Final Results

BlackRock Throgmorton Trust plc

(Legal Entity Identifier: 5493003B7ETS1JEDPF59)

Information disclosed in accordance with Article 5 Transparency Directive and DTR 4.2

Annual Results Announcement for the year ended 30 November 2017

PERFORMANCE RECORD

Attributable to ordinary shareholders	30 November 2017	30 November 2016
Net assets (£’000)1	396,846	301,547
Net asset value per ordinary share	542.66p	412.34p
Ordinary share price (mid-market)	457.50p	325.00p
Discount to cum income net asset value2	15.7%	21.2%
	--------	--------
Performance
Net asset value per share (total return)3	+33.9%	+7.3%
Numis Smaller Companies excluding AIM (excluding Investment Companies) Index	+21.3%	+6.3%
Ordinary share price (total return)3	+43.8%	-2.1%
	--------	--------

1.    The change in net assets reflects market movements.
2.    This is the difference between the share price and the NAV per share.
3.    This measures the Company’s NAV total return and share price, which assumes dividends paid by the Company have been reinvested.

Further information in relation to the calculations in the above table can be found in the glossary on page 81 of the Annual Report and Financial Statements.

	Year ended  30 November 2017	Year ended  30 November 2016	Change
Revenue
Net revenue profit after taxation (£’000)	7,396	5,723	+29.2%
Revenue return per ordinary share	10.11p	7.83p	+29.1%
	--------	--------	--------
Dividends
– Interim	2.00p	1.25p	+60.0%
– Final	7.00p	6.25p	+12.0%
	--------	--------	--------
Total dividends paid and payable	9.00p	7.50p	+20.0%
	=====	====	=====

OVERVIEW AND PERFORMANCE

TEN YEAR HISTORICAL RECORD

ASSETS

Year to 30 November	Equity shareholders' funds £m	NAV per share	Total return	Mid-market price per share
2007	272.5	194.62	-1.6	152.0
2008	77.01	93.5	-51.43	62.8
2009	106.9	144.3	+63.7	115.8
2010	127.3	212.8	+51.7	163.0
2011	147.8	202.1	-3.9	170.0
2012	174.1	238.0	+19.4	193.3
2013	240.8	329.2	+40.1	290.0
2014	235.5	322.0	-1.1	270.0
2015	286.3	391.6	+23.2	339.5
2016	301.5	412.3	+7.3	325.0
2017	396.8	542.7	+33.9	457.5
	--------	--------	--------	--------
Compound annual growth rate over the ten year period	-	10.8%	-	11.6%
	=====	=====	====	=====

1. Reduction from a tender offer and reorganisation of the Company in 2008, as well as market movements.
2. Prior charges at par.
3. Includes £5.5 million in respect of the write-back of prior years' VAT.

REVENUE

Year to 30 November	Net revenue after taxation5	Revenue return per share5	Dividends per share
	£m	p	p
2007	2.3	1.54	2.20
2008	4.8	3.85	2.404
2009	3.1	3.86	2.754
2010	1.9	2.85	3.00
2011	2.1	3.29	3.15
2012	2.7	3.64	3.32
2013	3.7	4.99	4.00
2014	3.8	5.19	4.40
2015	5.9	8.08	6.70
2016	5.7	7.83	7.50
2017	7.4	10.11	9.00
	--------	--------	--------
Compound annual growth rate over the ten year period	-	20.7%	15.1%
	=====	=====	====

4. Dividends per share do not include special dividends of 2.00 pence per share paid in 2009 and 3.00 pence per share paid in 2008.
5. Net revenue after taxation and revenue return per share for the years ended after 30 November 2012 relate to the parent company and for the years up to 30 November 2011, related to the Group including subsidiary companies.

CHAIRMAN’S STATEMENT

PERFORMANCE
I am delighted to report another year of very strong performance for your Company. During the year to 30 November 2017, the Company’s Net Asset Value per share (NAV) returned 33.9% on a total return basis, compared with a total return of 21.3% from the Company’s benchmark index, the Numis Smaller Companies excluding AIM (excluding Investment Companies) Index. This is a notable achievement and a significant outperformance of the benchmark by your investment managers. Since the year end and up to the close of business on 8 February 2018, the NAV has fallen by 0.6%, compared to the benchmark index return which fell by 4.0% (all figures in sterling terms with income reinvested).

It is also important to consider the Company’s NAV and share price performance over the longer term. During the five year period to 30 November 2017, NAV and share price returns have been 145.3% and 158.2% respectively, placing the Company second out of eleven in the UK smaller companies investment trust peer group. This performance compares very favourably to the benchmark index return over the same period of 88.6%. Additionally, when we compare the Company’s NAV performance to the wider UK stock market, the Company’s five year NAV return of 145.3% represents a substantial outperformance over the FTSE All-Share Index return of 57.1% over the same period, demonstrating the ability of smaller companies to outperform their larger counterparts over the medium to longer term.

Further information on portfolio performance can be found in the Investment Manager’s report.

SHARE PRICE DISCOUNT
During the year to 30 November 2017 the Company’s share price discount to NAV ranged between 12.7% and 20.8%, ending the year at 15.7%. As at 8 February 2018 the discount was 13.4%. The UK Smaller Companies sector has historically traded at a significant discount to NAV and the Company’s average discount to NAV since 1 July 2008 (the date BlackRock became Manager of the Company) has been 16.3%. Further information in relation to the discount can be found on page 10 of the Annual Report and Financial Statements.

REVENUE RETURN AND DIVIDENDS
The revenue return per share for the year amounted to 10.11 pence per share, compared with 7.83 pence per share for the previous year, an increase of 29.1%.

The Directors are pleased to declare a proposed final dividend of 7.00 pence per share for the year ended 30 November 2017. This, together with the interim dividend of 2.00 pence per share paid on 23 August 2017, gives a total dividend for the year of 9.00 pence per share, an increase of 20.0% on the total dividend distributed to shareholders in the prior financial year. This dividend will be paid on 29 March 2018, subject to shareholder approval at the forthcoming AGM, to shareholders on the Company’s register on 23 February 2018. The ex-dividend date is 22 February 2018.

INVESTMENT MANAGEMENT ARRANGEMENTS AND PROPOSED CHANGE OF INVESTMENT POLICY

Following the Board’s announcement in July of last year of a new lower fee structure (further details of which can be found on pages 22 and 23 of the Annual Report and Financial Statements) and an increase in the level of AIM holdings permitted to be held in the Company’s portfolio, the Board has continued to consider how best the Company should evolve to meet its objectives.

Following these discussions a number of changes to the Company’s portfolio management and Investment Policy are being proposed.

First, the benefits arising from the ability to vary market exposure and establish short positions through derivatives will now be achieved through a combined portfolio with a single manager, rather than in two separate portfolios. It has been agreed that Dan Whitestone, who has worked alongside Mike Prentis on the fund since March 2015 and who heads the UK smaller companies team at BlackRock, will become the sole portfolio manager following publication of the 2017 Annual Report. Mike remains a key member of BlackRock’s UK Small Cap team which collectively conducts investment research and shares ideas, and this team-based approach will continue to be a feature of the investment management of the Company. Collectively the four-strong BlackRock UK smaller companies team have 60 years’ experience of investing in smaller companies.

In a move that it is not anticipated will materially change the overall source of revenues or profits made collectively by companies in the portfolio, the Board is proposing that, in order to better reflect the evolving nature of the listing environment for UK smaller companies, in which an increasing number of high quality companies are choosing initially to list (and thereafter remain listed) on AIM, the Company will seek shareholder approval to remove the current restriction on the percentage of the portfolio permitted to be invested in AIM, and also to change the benchmark index to one which includes AIM.

Additionally, the Board is conscious that the geographical location of a company’s listing can often reflect where the best valuations can be achieved at IPO and subsequently, and not necessarily where the Company’s business is located or where most of its turnover is derived. In order to provide further flexibility, the Board are therefore also requesting shareholder approval that up to 15% of the Company’s gross assets may be invested in non UK-listed securities which will allow the portfolio manager to benefit from specific opportunities in the Small Cap space that may be listed or conduct their operations in countries other than the UK. We anticipate that these would be predominately European smaller companies where we see a more encouraging outlook. Other mandates managed by the portfolio manager have similar flexibility, and this change may allow the Company to take advantage of particular opportunities previously not available.

Taken together, we believe these changes equip the Company to be a uniquely attractive vehicle for investors looking to achieve exposure to UK smaller companies.

On behalf of both the Board and the Company, I would like to take this opportunity to thank Mike for the excellent performance he has delivered for shareholders, along with the BlackRock team, since BlackRock took on the mandate in 2008. We would also like to wish Dan continued success as he takes on his increased responsibilities.

PRIIPS REGULATION
With effect from 1 January 2018 the EU’s Packaged Retail and Insurance-based Products regulation came into force and is applicable to investment companies. Amongst other things, the regulation requires that the Company’s AIFM produce a PRIIPS compliant Key Information Document (KID) which must be made freely available on the Company’s website. The format and content of the KID are strictly prescribed, as are the calculation methodologies for the forward looking performance scenarios and risk disclosures therein, which are based on historic performance and may, in certain circumstances, produce figures that may not be reflective of the expected returns. Further information can be found on page 36 of the Annual Report and Financial Statements.

