Final Results

BlackRock Throgmorton Trust plc

(Legal Entity Identifier: 5493003B7ETS1JEDPF59)

Information disclosed in accordance with Article 5 Transparency Directive and DTR 4.1

Annual Results Announcement for the year ended 30 November 2020

PERFORMANCE RECORD

	As at 30 November 2020	As at 30 November 2019



Net assets (£000)¹	596,215	470,057
Net asset value per ordinary share	681.24p	634.10p
Ordinary share price (mid-market)	682.00p	640.00p
Benchmark Index²	15,232.31	14,670.11
Premium to cum income net asset value³	0.1%	0.9%
Average premium/(discount) to cum income net asset value for the year³	0.2%	(4.6%)
Performance
Net asset value per share (with dividends reinvested)³	+9.1%	+24.4%
Benchmark Index (with dividends reinvested)²	+3.8%	+8.0%
Ordinary share price (with dividends reinvested)³	+8.2%	+42.8%

	For the year ended 30 November 2020	For the year ended 30 November 2019	Change %
Revenue
Net revenue profit after taxation (£000)	5,379	6,265	-14.1%
Revenue return per ordinary share	6.57p	8.56p	-23.2%
Dividends per ordinary share
Interim	2.50p	2.50p	+0.0%
Final	7.70p	7.70p	+0.0%
	--------------	--------------	--------------
Total dividends paid and payable	10.20p	10.20p	+0.0%
	========	========	========

ANNUAL PERFORMANCE FOR THE FIVE YEARS TO 30 NOVEMBER 2020

	NAV %	Benchmark Index^{2 %}	Ordinary Share Price (mid-market) %
2016	7.3	6.3	-2.1
2017	33.9	21.3	43.8
2018	-2.7	-9.0	1.8
2019	24.4	8.0	42.8
2020	9.1	3.8	8.2

Performance figures 1 Year change %, calculated in sterling terms with dividends reinvested.

Sources: BlackRock and Datastream.

¹ The change in net assets reflects market movements, dividends paid and share issues during the year.

² The Company's Benchmark Index is the Numis Smaller Companies plus AIM (excluding Investment Companies) Index. With effect from 22 March 2018, the Numis Smaller Companies plus AIM (excluding Investment Companies) Index replaced the Numis Smaller Companies excluding AIM (excluding Investment Companies) Index as the Company’s Benchmark Index. From 1 December 2013 to 21 March 2018, the Company’s Benchmark Index was the Numis Smaller Companies excluding AIM (excluding Investment Companies) Index. Prior to 1 December 2013 the Company’s Benchmark Index was the Numis Smaller Companies plus AIM (excluding Investment Companies) Index. The performance of the Benchmark Indices during these periods has been blended to reflect these changes.

³ Alternative Performance Measures, see Glossary contained within the Annual Report and Financial Statements.

CHAIRMAN’S STATEMENT

Dear Shareholder

YEAR’S HIGHLIGHTS

· Strong investment performance maintained in the year to 30 November 2020:

– NAV outperformed the Benchmark Index over 1 year by 5.3% and Share Price outperformed the same index over 1 year by 4.4%

NAV has now outperformed the Benchmark Index by 30.1% over 3 years, by 58.4% over 5 years and by 155.0% over 10 years

– Share Price has now outperformed the Benchmark Index by 55.3% over 3 years, by 89.8% over 5 years and by 280.1% over 10 years

– The Company is one of the strongest performers in its peer group¹ over all time periods

· Share Price has remained close to NAV through most of a challenging year

· 13.3m shares (6.4m from Treasury and 6.9m new shares) raising £83.9m have been issued

· Final dividend maintained at of 7.70p per share (2019: 7.70p)

I am pleased to present the Annual Report for the year ended 30 November 2020.

OVERVIEW
In my statement for the six months to 31 May 2020, I commented that the first half of the year had been a remarkable and challenging period, dominated of course by the extraordinary upheaval brought about by COVID-19. These challenges continued in to the second half of the financial year with the result that, while its long-term implications have yet to play out, the pandemic has impacted almost every aspect of life in the global economy through most of the year.

The Board has maintained a regular dialogue with the Portfolio Manager, Dan Whitestone, and the rest of the BlackRock team throughout the year and I would like to, once again, pay tribute to how they have responded to the many and varied challenges the year has brought, not the least of which is a transformed working environment. They have shown great adaptability, skill and professionalism in their response, something that has continued to serve your Company very well.

