset value per ordinary share 170.68p 166.03p +2.8 -------- -------- -------- - with income reinvested +6.3 -------- -------- -------- Ordinary share price (mid-market) 167.25p 164.50p +1.7 -------- -------- -------- - with income reinvested +5.2 -------- -------- -------- FTSE All-Share Index (total return) 5,380.70 5,325.80 +1.0 -------- -------- -------- Net assets(1) (£'000) 45,194 45,491 -0.7 -------- -------- -------- Discount to net asset value 2.0% 0.9% -------- -------- 1) The change in net assets reflects market movements during the year and the purchase of the Company's own shares. Year Year Change ended ended % 31 31 October October 2014 2013 Revenue Revenue return per ordinary share 5.66p 5.63p +0.5 -------- -------- -------- Net revenue return after taxation (£'000) 1,524 1,576 -3.3 -------- -------- -------- Dividends Interim 2.20p 2.00p +10.0 -------- -------- ------- Final 3.50p 3.50p - -------- -------- -------- Total dividends paid and payable 5.70p 5.50p +3.6 -------- -------- -------- Chairman's statement I am pleased to present the annual report to shareholders of BlackRock Income and Growth Investment Trust plc for the year ended 31 October 2014. Performance During the period the Company's net asset value per share (NAV) returned 6.3% and the share price returned 5.2%. By comparison, the FTSE All-Share Index returned 1.0% (all percentages with income reinvested). The NAV outperformance relative to the FTSE All-Share Index during the year was due principally to stock selection. Further details of the factors which have contributed to performance are set out in the Investment Manager's Report. Since the year end the Company's NAV has risen by 1.7% compared with a fall in the benchmark of 1.6% over the same period. Revenue return and dividends The Company's revenue return per share for the year amounted to 5.66 pence compared with 5.63 pence for the previous year, representing an increase of 0.5%. 2.20 pence per share has already been distributed to shareholders during the year by way of an interim dividend. This represented an increase of 10% compared to the interim dividend paid in respect of the year ended 31 October 2013. The Directors are mindful of shareholders' desire for income in addition to capital growth and are proposing a final dividend per share of 3.50 pence (2013: 3.50 pence) giving a total for the year of 5.70 pence per share. This represents a 3.6% increase over the prior year (2013: 5.50 pence per share). The final dividend is payable on 6 March 2015 to shareholders on the Company's register at the close of business on 13 February 2015 (ex dividend date is 12 February 2015). Policy on share price discount The Directors recognise the importance to shareholders that the Company's shares should not trade at a significant discount to the underlying net asset value and, in normal market conditions, will therefore use the Company's share buy back, sale of shares from treasury and share issue powers to ensure that the share price is broadly in line with the underlying NAV per share. The existing authority to buy back up to 14.99% of the Company's issued share capital (excluding treasury shares) will expire at the conclusion of the 2015 Annual General Meeting and a resolution will be put to shareholders to renew the authority at that meeting. The Directors believe there are a number of advantages to shareholders arising from increasing the current size of the Company including improving the liquidity of the Company's shares and spreading fixed costs over a larger asset base. Accordingly, to provide the Directors with greater flexibility, should the appropriate opportunity arise, it is proposed to increase the existing authority to allot new shares or sell shares out of treasury. Currently, 5% of the Company's issued share capital can be allotted as new shares or sold from treasury. It is proposed that at the 2015 Annual General Meeting authority will be sought to allot as new shares or sell from treasury up to 35% of the Company's share capital. 920,000 ordinary shares were purchased and placed in treasury during the year for a total consideration of £1,532,000 (excluding costs).At the date of this report, 19.6% of the Company's issued share capital is held in treasury. Gearing The Company operates a flexible gearing policy which depends on prevailing market 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 2.6% and at 31 October 2014 net cash was 1.6%. During the year the Company had in place an unsecured sterling revolving credit facility of £5 million with ING Bank N.V., which matured on 31 October 2014 and was replaced with a £4 million, two year, single currency unsecured revolving facility agreement with Scotiabank (Ireland) Limited. Annual General Meeting The Company's Annual General Meeting will be held on Wednesday, 25 February 2015 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 to 63 of the Annual Report. The Portfolio Managers will make a presentation to shareholders on the Company's progress and the outlook for the year ahead. Alternative Investment Fund Managers' Directive (AIFMD) Following a change in regulations, BlackRock Fund Managers Limited (BFM) was appointed