BOARD COMPOSITION
As announced last year, the Company’s previous Chairman, Crispin Latymer, retired on 24 July 2017 and I succeeded him as Chairman of the Board with effect from this date. On behalf of the Board and the Company I would like to thank Crispin for his capable and diligent leadership of the Board and for his stewardship of the Company since his appointment as Chairman in 2012. We wish him well for the future.

ANNUAL GENERAL MEETING
The Company’s Annual General Meeting will be held on Thursday, 22 March 2018 at 11.00 a.m. at the offices of BlackRock, 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 77 to 80 of the Annual Report and Financial Statements. The investment managers will make a presentation to shareholders on the Company’s progress and the outlook for the year ahead.

OUTLOOK
There remain a number of headwinds for the UK economy, and UK GDP growth is being outpaced by both the Eurozone and the US. However, in this context it is worth noting that the UK equity market derives well over two thirds of its revenues from currencies other than sterling and that the Company’s portfolio has significant overseas exposure, notably to the US.

Against this backdrop, your investment managers continue to seek to identify attractive investment opportunities, either to add to existing holdings or to introduce new stocks to the portfolio. The investment managers believe that the portfolio is well positioned and is constructed of companies which have robust business models, strong cash flows, favourable industry characteristics and which are led by strong management teams.

CHRISTOPHER SAMUEL
Chairman
9 February 2018

INVESTMENT MANAGER’S REPORT

MARKET REVIEW AND OVERALL INVESTMENT PERFORMANCE
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 as the domestic economy continued to shrug off fears of a slowdown. 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 but geopolitical tensions were ratcheted upwards around the Korean peninsula as North Korean missile launches were met by hard words from President Trump.

PERFORMANCE REVIEW
The Company has had a very successful financial year, with the NAV per share rising by 33.9% to 542.66p on a total return basis. This return significantly outperforms the benchmark return of 21.3% and the FTSE 100 return of 12.3% over the same period.

The largest positive contributor to performance during the financial year has been Keywords Studios, the leading international technical services provider to the global video games industry which has seen its share price more than double during the period. Keywords' most recent results showed strong growth in revenues and profits, which increased by 50% and 60% respectively, driven by continued organic growth as well as positive contributions from acquisitions. The company has been taking advantage of the significant market fragmentation and the shift of the big games companies to outsource more of their requirements, and continues to expand its capabilities and geographical presence through M&A. Copper producer Kaz Minerals reported interim results showing earnings and costs better than expected helped by a higher copper price, whilst the company also raised production guidance for the full year. Driven by successful new projects, Kaz remains the fastest growing and one of the lowest cost copper miners in the world. Veterinary products manufacturer Dechra Pharmaceuticals continued to deliver strong organic growth ahead of consensus whilst higher synergies from acquisitions has resulted in broker upgrades to forecasts. Ticketing and virtual queuing solutions provider Accesso has been another top contributor during the year. Accesso is a great example where we see an opportunity for long-term compounding growth, as the company is benefiting from a shift towards electronic and mobile commerce in the attractions market, where their market leading technology is becoming increasingly central to their customers’ propositions, leveraging software and data to improve guest experience while driving operator profitability.

Whilst the short book cost money in absolute terms, losing less than 2% against our benchmark which appreciated by over 23% we think is a good outcome. 2017 has been a positive year for delivering stock specific successes from short positions, and our approach of targeting over-leveraged or capital intensive business, and companies facing structural or cyclical pressures has been rewarded throughout the year. In fact the second largest contributor to performance of the total trust return was from one of our short positions in a UK construction company that has fallen more than 90% on the back of reduced financial guidance, increased contract provisions and rising net debt. This is a company that we have been short for a long period of time, operating in a highly commoditised and capital intensive industry, with no pricing power, and this year our patience and disciplined approach certainly paid off.

The largest stock specific detractor during the period was the UK’s leading veterinary practitioner CVS Group. This was a disappointing result as CVS, a core holding across our team, had been a strong contributor to performance for most of the financial year, delivering consistent profit and revenue growth, acquiring surgeries at attractive valuations whilst also benefiting from structural underlying growth in veterinary spending. However the shares fell sharply on the last day of November (our financial year end) after the company released a trading statement flagging that like-for-like sales grew at only 1.5% (versus last year’s growth of over 6%) and that recent sales patterns had been more volatile. The circa 20% fall in the share price has since proved to be an overreaction to the 3% earnings downgrade for a quality business that we believe has a long runway of growth as they continue to consolidate the veterinary market and the shares have subsequently rallied.

Elsewhere plastic packaging engineer RPC fell as the market grew concerned around the company’s acquisition strategy following the announced acquisition of Letica for $490m funded by a 1 for 4 rights issue. Whilst RPC’s management has an excellent track record we have since sold the position.

ACTIVITY
As discussed in previous reports, we have been becoming progressively more cautious around the outlook for the UK economy and in particular those companies exposed to UK consumer spending. We have therefore continued to reduce our exposure to this area of the market, whilst increasing our exposure to more international earners such as Central Asia Metals, Ultra Electronics and Hill & Smith.

We purchased a new holding in Stock Spirits following a second positive meeting with the management team. Stock Spirits is an international spirits company with profits mainly generated in Poland and the Czech Republic.

We also invested in SuperDry, the distinctive fashion retailer. The company design, produce and sell premium clothing and accessories, which appeal to a broad range of customers of all ages, at an affordable price through stores and online. There is a clear strategy for continued growth of the e-commerce business while also growing the business overseas.

We continue to use strong share price performance to take some profits in a number of long term holdings which have performed well and where valuations are now quite high. Our view on many of these companies remains unchanged and we would add to many of these on any setback.

Within the short book we remain focused on identifying over-leveraged and capital intensive businesses. The rising market also continues to present short opportunities in many consumer services businesses facing structural headwinds such as digital disruption, low cost/specialised formats, or cyclical pressures, particularly in UK domestics, from falling demand and rising costs pressures.

PORTFOLIO POSITIONING
Relative to our benchmark index we are overweight construction companies, media companies and industrial engineers. Within the construction sector our holdings have a more infrastructure and public housing focus, including Ibstock, Morgan Sindall and Marshalls. Our media stocks include 4imprint, which generates all of its revenues from the US, and YouGov. Our engineering holdings include Hill & Smith, Avon Rubber, Bodycote, Gooch & Housego and Trifast. All these companies are very internationally focused and generally supplying attractive vertical markets.

We remain underweight travel & leisure companies, challenger banks and food producers.

We estimate that more than half of the revenues of our portfolio originate overseas. Our UK exposure is very deliberate, either to more defensive businesses, or businesses that may benefit from positive structural or cyclical trends in the current environment, such as those which are exposed to the building of affordable housing to name one example.

There has been little change to the overall shape of the portfolio, because we believe the key shares and sectors where we see good long investment opportunities are the same, and the short book still targets the same areas that we see as over-earning or under structural or cyclical pressure. The long book remains exposed to specific investment cases, often where companies have harnessed the power and convenience of technology in a capital light model that disrupts mature profit pools. Many of our short positions are wIthin Consumer Services, either facing structural headwinds (digital disruption, low cost or specialised formats) or cyclical (weakening consumer demand, rising cost pressures).

OUTLOOK
Following the strong performance of the UK stock market in 2017, the potential for a market correction may be a concern for investors, meanwhile Brexit negotiations continue, creating prolonged political and economic uncertainty in the UK. Despite these concerns we remain optimistic in the outlook for the Company as we enter the new year, a confidence derived from our belief that stock selection will once again be key in the coming year.

The UK domestic economy remains challenged and in the face of political uncertainty we see the possibility of weakness continuing for some time. Unemployment has continued to fall, but with negative real wages acting as a headwind for consumers, and uncertainty potentially causing companies to delay investment decisions, there are clear headwinds to UK growth. We are particularly cautious of those areas exposed to discretionary consumer spending, where we believe the risks are increasing with cost pressures from sterling and the national living wage impacting corporate margins while rising inflation and real wages turning negative is impacting demand for many consumer facing business models. This is a view that we have held for some time now and a number of consumer related profit warnings have reinforced our cautious view.

However, while we are cautious on the outlook for the UK economy, we are positive on the outlook for UK plc. Economic growth globally remains positive, supported by the US, Europe, Japan, China and Emerging Markets. We believe our portfolio is suitably diversified by sector and geography, and comprises many dynamic market-leading businesses, run by strong management teams, that are well capitalised and good cash generators. It is supplemented by short positions in a variety of fundamentally weak businesses. Overall we believe our portfolio continues to be well placed for the current environment.

DAN WHITESTONE AND MIKE PRENTIS
BLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED 
9 February 2018

STRATEGIC REPORT

The Directors present the Strategic Report of the Company for the year ended 30 November 2017.

As noted in the Chairman’s Statement, a proposal is being put forward at the Company’s AGM to seek approval from shareholders to make an amendment to the investment policy of the Company. The proposed amendment, if approved, shall come into effect from 22 March 2018. The proposed amendment to the Company’s investment policy and consequential amendment to the Company’s investment objective are described in the appendix on page 82 of the Annual Report and Financial Statements.

