Annual Financial Report

BlackRock Income & Growth Investment Trust plc
LEI:  5493003YBY59H9EJLJ16

Annual results announcement
for the year ended 31 October 2017
 

FINANCIAL HIGHLIGHTS

	As at 31 October 2017	As at 31 October 2016	Change
Assets
Net asset value per ordinary share	209.96p	190.53p	+10.2
– with income reinvested*			+13.8
Ordinary share price (mid-market)	205.50p	185.00p	+11.1
– with income reinvested*			+14.8
FTSE All-Share Index (total return)**	7,051.23	6,218.71	+13.4
Net assets (£’000)***	51,680	48,307	+7.0
Discount to net asset value	2.1%	2.9%
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*          Net asset value and share price performance include the dividend reinvestments.
**         The benchmark index.
***        The change in net assets reflects the market movements during the year and the purchase of the Company’s own shares.

Further information in relation to the calculations in the table above can be found in the Glossary on page 75 of the Annual Report and Financial Statements.

	Year ended 31 October 2017	Year ended 31 October 2016	Change
Revenue
Revenue profit per ordinary share	6.63p	6.93p	-4.3
Net profit after taxation (£’000)	1,668	1,803	-7.5
Dividends per ordinary share
Interim	2.50p	2.40p	+4.2
Final	4.10p	3.90p	+5.1
	------------------	------------------	------------------
Total dividends paid and payable	6.60p	6.30p	+4.8
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CHAIRMAN’S STATEMENT

I am pleased to present the annual report and financial statements of BlackRock Income and Growth Investment Trust plc for the year ended 31 October 2017.

PERFORMANCE
During the year the Company’s Net Asset Value per share (NAV) returned 13.8% and the share price returned 14.8%. By comparison, the Company’s benchmark, the FTSE All-Share Index, returned 13.4% (all percentages are in sterling with income reinvested). It is encouraging that the portfolio managers outperformed the benchmark in a rising market and generated a strong absolute return for shareholders over the period.

The portfolio’s overweight exposure to consumer services and industrial stocks contributed to overall performance. These sectors performed strongly during the year although these gains were offset by disappointing returns from BT and Provident Financial, whose shares fell sharply this year and the portfolio’s underweight exposure to the mining sector, where our managers remain cautious about the medium term outlook. A more detailed commentary on the portfolio’s performance, its positioning, and the outlook for the coming year can be found in the Investment Managers’ report.

With an investment objective to provide growth in capital and income over the longer term, it is important to consider the Company’s NAV and share price performance against its benchmark over a period of more than one year. Taking the three year period to 31 October 2017, NAV and share price returns have been 35.8% and 35.9% respectively against the FTSE All-Share Index return of 31.0%.

REVENUE RETURN AND DIVIDENDS
The Company’s revenue return per share for the year to 31 October 2017 amounted to 6.63 pence compared with 6.93 pence for the previous year.

An interim dividend of 2.50 pence per share (2016: 2.40 pence) was distributed to shareholders on 1 September 2017. The Directors are mindful of shareholders’ desire for income in addition to capital growth and are proposing a final dividend per share of 4.10 pence (2016: 3.90 pence) giving total dividends for the year of 6.60 pence per share. This represents a 4.8% increase over the prior year (2016: 6.30 pence per share). Subject to approval at the Annual General Meeting, the final dividend will be paid on 9 March 2018 to shareholders on the Company’s register at the close of business on 2 February 2018 (ex-dividend date is 1 February 2018).

INVESTMENT MANAGEMENT ARRANGEMENT
On 5 July 2017 the Company announced that the portfolio’s Co-Manager, Mark Wharrier, had left BlackRock to pursue other opportunities. The Board would like to take this opportunity to express their thanks to Mark for his contribution to the Company since his appointment in 2013. Mr Wharrier was replaced by David Goldman – an experienced, senior director within the BlackRock UK equity team – who was appointed Co-Manager alongside the existing Co-Manager, Adam Avigdori, with effect from 5 July 2017. The Board welcomes David’s appointment and looks forward to a continuation of its strategy.

POLICY ON SHARE PRICE DISCOUNT
The Directors recognise the importance to investors that the Company’s share price should not trade at a significant discount to NAV, and therefore, in normal market conditions, may 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.

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 2018 Annual General Meeting and a resolution will be put to shareholders to renew the authority at that meeting. Currently, ordinary shares representing up to 35% of the Company’s issued ordinary share capital can be allotted as new ordinary shares or sold from treasury. It is proposed to renew this authority at the forthcoming Annual General Meeting.

During the year, a total of 740,000 ordinary shares were purchased at an average price of 201.30 pence per share, for a total consideration of £1,488,000. These shares were placed in treasury for potential reissue, thereby saving the associated costs of an issue of new shares if demand arises. No shares were issued or sold from treasury this year. Subsequent to the year end, a further 220,000 ordinary shares have been purchased.

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 3.3% and at 31 October 2017 net gearing was 2.9%. The Company has in place a borrowing facility of up to £4 million, provided by ING Luxembourg S.A. The Company has drawn down on the facility in the sum of £2 million and maintained this level throughout the year.

OUTLOOK
In his Autumn Budget, the Chancellor of the Exchequer announced that UK GDP had remained resilient overall, although UK productivity, consumption and investment growth had fallen. The Office of Budget Responsibility has revised its UK growth forecasts for the coming year down to 1.5%. However, overall growth is expected to remain positive and unemployment in the UK is now at its lowest rate since 1975. The rate of inflation has now reached 3.1%, but is expected to fall towards the Bank of England’s 2% target over the medium term.

There remain risks associated with the UK’s exit from the European Union (‘EU’) although, at the time of writing, there are indications that the UK Government may have reached agreement with the EU on the quantum of the Brexit “bill” and is able to move forward to discuss matters of trade. The delay in reaching this position has negatively impacted the UK economy and a resolution should allow both sides to progress on to the important topic of trade negotiations. This development should be positive for the UK economy, although there remains substantial uncertainty on how the Brexit process will play out and its ultimate impact on the UK economy, particularly the UK financial services sector. In this context it is worth remembering that the UK equity market derives well over two thirds of its revenues from currencies other than sterling and for our largest companies the principal driver of future returns will be events in the global rather than domestic economy.

As you will read in their report which follows, the investment managers have become increasingly selective in terms of their UK domestic exposure given their belief that pressure on the UK consumer will increase. As a consequence, they have been adjusting the portfolio, which is now slightly more defensively positioned. However, they continue to find opportunities in the UK market, introducing new stocks to the portfolio which they believe can take advantage of the changing economic landscape. Their fundamental approach has not changed and they continue to seek to identify companies with robust business models, strong cash flows and favourable industry characteristics, which are led by management teams capable of ‘self-help’. The focus remains on bottom-up stock selection, assembling a portfolio of individual companies which, taken as a whole, should prove capable of growing the Company’s revenue and supporting dividend growth into the future. Your Board is fully supportive of this approach.

CONTINUATION VOTE
The Company’s Articles of Association provide for an ordinary resolution for the continuation of the Company as an investment trust to be proposed at every fifth Annual General Meeting and therefore an Ordinary resolution will be put to shareholders at the forthcoming AGM to be held at 12.00 noon on Wednesday, 7 March 2018. The Board has considered the Company’s investment strategy and objective and the ongoing viability of the Company over the next five years. It has also consulted with major shareholders on the appropriateness of the Company’s offering in its current form. The Board believes that the Company’s offering remains compelling, providing shareholders with growth in both capital and income over the longer term. The Board therefore unanimously recommends that shareholders vote in favour of the continuation of the Company in its current form.