as the Company's Alternative Investment Fund Manager (AIFM or Manager) on 2 July 2014. The Board has also appointed BNY Mellon Trust & Depositary (UK) Limited to act as the Company's Depositary. In complying with its new regulatory obligations, the Board continues to act independently of the AIFM and the arrangements in respect of the management fee remain unchanged. BlackRock Investment Management (UK) Limited (BIM (UK)) continues to act as the Company's Investment Manager under a delegation agreement with BFM. Outlook Economic growth prospects in the world have shown market variation in recent months. Whilst the US and UK have shown relatively strong growth, activity in the Eurozone, together with China and other emerging markets has slowed. The recent precipitous fall in oil and gas prices is likely to provide a boost to businesses with high energy costs. However, for producers such as Russia, which is already facing significant recessionary pressures, the negative impact will be severe. The subdued outlook for inflation and the lacklustre/negative growth in many parts of the Eurozone can be expected to prolong the current period of extraordinarily low Interest rates. Given the extent of overseas earnings for most UK listed companies, these global factors will continue to drive sentiment as much as more local concerns, including the forthcoming UK general election. It is therefore prudent to anticipate greater market volatility in 2015. In this environment your managers will continue to focus on companies with the capacity to grow their dividends, either through strong product and market positioning, or through `self-help' in addressing their business structures and cost bases. Notwithstanding the significant uncertainties created by global events, your Board believes that the Company can benefit from the investment strategy which has been put in place and deliver an attractive return for shareholders over the long term. Jonathan Cartwright Chairman 8 January 2015 Strategic report The Directors present the Strategic Report of the Company for the year ended 31 October 2014. Principal activity The Company carries on business as an investment trust and its principal activity is portfolio investment. Objective The Company's objective is to provide growth in capital and income over the long term through investment in a diversified portfolio of principally UK listed equities. Strategy, business model and investment policy The Company seeks to achieve its 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. 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 only 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. In constructing the portfolio the Investment Manager focuses on three areas: * `high free cash flow' companies that can sustain cash generation and pay a growing dividend whilst aiming to deliver a double digit total return; * `growth' companies that have significant barriers to entry or unique products or intellectual property that enable them to grow consistently; and * `turnarounds', which represent those companies that are significantly out of favour with the market, facing temporary challenges with high yields/very low valuations, but with recovery potential. Appropriate use of gearing can add value over time. This gearing is typically in the form of a revolving facility. With effect from 31 October 2014, the Company entered into a new two year unsecured revolving facility agreement with Scotiabank (Ireland) Limited. The Company also has an overdraft facility with The Bank of New York Mellon (International) Limited. The level of and benefit from any gearing is discussed and agreed regularly by the Board. The Manager generally aims to be fully invested and 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. 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 the zero discount policy adopted in January 2013. In the year to 31 October 2014, the Company's share price to NAV traded in the range of a premium of 2.7% to a discount of 3.6% on a cum income basis. Portfolio analysis A detailed analysis of the portfolio is provided on pages 12 to 14 of the Annual Report. Performance In the year to 31 October 2014, the Company's undiluted NAV per share returned 6.3% (compared with a rise in the FTSE All-Share Index on a total return basis of 1.0%). The share price returned 5.2% (all percentages calculated in sterling terms with income reinvested). The Investment Manager's report on pages 9 and 10 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. The total return for the year, after taxation, was £2,782,000 (2013: £6,633,000) of which the revenue return amounted to £1,524,000 (2013: £1,576,000). An interim dividend of 2.20p (2013: 2.00p) per share was paid on 5 September 2014. The Directors recommend the payment of a final dividend of 3.50p (2013: 3.50p) per share. Subject to approval at the forthcoming Annual General Meeting, the dividend will be paid on 6 March 2015 to shareholders on the register of members at the close of business on 13 February 2015. 