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 shareholders with capital growth and an attractive total return through investment primarily in UK smaller and mid-capitalisation companies listed on the main market of the London Stock Exchange.

STRATEGY, BUSINESS MODEL, INVESTMENT POLICY AND INVESTMENT PROCESS
The Company invests in accordance with the objective given above. 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, BlackRock Fund Managers Limited (BFM). Matters for the Board include setting the Company’s strategy, including its investment objective and policy, setting limits on gearing (both bank borrowings and the effect of derivatives), capital structure, governance, and appointing and monitoring of 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 who is the principal service provider.

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 the decisions relating to the day-to-day running of the Company and is accountable to the Board for the investment, financial and operating performance of the Company.

Other service providers include the Depositary and the Fund Accountant, Bank of New York Mellon (International) Limited, and the Registrar, Computershare Investor Services PLC. Details of the contractual terms with third party service providers are set out in the Directors’ Report.

INVESTMENT POLICY
The Company’s investment performance is measured against the Numis Smaller Companies excluding AIM (excluding Investment Companies) Index (the Index).

The Company may hold up to 35% of its gross assets, at the time of acquisition, in equities or collective investment vehicles traded on the AIM market of the London Stock Exchange.

The Investment Manager, BlackRock Investment Management (UK) Limited (BIM (UK)), may invest in companies outside the Index without restriction subject to the limits noted above.

In addition to holding a conventional long only portfolio of UK smaller and mid-capitalisation equities, the Company can hold up to 30% of its net assets in a portfolio of contracts for difference (CFDs) and/or comparable equity derivatives which provide both long and short exposure. Under normal circumstances, the long only portfolio is expected to comprise 100% of the Company’s net assets. Therefore, the Company can have gross exposure of 130% of net assets, albeit that some of this exposure may represent short positions.

Portfolio risk will be mitigated by investment in a diversified portfolio of companies. No more than 5% of the Company’s gross assets, at the time of acquisition, may be invested in any one single company excluding holdings in cash or money market funds where up to 10% of the Company’s gross assets may be held. The Company will not invest more than 10% of its gross assets, at the time of the acquisition, in other listed closed-ended investment funds, unless such companies have a stated investment policy not to invest more than 15% of their gross assets in other listed closed-ended investment funds, in which case the limit is 15% of gross assets.

The Board’s policy is that net gearing, borrowing less cash, should not exceed 20% of gross assets. However, the Company is geared primarily through its portfolio of CFDs.

No material change will be made to the investment objective and policy without shareholder approval.

INVESTMENT PROCESS
A unique feature of the Company is that it has an additional source of performance. A traditional long only portfolio and a long/short portfolio, representing approximately 30% of the Company’s net assets.

Notwithstanding recent positive returns from UK small and mid-cap companies, the sector has demonstrated considerable volatility over the past 20 years. The chart on page 9 of the Annual Report and Financial Statements shows the annual performance of the FTSE 250 Index since 1997 together with the extent of the maximum decline in the Index during each of those years. Such an environment provides an attractive opportunity to add value via derivatives, instruments which can exploit share price moves whether up or down. During 2017, this facility added approximately 4.2% to performance and has added 22.8% since its inception on 11 September 2008.

As the maximum short portfolio exposure through derivatives is 30% of net assets, the Company will at all times retain a significant exposure to the market, as shown in the following chart.

In the course of their research the Portfolio Managers come across companies which they judge are likely to underperform; the ability to take short positions therefore significantly enhances the opportunity to make money for shareholders. This is not possible in a conventional or long only portfolio.

When markets are expected to rise in the medium term, the long/short strategy is used to generate additional market exposure through ensuring that the long portfolio exceeds the short portfolio in a range between 0% to 15% of the net assets of the Company. Rising or ‘bull’ markets have historically (in the UK) persisted for longer than falling or ‘bear’ markets. A typical net market exposure might therefore be between 100% and 115%. This is lower than the ‘gross exposure’, which is the combination of the long only portfolio, and the short and long positions added together expressed as a percentage of net assets.

In a recessionary environment the Portfolio Managers have the flexibility to reduce market exposure to – at the maximum of its ‘least exposed’ level – around 70%.

If successfully implemented this strategy would provide some cushioning of the Company’s performance in falling markets.

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

RESULTS AND DIVIDENDS
The results for the Company are set out in the Statement of Comprehensive Income on page 46 of the Annual Report and Financial Statements. The total profit for the year, after taxation, was £101,332,000 (2016: a profit of £20,213,000) of which the revenue return amounted to £7,396,000 (2016: £5,723,000), and a capital profit of £93,936,000 (2016: £14,490,000).

Details of the dividends declared in respect of the year are set out in the Chairman’s Statement.

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 (KPIs) used to measure the progress and performance of the Company over time, which are comparable to those reported by other investment trusts, are set out in the following table.

	Year ended  30 November 2017	Year ended  30 November 2016
Net asset value total return1	33.9%	7.3%
Share price total return2	43.8%	(2.1%)
Benchmark total return3	21.3%	6.3%
Discount to cum income net asset value	15.7%	21.2%
Revenue return per share	10.11p	7.83p
Total dividend per share	9.00p	7.50p
Ongoing charges1	0.9%	1.1%
Ongoing charges4	2.2%	1.3%

1.   Calculated in accordance with the Association of Investment Companies (AIC) guidelines.
2.   Calculated on a mid to mid basis with income reinvested.
3.   Numis Smaller Companies excluding AIM (excluding Investment Companies) Index.
4.   Calculated as a percentage of average net assets for the year and using expenses, including performance fees and interest costs.

The Board monitors the KPIs at each meeting. Additionally, it regularly reviews a number of indices and ratios to understand the impact on the Company’s relative performance of the various components such as asset allocation and stock selection. This includes an assessment of the Company’s performance and ongoing charges against its peer group of investment trusts with similar investment objectives.

The Directors recognise that it is in the long term interests of shareholders that the Company’s shares do not trade at a significant discount to their prevailing NAV. In the year under review the discount to NAV of the ordinary shares on a cum income basis has ranged between 12.7% and 20.8%, with the average being 16.8%. The shares ended the year at a discount of 15.7% on a cum income basis. As at 8 February 2018 the discount was 13.4%.

DISCOUNT
Your Board believes that the best way of addressing the discount over the longer term is to continue to generate good performance and to create demand for the Company’s shares in the secondary market through effective communication of the Company’s unique structure to existing and potential shareholders. The Board will also be seeking to renew the authority from shareholders to buy back shares.

PRINCIPAL RISKS
The Company is exposed to a variety of risks and uncertainties and the Board has in place a robust process to identify, assess and monitor the principal risks faced by the Company. A core element of this process is the Company’s risk register, which identifies the risks facing the Company and the likelihood and potential impact of each risk, together with the controls established for mitigation. A residual risk rating is calculated for each risk which allows the effect of any mitigating procedures to be reflected in the register. The principal risks and uncertainties faced by the Company during the financial year, together with the potential effects, controls and mitigating factors, are set out below.