ANNUAL GENERAL MEETING
The Company’s Annual General Meeting will be held on Wednesday, 7 March 2018 at 12.00 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 71 to 74 of the Annual Report and Financial Statements. The Investment Manager will make a presentation to shareholders on the Company’s progress and the outlook for the year ahead.

JONATHAN CARTWRIGHT
Chairman
20 December 2017

STRATEGIC REPORT

The Directors present the Strategic Report of the Company for the year ended 31 October 2017.

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.

BUSINESS AND MANAGEMENT OF THE COMPANY
BlackRock Income and Growth Investment Trust plc is an investment trust company that has a premium listing on the London Stock Exchange. Its principal activity is portfolio investment. Investment trusts, like unit trusts and OEICs, are pooled investment vehicles which allow exposure to a diversified range of assets through a single investment, thus spreading, although not eliminating investment risk.

Investment trusts, unlike unit trusts and OEICs, have the ability to borrow for investment purposes and to manage dividend distributions through revenue reserves. They also enjoy, unlike unit trusts, the benefit of continuous dealing during market hours.

The Company is an Alternative Investment Fund in accordance with the Alternative Investment Fund Managers Directive (AIFMD). BlackRock Fund Managers Limited (the Manager) is the Company’s Alternative Investment Fund Manager. The management of the investment portfolio and the administration of the Company have been contractually delegated to the Manager. The Manager, operating under guidelines determined by the Board, has direct responsibility for decisions relating to the running of the Company and is accountable to the Board for the investment, financial and operating performance of the Company.

The Company delegates fund accounting services to BlackRock Investment Management (UK) Limited (BIM (UK) or the Investment Manager), which in turn sub-delegates these services to the Fund Accountant, The Bank of New York Mellon (International) Limited and also sub-delegates registration services to the Registrar, Computershare Investor Services PLC. Other service providers include the Depositary, The Bank of New York Mellon (International) Limited. Prior to 1 November 2017, the entity appointed as the Company’s Depository was BNY Mellon Trust & Depositary (UK) Limited. Details of the contractual terms with these service providers are set out in the Directors’ Report on pages 21 to 25 of the Annual Report and Financial Statements.

BUSINESS MODEL
The Company invests in accordance with the investment objective. The Board is collectively responsible to shareholders for the long term success of the Company and is its governing body. There is a clear division of responsibility between the Board and the Manager. Matters reserved for the Board include setting the Company’s strategy, including its investment objective and policy, setting limits on gearing, capital structure, governance, and appointing and monitoring the performance of service providers, including the Manager.

The Company’s business model follows that of an externally managed investment trust, therefore the Company does not have any employees and outsources its activities to third party service providers, including the Manager which is the principal service provider.

INVESTMENT STRATEGY AND 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, 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 (the 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 can be made to the investment policy without the approval of shareholders by ordinary resolution.

INVESTMENT APPROACH AND PROCESS
In assembling the Company’s portfolio, a relatively concentrated approach to investment is adopted to ensure that the fund manager’s best ideas contribute significantly to returns. We believe that it is the role of the portfolio overall to achieve a premium level of yield rather than every individual company within it. This gives 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, the returns will vary, sometimes significantly from those of the Index. Over longer periods the objective is to achieve returns greater than the Index.

The foundation of the portfolio, approximately 70% by value, 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, the investment managers seek to identify and invest 20% by value of the portfolio in ‘growth’ companies that have significant barriers to entry and scalable business models that enable them to grow consistently. Turnaround companies are also sought, at around 10% by value, which represent those companies that are out of favour by the market, facing temporary challenges with high yields/very low valuations, but with recovery potential. The return from this segment is expected to contribute meaningfully to returns over time.

GEARING AND BORROWINGS
The appropriate use of gearing can add value and the Company may, from time to time, use borrowings to achieve this. The Board is responsible for the level of gearing in the Company and reviews the position at every meeting. 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. Any borrowing, except for short term liquidity purposes, is used for investment purposes or to fund the purchase of the Company’s own shares.

The Company has entered into a two year unsecured sterling revolving credit facility of £4 million, provided by ING Luxembourg S.A. which is due to expire on 31 October 2018. At the date of this report the existing facility is drawn down by £2 million.

PERFORMANCE
Details of the Company’s performance for the year are given in the Chairman’s Statement. The Investment Manager’s report includes a review of the main developments during the year, together with information on investment activity within the Company’s portfolio.

RESULTS AND DIVIDENDS
The Company’s revenue earnings for the year amounted to 6.63p per share (2016: 6.93p per share). Details of dividends paid and declared in respect of the year are set out in the Chairman’s Statement.

KEY PERFORMANCE INDICATORS

A number of performance indicators (KPIs) are used to monitor and assess the Company’s success in achieving its objectives and to measure its progress and performance.

The principal KPIs are described below:

Performance against the benchmark
The performance of the portfolio together with the performance of the Company’s net asset value and share price are reviewed at each Board meeting and compared to the return of the Company’s benchmark, the FTSE All-Share Index.

Premium/discount to NAV
At each meeting the Board monitors the level of the Company’s premium or discount to NAV and considers strategies for managing any premium or discount. Further details of the discount policy are provided on page 4 of the Annual Report and Financial Statements. In the year to 31 October 2017, the Company’s share price to NAV traded in the range of a premium of 0.1% to a discount of 6.2%, both on a cum income basis. The Company bought back a total of 740,000 ordinary shares during the year at an average discount of 2.8% and an average price of 201.30p per share.

The total consideration (including costs) was £1,488,000. A further 220,000 ordinary shares have been bought back since the year end for a total consideration of £442,000. No shares were issued or sold from treasury.

Ongoing charges
The ongoing charges represent the Company’s management fee and all other recurring operating and investment management expenses, excluding finance costs, expressed as a percentage of average net assets.

The Board reviews the ongoing charges and monitors the expenses incurred by the Company at each meeting. The Board also compares the level of ongoing charges against those of its peers.

Performance
The Board also regularly reviews the Company’s performance attribution analysis to understand how performance was achieved. This provides an understanding of how components such as sector exposure, stock selection and asset allocation impact performance.

The table below provides performance information for the current and prior year. Further details are provided in the Investment Manager’s Report.

	Year ended 31 October 2017	Year ended 31 October 2016
NAV per share1	209.96p	190.53p
Share price2	205.50p	185.00p
Change in benchmark index3	13.4%	12.2%
Discount to net asset value	2.1%	2.9%
Revenue return per share	6.63p	6.93p
Ongoing charges4	1.08%	1.00%
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1          Calculated with income reinvested in accordance with AIC guidelines.
2          Calculated on a mid to mid-market share price basis with income reinvested.
3          FTSE All-Share Index (total return).
4          Ongoing charges represent the Company’s management fee and all other recurring operating and investment management expenses, excluding finance costs, expressed as a percentage of average net assets.

Performance against the Company’s peers
Whilst the principal objective is to achieve growth in capital and income relative to the benchmark, the Board also monitors performance relative to a range of competitor funds, particularly those also within the AIC UK Equity Income sector.

PRINCIPAL RISKS

The Company is exposed to a variety of risks and uncertainties. The Board has in place a robust process to identify, assess and monitor the principal risks of the Company. A core element of this process is the Company’s risk register which identifies the risks facing the Company and assesses the likelihood and potential impact of each risk and the controls established for mitigation. A residual risk rating is then calculated for each risk. The risk register is regularly reviewed and the risks reassessed. The risk environment in which the Company operates is also monitored and regularly appraised. New risks are also added to the register as they are identified which ensures that the document continues to be an effective risk management tool.