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 Year ended ended 31 31 October October 2014 2013 Net asset value per share(1) 170.68p 166.03p Share price(2) 167.25p 164.50p Change in benchmark index(3) 1.0% 22.8% Discount to net asset value 2.0% 0.9% Revenue return per share 5.66p 5.63p Ongoing charges(4) 1.2% 1.1% (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 including expenses, 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 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. 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; - 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; and - the 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. * Income/dividend risk - The amount of dividends and future dividend growth will depend on the performance of the 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 the shareholder profile, 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 Manager, BNY Mellon Trust & Depositary (UK) Limited (the Depositary) and the Bank of New York Mellon (International) Limited, 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 are regularly tested and monitored throughout the year which is evidenced through their Service Organisation Control (SOC) reports to provide assurance regarding the effective operation of internal controls which are reported on 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 that 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. Future prospects The Board's main focus is on the achievement of income and capital growth. The future performance of the Company is dependent upon the success of the investment strategy. The outlook for the Company is discussed in the Chairman's Statement and in the Investment Manager's Report. 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 26 of the Annual Report. Directors and employees The Directors of the Company on 31 October 2014, all of whom held office throughout the year, are set out in the Governance Structure and Directors' biographies on page 15 of the Annual Report. The Board currently consists of four male Directors. 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 8 January 2015. By order of the Board BlackRock Investment Management (UK) Limited Company Secretary 8 January 2015 Investment manager's report Performance The Investment Manager reports that for the twelve month period ended 31 October 2014 the Company's NAV per share returned 6.3% and the share price 5.2%. Over the same period, the FTSE All-Share Index (the Index) and the peer group as measured by the IMA UK Income sector returned 1.0% and 1.8% respectively. (All percentages are in sterling with income reinvested). Investment approach and process In assembling the Company's investment portfolio we adopt a relatively concentrated approach to investment, to ensure that our best ideas contribute significantly to returns. We believe it is the role of the portfolio overall to achieve a premium level of yield rather than every individual company within it. This gives us increased flexibility to invest where returns are most attractive. This 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 dividend 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', at around 10% of portfolio value, which represent those companies that are significantly out of favour with the market, facing temporary challenges with high yields/low valuations, but with recovery potential. The expected return from this segment, although relatively small, is expected to contribute meaningfully to returns over time. Market comment UK equities performance was volatile during the reporting period, in contrast to the strong increase over the preceding reporting year. The headline market return masks a sharp reversal in share price momentum that began in March 2014, whereby many of the previously best performing shares in the market became the worst performers. Central bankers played a part with evolving messages over interest rate policy and the deterioration of the security situation in Iraq and Ukraine also unsettled investors causing a flight to safety. Economic data were mixed with strength, for the most part, in the US offset by weakness in Europe. This divergence in growth led to differences in central bank policy with the US Federal Reserve ending its stimulus program, whilst the European Central Bank and Bank of Japan increased asset purchases. Market highlights included the large number of IPOs, however signs of indigestion emerged as a number of shares traded below their issue price. Large cap M & A surfaced with approaches by Pfizer for AstraZeneca, and subsequently for Shire by Abbvie. Both appeared to have cross border tax savings between the USA and the UK as a significant motivator and both failed to complete. More defensive sectors generally performed well with the pharmaceutical, tobacco, utility and real estate sectors outperforming mining and oil & gas, which suffered as commodity prices fell. The banking sector suffered from further provisioning for PPI claims and fines for past rule breaches and Tesco led the food retail sector lower, where competition from the discount retailers is impacting profitability. Contributors to performance Portfolio performance over the year has been strong in relative terms significantly outperforming both the benchmark and the IMA