Principal Risk	Mitigation/Control
Investment Performance The Board is responsible for: - setting the investment policy to fulfil the Company's objectives; and - monitoring the performance of the Company's Investment Manager and the strategy adopted. An inappropriate policy or strategy may lead to: - poor performance compared to the Company's benchmark, peer group or shareholder expectations; - a widening discount to NAV; - a reduction or permanent loss of capital; and - dissatisfied shareholders and reputational damage.	To manage these risks the Board: - regularly reviews the Company's investment mandate and long term strategy; - has set, and regularly reviews, the investment guidelines and has put in place appropriate limits on levels of gearing and the use of derivatives; - receives from the Investment Manager a regular explanation of stock selection decisions, portfolio gearing and any changes in gearing and the rationale for the composition of the investment portfolio; - receives from the Investment Manager regular reporting on the portfolio's exposure through derivatives, including the extent to which the portfolio is geared in this manner and the value of any short positions; and - monitors the maintenance of an adequate spread of investments in order to minimise the risks associated with particular sectors, based on the diversification requirements inherent in the Company's investment policy.
Market Risk Market risk arises from changes to the prices of the Company’s investments. It represents the potential loss the Company might suffer through holding investments whose prices decline. Market risk includes the potential impact of events which are outside the scope of the Company’s control, such as the UK’s decision to leave the European Union.	The Board carefully considers diversification of the portfolio, asset allocation, stock selection, unquoted investments and levels of gearing on a regular basis and has set investment restrictions and guidelines which are monitored and reported on by the Investment Manager. The Board monitors the implementation and results of the investment process with the Investment Manager.
Income/dividend risk The amount of dividends and future dividend growth will depend on the performance of the Company’s underlying portfolio. Any change in the tax treatment of the dividends or interest received by the Company 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. 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.
Financial risk The Company’s investment activities expose it to a variety of financial risks that include market risk, foreign currency risk and interest rate risk. At 30 November 2017, the Company had approximately 31.3% of its gross asset value invested in AIM traded equity securities, and, by the very nature of its investment objective, largely invests in smaller companies. Liquidity in these securities can from time-to-time become constrained, making these investments difficult to realise at or near published prices.	The Company is not materially exposed to foreign currency and interest rate risk. For mitigation of market risk, see above. There are also risks linked to the Company’s use of derivative transactions including CFDs. Details are disclosed in note 11 on pages 57 and 58 of the Annual Report and Financial Statements, together with a summary of the policies for managing and controlling these risks in note 16 of the Annual Report and Financial Statements.
Operational risk In common with most other investment trust companies, the Company has no employees. The Company therefore relies upon the services provided by BlackRock (the Manager) and Bank of New York Mellon (International) Limited (the Depositary and Fund Accountant) who maintain the Company’s accounting records. Failure by any service provider to carry out its obligations to the Company could have a material adverse effect on the Company’s performance. Disruption to the accounting, payment systems or custody records, as a result of a cyber-attack or otherwise, could impact the monitoring and reporting of the Company’s financial position. 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.	The Board reviews the overall performance of the Manager, Investment Manager and all other third party service providers and compliance with the investment management agreement on a regular basis. The Fund Accountant’s and the Manager’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. The Company’s assets are subject to a strict liability regime and in the event of a loss of financial assets held in custody, the Depositary must return assets of an identical type or the corresponding amount, unless able to demonstrate that the loss was a result of an event beyond its reasonable control. The Board considers succession arrangements for key employees of the Manager and the Investment Manager and receives reports on the business continuity arrangements for the Company’s key service providers. The Board also receives regular reports from BlackRock’s internal audit function.
Legal and regulatory risk The Company has been accepted by HM Revenue & Customs as an investment trust, subject to continuing to meet the relevant eligibility conditions, and 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. Any breach of the relevant eligibility conditions could lead to the Company losing its investment trust status and being subject to corporation tax on capital gains realised within the Company’s portfolio. In such event the investment returns of the Company may be adversely affected. 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. Amongst other relevant laws and regulations, the Company is required to comply with the provisions of the Companies Act 2006, the Alternative Investment Fund Managers’ Directive, the Market Abuse Regulation, the UK Listing Rules and the Disclosure & Transparency Rules.	The Investment Manager monitors investment movements, the level 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. 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. Compliance with the accounting standards applicable to quoted companies and those applicable to investment trusts are also regularly monitored to ensure compliance. The Company Secretary and the Company’s professional advisers monitor developments in relevant laws and regulations and provide regular reports to the Board in respect of the Company’s compliance.
Counterparty risk The potential loss that the Company could incur if a counterparty is unable (or unwilling) to perform on its commitments. The Company’s investment policy also permits the use of both exchange-traded and over-the-counter derivatives (including contracts for difference).	Due diligence is undertaken before contracts are entered into and exposures are diversified across a number of counterparties. The Board reviews 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 that these are within set limits. The Depository is liable for restitution for the loss of financial instruments held in Custody, unless it is able to demonstrate that the loss was due to an event beyond its reasonable control.

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 teams. Where produced, the Audit Committee also reviews summaries of the SOC 1 reports from the Company’s service providers.

As required by the UK Corporate Governance 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. The principal risks have been described on pages 11 and 12 of the Annual Report and Financial Statements, together with an explanation of how they are managed and mitigated. The Board will continue to assess these risks on an ongoing basis.

VIABILITY STATEMENT
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 is generally the investment holding period investors consider while investing in the smaller companies sector. In making this assessment the Board has considered the following factors:

• the Company’s principal risks as set out on pages 11 and 12 of the Annual Report and Financial Statements;the impact of a significant fall in UK equity markets on the value of the Company’s investment portfolio;

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

• the level of demand for the Company’s shares

The Directors have also considered the Company’s revenue and expense forecasts and the fact that expenses and liabilities are relatively stable. The Company also has a portfolio of investments which provides a level of cash receipts in the form of dividends and which are considered to be relatively realisable if required.

The Directors reviewed the assumptions and considerations underpinning the Company’s existing going concern assertion which are based on:

• processes for monitoring costs;

• key financial ratios;

• evaluation of risk management and controls;

• compliance with the investment objective;

• the Company’s ability to meet its liabilities as they fall due;

• portfolio risk profile;

• share price discount to NAV;

• gearing; and

• counterparty exposure and liquidity risk.

The Company has a relatively liquid portfolio and largely fixed overheads (excluding any applicable performance fees) which comprise a very small percentage of net assets (0.9%). In addition, with effect from 1 December 2017, the effective performance fee cap in the event that the fund return exceeds the benchmark return over the performance period was reduced to 0.9% of the Performance Fee Market Value and the applicable percentage to be applied to the outperformance of the NAV total return over the benchmark return was changed from 10% to 15%. In addition, the maximum cap on total fees was reduced from 1.70% (measured over a one year period) to 1.25% of average gross assets (measured over a rolling two year period). Therefore, the Board has concluded that the Company would be able to meet its ongoing operating costs as they fall due.

The Board has also considered the current and potential future impact on the Company of the UK’s decision to leave the European Union following the referendum held in June 2016. It has concluded that the Company’s business model and strategy are not threatened by this event.

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 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 and taxation. However, due to the complexity and general lack of information available at present, it is challenging to accurately assess the future impact of the UK’s exit from the European Union. Therefore, the Board intends to closely monitor 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 on the achievement of capital growth and the future of the Company is dependent upon the success of the investment strategy. The outlook for the Company is discussed in 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 35 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.

GLOBAL GREENHOUSE GAS EMISSIONS FOR THE PERIOD 1 DECEMBER 2016 TO 30 NOVEMBER 2017
The Company has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013.

DIRECTORS, EMPLOYEES AND GENDER REPRESENTATION
The Directors of the Company on 30 November 2017, all of whom held office throughout the year, are set out on pages 20 and 21 of the Annual Report and Financial Statements. The Board recognises the importance of having a range of experienced Directors who, both individually and collectively, possess a suitable balance of skills, knowledge and diversity to enable it to fulfil its obligations. As at 30 November 2017, the Board consisted of four men and one woman.

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 information on pages 15 to 19 of the Annual Report and Financial including the Investment Manager’s Report forms part of this Strategic Report.

The Strategic Report was approved by the Board at its meeting on 9 February 2018.

BY ORDER OF THE BOARD
KEVIN MAYGER, FOR AND ON BEHALF OF
BLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED
Company Secretary
9 February 2018

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 22 and 23 of the Annual Report and Financial Statements.

The investment management fee due for the year ended 30 November 2017 amounted to £2,643,000 (2016: £2,483,000). In addition, a performance fee is payable of £4,659,000 (2016: £768,000). At the year end, £1,942,000 was outstanding in respect of management fees (2016: £656,000) and £4,659,000 (2016: £768,000) was outstanding in respect of performance fees.

In addition to the above services, BlackRock has provided marketing services. The total fees paid or payable for these services for the year ended 30 November 2017 amounted to £54,000 excluding VAT (2016: £92,000). Marketing fees of £92,000 (2016: £113,000) were outstanding at the year end.

The Company has an investment in BlackRock’s Institutional Cash Series plc – Sterling Liquidity Fund of £13,004,000 (2016: Â£5,390,000) at the year end.

The related party transactions with Directors are set out in the Directors’ Remuneration Report on pages 28 to 31 of the Annual Report and Financial Statements. 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 28 and 31 of the Annual Report and Financial Statements. At 30 November 2017, £11,000 (2016: £12,000) was outstanding in respect of Directors’ fees.

The Board consists of five non-executive Directors, all of whom are considered to be independent by the Board. None of the Directors has a service contract with the Company. For the year ended 30 November 2017, the Chairman received an annual fee of £36,000, the Chairman of the Audit and Management Engagement Committee received an annual fee of £28,000 and each other Director received an annual fee of £24,000. 

As at 30 November 2017, all members of the Board held shares in the Company. Christopher Samuel held 11,000 ordinary shares, Loudon Greenlees held 15,000 ordinary shares, Simon Beart held 45,661 ordinary shares (including 15,020 ordinary shares held by Mrs Beart), Jean Matterson held 46,000 ordinary shares and Andrew Pegge held 2,000 ordinary shares.

All of the holdings of the Directors are beneficial. Since the year end there have been a number of changes to the Directors’ share interests. As at the date of this report Mr Beart holds 46,291 ordinary shares (including 15,335 ordinary shares held by Mrs Beart). All other shareholdings remain unchanged.
 

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, 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 are required to prepare the financial statements in accordance with IFRS as adopted by the European Union. 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 in accordance with IAS8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;

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

• make judgements and estimates that are reasonable and prudent;

• state whether the financial statements have been prepared in accordance with IFRS as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements;

• provide additional disclosures when compliance with the specific requirements in IFRS as adopted by the European Union is insufficient to enable users to understand the impact of particular transactions, other events and conditions 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 and the Corporate Governance Statement in accordance with the Companies Act 2006 and applicable regulations, including the requirements of the Listing Rules and the Disclosure and Transparency Rules. The Directors have delegated responsibility to the Investment Manager and the AIFM for the maintenance and integrity of the Company’s corporate and financial information included on BlackRock’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors, whose names are listed on pages 20 and 21 of the Annual Report and Financial Statements, confirms to the best of his or her knowledge that:

• the financial statements, which have been prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and net return of the Company; and

• the Annual Report and Financial Statements include 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 also requires Directors to ensure that the Annual Report and Financial Statements are fair, balanced and understandable. In order to reach a conclusion on this matter, the Board has requested that the Audit Committee advise on whether it considers that the Annual Report and Financial Statements fulfils these requirements. The process by which the Committee has reached these conclusions is set out in the Audit Committee’s report on pages 37 to 39 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 30 November 2017, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position, performance, business model and strategy.