The risk register, its method of preparation and the operation of key controls in the Manager’s and third party service providers systems of internal control are reviewed on a regular basis by the Audit Committee. In order to gain a more comprehensive understanding of the Manager’s and other third party service providers’ risk management processes and how these apply to the Company’s business, the Audit Committee periodically receives presentations from BlackRock’s Internal Audit and Risk & Quantitative Analysis functions. The Audit Committee also reviews Service Organisation Control (SOC 1) reports from the Company’s service providers.

As required by the UK Corporate Governance Code (2016 Code), the Board has undertaken a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. Those principal risks have been described in the table below, together with an explanation of how they are managed and mitigated. The Board will continue to assess these risks on an ongoing basis.

The current risk register includes a range of risks which are categorised under the following headings:

• investment performance;

• income/dividend;

• gearing;

• legal and regulatory compliance;

• operational;

• market; and

• financial .

Principal Risk	Mitigation/Control
Investment performance
The Board is responsible for: •     setting the investment strategy to fulfil the Company’s       objective; and •     monitoring the performance of the Investment       Manager and the implementation of the investment        strategy. An inappropriate investment strategy may lead to: •     poor performance compared to the Benchmark Index        and the Company’s peer group; •     a widening discount to NAV; •     a reduction or permanent loss of capital; and •     dissatisfied shareholders and reputational damage.	To manage this risk the Board: •     regularly reviews the Company’s investment mandate       and long term strategy; •     is required to provide prior consent to the use of        derivatives and exchange traded funds; •     has set investment restrictions and guidelines which        the Investment Manager monitors and regularly        reports on; •     reviews changes in gearing and the rationale for the        composition of the investment portfolio; •     monitors the maintenance of an adequate spread of        investments in order to minimise the risks associated        with factors specific to particular sectors, based on the        diversification requirements inherent in the investment        policy; and •     monitors the discount to NAV and use of the granted        buyback powers.
Income/Dividend
The amount of dividends and future dividend growth will depend on the Company’s underlying portfolio. Changes in the composition of the portfolio, any change in the tax treatment of the dividends or interest received by the Company may alter 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. The Company also has a revenue reserve and powers to pay dividends from capital which could potentially be used to support the Company’s dividend if required.
Gearing
The Company’s investment strategy may involve the use of gearing to enhance investment returns. Gearing may be generated through borrowing money or increasing levels of market exposure through the use of derivatives. The Company currently has an unsecured revolving credit facility with ING Luxembourg S.A. The use of gearing exposes the Company to the risks associated with borrowing. Gearing provides an opportunity for greater returns where the return on the Company’s underlying assets exceeds the cost of borrowing. It is likely to have the opposite effect where the return on the underlying assets is below the cost of borrowings. Consequently, the use of borrowings by the Company may increase the volatility of the NAV.	To manage this risk the Board has limited gearing, including borrowings and gearing through the use of derivatives, to 20% of NAV at the time of investment, drawdown or participation. The Investment Manager will only use gearing when confident that market conditions and opportunities exist to enhance investment returns.
Legal and Regulatory Compliance
The Company has been accepted by HM Revenue & Customs as an investment trust, subject to meeting the relevant eligibility conditions and operating as an investment trust in accordance with sections 1158 and 1159 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. Any breach of the relevant eligibility conditions could lead to the Company losing investment trust status and being subject to corporation tax on capital gains realised within the Company’s portfolio. The Company is required to comply with the provisions of the Companies Act 2006, the Alternative Investment Fund Managers Directive, the Market Abuse regulations, the UK Listing Rules and the FCA’s Disclosure & Transparency Rules. Any serious breach could result in the Company and/or the Directors being fined or the subject of criminal proceedings or the suspension of the Company’s shares which would in turn lead to a breach of the Corporation Tax Act 2010.	Compliance with the accounting rules affecting investment trusts are regularly monitored. 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. The results are reported to the Board at each meeting. The Company Secretary and the Company’s professional advisers provide regular reports to the Board in respect of compliance with all applicable rules and regulation. Following authorisation under the Alternative Investment Fund Managers’ Directive (AIFMD), the Company and its appointed Alternative Investment Fund Manager (AIFM) are subject to the risks that the requirements of this Directive are not correctly complied with. The Board and the AIFM also monitor changes in government policy and legislation which may have an impact on the Company. The Market Abuse regulation came into force across the EU on 3 July 2016. The Board has taken steps to ensure that individual Directors (and their Persons Closely Associated) are aware of their obligations under the regulation and has updated internal processes, where necessary, to ensure the risk of non-compliance is effectively mitigated.
Operational
The Company relies on the services provided by third parties. Accordingly, it is dependent on the control systems of the Manager, and the Bank of New York Mellon (International) Limited (the Fund Accountant, Depositary and Custodian), who maintain the Company’s assets, dealing procedures and accounting records. The security of the Company’s assets, dealing procedures, accounting records and adherence to regulatory and legal requirements depend on the effective operation of the systems of these third party service providers. Disruption to the accounting, payment systems or custody records, as a result of a cyber-attack or otherwise, could prevent the accurate reporting and monitoring of the Company’s financial position.	Due diligence is undertaken before contracts are entered into with third party service providers. Thereafter, the performance of the provider is subject to regular review and reported to the Board. The Bank of New York Mellon's and the BlackRock’s internal control processes are regularly tested and monitored throughout the year and are evidenced through their Service Organisation Control (SOC 1) reports, which are subject to review by an Independent Service Assurance Auditor. The SOC 1 reports provide assurance in respect of the effective operation of internal controls. These reports are regularly reviewed by the Audit Committee. The Company’s assets are subject to a strict liability regime and in the event of a loss of assets, the Depositary must return assets of an identical type or the corresponding amount, unless able to demonstrate the loss was a result of an event beyond its reasonable control. The Board reviews the overall performance of the Manager, Investment Manager and all other third party service providers on a regular basis and compliance with the Investment Management Agreement regularly. The Board also considers the business continuity arrangements of the Company’s key service providers.
Market
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 at a time of negative market movements. There is also the potential for the Company to suffer loss through holding investments in a period of negative market movements.	The Board considers the diversification of the portfolio, 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
The Company’s investment activities expose it to a variety of financial risks that include interest rate risk.	Details of these risks are disclosed in note 16 to the financial statements, together with a summary of the policies for managing these risks.

VIABILITY STATEMENT
In accordance with provision C.2.2 of the UK Corporate Governance Code, the Directors have assessed the prospects of the Company over a longer period than the 12 months referred to by the ‘Going Concern’ guidelines.

The Board conducted this review for the period up to the AGM in 2023, being a five year period from the date that this annual report will be approved by Shareholders. This period has been selected as it is aligned to the Company’s objective of achieving long-term growth in capital and income. In making this assessment the Board has considered the following factors:

• the Company’s principal risks as set out above;

• the ongoing relevance of the Company’s investment objective in the current environment; and

• the level of demand for the Company’s shares.

The Company is required to undertake a continuation vote in 2018 and has also reviewed the potential impact that this may have on the Company’s viability. Particular consideration has been given to the following:

• good communication with major shareholders; at the present time there has been no indication that the continuation vote would not be successful; and

• at the close of business on 19 December 2017, the Company’s shares were trading at a discount to NAV of 4.1%.

Having considered the above factors, the Board believes that the scheduled continuation vote does not have a detrimental impact on the Company’s viability.