UK Income sector. Performance was driven by good stockpicking across a wide range of sectors and industries. Many of the strongest contributors, such as Shire and Ashtead, are not typical income portfolio investments given their low starting dividend yields, but were chosen for their capital return prospects. The Company also benefited in relative terms by not holding some of the larger companies that fell such as Tesco, Standard Chartered and Experian. The largest contribution to returns came from Shire, which rose strongly following a takeover approach from US pharmaceutical company Abbvie having delivered on its strategy of increasing sales of its attention deficit hyperactivity disorder (ADHD) business, whilst diversifying its sources of revenue by developing its rare diseases franchise. Although Shire's share price fell back following Abbvie's withdrawal of its bid, citing uncertainty and change to the US tax treatment of such deals, the Company had exited the position to crystallise the gain. Plant hire business Ashtead Group, which is based mainly in the US, rose strongly over the year. As one of the market leaders in a fragmented market they have had the capital to expand unlike many of the smaller competitors. The company has been delivering strong results for some time and continues to report good progress. Dixons Carphone has performed strongly as shareholders approved the merger between Carphone Warehouse and Dixons Group. The group has highlighted the opportunity for earnings enhancement from the strategic tie-up and subsequently released a reassuring trading update. In the free cash flow portion of the portfolio that accounts for 70% of the Company's investments, holdings in Reed Elsevier, Compass Group, British American Tobacco, Legal & General Group and Reckitt Benckiser Group all outperformed and provided examples of companies which are able to grow their dividend following positive earnings growth. We believe these are attractive and valuable attributes in a world where interest rates and inflation remain at historically low levels. In the turnaround part of the portfolio, Rentokil Initial contributed positively as management have begun to improve cash flow, restructure the business and reduce costs. In particular the US business continues to perform well, although growth in the European businesses remains weak due to the poor economic growth in France and Belgium. The main detractors from performance included electronic control and process product manufacturer Spectris, following earnings disappointment, due to weakness in demand from the mining sector combined with sterling strength. Tate & Lyle fell following greater price competition in its Splenda sweetener business coupled with an announcement that supply problems at a Singapore factory would also impact earnings. Portfolio Activity During the year the Company added exposure to high quality franchise companies with new purchases in Prudential, AstraZeneca and Next and added to the holding in Reckitt Benckiser Group, Compass Group, Unilever and Reed Elsevier. In an environment where global economic growth remains modest, rather than positioning the portfolio for a particular macroeconomic scenario, we have been keen to build positions in companies with credible self-help potential. This is the rationale behind our recent purchases of Carnival, Burberry Group, Direct Line Insurance and Friends Life. In the free cash flow portion of the portfolio the Company sold Vodafone, Tate & Lyle, National Grid and reduced the holding in Legal & General Group whilst in the growth portion the Company, sold Barclays, Hargreaves Lansdown, Ryanair and Betfair and reduced Dixons Carphone, 3I Group and Spectris. Outlook/Strategy While the outlook for the global economy has improved in recent years, it remains fragile. Eurozone economic activity remains subdued despite an increasingly supportive policy response from the European Central Bank, whilst in the US the ending of quantitative easing is contributing to uncertainty. We continue to focus more on the specific drivers of individual companies and the ability to determine their future rather than relying on a specific macro outcome. Given that the outlook for both economic growth and interest rates remains uncertain, we seek those companies that can drive returns through self-help and have a clear strategy to deploy the cash flow they generate. The portfolio is primarily invested in high free cash flow companies that can sustain cash generation and pay a growing dividend, but also has exposure to companies with sustainable growth franchises and turnaround situations. Adam Avigdori and Mark Wharrier BlackRock Investment Management (UK) Limited 8 January 2015 Ten largest equity investments as at 31 October 2014 Royal Dutch Shell `B': 6.8% (2013: 5.1%) 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. British American Tobacco: 6.3% (2013: 5.2%) 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. HSBC Holdings: 6.3% (2013: 6.0%) 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, the Middle East and North Africa. AstraZeneca: 5.3% (2013: nil) is a global pharmaceutical company, operating in the