FOR AND ON BEHALF OF THE BOARD
CHRISTOPHER SAMUEL
Chairman
9 February 2018

FIFTY LARGEST INVESTMENTS AS AT 30 NOVEMBER 2017
 

Company		Market  value  £’000	% of net  assets	Description
Dechra Pharmaceuticals	Ordinary Shares Long CFD Position	10,287  1,820	3.1	Development and supply of pharmaceutical and other products focused on the veterinary market
4imprint Group	Ordinary Shares Long CFD Position	8,853  1,581	2.6	Supply of promotional merchandise in the US
Ibstock	Ordinary Shares Long CFD Position	7,618  1,341	2.3	Manufacture of clay bricks and concrete products
Hill & Smith	Ordinary Shares Long CFD Position	8,045  638	2.2	Production of infrastructure products and supply of galvanising services
Big Yellow	Ordinary Shares	8,603	2.2	Provision of self-storage services
Accesso Technology*	Ordinary Shares Long CFD Position	6,707  1,586	2.1	Development and supply of ticketing and virtual queuing solutions
Robert Walters	Ordinary Shares	8,287	2.1	Provision of specialist recruitment services
CVS Group*	Ordinary Shares Long CFD Position	6,048  2,140	2.1	Operation of veterinary surgeries
Ascential	Ordinary Shares Long CFD Position	4,516  3,398	2.0	Global business-to-business media company
Avon Rubber	Ordinary Shares	7,778	2.0	Production of safety masks and dairy related products
Johnson Service Group*	Ordinary Shares Long CFD Position	5,727  1,983	1.9	Provision of textile related services
Restore*	Ordinary Shares Long CFD Position	6,196  1,357	1.9	Management of business information in both paper and digital form
Advanced Medical Solutions*	Ordinary Shares Long CFD Position	6,250  981	1.8	Development and manufacture of wound care and closure products
Bodycote	Ordinary Shares Long CFD Position	6,174  560	1.7	Provision of thermal processing services
Melrose Industrials	Ordinary Shares Long CFD Position	2,895  3,735	1.7	Purchasing and improvement of manufacturing business
Trifast	Ordinary Shares	6,628	1.7	Manufacturing and distribution of industrial fastenings
Hiscox	Ordinary Shares Long CFD Position	4,243  2,079	1.6	Provision of insurance services
Central Asia Metals*	Ordinary Shares	6,279	1.6	Copper mining
Marshalls	Ordinary Shares Long CFD Position	5,194  1,020	1.6	Manufacture and sale of concrete stone paving and related products
Workspace Group	Ordinary Shares Long CFD Position	5,219  966	1.6	Supply of flexible workspace to businesses in London
Headlam Group	Ordinary Shares	6,039	1.5	Distribution of carpets and other floor coverings
Premier Asset Management Group*	Ordinary Shares	5,968	1.5	Retail asset management
Keywords Studios*	Ordinary Shares Long CFD Position	4,453  1,405	1.5	Provision of services to the global video games industry
Morgan Sindall	Ordinary Shares	5,827	1.5	Supply of office fit-out, construction and urban regeneration services
Scapa*	Ordinary Shares Long CFD Position	4,233  1,446	1.4	Manufacturing of adhesive products
Savills	Ordinary Shares Long CFD Position	4,916  465	1.4	Provision of property services
Vesuvius	Ordinary Shares Long CFD Position	5,011  282	1.3	Provider of metal flow engineering services and solutions to the steel and foundry industries
Coats Group	Ordinary Shares	5,290	1.3	Manufacturer of threads and yarns
First Derivatives*	Ordinary Shares Long CFD Position	3,630  1,566	1.3	Provider of software and consulting services to finance, technology and energy organisations
YouGov*	Ordinary Shares Long CFD Position	4,335  856	1.3	Provision of research and consultancy services
Polar Capital Holdings*	Ordinary Shares	5,066	1.3	Provision of investment management services
Sanne	Ordinary Shares Long CFD Position	3,653  1,281	1.2	Provision of corporate, fund and private client administration, reporting and fiduciary services
KAZ Minerals	Ordinary Shares	4,930	1.2	Copper mining
Fevertree Drinks*	Ordinary Shares Long CFD Position	3,301  1,599	1.2	Development and sale of soft drinks and mixers
Bellway	Ordinary Shares Long CFD Position	3,931  926	1.2	UK housebuilder focused on affordable housing outside of London
St. Modwen Properties	Ordinary Shares	4,779	1.2	Investment and development of property
SSP	Ordinary Shares Long CFD Position	3,168  1,455	1.2	Operator of food and beverage concessions in travel locations
XLMedia*	Ordinary Shares	4,586	1.2	Provider of digital marketing services used by customers to generate online and mobile traffic
Supergroup	Ordinary Shares Long CFD Position	3,658  897	1.1	Distinctive fashion retailer behind the Superdry brand
Next Fifteen Communications*	Ordinary Shares	4,548	1.1	Provision of digital communication products and services
Sophos Group	Ordinary Shares Long CFD Position	1,800  2,678	1.1	Provider of cloud-enabled end-user and network security solutions
888	Ordinary Shares Long CFD Position	3,207  1,068	1.1	Provision of online gaming entertainment and solutions
GB Group*	Ordinary Shares	4,262	1.1	Development and supply of identity verification solutions
Gooch & Housego*	Ordinary Shares Long CFD Position	3,651  590	1.0	Manufacturer of photonics technologies
Ocean Wilsons	Ordinary Shares	4,123	1.0	Port servicing and related manufacturing
Fuller Smith & Turner	Ordinary Shares Long CFD Position	3,814  294	1.0	Ownership and operation of pubs mainly in the London area
Derwent London	Ordinary Shares Long CFD Position	3,101  954	1.0	Owns and manages properties in London’s West End
Countryside Properties	Ordinary Shares	3,951	1.0	Housebuilding and urban regeneration
Faroe Petroleum*	Ordinary Shares	3,917	1.0	Oil & gas exploration
Liontrust Asset Management	Ordinary Shares	3,880	1.0	Investment management company
		-----------	-------
50 largest investments		301,522	76.0
		----------	--------

*     Traded on the Alternative Investment Market (AIM) of the London Stock Exchange.

Net portfolio is calculated as long only equity portfolio plus long CFD portfolio less short CFD portfolio. All investments are in equity shares unless otherwise stated.

At 30 November 2017, the Company did not hold any equity interest representing more than 3% of any company’s share capital.

A list of the Company’s long only equity portfolio and long CFD portfolio is available on the Company’s website.

2016 COMPARATIVE FOR TEN LARGEST INVESTMENTS

Company		30 November 2016  Market value  £’000	% of net assets
CVS Group	Ordinary shares Long CFD position	8,460 1,990	3.5
4imprint Group	Ordinary shares Long CFD position	8,108 1,502	3.2
JD Sports Fashion	Ordinary shares Long CFD position	5,471 2,763	2.7
Dechra Pharmaceuticals	Ordinary shares Long CFD position	5,956 1,529	2.5
Hill & Smith	Ordinary shares Long CFD position	5,957 612	2.2
Avon Rubber	Ordinary shares	6,152	2.0
Accesso Technology	Ordinary shares Long CFD position	4,243 1,200	1.8
Cineworld Group	Ordinary shares Long CFD position	3,607 1,772	1.8
Workspace Group	Ordinary shares Long CFD position	4,841 423	1.7
Restore	Ordinary shares Long CFD position	3,992 844	1.6

FAIR VALUE AND GROSS MARKET EXPOSURE OF INVESTMENTS

Portfolio	Fair  value1 £’000	Gross market  exposure2  £’000	Gross market  exposure  as a % of  net assets3  2017	Gross market  exposure  as a % of  net assets3  2016
Equity investments (excluding BlackRock’s Institutional Cash Fund) and CFDs	390,326	390,326	98.4	98.5
Total long CFD positions	(886)	74,071	18.7	18.7
Total short CFD positions and index futures	193	(34,642)	(8.7)	(8.5)
	--------	--------	--------	--------
Total Investments	389,633	429,755	108.4	108.7
Cash and cash equivalents4	44	(40,078)	(10.2)	(9.5)
BlackRock’s Institutional Cash Fund4	13,004	13,004	3.3	1.8
Other net current liabilities	(5,835)	(5,835)	(1.5)	(1.0)
	--------	--------	--------	--------
Net assets	396,846	396,846	100.0	100.0
	--------	--------	--------	--------

1.    Fair value is determined as follows:

–     Listed and AIM quoted investments are valued at bid prices where available, otherwise at published price quotations.