What is also clear from this difficult year is that your Manager’s longstanding focus on financially strong companies, many with innovative and disruptive business models, has continued to serve the Company well; hopefully it will continue to do so in the months and years ahead.

PERFORMANCE
Over the twelve months to 30 November 2020, the Company’s NAV returned 9.1%, compared with a total return of 3.8% from the Company’s Benchmark Index, the Numis Smaller Companies plus AIM (excluding Investment Companies) Index. This outperformance of the Benchmark Index by 5.3% is a considerable achievement given the challenging economic and political backdrop during the period. The share price returned +8.2% delivering outperformance of 4.4% during the year as the Company’s premium to NAV narrowed slightly from a premium of 0.9% to a premium of 0.1%.

¹ The peer group is the UK Smaller Companies investment trust sector.

PERFORMANCE RECORD TO 30 NOVEMBER 2020 (WITH DIVIDENDS REINVESTED)

	1 year change %	3 year change %	5 year change %
NAV per share	9.1	32.1	89.8
Share price	8.2	57.3	121.2
Benchmark Index	3.8	2.0	31.4

Since the year end, the NAV has increased by 14.5% to the close of business on 5 February 2021 compared to the Benchmark Index which has increased by 12.8% (all figures in sterling terms with dividends reinvested) to produce further outperformance of 1.7%. The Share Price over the same period has increased by 15.8% and so outperformed the Benchmark Index by 3.0%.

As a result, the Company retains one of the strongest long-term track records in the UK Smaller Companies investment trust sector with NAV outperforming the Benchmark Index by 30.1% over 3 years; by 58.4% over 5 years and by 155.0% over 10 years. The equivalent share price outperformed the Benchmark Index by 55.3% over 3 years; 89.8% over 5 years and 280.1% over 10 years.

It is also very good to see this outperformance coming consistently throughout the year in very different investment environments and market conditions, and moreover to see it coming from both the Company’s long and short positions.

As I reported in the half yearly financial report, the six months to 31 May 2020 can be viewed as two separate periods with very different market conditions. In the three months to 29 February 2020 the total return on net assets was -3.8% compared to the Company’s Benchmark Index of -5.1% for an outperformance of 1.3%. With the further spread of COVID-19 in March 2020 and the resulting market falls, the total return on net assets for the three months to 31 May 2020 was -8.5% compared to -10.2% for the Company’s Benchmark Index for further outperformance of 1.7%. This meant that performance for the six months to 31 May 2020 was -12.0% compared to a total return for the same period from the Company’s Benchmark Index of -14.8%, an outperformance of 2.8%.

The total return on net assets during the following six months from 1 June 2020 to 30 November 2020 was +24.0% as central banks and government support combined with positive news on vaccines compared to +21.8% for the Benchmark Index, resulting in outperformance of 2.2%. This resulted in Net Asset Value per share outperformance for the 12 months ended 30 November 2020 of 5.3%. On top of this, your Manager generated performance from both the Company’s short and long positions over the year of 9.5% and 1.8% respectively.

These achievements continue to be recognised by a variety of industry awards. This year I am very pleased to report that the Company won the AJ Bell Investment Trust Award 2020 in the UK Smaller Companies Active category and the Money Observer Investment Trust Award 2020 for Best UK Growth Trust. It was also awarded Best UK Smaller Companies Trust in the ADVFN International Financial Awards 2020.

All of which means that our Portfolio Manager, Dan Whitestone, is to be congratulated once again on what has been another impressive year, particularly given the challenging circumstances.

Further information on portfolio performance, positioning and the outlook for the forthcoming year can be found in the Investment Manager’s report below.

SHARE PRICE DISCOUNT/PREMIUM
During the year to 30 November 2020 the Company’s share price discount/premium to NAV ranged between a discount of 12.0% and a premium of 4.9% and ended the year at a premium of 0.1% (30 November 2019: 0.9%). The 12-month average premium as at 30 November 2020 was 0.2% (average discount 2019: 4.4%) versus the AIC UK Smaller Companies investment trust sector average discount of 8.4%. As at 5 February 2021 the Company’s shares were trading at a premium of 1.3%. Despite what has been a challenging and volatile year it is pleasing to note that the Company’s discount has been relatively stable and traded within a tight range for most of the year.