research, development, manufacture and marketing of pharmaceutical products, including cardiovascular and metabolic disease, oncology, and respiratory, inflammation and autoimmunity. Reed Elsevier: 4.3% (2013: 3.3%) is a global provider of professional information solutions that includes publication of scientific, medical, technical and legal journals. Reed Elsevier is also the leading exhibitions and events business globally. GlaxoSmithKline: 4.2% (2013: 5.7%) 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. Wolseley: 4.1% (2013: 3.3%) 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. Imperial Tobacco Group: 3.9% (2013: 3.0%) is a leading international tobacco company that operates in over 160 countries worldwide. It manufactures, markets, and sells a portfolio of brands and products across all tobacco categories. Prudential: 3.7% (2013: nil) is a global life insurance company with businesses in the UK, US and Asia. Their businesses include the provision of health and protection insurance products in Asia, retirement products in the US, life and pensions products in the UK and an investment management business (M&G). Rio Tinto: 3.7% (2013: 3.1%) is one of the world's leading mining companies, supplying iron ore, aluminium, copper, diamonds, thermal and metallurgical coal, uranium, gold and industrial minerals (borax, titanium dioxide and salt). The group operate in over 40 countries with significant operations in Australia, South America and Africa. 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 October 2013. Together, the ten largest investments represent 48.6% of the Company's portfolio (31 October 2013: 44.4%). Distribution of investments as at 31 October 2014 ANALYSIS OF PORTFOLIO BY SECTOR % % Benchmark of investments 1 Pharmaceuticals & Biotechnology 7.8 10.3 2 Tobacco 4.5 10.2 3 Oil & Gas Producers 13.5 9.9 4 Support Services 4.5 9.8 5 Life Insurance 4.5 8.8 6 Travel & Leisure 3.7 6.5 7 Banks 11.4 6.3 8 Cash and Cash Equivalents 0.0 6.2 9 Household Goods & Home Construction 2.7 5.0 10 General Retailers 2.2 4.8 11 Media 3.2 4.3 12 Nonlife Insurance 1.1 4.0 13 Mining 6.7 3.7 14 Food Producers 0.8 3.3 15 Electronic & Electrical Equipment 0.5 2.2 16 Beverages 4.2 2.0 17 Financial Services 2.3 1.4 18 Personal Goods 1.9 1.3 Total 100.0 INVESTMENT SIZE Number % of Investments of Portfolio Below £1m 20 29.4 £1m to £2m 10 35.5 £2m to £3m 5 28.3 £3m to £4m 1 6.8 Total 36 100.0 Source: BlackRock Investments as at 31 October 2014 Market % of value investments £'000 Pharmaceuticals & Biotechnology AstraZeneca 2,503 5.3 GlaxoSmithKline 1,999 4.2 Shire 387 0.8 -------- -------- 4,889 10.3 -------- -------- Tobacco British American Tobacco 2,988 6.3 Imperial Tobacco Group 1,843 3.9 -------- -------- 4,831 10.2 -------- -------- Oil & Gas Producers Royal Dutch Shell `B' 3,233 6.8 BP Group 1,441 3.1 -------- -------- 4,674 9.9 -------- -------- Support Services Wolseley 1,963 4.1 Rentokil Initial 964 2.0 Essentra 958 2.0 Howden Joinery Group 773 1.7 -------- -------- 4,658 9.8 -------- -------- Life Insurance Prudential 1,774 3.7 Legal & General Group 1,443 3.0 Friends Life 948 2.1 -------- -------- 4,165 8.8 -------- -------- Travel & Leisure Compass Group 1,277 2.7 Carnival 935 2.0 Cineworld Group 521 1.1 Patisserie Holdings 339 0.7 -------- -------- 3,072 6.5 -------- -------- Banks HSBC Holdings 2,964 6.3 -------- -------- 2,964 6.3 -------- -------- Household Goods & Home Construction Reckitt Benckiser Group 1,768 3.7 Berkeley Group Holdings 613 1.3 -------- -------- 2,381 5.0 -------- -------- General Retailers Next 953 2.0 Dixons Carphone 742 1.6 Marks & Spencer Group 561 1.2 -------- -------- 2,256 4.8 -------- -------- Media Reed Elsevier 2,023 4.3 -------- -------- 2,023 4.3 -------- -------- Non-life Insurance Direct Line Insurance 820 1.7 esure 687 1.4 Admiral Group 402 0.9 -------- -------- 1,909 4.0 -------- -------- Mining Rio Tinto 1,773 3.7 -------- -------- 1,773 3.7 -------- -------- Food Producers Unilever 1,566 3.3 -------- -------- 1,566 3.3 -------- -------- Electronic & Electrical Equipment Domino Printing Sciences 533 1.1 Spectris 498 1.1 -------- -------- 1,031 2.2 Beverages 926 2.0 Diageo -------- -------- 926 2.0 -------- -------- Financial Services 3i Group 727 1.4 -------- -------- 727 1.4 -------- -------- Personal Goods Burberry Group 621 1.3 -------- -------- 621 1.3 -------- -------- 44,466 93.8 -------- -------- Cash and Cash Equivalents BlackRock's Institutional Cash Fund 2,953 6.2 -------- -------- 2,953 6.2 -------- -------- Total Value of Securities 47,419 100.0 ======== ======== All investments are in ordinary shares unless otherwise stated. The total number of holdings as at 31 October 2014 was 36 (31 October 2013: 39). At 31 October 2014 the Company did not hold any equity interests comprising more than 3% of any company's share capital. Related party transactions BlackRock Investment Management (UK) Ltd (BIM (UK)) provided management and administrative services to the Company under a contract which was terminated with effect from 2 July 2014. BlackRock Fund Managers Limited (BFM) was appointed as the Company's AIFM with effect from 2 July 2014. BFM