The Board has also considered a number of financial metrics in its assessment, including:

• the level of ongoing charges, both current and historical;

• the level at which the shares trade relative to NAV;

• the level of income generated;

• future income forecasts; and

• the liquidity of the portfolio.

The Board has concluded that the Company would be able to meet its ongoing operating costs as they fall due as a consequence of:

• a liquid portfolio; and

• overheads which comprise a small percentage of net assets.

Therefore, the Board has concluded that even in exceptionally stressed operating conditions, the Company would comfortably be able to meet its ongoing operating costs as they fall due.

However, investment companies may face other challenges. These include regulatory changes, changes to the tax treatment of Investment Trusts, a significant decrease in size due to substantial share buy back activity, which may result in the Company no longer being of sufficient market capitalisation to represent a viable investment proposition or no longer being able to continue in operation.

The Board has also considered the current and potential impact on the Company of the UK’s decision to leave the European Union. It has concluded that the Company’s business model and strategy are not threatened by this event and therefore it does not believe that it represents a principal risk to the Company.

In reaching this conclusion the Board considered whether this event has, or would be likely to have, a significant impact on the Company’s activities and whether or not the Investment Manager would be materially impeded in achieving its investment objectives as a result of the impact of the leave vote.

The Board also considered the impact of potential changes in law, regulation, foreign exchange, taxation and other potential political developments. However, due to the complexity and general lack of information available at present, it is challenging to assess accurately the future impact of UK’s exit from the European Union. Therefore, the Board intends to monitor closely the situation as it develops and will regularly reappraise its position.

Based on the results of their analysis, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment.

FUTURE PROSPECTS
The Board’s main focus is 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.

EMPLOYEES, SOCIAL, COMMUNITY AND HUMAN RIGHTS ISSUES
The Company has no employees and all of its Directors are non-executive, therefore, there are no disclosures to be made in respect of employees.

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 33 of the Annual Report and Financial Statements.

MODERN SLAVERY ACT
As an investment vehicle the Company does not provide goods or services in the normal course of business, and does not have customers. Accordingly, the Directors consider that the Company is not required to make any slavery or human trafficking statement under the Modern Slavery Act 2015. The Board considers the Company’s supply chain, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter.

DIRECTORS, GENDER REPRESENTATION AND EMPLOYEES
The Directors of the Company on 31 October 2017, all of whom held office throughout the year, are set out in the Governance Structure and Directors’ biographies on page 20 of the Annual Report and Financial Statements.

The Board recognises the importance of having a range of experienced Directors with the right skills and knowledge to enable it to fulfil its obligations. As at 31 October 2017, the Board consisted of four male Directors. The Company does not have any employees as stated above.

BY ORDER OF THE BOARD
KEVIN MAYGER
FOR AND ON BEHALF OF
BLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED
Company Secretary
20 December 2017

RELATED PARTY TRANSACTIONS

BlackRock Fund Managers Limited (BFM) provides management and administration services to the Company under a contract which is terminable on six months’ notice. BFM has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services, to BlackRock Investment Management (UK) Limited (BIM (UK)). Further details of the investment management contract are disclosed in the Directors’ Report on pages 21 and 22 of the Annual Report and Financial Statements.

The investment management fee is levied quarterly, based on 0.60% per annum of the Company’s market capitalisation. The investment management fee due for the year ended 31 October 2017 amounted to £297,000 (2016: £281,000). At the year end, £225,000 was outstanding in respect of the management fee (2016: £140,000).

The Company held an investment in Blackrock’s Institutional Sterling Liquidity Fund plc of £1,062,000 (2016: £1,508,000) which for the year ended 31 October 2017 has been presented in the financial statements as a cash equivalent.

In addition to the above services, BlackRock has provided the Company with marketing services. The total fees paid or payable for these services for the year ended 31 October 2017 amounted to £22,000 including VAT (2016: (£8,000)). Marketing fees of £22,000 including VAT were outstanding at 31 October 2017 (2016: £12,000).

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 2017 and 2016, the Chairman received an annual fee of £28,000, the Chairman of the Audit Committee received an annual fee of £22,500 and each of the other Directors received an annual fee of £19,000.  With effect from 1 November 2017 Directors’ fee have been increased.  The Chairman will receive a fee of £28,750, the Audit Committee Chairman will receive a fee of £23,250 and all other Directors will receive a fee of £19,750.  Directors’ fees were last increased with effect from 1 November 2014. 

Disclosures of the Directors’ interests in the ordinary shares of the Company and fees and expenses payable to the Directors are set out in the Directors’ Remuneration Report on pages 26 to 29 of the Annual Financial Report. At 31 October 2017, £7,000 (2016: £7,000) was outstanding in respect of Directors’ fees.

As at 31 October 2017 and 2016, the Directors’ interests in the Company’s ordinary shares were as follows:

	31 October	31 October
	2017	2016
J H Cartwright (Chairman)	20,000	20,000
N R Gold	20,000	20,000
G M Luckraft	–	–
C R Worsley	987,5392	987,5391

1.         Including a non-beneficial interest in 155,500 ordinary shares.
2.         Including a non-beneficial interest in 655,500 ordinary shares.

The information in the table above has been audited.

All of the holdings of the Directors and their families are beneficial, except as stated. No changes to these holdings had been notified up to the date of this report.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND FINANCIAL STATEMENTS

The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with applicable law and United Kingdom Generally Accepted Accounting Practice, including FRS 102 The Financial Reporting Standard applicable in the UK and Ireland.

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

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; 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 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 20 of the Annual Report and Financial Statements, 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 2016 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 35 to 38 of the Annual Report and Financial Statements. As a result, the Board has concluded that the Annual Report and Financial Statements for the year ended 31 October 2017, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company’s position and performance, business model and strategy.

FOR AND ON BEHALF OF THE BOARD
JONATHAN CARTWRIGHT
Chairman
20 December 2017

INVESTMENT MANAGER’S REPORT

PERFORMANCE
Over the year to 31 October 2017, the Company’s NAV rose by 13.8% and the share price by 14.8%. Over the same period, the FTSE All-Share Index returned 13.4%. (All percentages are in sterling with income reinvested).

MARKET REVIEW
Economic growth and improving corporate earnings drove global equity markets higher, with the UK market rising strongly over the reporting period. Within this we saw UK small and medium sized companies outperforming larger companies. The UK launched the process to leave the European Union. Falling unemployment alongside other positive data were sufficient for the Bank of England to raise the base rate to 0.5%. Political concerns around Europe abated somewhat following national elections in France and Germany. In the US, President Trump has been slow to enact his pro-business agenda and the US Federal Reserve implied its moves towards policy normalisation would continue as economic data remained supportive.

CONTRIBUTORS TO PERFORMANCE
The Company saw a significant performance contribution from several stock specific positives during the year. This was led by Rentokil Initial where we continue to see strong structural drivers in pest control and a favourable industry backdrop where innovation, scale and investment in technology can make a difference. Forterra, a supplier of building products for the UK construction industry, also continues to perform well and is supported by a strong dynamic for UK brick manufacturers as sterling weakness limits imports. Elsewhere in the portfolio we saw positive contributions from Premier Asset Management, Unilever and the paper and packaging business DS Smith. From a sector perspective, overweight positions in consumer services and industrials contributed to performance.

On the negative side, BT was the largest detractor from performance after the company quantified the impact of a fraud issue in Italy. In addition, the company highlighted a weaker revenue performance in parts of its UK business which will impact near term profit growth. Provident Financial shares were badly hit after a profit warning from the sub-prime lender indicated a fall in debt collection rates from 90% to 57% which led to a significant drop in profits. Other detractors from performance include Babcock, Kier Group and an underweight position to the mining sector which has performed strongly over the year. We continue to have concerns around the mining industry due to the volatility in Chinese demand and signs that the industry will need to enter into a phase of capital expenditure investment which would bring cash flow under strain.