Although the Board has not seen fit to buy back shares during the year, it believes that it is in shareholders’ interests that the share price does not trade at an excessive premium or discount to NAV. Therefore, where deemed to be in shareholders’ long-term interests, it may exercise its powers to issue or buy back shares with the objective of ensuring that an excessive premium or discount does not arise.

The Company is therefore once again seeking shareholder authority at the forthcoming Annual General Meeting to issue up to 10%, and to buy back up to 14.99%, of the Company’s issued share capital and recommends that shareholders support the renewal of these powers.

Further information in relation to the discount can be found within the Annual Report and Financial Statements.

SHARE ISSUANCE
The Board is pleased that, following a period of strong investment performance and active marketing, the Company issued a total of 13.3m ordinary shares during the year raising total gross proceeds of £83.9m via a combination of ongoing tap issuance in response to market demand and a structured placing in November 2020.

Your Company was one of very few in the sector trading on a premium during the year and we are pleased that the Company was able to grow as a result. Equally encouraging was the successful placing in December 2020 which was one of very few carried out in the UK Smaller Companies investment trusts sector in the past decade. We believe that the Company’s ability to raise capital under the current challenging conditions is further evidence of shareholders’ ongoing support of, and investors’ interest in, both the Company’s investment strategy and of our Manager.

The Board believes growing the Company has benefited all shareholders because all share issuance was carried out at a premium to Net Asset Value, the fixed costs of the Company are as a result spread over a wider asset base and the increased size of the Company should improve liquidity in the shares.

This demand necessitated calling two General Meetings of the Company’s shareholders, one in late February 2020 and one in December 2020 to renew the Board’s authority to sell shares from Treasury and/or issue new shares representing up to 10% of the Company’s issued share capital. Resolutions renewing these powers were supported by the vast majority of shareholders with some 91% of votes in February and 87% of votes in December in favour of the resolutions.

As it does each year, the Board is seeking to renew at the AGM its powers to issue new shares and for up to 10% of the Company’s shares to be issued on a non-pre-emptive basis. It should be noted that these powers, if approved, will substitute, not add to, the outstanding authority given to issue shares at the General Meeting in December 2020. The Board believes that support of these resolutions are in shareholders’ best interests and therefore again encourages shareholders to support the relevant resolutions.

REVENUE RETURN AND DIVIDENDS
The revenue return per share for the year amounted to 6.57 pence per share, compared with 8.56 pence per share for the previous year. This represents a fall of 23.2% and results from decreases in both ordinary and special dividends received during the period, predominantly as a result of the COVID-19 pandemic which has meant that many companies have suspended their dividend payments due to the uncertain outlook.

The Board recognises that, although the Company’s objective is capital growth, shareholders value consistency in the dividends paid by the Company; the Directors are therefore pleased to declare a proposed final dividend of 7.70 pence per share for the year ended 30 November 2020 (2019: 7.70p). This, together with the interim dividend of 2.50 pence per share paid on 28 August 2020, would give a total dividend for the year of 10.20 pence per share, maintaining the total dividend distributed to shareholders in the prior financial year. This dividend will be paid on 2 April 2021, subject to shareholder approval at the forthcoming AGM, to shareholders on the Company’s register on 19 February 2021.

One of the features of investment trusts is their ability to distribute retained revenue from previous periods in years like this one where revenue falls in order to smooth out dividends paid. The proposed dividend will mean that the Company will pay £3.6m from revenue reserves this year, representing 40.2% of the total dividend paid. After this payment, the Company will retain some £5.2m in revenue reserves. In addition, the Company has substantial distributable capital reserves, as set out in note 15 to the Financial Statements contained within the Annual Report and Financial Statements.

OPERATIONAL RESILIENCE
Throughout the COVID-19 outbreak the Board has been working closely with our Manager, BlackRock, and the Company’s key suppliers to minimise the risk the virus poses to the health and wellbeing of all those working on the management and administration of the Company. We have received regular updates on the portfolio, and I am pleased to report that, while the Company has not been able to hold the AGM or either of the two General Meetings it held this year in the normal way, the Company’s operations have not been adversely affected and that established business continuity plans have been operating effectively.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE MATTERS
Your Board is conscious that Environmental, Social and Governance (ESG) matters are increasingly at the forefront of investors’ minds. It therefore believes that it is important that companies in which your Company invests operate in a responsible and sustainable way having regard to the interests of all their stakeholders, whether these are shareholders, employees, customers, regulators or suppliers.