–     The sum of the fair value column for the CFD contracts represents the fair valuation of all the CFD contracts, which is determined based on the difference between the purchase price and value of the underlying shares in the contract (in effect the unrealised gains/(losses) on the exposed positions). The cost of purchasing the securities held through long CFD positions directly in the market would have amounted to £74,957,000 at the time of purchase, and subsequent market falls in prices have resulted in unrealised losses on the CFD contracts of £886,000, resulting in the value of the total market exposure to the underlying securities decreasing to £74,071,000 as at 30 November 2017. The notional price of selling the securities to which exposure was gained via the short CFD positions and index futures would have been £34,835,000 at the time of entering into the contract, and subsequent price falls have resulted in unrealised gains on the short CFD positions of £193,000 and the value of the market exposure of these investments decreasing to £34,642,000 at 30 November 2017. If the short position had been closed on 30 November 2017 this would have resulted in a gain of £193,000 for the Company.

2.    Market exposure in the case of equity investments is the same as fair value. In the case of CFDs it is the market value of the underlying shares to which the portfolio is exposed via the contract.

3.    % based on the total market exposure.

4.    The gross market exposure column for Cash and Cash Fund investments has been adjusted to assume the Company traded direct holdings rather than exposure being gained through CFDs.

DISTRIBUTION OF INVESTMENTS AS AT 30 NOVEMBER 2017

PORTFOLIO BY MAIN INDEX MEMBERSHIP
AT 30 NOVEMBER 2017

	Gross Basis1	Net Basis2
FTSE 250	42.6%	37.1%
FTSE AIM	31.3%	35.3%
FTSE Small Cap	23.9%	25.2%
Other	1.9%	2.0%
International	0.3%	0.4%

Source: BlackRock.

1.    Long and short portfolios in aggregate plus long only equity portfolio excluding investment in BlackRock’s Institutional Cash Fund.
2.    Long portfolio less short portfolio plus long only equity portfolio excluding investment in BlackRock’s Institutional Cash Fund.

MARKET CAPITALISATION AS AT 30 NOVEMBER 2017

	Long Positions (including the long only portfolio and the long derivative portfolio)	Short Positions
£1bn+	35.8%	-3.1%
£400m to £1bn	41.2%	-1.4%
£100m to £400m	27.8%	-1.2%
£0m to £100m	0.9%	0.0%

Source: BlackRock.

POSITION SIZE AS AT 30 NOVEMBER 2017

	Long Positions (including the long only portfolio and the long derivative portfolio)	Short Positions
£2m+	81	0
£1m to £2m	38	-5
£0m to £1m	21	-34

Source: BlackRock.

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 NOVEMBER 2017

	Notes	Revenue  2017  £’000	Revenue  2016  £’000	Capital  2017  £’000	Capital  2016  £’000	Total  2017  £’000	Total  2016  £’000
Income from investments held at fair value through profit or loss	3	8,216	6,794	–	–	8,216	6,794
Net income from contracts for difference	3	370	76	–	–	370	76
Other income	3	15	1	–	–	15	1
		--------	--------	--------	--------	--------	--------
Total revenue		8,601	6,871	–	–	8,601	6,871
		--------	--------	--------	--------	--------	--------
Net profit on investments held at fair value through profit or loss		–	–	88,130	10,419	88,130	10,419
Net loss on foreign exchange		–	–	(70)	(24)	(70)	(24)
Net profit from contracts for difference and futures		–	–	12,535	6,746	12,535	6,746
		--------	--------	--------	--------	--------	--------
Total		8,601	6,871	100,595	17,141	109,196	24,012
		--------	--------	--------	--------	--------	--------
Expenses
Investment management and performance fees	4	(661)	(621)	(6,641)	(2,630)	(7,302)	(3,251)
Other operating expenses	5	(525)	(519)	(16)	(18)	(541)	(537)
		--------	--------	--------	--------	--------	--------
Total operating expenses		(1,186)	(1,140)	(6,657)	(2,648)	(7,843)	(3,788)
		--------	--------	--------	--------	--------	--------
Net profit on ordinary activities before finance costs and taxation		7,415	5,731	93,938	14,493	101,353	20,224
Finance costs		(1)	(1)	(2)	(3)	(3)	(4)
		--------	--------	--------	--------	--------	--------
Net profit on ordinary activities before taxation		7,414	5,730	93,936	14,490	101,350	20,220
Taxation		(18)	(7)	–	–	(18)	(7)
		--------	--------	--------	--------	--------	--------
Profit for the year		7,396	5,723	93,936	14,490	101,332	20,213
		========	========	========	========	========	========
Earnings per ordinary share (pence)	7	10.11	7.83	128.45	19.81	138.56	27.64
		========	========	========	========	========	========

The total column of this statement is prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). 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. No operations were acquired or discontinued during the year. All income is attributable to the equity holders of the Company.

The Company does not have any other comprehensive income. The total net profit for the year disclosed above represents the Company’s total comprehensive income.

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 NOVEMBER 2017

	Notes	Called up  share  capital  £’000	Share  premium  account  £’000	Capital  redemption  reserve  £’000	Special  reserve  £’000	Capital  reserves  £’000	Revenue  reserve  £’000	Total  £’000
For the year ended 30 November 2017
At 30 November 2016		4,026	21,049	11,905	35,272	219,011	10,284	301,547
Total Comprehensive Income:
Net profit for the year		–	–	–	–	93,936	7,396	101,332
Transactions with owners, recorded directly to equity:
Dividends paid*	6	–	–	–	–	–	(6,033)	(6,033)
		--------	--------	--------	--------	--------	--------	--------
At 30 November 2017		4,026	21,049	11,905	35,272	312,947	11,647	396,846
		--------	--------	--------	--------	--------	--------	--------
For the year ended 30 November 2016
At 30 November 2015		4,026	21,049	11,905	35,272	204,521	9,570	286,343
Total Comprehensive Income:
Net profit for the year		–	–	–	–	14,490	5,723	20,213
Transactions with owners, recorded directly to equity:
Dividends paid**	6	–	–	–	–	–	(5,009)	(5,009)
		--------	--------	--------	--------	--------	--------	--------
At 30 November 2016		4,026	21,049	11,905	35,272	219,011	10,284	301,547
		--------	--------	--------	--------	--------	--------	--------

*       Final dividend of 6.25p per share for the year ended 30 November 2016, declared on 6 February 2017 and paid on 29 March 2017 and interim dividend of 2.00p per share for the year ended 30 November 2017, declared on 24 July 2017 and paid on 23 August 2017.

**     Final dividend of 5.60p per share for the year ended 30 November 2015, declared on 12 February 2016 and paid on 5 April 2016 and interim dividend of 1.25p per share for the year ended 30 November 2016, declared on 18 July 2016 and paid on 19 August 2016.

STATEMENT OF FINANCIAL POSITION AS AT 30 NOVEMBER 2017

	Notes	30 November 2017  £’000	30 November 2016  £’000
Non current assets
Investments held at fair value through profit or loss		390,326	297,072
		--------	--------
Current assets
Other receivables		1,703	1,346
Derivative financial assets held at fair value through profit or loss		189	1,934
Cash collateral held with brokers		1,117	152
Cash and cash equivalents		13,048	5,509
		--------	--------
		16,057	8,941
		--------	--------
Total assets		406,383	306,013
		--------	--------
Current liabilities
Other payables		(7,375)	(3,024)
Derivative financial liabilities held at fair value through profit or loss		(882)	(19)
Cash collateral received in respect of contracts for difference		(1,280)	(1,423)
		--------	--------
		(9,537)	(4,466)
		--------	--------
Net assets		396,846	301,547
		--------	--------
Equity attributable to equity holders
Called up share capital	8	4,026	4,026
Share premium account	9	21,049	21,049
Capital redemption reserve	9	11,905	11,905
Special reserve	9	35,272	35,272
Capital reserves	9	312,947	219,011
Revenue reserve	9	11,647	10,284
		--------	--------
Total equity		396,846	301,547
		--------	--------
Net asset value per ordinary share (pence)	7	542.66	412.34
		======	======

CASH FLOW STATEMENT FOR THE YEAR ENDED 30 NOVEMBER 2017

	30 November 2017  £’000	30 November 2016  £’000
Operating activities
Net profit on ordinary activities before taxation	101,350	20,220
Add back finance costs	3	4
Net profit on investments and contracts for difference held at fair value through profit or loss (including transaction costs)	(101,032)	(17,512)
Net loss on foreign exchange	70	24
Sales of investments held at fair value through profit or loss	171,534	110,936
Purchases of investments held at fair value through profit or loss	(176,658)	(110,369)
Realised gains on closure of contracts for difference	43,446	35,038
Realised losses on closure of contracts for difference	(27,449)	(28,282)
Realised losses on closure of futures contracts	(487)	(461)
Collateral (pledged)/received in respect of contracts for difference	(1,108)	37
(Increase)/decrease in other receivables	(242)	65
Increase/(decrease) in other payables	5,058	(3,253)
(Increase)/decrease in amounts due from brokers	(115)	1,655
(Decrease)/increase in amounts due to brokers	(707)	106
	--------	--------
Net cash inflow from operating activities before interest and taxation	13,663	8,208
	--------	--------
Taxation on investment income included within gross income	(18)	(7)
	--------	--------
Net cash inflow from operating activities	13,645	8,201
	--------	--------
Financing activities
Interest paid	(3)	(3)
Dividends paid	(6,033)	(5,009)
	--------	--------
Net cash outflow from financing activities	(6,036)	(5,012)
	--------	--------
Increase in cash and cash equivalents	7,609	3,189
Effect of foreign exchange rate changes	(70)	(24)
	--------	--------
Change in cash and cash equivalents	7,539	3,165
Cash and cash equivalents at start of year	5,509	2,344
	--------	--------
Cash and cash equivalents at end of the year	13,048	5,509
	--------	--------
Comprised of:
Cash at bank	44	119
BlackRock’s Institutional Cash Series plc – Sterling Liquidity Fund	13,004	5,390
	--------	--------
	13,048	5,509
	========	========

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 in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006. All of the Company’s operations are of a continuing nature.