has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services to BIM (UK). Details of the fees payable to BIM (UK) up to 1 July 2014 and to BFM with effect from 2 July 2014 are set out in note 4. Transactions and relationship details are set out in the Directors’ Report on page 16 of the Annual Report. With effect from 1 July 2014 the Company is no longer subject to a performance related fee. Previously a performance fee was payable for the financial period based on the Company's net asset value outperformance of the benchmark. The performance fee was 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 uses 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. At the year end, £200,000 was outstanding in respect of the management fee (2013: £133,000). The investment management fee was, until 1 July 2014, paid to BIM (UK) and thereafter to BFM. No performance fee has been accrued in respect of the year ended 31 October 2014 (2013: nil). 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 October 2014 amounted to £32,000 excluding VAT (2013: nil), of which £32,000 (2013: nil) was outstanding at 31 October 2014. 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 2014 and 2013, 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. With effect from 1 November 2014, the remuneration of th Chairman increased to £28,000, the Chairman of the Audit Committee increased to £22,500 and the other Directors to £19,000. At 31 October 2014, the Directors’ interests in the Company’s Ordinary Shares were as follows: 2014 2013 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 155,500 shares. Statement of Directors' Responsibilities in respect of the Annual Report and Financial Statements 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 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 Corporate Governance Statement and the Report of the Audit 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 Investment 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 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 is set out in the Audit Committee's report on pages 28 to 30 of the Annual Report. As a result, the Board has concluded that the Annual Report for the year ended 31 October 2014, 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 8 January 2015 Financial statements Income statement for the year ended 31 October 2014 Notes Revenue Revenue Capital Capital Total Total 2014 2013 2014 2013 2014 2013 £'000 £'000 £'000 £'000 £'000 £'000 Gains on investments at fair value through profit or loss - - 1,485 5,297 1,485 5,297 Income from investments at fair value through profit or loss 3 1,881 1,880 - - 1,881 1,880 Investment management fee 4 (67) (64) (201) (192) (268) (256) Other operating expenses 5 (283) (229) (4) (16) (287) (245) Net return before finance costs and taxation 1,531 1,587 1,280 5,089 2,811 6,676 -------- -------- -------- -------- -------- -------- Finance costs 6 (7) (11) (22) (32) (29) (43) Return on ordinary activities before taxation 1,524 1,576 1,258 5,057 2,782 6,633 -------- -------- -------- -------- -------- -------- Taxation - - - - - - ======== ======== ======== ======== ======== ======== Return on ordinary activities after taxation 8 1,524 1,576 1,258 5,057 2,782 6,633 ======== ======== ======== ======== ======== ======== Return per ordinary share 8 5.66p 5.63p 4.67p 18.09p 10.33p 23.72p ======== ======== ======== ======== ======== ======== 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. All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year. Financial statements Reconciliation of movements in shareholders' funds for the year ended 31 October 2014 Notes 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 2014 At 31 October 2013 329 14,819 220 24,846 3,140 2,137 45,491 Return for the year - - - - 1,258 1,524 2,782 Shares purchased to be held in treasury - - - (1,540) - - (1,540) Dividends paid* 7 - - - - - (1,539) (1,539) -------- -------- -------- -------- -------- -------- -------- At 31 October 2014 329 14,819 220 23,306 4,398 2,122 45,194 -------- -------- -------- -------- -------- -------- -------- 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 Shares purchased to be held in treasury - - - (1,555) - - (1,555) Dividends paid** 7 - - - - - (1,534) (1,534) -------- -------- -------- -------- -------- -------- -------- At 31 October 2013 329 14,819 220 24,846 3,140 2,137 45,491 ======== ======== ======== ======== ======== ======== ======== * Final dividend of 3.50p per share for the year ended 31 October 2013, declared on 20 December 2013 and paid on 7 March 2014, and the interim dividend of 2.20p per share for the six months ended 30 April 2014, declared on 25 June 2014 and paid on 5 September 2014. ** 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. Balance sheet as at 31 October 2014 Notes 2014 2013 £'000 £'000 Fixed assets Investments held at fair value through profit or loss 47,419 46,396 -------- -------- Current assets Debtors 103 2,322 Cash at bank 110 278 -------- -------- 213 2,600 -------- -------- Creditors - amounts falling due within one year Bank loan (2,000) (2,000) -------- -------- Other creditors (438) (1,505) -------- -------- (2,438) (3,505) -------- -------- Net