PORTFOLIO ACTIVITY
We continue to run a flexible and concentrated portfolio with competition for capital ensuring we only hold the highest conviction positions. We are being increasingly selective with our UK domestic exposures where we have added to Derwent London and where we hold Next and Lloyds. We have sold our positions in Sky, Stagecoach, Dixons Carphone and Cineworld and have reduced positions in AstraZeneca, Unilever and RPC. We continue to find attractive investment opportunities in the UK market and have added positions in Diageo, where we see a pick-up in growth and margins, CRH, which we expect to benefit from US construction trends and Bodycote.

OUTLOOK
We see increasing pressure in the UK consumer space as rock bottom household savings are coupled with rising household debt levels. Whilst we remain cautious in this area, we certainly do not treat all companies equally. By focusing on those companies that can generate cashflow from strong business models, have strong balance sheets or scope for management driven self-help, we are able to access some of the major domestic opportunities starting to emerge.

As ever, we remain believers that over the longer-term earnings and cashflow growth tend to be the dominant driver of share prices. Where equity markets fail to recognise that, corporate buyers have the potential to exploit the opportunity. With a combination of continued sterling weakness and a low interest rate environment fuelling cheap debt, we believe that M&A activity will remain a theme for many months to come.

ADAM AVIGDORI AND DAVID GOLDMAN
BLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED
20 December 2017

TEN LARGEST INVESTMENTS AS AT 31 OCTOBER 2017

British American Tobacco: 6.3% (2016: 6.5%) is one of the world’s leading tobacco groups, with more than 200 brands in the portfolio selling in approximately 180 markets worldwide.

Lloyds Banking Group: 4.5% (2016: 3.6%) is a UK-based financial services group, providing a wide range of banking and financial services, focused on personal and commercial customers. Its main business activities are retail, commercial and corporate banking, general insurance and life insurance, pensions and investment provision.

RELX: 4.3% (2016: 4.0%) is a global provider of professional information solutions that includes publication of scientific, medical, technical and legal journals. It also has the world’s leading exhibitions, conference and events business.

Royal Dutch Shell ‘B’: 4.2% (2016: 3.7%) is an oil and gas company based in the UK. The company operates in both Upstream and Downstream industries. Upstream is engaged in searching for and recovering crude oil and natural gas, the liquefaction and transportation of gas. Downstream is engaged in manufacturing, distribution and marketing activities for oil products and chemicals.

Unilever: 4.1% (2016: 5.2%) is a global supplier of food, home and personal care products with more than 400 brands focused on health and wellbeing.

Rentokil Initial: 3.7% (2016: 3.1%) is a business services company that operates in over 60 countries globally, providing Pest Control and Hygiene services.

Ferguson (formerly Wolseley): 3.3% (2016: 2.5%) is a multi-national building materials distribution company who supply heating and plumbing supplies to professional contractors and consumers across the USA, UK, Nordics, Canada and Europe.

John Laing Group: 3.1% (2016: 3.6%) is an international originator, active investor and manager of infrastructure projects. Its business is focused on major transport, social and environmental infrastructure projects awarded under governmental public-private partnership programmes and renewable energy projects, across a range of international markets including the UK, Europe, Asia Pacific and North America.

HSBC Holdings: 3.0% (2016: 3.2%) is a multi-national banking and financial services company operating across 70 countries. The company operates within four business groups: Commercial Banking; Global Banking and Markets; Retail Banking and Wealth Management; and Global Private Banking.

BP Group: 2.8% (2016: 2.8%) is one of the world’s leading integrated oil and gas companies with involvement in all areas of the industry including exploration and production, distribution, power generation and renewable energy.

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 2016. Together, the ten largest investments represent 39.3% of total investments (ten largest investments as at 31 October 2016: 38.2%).

DISTRIBUTIONS OF INVESTMENTS AS AT 31 OCTOBER 2017

ANALYSIS OF PORTFOLIO BY SECTOR

Banks	8.9	11.1
Support Services	8.2	5.2
Pharmaceuticals & Biotechnology	7.4	7.2
Tobacco	7.2	5.8
Oil & Gas Producers	7.0	12.4
Financial Services	6.2	2.9
Media	5.9	3.3
Non-life insurance	5.9	1.1
Travel & Leisure	5.8	4.6
Construction & Materials	5.0	1.5
Food Producers	4.1	0.8
General Retailers	3.9	1.9
General Industrials	3.8	1.0
Industrial Engineering	3.2	0.8
Fixed Line Telecommunications	2.6	1.0
Beverages	2.5	2.9
Food & Drug Retailers	2.3	1.2
Mobile Telecommunications	1.9	2.5
Real Estate Investment & Services	1.8	0.4
Aerospace & Defence	1.7	1.9
Household Goods & Home Construction	1.5	3.4
Chemicals	1.4	0.7
Software & Computer Services	0.9	1.1
Real Estate Investment Trusts	0.9	2.0

Sources: BlackRock and Datastream.

INVESTMENT SIZE

	Number of Investments	% of investments by value
<£1m	21	26.7
£1m to £2m	20	49.9
£2m to £3m	4	17.1
£3m to £4m	1	6.3

Source: BlackRock.

INVESTMENTS AS AT 31 OCTOBER 2017

	Market value £’000	% of investments
Banks
Lloyds Banking Group	2,381	4.5
HSBC Holdings	1,595	3.0
Standard Chartered	779	1.4
	-------------------	-------------------
	4,755	8.9
	-------------------	-------------------
Support Services
Rentokil Initial	1,955	3.7
Ferguson (formerly Wolseley)	1,768	3.3
Babcock International	635	1.2
	-------------------	-------------------
	4,358	8.2
	-------------------	-------------------
Pharmaceuticals & Biotechnology
Shire	1,466	2.8
GlaxoSmithKline	1,368	2.6
AstraZeneca	1,086	2.0
	-------------------	-------------------
	3,920	7.4
	-------------------	-------------------
Tobacco
British American Tobacco	3,343	6.3
Imperial Brands	492	0.9
	-------------------	-------------------
	3,835	7.2
	-------------------	-------------------
Oil & Gas Producers
Royal Dutch Shell ‘B’	2,231	4.2
BP Group	1,479	2.8
	-------------------	-------------------
	3,710	7.0
	-------------------	-------------------
Financial Services
John Laing Group	1,645	3.1
Premier Asset Management Group	808	1.5
Hargreaves Lansdown	427	0.8
TP ICAP	410	0.8
	-------------------	-------------------
	3,290	6.2
	-------------------	-------------------
Media
RELX	2,301	4.3
ITV	850	1.6
	-------------------	-------------------
	3,151	5.9
	-------------------	-------------------
Non-life Insurance
Admiral Group	1,072	2.0
Direct Line Insurance	1,064	2.0
Hiscox	1,009	1.9
	-------------------	-------------------
	3,145	5.9
	-------------------	-------------------
Travel & Leisure
Carnival	1,389	2.6
Intercontinental Hotels Group	1,069	2.0
Patisserie Holdings	631	1.2
	-------------------	-------------------
	3,089	5.8
	-------------------	-------------------
Construction & Materials
CRH	1,126	2.1
Kier Group	858	1.6
Forterra	665	1.3
	-------------------	-------------------
	2,649	5.0
	-------------------	-------------------
Food Producers
Unilever	2,162	4.1
	-------------------	-------------------
	2,162	4.1
	-------------------	-------------------
General Retailers
Inchcape	1,201	2.2
Next	895	1.7
	-------------------	-------------------
	2,096	3.9
	-------------------	-------------------
General Industrials
DS Smith	1,340	2.5
RPC Group	694	1.3
	-------------------	-------------------
	2,034	3.8
	-------------------	-------------------
Industrial Engineering
Bodycote	955	1.8
Weir Group	723	1.4
	-------------------	-------------------
	1,678	3.2
	-------------------	-------------------
Fixed Line Telecommunications
BT Group	1,399	2.6
	-------------------	-------------------
	1,399	2.6
	-------------------	-------------------
Beverages
Diageo	1,345	2.5
	-------------------	-------------------
	1,345	2.5
	-------------------	-------------------
Food & Drug Retailers
Tesco	1,210	2.3
	-------------------	-------------------
	1,210	2.3
	-------------------	-------------------
Mobile Telecommunications
Vodafone	1,010	1.9
	-------------------	-------------------
	1,010	1.9
	-------------------	-------------------
Real Estate Investment & Services
U and I Group	589	1.1
Foxtons Group	355	0.7
	-------------------	-------------------
	944	1.8
	-------------------	-------------------
Aerospace & Defence
BAE Systems	896	1.7
	-------------------	-------------------
	896	1.7
	-------------------	-------------------
Household Goods & Home Construction
Reckitt Benckiser	781	1.5
	-------------------	-------------------
	781	1.5
	-------------------	-------------------
Chemicals
Elementis	773	1.4
	-------------------	-------------------
	773	1.4
	-------------------	-------------------
Software & Computer Services
Accesso Technology	487	0.9
	-------------------	-------------------
	487	0.9
	-------------------	-------------------
Real Estate Investment Trusts
Derwent London	460	0.9
	-------------------	-------------------
	460	0.9
	-------------------	-------------------
Total Investments	53,177	100.0
	===========	===========