Insofar as the Statement of Recommended Practice (SORP) for investment trust companies and venture capital trusts issued by the Association of Investment Companies (AIC), revised in November 2014, is compatible with IFRS, the financial statements have been prepared in accordance with guidance set out in the SORP.

Substantially all of the assets of the Company consist of securities that are readily realisable and, accordingly, the Directors believe that the Company has adequate resources to continue in operational existence for the foreseeable future. Consequently, the Directors have determined that it is appropriate for the financial statements to be prepared on a going concern basis.

The Company’s financial statements are presented in sterling, which is the functional currency of the Company and 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.

A number of new standards, amendments to standards and interpretations that became effective during the year, had no significant impact on the amounts reported in these financial statements but may impact accounting for future transactions and arrangements.

At the date of authorising these financial statements the following standards and interpretations which had not been applied in these financial statements were in issue but not yet effective.

IFRS 9 Financial Instruments (2014) replaces IAS 39 and deals with a package of improvements including principally a revised model for classification and measurement of financial instruments, a forward looking expected loss impairment model and a revised framework for hedge accounting. In terms of classification and measurement the revised standard is principles based depending on the business model and nature of cash flows. Under this approach, instruments are measured at either amortised cost or fair value. Under IFRS 9 equity and derivative investments will be held at fair value because they fail the ‘solely payments of principal and interest’ test and debt investments will be held at fair value if the business model is to manage them on a fair value basis. The standard is effective from 1 January 2018 with earlier application permitted. The Company does not plan to early adopt this standard. The standard is not expected to have any impact on the Company as all its investments are held at fair value through profit or loss.

Amendments to IAS 7 – Disclosure initiative Statement of Cash Flows (effective 1 January 2017). The amendments will not have a significant effect on the presentation of the Cash Flow Statement within the financial statements of the Company as the Company does not have any debt.

Amendments to IAS 12 – Recognition of deferred tax assets for unrealised losses (effective 1 January 2017). The amendment will not have a significant effect on the measurement of amounts recognised in the financial statements of the Company.

IFRS 15 – Revenue from Contracts with Customers (effective 1 January 2018) specifies how and when an entity should recognise revenue and enhances the nature of revenue disclosures. Given the nature of the Company’s revenue streams from financial instruments, the provisions of this standard are not expected to have a material impact.

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

(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 recognised 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. Provision is made for any dividends not expected to be received. Special dividends, if any, are treated as a capital or a revenue receipt depending on the facts or circumstances of each particular case. Interest income and deposit interest is accounted for on an accruals basis.

Where the Company has elected to receive its dividends in the form of additional shares rather than 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, including finance costs, are accounted for on an accruals basis. Expenses have been charged wholly to the revenue column of the Statement of Comprehensive Income, except as follows:

• expenses which are incidental to the acquisition or sale of an investment are charged to the capital column of the Statement of Comprehensive Income. Details of transaction costs on the purchases and sales of investments are disclosed within note 10 to the financial statements on page 56 of the Annual Report and Financial Statements.

• expenses are treated as capital where a connection with the maintenance or enhancement of the value of the investments can be demonstrated.

• the investment management fee and finance costs have been allocated 75% to the capital column and 25% to the revenue column of the Statement of Comprehensive Income in line with the Board’s expected long term split of returns, in the form of capital gains and income respectively, from the investment portfolio.

• performance fees are allocated 100% to the capital column of the Statement of Comprehensive Income as fees are generated in connection with enhancing the value of the investment portfolio.

(f) Taxation
The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the Statement of Comprehensive Income because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that were applicable at the balance sheet date.

Where expenses are allocated between capital and revenue, any tax relief in respect of the expenses is allocated between capital and revenue returns on the marginal basis using the Company’s effective rate of corporation taxation for the accounting period.

Deferred taxation is recognised in respect of all temporary differences that have originated but not reversed at the financial reporting date, where transactions or events that result in an obligation to pay more tax in the future or a right to less tax in the future have occurred at the financial reporting date. This is subject to deferred tax 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 temporary differences can be deducted. Deferred tax assets and liabilities are measured at the rates applicable to the legal jurisdictions in which they arise.

(g) Investments held at fair value through profit or loss
The Company’s investments are designated upon initial recognition as held at fair value through profit or loss in accordance with IAS 39 – Financial Instruments: Recognition and Measurement and are managed and evaluated on a fair value basis in accordance with its investment strategy.

All investments are measured initially and subsequently at fair value through profit or loss. Purchases of investments are recognised on a trade date basis. The sales of assets are recognised at the trade date of the disposal. Proceeds are measured at fair value, which is regarded as the proceeds of sale less any transaction costs.

The fair value of the equity investments is based on their quoted bid price at the financial reporting date, without deduction for the estimated future selling costs. This policy applies to all current and non current asset investments held by the Company.

Changes in the value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Statement of Comprehensive Income as Net profit 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.

(h) Derivatives
The Company can hold long and short positions in contracts for difference (CFD) and index futures which are held at fair value based on the bid prices of the underlying securities in respect of long positions, and the offer prices of the underlying securities in respect of short positions.

Profits and losses on derivative transactions are recognised in the Statement of Comprehensive Income. They are shown in the capital column of the Statement of Comprehensive Income if they are of a capital nature and are shown in the revenue column of the Statement of Comprehensive Income if they are of a revenue nature. To the extent that any profits or losses are of a mixed revenue and capital nature, they are apportioned between revenue and capital accordingly.

(i) Other receivables and other payables
Other receivables and other payables do not carry any interest and are short term in nature and are accordingly stated at their nominal value.

(j) Dividends payable
Under IFRS, final dividends should not be accrued in the financial statements unless they have been approved by shareholders before the financial reporting date. Interim dividends should not be accrued in the financial statements unless they have been paid.

Dividends payable to equity shareholders are recognised in the Statement of Changes in Equity.

(k) Foreign currency translation
Transactions involving foreign currencies are converted at the rate ruling at 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 rate ruling on the financial reporting date. Foreign exchange differences arising on translation are recognised in the Statement of Comprehensive Income as a revenue or capital item depending on the income or expense to which they relate. For investment transactions and investments held at the year end, denominated in a foreign currency, the resulting gains or losses are included in Net profit on investments held at fair value through profit or loss in the Statement of Comprehensive Income.

(l) Cash and cash equivalents
Cash comprises cash in hand and demand deposits. Cash equivalents are 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) Bank borrowings
Bank borrowings are recorded as the proceeds are received. Finance charges are accounted for on an accruals basis in the Statement of Comprehensive Income using the effective interest rate method and are added to the carrying amount of the instruments to the extent that they are not settled in the period in which they arise.

3. INCOME

	2017  £’000	2016  £’000
Investment income:
UK listed dividends	5,866	5,430
UK listed special dividends	441	403
UK listed stock dividend	58	36
UK listed REIT dividends	482	405
Overseas listed dividends	1,192	474
Overseas listed special dividends	177	46
Income from contracts for difference	370	76
	--------	--------
	8,586	6,870
	--------	--------
Other income:
Deposit interest	2	1
Underwriting commission	13	–
	--------	--------
Total income	8,601	6,871
	=====	=====

Dividends and interest received during the year amounted to £8,344,000 and £2,000 (2016: £6,364,000 and £1,000).

A special dividend of £8,000 has been recognised in capital (2016: dividends of £131,000).

4. INVESTMENT MANAGEMENT AND PERFORMANCE FEES

	2017			2016
	Revenue  £’000	Capital  £’000	Total  £’000	Revenue  £’000	Capital  £’000	Total  £’000
Investment management fee	661	1,982	2,643	621	1,862	2,483
Performance fee	–	4,659	4,659	–	768	768
	--------	--------	--------	--------	--------	--------
Total	661	6,641	7,302	621	2,630	3,251
	=====	=====	=====	=====	=====	=====

Performance fees have been wholly allocated to the capital column of the Statement of Comprehensive Income as the performance has been predominantly generated through capital returns from the investment portfolio. As at 30 November 2017, the performance fee payable to the Investment Manager amounted to £4,659,000 (2016: £768,000).

With effect from 1 December 2017 the performance fee will be changed from 10% to 15% of Net Asset Value total return outperformance of the benchmark measured over a two year rolling basis and will be applied on the average gross assets over two years. The previous cap on the performance fee of 1% of average gross assets over a one year period has been replaced with a cap on total management and performance fees of 1.25% of average gross assets over a two year period which has the effect of capping performance fees at 0.9% of average gross assets over two years. This has been effective from 1 December 2017.