With this in mind, our Investment Manager, BlackRock, has an Investment Stewardship team which is responsible for protecting and enhancing the value of your Company’s investments by, for example, encouraging business and management practices in portfolio companies that support sustainable financial performance over the long-term.

Further information on ESG and Socially Responsible Investment can be found in the Strategic Report below.

CORPORATE GOVERNANCE
The Board takes its governance responsibilities very seriously and follows best practice requirements as closely as possible. The revised UK Code of Corporate Governance (the UK Code) published in 2018 requires enhanced disclosure setting out how we, as Directors, have fulfilled our duties in taking into account the wider interests of stakeholders in promoting the success of the Company. Further details of these are included within the Annual Report and Financial Statements.

The Board hopes to continue to grow your Company which may, in due course, result in membership of the FTSE 250 which would bring with it some additional governance requirements. Having considered the provisions and application of the UK Code as it does each year and with these plans to grow in mind, the Board has resolved to appoint an existing Director, Louise Nash, as the Company’s Senior Independent Director and establish a new Remuneration Committee to be chaired by Angela Lane who joined the Board in June 2020. The appointment of a Senior Independent Director and the establishment of the Remuneration Committee are effective from 1 February 2021.

Further information on the duties and responsibilities of the Remuneration Committee and the Senior Independent Director can be found in the Directors’ Report contained within the Annual Report and Financial Statements.

BOARD COMPOSITION
Following nine years of diligent service on the Board, Jean Matterson has indicated that she wishes to retire from the Board at the forthcoming AGM. I would like to take this opportunity to thank Jean for her invaluable contribution to the ongoing success of the Company and in particular for the benefit of her expertise and insight into the UK market during her tenure.

The Board operated for many years with five Directors until, with the need for one Director to step down at short notice in March 2019, the Board continued for a short period with four Directors. As I reported at the half year, a Board of five Directors was re-established when we welcomed Angela Lane to the Board on 10 June 2020. Further details of this appointment can be found in my statement in the half yearly financial report and within the Annual Report and Financial Statements; as I noted at the half year, we are delighted to welcome Angela to the Board. She will serve on the Audit and Nomination Committees and, with effect from 1 February, Chair the Company’s new Remuneration Committee.

In accordance with the Board’s succession plans, and to continue to ensure we retain both the skills and diversity that will likely be expected of a company in the FTSE 250 in the coming years, I reported at the half year that the Board had agreed to commence a search process to identify new Directors using a third party recruitment firm, Fletcher Jones. Following the completion of a thorough search process which identified a number of very suitable candidates, the Board has decided to increase the number of Directors to six, at least for the next couple of years.

To this end, I am delighted to welcome Nigel Burton, who joined the Board on 21 December 2020 as our sixth Director, and Merryn Somerset Webb, who will join the Board just ahead of the AGM on 24 March 2021 to replace Jean Matterson. Nigel brings with him a strong background in investment banking and the management of smaller companies and Merryn brings with her considerable knowledge of a broad range of investment matters, not least the personal finance markets. Their appointments are subject to approval by shareholders at the forthcoming AGM. Both Directors will serve on the Company’s Audit, Nomination, Remuneration and Management Engagement Committees.

The Board’s policy on Director tenure and succession planning can be found in the Corporate Governance Statement contained within the Annual Report and Financial Statements. Further details of all the Directors can be found in their biographies contained within the Annual Report and Financial Statements.

AMENDMENT OF THE ARTICLES OF ASSOCIATION
In light of the circumstances created by the COVID-19 pandemic, in particular the restrictions on social interactions which have made it impossible for shareholders to attend physical general meetings and the Government’s plans to permit virtual general meetings, the Board is proposing amendments to the Articles. These changes will enable the Company to hold general meetings (wholly or partially) by electronic means and provide additional powers in respect of postponing or adjourning meetings and will ensure that your Company can take advantage of the changes, once implemented, proposed by the Government.

The Board’s aim is to make it easier for shareholders to participate in general meetings through introducing electronic access for those not able to travel, and also to ensure that appropriate security measures are in place for the protection and wellbeing of shareholders. I should make it clear that these powers would only be used if the specific circumstances or applicable law and regulation required it and the Board’s intention is to continue to hold a physical AGM provided it is both safe and practical to do so. The safety of all of the Company’s stakeholders must of course remain paramount.