All investments are in ordinary shares unless otherwise stated.
The total number of holdings as at 31 October 2017 was 46 (31 October 2016: 42).
As at 31 October 2017 the Company did not hold any equity interests representing more than 3% of any company’s share capital.

INCOME STATEMENT
for the year ended 31 October 2017

	Notes	Revenue  2017  £’000	Revenue  2016  £’000	Capital  2017  £’000	Capital  2016  £’000	Total  2017  £’000	Total  2016  £’000
Gains on investments held at fair value through profit or loss		–	–	5,050	654	5,050	654
Income from investments held at fair value through profit or loss	3	1,991	2,066	–	–	1,991	2,066
Other income	3	9	12	–	–	9	12
		--------	--------	--------	--------	--------	--------
Total income		2,000	2,078	5,050	654	7,050	2,732
		--------	--------	--------	--------	--------	--------
Investment management fees	4	(74)	(70)	(223)	(211)	(297)	(281)
Other operating expenses	5	(252)	(198)	(5)	(3)	(257)	(201)
		--------	--------	--------	--------	--------	--------
Total operating expenses		(326)	(268)	(228)	(214)	(554)	(482)
		--------	--------	--------	--------	--------	--------
Net profit on ordinary activities before finance costs and taxation		1,674	1,810	4,822	440	6,496	2,250
Finance costs	6	(6)	(7)	(16)	(21)	(22)	(28)
		--------	--------	--------	--------	--------	--------
Net profit on ordinary activities before taxation		1,668	1,803	4,806	419	6,474	2,222
Taxation		–	–	–	–	–	–
		--------	--------	--------	--------	--------	--------
Net profit on ordinary activities after taxation	8	1,668	1,803	4,806	419	6,474	2,222
		========	========	========	========	========	========
Earnings per ordinary share (pence)	8	6.63	6.93	19.09	1.62	25.72	8.55
		========	========	========	========	========	========

The total column of this statement represents the Company’s profit and loss account.

There were no dilutive securities at the year end.

The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies (AIC). All items in the above statement derive from continuing operations and no operations were acquired or discontinued during the year. All income is attributable to the equity holders of the Company.

The net profit on ordinary activities for the year disclosed above represents the Company’s total comprehensive income.

STATEMENT OF CHANGES IN EQUITY
for the year ended 31 October 2017

	Notes	Called up  share  capital  £’000	Share  premium  account  £’000	Capital  redemption  reserve  £’000	Capital  reserve  £’000	Special  reserve  £’000	Revenue  reserve  £’000	Total  £’000
For the year ended 31 October 2017
At 31 October 2016		329	14,819	220	9,101	21,272	2,566	48,307
Total comprehensive income:
Profit for the year		–	–	–	4,806	–	1,668	6,474
Transactions with owners, recorded directly to equity:
Ordinary shares purchased into treasury	9		–	–	–	(1,480)	–	(1,480)
Share purchase costs	9	–	–	–	–	(8)	–	(8)
Dividends paid(a)	7	–	–	–	–	–	(1,613)	(1,613)
		--------	--------	--------	--------	--------	--------	--------
At 31 October 2017		329	14,819	220	13,907	19,784	2,621	51,680
		--------	--------	--------	--------	--------	--------	--------
For the year ended 31 October 2016
At 31 October 2015		329	14,819	220	8,682	22,857	2,324	49,231
Total comprehensive income:
Profit for the year		–	–	–	419	–	1,803	2,222
Transactions with owners, recorded directly to equity:
Ordinary shares purchased into treasury	9	–	–	–	–	(1,576)	–	(1,576)
Share purchase costs	9	–	–	–	–	(9)	–	(9)
Dividends paid(b)	7	–	–	–	–	–	(1,561)	(1,561)
		--------	--------	--------	--------	--------	--------	--------
At 31 October 2016		329	14,819	220	9,101	21,272	2,566	48,307
		--------	--------	--------	--------	--------	--------	--------

(a)    Interim dividend paid in respect of the six months ended 30 April 2017 of 2.50p per share was declared on 26 June 2017 and paid on 1 September 2017. Final dividend paid in respect of the year ended 31 October 2016 of 3.90p per share was declared on 21 December 2016 and paid on 10 March 2017.

(b)    Interim dividend paid in respect of the six months ended 30 April 2016 of 2.40p per share was declared on 29 June 2016 and paid on 2 September 2016. Final dividend paid in respect of the year ended 31 October 2015 of 3.60p per share was declared on 15 January 2016 and paid on 4 March 2016.