The rate charged for investment management fees changed with effect from 1 August 2017 from 0.70% per annum to 0.35% per annum on month end gross assets. The management fee is charged 25% to revenue and 75% to capital.

5. OTHER OPERATING EXPENSES

	2017  £’000	2016  £’000
Allocated to revenue:
Custody fee	8	7
Auditor's remuneration:
– audit services	37	36
– other assurance services	6	6
Registrar’s fee	33	33
Directors’ emoluments	167	150
Broker fees	37	37
Depositary fees	49	39
Marketing fees	92	126
Marketing fee accrual written back	(38)	(34)
Other administrative costs	134	119
	--------	--------
	525	519
	--------	--------
Allocated to capital:
Custody transaction charges	16	18
	--------	--------
	16	18
	--------	--------
The Company’s ongoing charges, calculated as a percentage of average net assets and using expenses, excluding performance fees, finance costs, and taxation were:	0.9%	1.1%
	--------	--------
The Company’s ongoing charges, calculated as a percentage of average net assets and using expenses, including performance fees but excluding finance costs and taxation were:	2.2%	1.3%
	========	========

Details of the calculation methodology for ongoing charges can be found in the Glossary on page 81 of the Annual Report and Financial Statements.

Auditor’s remuneration for other assurance services comprised £6,000 relating to the interim review (2016: £6,000). For the year ended 30 November 2017, expenses of £16,000 (2016: £18,000) were charged to the capital column of the Statement of Comprehensive Income. These relate to transaction costs charged by the custodian on sale and purchase trades.

Details of the Directors’ emoluments are given in the Directors’ Remuneration Report on pages 28 to 31 of the Annual Report and Financial Statements.

6. DIVIDENDS
Dividends paid on equity shares

	Record date	Payment date	2017  £’000	2016  £’000
Final dividend of 6.25p per share for the year ended 30 November 2016 (2015: 5.60p)	17 February 2017	29 March 2017	4,571	4,095
Interim dividend of 2.00p per share for the year ended 30 November 2017 (2016: 1.25p)	4 August 2017	23 August 2017	1,462	914
			--------	--------
			6,033	5,009
			========	========

The total dividends payable in respect of the year ended 30 November 2017 which form the basis 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 this legislation.

Dividends paid, proposed or declared on equity shares:	2017  £’000	2016  £’000
Interim dividend of 2.00p per share for the year ended 30 November 2017 (2016: 1.25p)	1,462	914
Final dividend of 7.00p per share for the year ended 30 November 2017* (2016: 6.25p)	5,119	4,571
	--------	--------
	6,581	5,485
	--------	--------

*       Based on 73,130,326 (2016: 73,130,326) ordinary shares in issue on 9 February 2018.

7. EARNINGS AND NET ASSET VALUE PER ORDINARY SHARE
Total revenue and capital return per share and net asset value per share are shown below and have been calculated using the following:

	2017  £’000	2016  £’000
Net revenue profit attributable to ordinary shareholders (£’000)	7,396	5,723
Net capital profit attributable to ordinary shareholders (£’000)	93,936	14,490
	--------	--------
Total profit attributable to ordinary shareholders (£’000)	101,332	20,213
	========	========
Equity shareholders’ funds (£’000)	396,846	301,547
	--------	--------
The weighted average number of ordinary shares in issue during the year, on which the earnings per ordinary share was calculated was:	73,130,326	73,130,326
	--------	--------
The actual number of ordinary shares in issue at the year end, on which the net asset value per ordinary share was calculated was:	73,130,326	73,130,326
	========	========
Return per share
Revenue earnings per share – (pence)	10.11	7.83
Capital earnings per share – (pence)	128.45	19.81
	--------	--------
Total earnings per share – (pence)	138.56	27.64
	========	========
Net asset value per ordinary share – (pence)	542.66	412.34
	--------	--------
Ordinary share price – (pence)	457.50	325.00
	========	========

There were no dilutive securities at the year end.

8. CALLED UP SHARE CAPITAL

	Number of  ordinary  shares in  issue	Treasury  shares	Total  shares	Nominal  value  £’000
Allotted, called up and fully paid share capital comprised:
Ordinary shares of 5p each:
At 30 November 2016	73,130,326	7,400,000	80,530,326	4,026
	--------	--------	--------	--------
At 30 November 2017	73,130,326	7,400,000	80,530,326	4,026
	========	========	========	========

No ordinary shares were issued, purchased or cancelled in the year (2016: nil).

9. RESERVES

	Share  premium  account  £’000	Capital  redemption  reserve  £’000	Special  reserve  £’000	Capital  reserve  arising on  investments  sold  £’000	Capital  reserve  arising on  revaluation  of investments  held  £’000	Revenue  reserve  £’000
At 30 November 2016	21,049	11,905	35,272	151,834	67,177	10,284
Movement during the year:
Total Comprehensive Income:
Net capital profit for the year	–	–	–	41,433	52,503	-
Net revenue profit for the year	–	–	–	–	–	7,396
Transactions with owners, recorded directly to equity:
Dividends paid	–	–	–	–	–	(6,033)
	--------	--------	--------	--------	--------	--------
At 30 November 2017	21,049	11,905	35,272	193,267	119,680	11,647
	=====	=====	=====	======	======	=====

The share premium account and capital redemption reserve are not distributable profits under the Companies Act 2006. The special reserve may be used as distributable profits for all purposes and, in particular, for the repurchase by the Company of its ordinary shares and for payment as dividends. In accordance with the Company’s articles, net capital returns may be distributed by way of dividend.

10. VALUATION OF FINANCIAL INSTRUMENTS

Financial assets and financial liabilities are either carried in the Statement of Financial Position at their fair value (investment and derivatives) or at an amount which is a reasonable approximation of fair value (due from brokers, dividends and interest receivable, due to brokers, accruals, cash at bank and bank overdrafts). IFRS 13 requires the 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 2(g) to the Financial Statements on page 51 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 as follows.

The fair value hierarchy has the following levels:

Level 1 – Quoted market price in an active market for an identical instrument. 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 used to price securities based on 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. Valuation techniques used for non-standardised financial instruments such as options, currency swaps and other over-the-counter derivatives include the use of comparable recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants making the maximum use of market inputs and relying as little as possible on entity specific inputs.

As at the year end the CFDs were valued using the underlying equity bid price and the contract price at the inception of the CFD trade or at the trade reset date. There have been no changes to the valuation technique since the previous year or as at the date of this report.

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

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’ 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.

Contracts for difference have been classified as Level 2 investments as their valuation has been based on market observable inputs represented by the market prices of the underlying quoted securities to which these contracts expose the Company. Index futures have also been classified as level 2 investments.

Fair values of financial assets and financial liabilities
The table below sets out fair value measurements using the IFRS 13 fair value hierarchy.

Financial assets/(liabilities) at fair value through profit or loss  at 30 November 2017	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Assets:
Equity investments	390,326	–	–	390,326
Contracts for difference (gross exposure on long positions)	–	74,071	–	74,071
Liabilities:
Contracts for difference (gross exposure on short positions)	–	(25,020)	–	(25,020)
Index futures – (gross exposure on short position)	–	(9,622)	–	(9,622)
	-----------	----------	-----------	------------
	390,326	39,429	–	429,755
	======	======	======	=======

Financial assets/(liabilities) at fair value through profit or loss  at 30 November 2016	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Assets:
Equity investments	297,072	-	–	297,072
Contracts for difference (gross exposure on long positions)	–	56,467	–	56,467
Liabilities:
Contracts for difference (gross exposure on short positions)	–	(23,260)	–	(23,260)
Index futures – (gross exposure on short position)	–	(2,452)	–	(2,452)
	-----------	----------	------------	-----------
	297,072	30,755	–	327,827
	======	======	======	======

There were no transfers between levels for financial assets and financial liabilities during the year recorded at fair value as at 30 November 2017 and 30 November 2016. The Company did not hold any Level 3 securities throughout the financial year or as at 30 November 2017 (2016: nil).

11. CONTINGENT LIABILITIES
There were no contingent liabilities at 30 November 2017 (2016: nil).

12. ANNUAL REPORT

Copies of the Annual Report and Financial Statements will be sent to members shortly and will be available from the registered office, c/o The Company Secretary, BlackRock Throgmorton Trust plc, 12 Throgmorton Avenue, London EC2N 2DL. 

13. ANNUAL GENERAL MEETING

The Annual General Meeting of the Company will be held at 12 Throgmorton Avenue, London EC2N 2DL on Thursday, 22 March 2018 at 11.00 a.m.

This announcement contains inside information as defined in EU Regulation No. 596/2014 and is in accordance with the Company's obligations under Article 17 of that Regulation.   Upon the publication of this announcement the inside information within is now considered to be in the public domain.

ENDS

The Annual Report will also be available on the BlackRock website at blackrock.co.uk/thrg.  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, Closed End Funds, BlackRock Investment Management (UK) Limited
Tel: [phone]

Press Enquiries:

Lucy Horne, Lansons Communications – Tel:  [phone]
E-mail:  [e-mail]

9 February 2018

12 Throgmorton Avenue
London
EC2N 2DL