current liabilities (2,225) (905) -------- -------- Net assets 45,194 45,491 ======== ======== Capital and reserves Called-up share capital 9 329 329 Share premium account 10 14,819 14,819 Capital redemption reserve 10 220 220 Special reserve 23,306 24,846 Capital reserves 10 4,398 3,140 Revenue reserve 2,122 2,137 -------- -------- Total equity shareholders' funds 8 45,194 45,491 ======== ======== Net asset value per ordinary share 8 170.68p 166.03p ======== ======== Cash flow statement for the year ended 31 October 2014 Notes 2014 2013 £'000 £'000 Net cash inflow from operating activities 5(b) 1,220 1,683 Returns on investment and servicing of finance -------- -------- Interest paid (29) (56) Capital expenditure and financial investment Purchases of investments (50,125) (61,831) Proceeds from sales of investments 51,845 63,470 -------- -------- Net cash inflow from capital expenditure and financial investment 1,720 1,639 Equity dividends paid 7 (1,539) (1,534) -------- -------- Net cash inflow before financing 1,372 1,732 Financing Repurchase of ordinary shares (1,540) (1,555) Repayment of bank loan (2,000) (2,000) Drawdown of bank loan 2,000 2,000 -------- -------- Net cash outflow from financing (1,540) (1,555) ======== ======== (Decrease)/increase in cash in the year (168) 177 ======== ======== Notes to the financial statements 1. Principal Activity 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 reflect better 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. (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 on pages 6 to 8 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 46 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; and * prior to 1 July 2014, performance fees were allocated 100% to the capital column of the Income Statement, as performance was predominantly generated through capital returns from 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 nondiscounted 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 the 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 of the 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 2014 2013 £'000 £'000 Investment income: Franked UK listed dividends 1,841 1,778 -------- -------- Unfranked equity income from UK investments - 66 -------- -------- Overseas listed dividends 18 36 -------- -------- Underwriting commission 22 - -------- -------- Total income 1,881 1,880 ======== ======== 4. Investment management and performance fees 2014 2013 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Investment management fee 67 201 268 64 192 256 -------- -------- -------- -------- -------- -------- 67 201 268 64 192 256 ======== ======== ======== ======== ======== ======== BlackRock Investment Management (UK) Limited (BIM (UK)) was appointed as Investment Manager and Company Secretary on 1 April 2012. BIM (UK) provided management and administrative services to the Company under a contract which was terminated with effect from 2 July 2014. BlackRock Fund Managers Limited (BFM) was appointed as the Company’s AIFM with effect from 2 July 2014. BIM (UK) continues to act as the Company’s Investment Manager under a delegation agreement with BFM. Under the terms of the investment management agreement with BFM, BFM is entitled to a base fee of 0.60% per annum of the Company’s market capitalisation. There is no additional fee for company secretarial and administration services. With effect from 1 July 2014 the Company is no longer subject to a performance related fee. Previously a performance fee was payable for the financial period based on the Company’s net asset value outperformance of the benchmark. The performance fee was 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 uses 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. At the year end, £200,000 was outstanding in respect of the management fee (2013: £133,000). The investment management fee was, until 1 July 2014, paid to BIM (UK) and thereafter to BFM. No performance fee has been accrued in respect of the year ended 31 October 2014 (2013: nil). 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 October 2014 amounted to £32,000 excluding VAT (2013: nil), of which £32,000 (2013: nil) was outstanding at 31 October 2014. 5. Other operating expenses 2014 2013 £'000 £'000 (a) Operating expenses Custody fee 1 2 Auditor's remuneration: - statutory audit 21 21 Depositary fee 2 - Directors' emoluments 79 79 Other operating expenses 180 127 -------- -------- 283 229 In addition to the above, custodian handling charges of £4,000 (2013: £16,000) were charged to capital. The Company's ongoing charges, calculated as a percentage of average net assets and using expenses, excluding performance fees and interest costs, after relief for any taxation was: 1.2% 1.1% 2014 2013 £'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 2,811 6,676 Capital return before finance costs and taxation (1,280) (5,089) Net revenue return before finance costs and taxation 1,531 1,587 Expenses charged to capital (205) (208) Special dividends credited to capital - 38 (Increase)/decrease in debtors (47) 52 (Decrease)/increase in creditors (59) 214 -------- -------- Net cash inflow from operating activites 