BALANCE SHEET
as at 31 October 2017

	Notes	2017  £’000	2016  £’000
Fixed assets
Investments held at fair value through profit or loss		53,177	48,925
		--------	--------
Current assets
Debtors		487	507
Cash and cash equivalents		1,192	1,581
		--------	--------
		1,679	2,088
		--------	--------
Creditors – amounts falling due within one year
Bank loan		(2,000)	(2,000)
Other creditors		(1,176)	(706)
		--------	--------
		(3,176)	(2,706)
		--------	--------
Net current liabilities		(1,497)	(618)
		--------	--------
Net assets		51,680	48,307
		========	========
Capital and reserves
Called up share capital	9	329	329
Share premium account	10	14,819	14,819
Capital redemption reserve	10	220	220
Capital reserves	10	13,907	9,101
Special reserve	11	19,784	21,272
Revenue reserve	11	2,621	2,566
		--------	--------
Total shareholders’ funds	8	51,680	48,307
		========	========
Net asset value per ordinary share	8	209.96p	190.53p
		========	========

STATEMENT OF CASH FLOWS
for the year ended 31 October 2017

	Notes	2017  £’000	2016  £’000
Operating activities
Net profit before taxation		6,474	2,222
Add back finance costs		22	28
Gains on investments held at fair value through profit or loss		(5,050)	(654)
Special dividends allocated to capital		–	198
Sales of investments		15,700	22,194
Purchase of investments		(14,427)	(20,222)
Decrease/(increase) in debtors		14	(1)
Decrease in other creditors		(3)	(3)
		--------	--------
Net cash generated from operating activities		2,730	3,762
		--------	--------
Financing activities
Ordinary shares purchased into treasury		(1,480)	(1,576)
Share purchase costs		(9)	(7)
Interest paid		(17)	(28)
Dividends paid	7	(1,613)	(1,561)
		--------	--------
Net cash used in financing activities		(3,119)	(3,172)
		--------	--------
(Decrease)/increase in cash and cash equivalents		(389)	590
		--------	--------
Cash and cash equivalents at the beginning of the year		1,581	991
		--------	--------
Cash and cash equivalents at the end of the year		1,192	1,581
		========	========
Comprised of:
Cash at bank		130	73
BlackRock’s Institutional Cash Series plc – Sterling Liquidity Fund		1,062	1,508
		--------	--------
		1,192	1,581
		========	========

NOTES TO THE FINANCIAL STATEMENTS

1. PRINCIPAL ACTIVITY
The principal activity of the Company is that of an investment trust company within the meaning of section 1158 of the Corporation Tax Act 2010.

2. ACCOUNTING POLICIES
The principal accounting policies adopted by the Company are set out below:

(a) Basis of preparation
The financial statements have been prepared on a going concern basis in accordance with FRS 102 and the revised Statement of Recommended Practice – ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ (SORP) issued by the Association of Investment Companies (AIC) in November 2014 and the provisions of the Companies Act 2006.

The principal accounting policies adopted by the Company are set out below. Unless specified otherwise, the policies have been applied consistently throughout the year and are consistent with those applied in the preceding year. 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 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 a capital nature has been presented alongside the Income Statement.

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

(d) Income
Dividends receivable on equity shares are treated as revenue for the year on an ex-dividend basis. Where no ex-dividend date is available, dividends receivable on or before the year end are treated as revenue for the year. Provisions are made for dividends not expected to be received.

Special dividends are recognised on an ex-dividend basis and treated as capital or revenue depending on the facts and circumstances of each dividend.

Dividends are accounted for in accordance with Section 29 of FRS 102 on the basis of income actually receivable, without adjustment for tax credits attaching to the dividend. Dividends from overseas companies continue to be shown gross of withholding tax.

Deposit interest receivable is accounted for on an accruals basis. Underwriting commission is recognised when the issue underwritten closes.

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.

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

• expenses which are incidental to the acquisition or disposal of an investment are treated as capital. Details of transaction costs on the purchases and sales of investments are disclosed in note 10 on page 55 of the Annual Report and Financial Statements;

• 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.

(f) Finance costs
Finance costs are accounted for on an accruals basis. Finance costs are allocated, insofar as they relate to the financing of the Company’s investments, 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.

(g) Taxation
The current tax effect of different items of expenditure 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 at the financial reporting date, where transactions or events that result in an obligation to pay more taxation in the future or right to less taxation in the future have occurred at the balance sheet date. Deferred tax is measured on a non-discounted basis, at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. This is subject to deferred taxation assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the timing differences can be deducted.

(h) Investments held at fair value through profit or loss
The Company’s investments are classified as held at fair value through profit or loss in accordance with Sections 11 and 12 of FRS 102 and are managed and evaluated on a fair value basis in accordance with its investment strategy.

All investments are designated upon initial recognition as held at fair value through profit or loss. Purchases of investments are recognised on a trade date basis. Sales are recognised at the trade date of the disposal and the proceeds are measured at fair value, which is regarded as the proceeds of the sale less any transaction costs.

The fair value of the financial investments is based on their quoted bid price at the balance sheet date on the exchange on which the investment is quoted, without deduction for the estimated future selling costs.

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

The fair value hierarchy consists of the following three levels:

Level 1 – Quoted prices for identical instruments in active markets

Level 2 – Valuation techniques using observable inputs

Level 3 – Valuation techniques using significant unobservable inputs

(i) Debtors
Debtors include sales for future settlement, other debtors and pre-payments and accrued income in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non?current assets.

(j) Creditors
Creditors include purchases for future settlements, interest payable, share buy back costs and accruals in the ordinary course of business. Creditors are classified as creditors – amounts due within one year if payment is due within one year or less. If not, they are presented as creditors – amounts due after more than one year.

(k) Dividends payable
Under Section 32 of FRS 102, final dividends should not be accrued in the financial statements unless they have been approved by shareholders before the balance sheet date. Dividends payable to equity shareholders are recognised in the Statement of Changes in Equity when they have been approved by shareholders and have become a liability of the Company. Interim dividends are only recognised in the financial statements in the period in which they are paid.

(l) Cash and cash equivalents
Cash comprises cash in hand and demand deposits. Cash equivalents include bank overdrafts repayable on demand and short term, highly liquid investments, that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value.

(m) Foreign currency translation
In accordance with Section 30 of FRS 102, 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, and non-monetary assets held at fair value 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.

(n) 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

	2017  £’000	2016  £’000
Investment income:
UK dividends	1,953	2,010
UK REITs	9	23
UK Scrip dividends	25	19
Overseas dividends	4	14
	--------	--------
	1,991	2,066
	--------	--------
Other income:
Deposit interest	1	–
Underwriting commission	8	12
	--------	--------
	9	12
	--------	--------
Total	2,000	2,078
	========	========

Dividends and interest received during the year amounted to £2,004,000 and £1,000 respectively (2016: £2,059,000 and nil).

Special dividends of £nil have been recognised in capital (2016: £198,000) and deducted from investment costs.

4. INVESTMENT MANAGEMENT FEES

	2017			2016
	Revenue  £’000	Capital  £’000	Total  £’000	Revenue  £’000	Capital  £’000	Total  £’000
Investment management fees	74	223	297	70	211	281
	--------	--------	--------	--------	--------	--------
Total	74	223	297	70	211	281
	========	========	========	========	========	========

Under the terms of the investment management agreement with BFM, BFM is entitled to a fee of 0.6% per annum of the Company’s market capitalisation. The investment management fee is allocated 75% to capital reserves and 25% to the revenue reserve. There is no additional fee for company secretarial and administration services.

5. OTHER OPERATING EXPENSES

	2017  £’000	2016  £’000
Taken to revenue:
Custody fees	1	1
Depositary fees	7	7
Audit fees	24	21
Registrars’ fees	23	21
Directors’ emoluments*	89	89
Marketing fees	22	(8)
Other administration costs	86	67
	--------	--------
	252	198
	========	========
Taken to capital:
Transaction charges	5	3
	--------	--------
	257	201
	========	========
The Company’s ongoing charges, calculated as a percentage of average shareholders’ funds and using operating expenses, finance costs, and taxation were:	1.08%	1.00%
	--------	--------

*  Further information on Directors’ emoluments can be found in the Directors’ Remuneration Report on pages 26 to 29 of the Annual Report and Financial Statements.

The Company has no employees.

6. FINANCE COSTS

	2017			2016
	Revenue  £’000	Capital  £’000	Total  £’000	Revenue  £’000	Capital  £’000	Total  £’000
Interest on sterling bank loan	6	16	22	7	21	28
	--------	--------	--------	--------	--------	--------
	6	16	22	7	21	28
	========	========	========	========	========	========

7. DIVIDENDS

	Record  date	Payment  date	2017  £’000	2016  £’000
2015 Final dividend of 3.60p	12 February 2016	4 March 2016	–	944
2016 Interim dividend of 2.40p	15 July 2016	2 September 2016	–	617
2016 Final dividend of 3.90p	17 February 2017	10 March 2017	989	–
2017 Interim dividend of 2.50p	14 July 2017	1 September 2017	624	–
			--------	--------
			1,613	1,561
			========	========

The Directors have proposed a final dividend of 4.10p per share in respect of the year ended 31 October 2017. The proposed final dividend will be paid, subject to shareholders’ approval, on 9 March 2018 to shareholders on the Company’s register on 2 February 2018. The proposed final dividend has not been included as a liability in these financial statements as final dividends are only recognised in the financial statements when they have been approved by shareholders, or in the case of 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 purpose of section 1158 of the Corporation Tax Act 2010 and section 833 of the Companies Act 2006, and the amount proposed for the year ended 31 October 2017, meet the relevant requirements as set out in this legislation.

Dividends paid or proposed on equity shares:	2017  £’000	2016  £’000
Interim paid of 2.50p (2016: 2.40p)	624	617
Final proposed of 4.10p* (2016: 3.90p)	1,009	989
	--------	--------
	1,633	1,606
	========	========

*  Based upon 24,614,268 ordinary shares (excluding treasury shares) in issue.

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.

All dividends paid or payable are distributed from the Company’s revenue profits.

8. EARNINGS AND NET ASSET VALUE PER ORDINARY SHARE
Revenue and capital earnings per share are shown below and have been calculated using the following:

	2017	2016
Net revenue profit attributable to ordinary shareholders (£’000)	1,668	1,803
Net capital profit attributable to ordinary shareholders (£’000)	4,806	419
	--------	--------
Total profit attributable to ordinary shareholders (£’000)	6,474	2,222
	--------	--------
Total shareholders’ funds (£’000)	51,680	48,307
	--------	--------
Earnings per share
The weighted average number of ordinary shares in issue during the year on which the earnings per ordinary share was calculated was:	25,166,474	26,003,176
	--------	--------
The actual number of ordinary shares in issue at the end of each year on which the net asset value was calculated was:	24,614,268	25,354,268
	--------	--------
The number of ordinary shares in issue, including treasury shares at the year end was:	32,933,932	32,933,932
	--------	--------
Calculated on weighted average number of ordinary shares
Revenue profit	6.63p	6.93p
Capital profit	19.09p	1.62p
	--------	--------
Total	25.72p	8.55p
	========	========

	2017	2016
Net asset value	209.96p	190.53p
	--------	--------
Ordinary share price	205.50p	185.00p
	--------	--------

There are no dilutive securities at the year end.

9. SHARE CAPITAL

	Ordinary  shares  number	Treasury  shares  number	Total  shares	Nominal  value  £’000
Allotted, called up and fully paid share capital comprised:
Ordinary shares of 1p each
At 31 October 2016	25,354,268	7,579,664	32,933,932	329
Shares purchased and held in treasury	(740,000)	740,000	–	–
	--------	--------	--------	--------
At 31 October 2017	24,614,268	8,319,664	32,933,932	329
	========	========	========	========

During the year 740,000 ordinary shares were purchased and held in treasury (2016: 875,000 were purchased and placed in treasury) for a total consideration of £1,488,000 (2016: £1,585,000). No shares were cancelled from treasury during the year (2016: nil).

10. SHARE PREMIUM AND CAPITAL RESERVES

			Capital reserves
	Share  premium  account  £’000	Capital  redemption  reserve  £’000	arising on  investments  sold  £’000	arising on  revaluation  of  investments  held  £’000
At 1 November 2016	14,819	220	4,467	4,634
Movement during the year:
Gains on realisation of investments	–	–	1,462	–
Change in investment holding gains	–	–	–	3,588
Finance costs, investment management and other fees charged to capital	–	–	(244)	–
	--------	--------	--------	--------
At 31 October 2017	14,819	220	5,685	8,222
	========	========	========	========

11. DISTRIBUTABLE RESERVES

	Special  reserve  £’000	Revenue  reserve  £’000
At 1 November 2016	21,272	2,566
Movement during the year:
	--------	--------
Purchase of ordinary shares to be held in treasury	(1,480)	–
Share purchase costs	(8)	–
Return for the year	–	1,668
Dividends paid during the year	–	(1,613)
	--------	--------
At 31 October 2017	19,784	2,621
	========	========

12. VALUATION OF FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are either carried in the balance sheet at their fair value (investments) or at an amount which is a reasonable approximation of fair value (due from brokers, dividends and interest receivable, due to brokers, accruals, cash at bank, bank overdrafts and bank loans). Section 11 of FRS 102 requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The valuation techniques used by the Company are explained in the accounting policies note to the Financial Statements on page 50 of the Annual Report and Financial Statements.

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset.

The fair value hierarchy has the following levels:

Level 1 – Quoted market price for identical instruments in active markets
A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The Company does not adjust the quoted price for these instruments.

Level 2 – Valuation techniques using observable inputs
This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

Level 3 – Valuation techniques using significant unobservable inputs
This category includes all instruments where the valuation technique includes inputs not based on market data and these inputs could have a significant impact on the instrument’s valuation.

This category also includes instruments that are valued based on quoted prices for similar instruments where significant entity determined adjustments or assumptions are required to reflect differences between the instruments and instruments for which there is no active market. The determination of what constitutes ‘observable’ inputs requires significant judgement by the Investment Manager. The Investment Manager considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement.

Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability. The determination of what constitutes ‘observable’ inputs requires significant judgement by the Investment Manager.

The table below is an analysis of the Company’s financial instruments measured at fair value at the balance sheet date.

Financial assets at fair value through profit or loss at 31 October 2017	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Equity investments	53,177	–	–	53,177
	========	========	========	========

Financial assets at fair value through profit or loss at 31 October 2016	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Equity investments	48,925	–	–	48,925
	========	========	========	========

There were no transfers between levels for financial assets and financial liabilities during the year recorded at fair value as at 31 October 2017 and 31 October 2016. The Company did not hold any Level 3 securities throughout the financial year or as at 31 October 2017 (2016: nil).

13. CONTINGENT LIABILITIES
There were no contingent liabilities at 31 October 2017 (2016: nil).

14. PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information contained in this announcement does not constitute statutory accounts as defined in the Companies Act 2006.  The Annual Report and Financial Statements for the year ended 31 October 2017 will be filed with the Registrar of Companies after the Annual General Meeting.

The figures set out above have been reported upon by the auditor, whose report for the year ended 31 October 2017 contains no qualification or statement under section 498(2) or (3) of the Companies Act 2006.

The comparative figures are extracts from the audited financial statements of BlackRock Income and Growth Investment Trust plc for the year ended 31 October 2016, which have been filed with the Registrar of Companies, unless otherwise stated.  The report of the auditor on those financial statements contained no qualification or statement under section 498 of the Companies Act.

15. 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.

16. ANNUAL GENERAL MEETING

The Annual General Meeting of the Company will be held at 12 Throgmorton Avenue, London EC2N 2DL on Wednesday, 7 March 2018 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 Trusts, BlackRock Investment Management (UK) Limited
Tel: [phone]

Press enquires:
Lucy Horne, Lansons Communications - 020 7294 3689
E-mail:[e-mail]

20 December 2017

12 Throgmorton Avenue
London
EC2N 2DL