1,220 1,683 6. Finance costs 2014 2013 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Interest payable - bank overdraft - - - 1 - 1 Interest payable - sterling bank loan 7 22 29 10 32 42 -------- -------- -------- -------- -------- -------- 7 22 29 11 32 43 ======== ======== ======== ======== ======== ========= 7. Dividends on ordinary shares Dividends paid on equity shares: 2014 2013 £'000 £'000 Final dividend of 3.50p per ordinary share paid 7 March 2014 (2013: 3.45p paid 8 March 2013) 952 979 Interim dividend of 2.20p per ordinary share paid 5 September 2014 (2013: 2.00p paid 6 September 2013) 587 555 -------- -------- 1,539 1,534 ======== ======== The Directors have proposed a final dividend of 3.50 p per share in respect of the year ended 31 October 2014. The proposed final dividend will be paid, subject to shareholders' approval, on 6 March 2015 to shareholders on the Company's register on 13 February 2015. 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. Dividends paid or proposed on equity shares: 2014 2013 £'000 £'000 Interim paid 2.20p per ordinary share paid 6 September 2014 (2013: 2.00p) 587 555 Final proposed 3.50 p* payable 6 March 2015 (2014: 3.50p) 927 952 -------- -------- 1,514 1,507 ======== ======== * Based upon 26,479,268 ordinary shares (excluding treasury shares) in issue on 8 January 2015. 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. 8. Return per ordinary share Revenue and capital returns per share are shown below and have been calculated using the following: 2014 2013 Net revenue return attributable to ordinary shareholders (£'000) 1,524 1,576 Net capital return attributable to ordinary shareholders(£'000) 1,258 5,057 -------- -------- Total return (£'000) 2,782 6,633 -------- -------- Equity shareholders' funds (£'000) 45,194 45,491 -------- -------- The weighted average number of ordinary shares in issue during each year, on which the return per ordinary share was calculated was: 26,924,569 27,958,747 ========== ========== The actual number of ordinary shares in issue at the end of each year, on which the net asset value was calculated was: 26,479,268 27,399,268 ========== ========== 2014 2013 Revenue Capital Total Revenue Capital Total p p p p p p Return per share Calculated on weighted average number of shares 5.66 4.67 10.33 5.63 18.09 23.72 Net asset value per share (debt at par value) 170.68* 166.03** -------- -------- Ordinary share price 167.25 164.50 ======== ======== * The net asset value is based on 26,479,268 ordinary shares in issue. An additional 6,454,664 shares were held in treasury. ** The net asset value is based on 27,399,268 ordinary shares in issue. An additional 5,534,664 shares were held in treasury. 9. 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 2013 27,399,268 5,534,664 32,933,932 329 Shares purchased and held in treasury (920,000) 920,000 - - -------- -------- -------- -------- At 31 October 2014 26,479,268 6,454,664 32,933,932 329 ======== ======== ======== ======== During the year 920,000 ordinary shares were purchased and placed in treasury (2013: 980,000 were purchased and placed in treasury) for a total consideration of £1,540,000. No shares were cancelled from treasury during the year. (2013:nil). 10. Share premium account and reserves Capital reserves Share Capital arising arising premium redemption on on account reserve investments revaluation £'000 £'000 sold of £'000 investments held £'000 At 1 November 2013 14,819 220 (210) 3,350 -------- -------- -------- -------- Movement during the year: -------- -------- -------- -------- Gains on realisation of investments - - 2,190 - -------- -------- -------- -------- Movement in investment holding gains - - - (705) -------- -------- -------- -------- Finance costs, investment management and performance fees charged to capital after taxation - - (227) - -------- -------- -------- -------- At 31 October 2014 14,819 220 1,753 2,645 ======== ======== ======== ======== 11. CONTINGENT LIABILITIES There were no contingent liabilities at 31 October 2014 (2013: 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 2014 Annual Report and Financial Statements will be filed with the Registrar of Companies shortly. The report of the auditor for the year ended 31 October 2014 contains no qualification or statement under Section 498(2) or (3) of the Companies Act 2006. This announcement was approved by the Board of Directors on 8 January 2015. 13. Annual Report Copies of the Annual Report will be sent to members shortly and will be available from the registered office c/o The Company Secretary, BlackRock Income & Growth Investment Trust plc, 12 Throgmorton Avenue, London EC2N 2DL. 14. Annual General Meeting The Annual General Meeting of the Company will be held at 12 Thorgmorton Avenue, London EC2N 2DL on Wednesday, 25 February 2015 at 12.00 noon. ENDS The Annual Report will also be available on the BlackRock website at blackrock.co.uk/brig. 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 Julia Wennstrom, Media Relations, BlackRock Investment Management (UK) Limited Tel: 020 7743 4142 8 January 2015 12 Throgmorton Avenue London EC2N 2DL

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