The principal changes proposed to be introduced in the Articles, and their effect, are set out in more detail in the Directors’ report contained within the Annual Report and Financial Statements.

ANNUAL GENERAL MEETING
The Company’s Annual General Meeting will be held on Wednesday, 24 March 2021 at 11.00 a.m. at the offices of BlackRock at 12 Throgmorton Avenue, London, EC2N 2DL. Details of the business of the meeting are set out in the Notice of Annual General Meeting contained within the Annual Report and Financial Statements.

The Board is mindful that, in a response to the COVID-19 pandemic, Stay at Home Measures were passed into law in England and Wales, with immediate effect, in statutory instruments (2020/350 in England and 2020/353 in Wales) made pursuant to the Public Health (Control of Disease) Act 1984. Under these restrictions, public gatherings of more than two people are not permitted at present.

Accordingly, it will not be possible for shareholders to attend general meetings in person until these restrictions are lifted. The only attendees who will therefore be permitted entry to the Company’s AGMs under the current legislation will be those who will need to be present to form the quorum to allow the business to be conducted. If there is any change to these restrictions, further information will be made available in due course through the Company’s website at www.blackrock.com/uk/thrg and the Regulatory News Service announcements of the London Stock Exchange.

As many shareholders look forward to hearing the views of the Investment Manager, the AGM will be followed by a webinar, which will include a presentation from Dan Whitestone, and will be followed by a live question and answer session. Shareholders are invited to join the 11.30 a.m. webinar and address any questions they have either by submitting questions during the webinar or in advance by writing to the Company Secretary at cosec@ blackrock.com. Details on how to register for this event will be made available prior to the AGM and can be found on the Company’s website at www.blackrock.com/uk/thrg, or by writing to the Company Secretary.

As shareholders will not be able to attend the Annual General Meeting, the Board strongly encourages all shareholders to exercise their votes by completing and returning their proxy forms in accordance with the notes to the Notice of Meeting contained within the Annual Report and Financial Statements. The Portfolio Manager’s presentation will be made available on the Company’s website following the AGM.

OUTLOOK
At the time of writing, the full extent of the economic and social impact of the pandemic and the duration of the measures being applied to limit the virus, along with the impact of the new trading arrangements with the European Union, remain unclear. As a result, the longer-term impact on how we live our lives, how businesses and public services operate and how governments will seek to regain equilibrium in their finances are very hard to predict. The outlook for the UK economy therefore remains uncertain and will depend, amongst other things, on the evolution of the pandemic, measures taken to protect public health and how our trading relationship with the EU develops.

The forthcoming years will present many challenges but your Portfolio Manager believes that UK small and mid-sized companies will continue to provide a great number of exciting investment opportunities. As you will read in Dan Whitestone’s report, which follows, he believes that a focus on stock and industry specifics can triumph over the current challenging macroeconomic conditions over the long-term, as proved to be the case this year. The Company’s portfolio therefore remains focused on high quality companies which have robust business models, strong cash flows, favourable industry characteristics and which are led by experienced management teams. Overall, your Manager believes there are grounds for cautious optimism.

Let me finish by again saying that your Board is confident that, in Dan Whitestone and BlackRock, we have a manager who has the resources, investment processes, insights and capability to continue to provide shareholders with long-term capital growth and an attractive return. It therefore remains fully supportive of the Company’s current approach and believes the Company can continue to meet its objectives of providing shareholders with long-term capital growth and an attractive total return.

CHRISTOPHER SAMUEL
Chairman
9 February 2021

INVESTMENT MANAGER’S REPORT

MARKET REVIEW
The COVID-19 pandemic remained the principal focus for stock markets globally throughout the period. The strong start for the UK market at the beginning of the financial year (December 2019), in response to the Conservative Party’s convincing majority in the UK General Election was soon a distant memory. The outbreak of Coronavirus sparked one of the most rapid contractions in equity markets ever witnessed, as investors became concerned over the potential impact of the virus on the global economy. Governments around the world continue to take steps to mitigate the pandemic’s impacts on their economies, through both lower interest rates and monetary easing as well as direct interventions to cover labour costs and ease business costs in the face of social shutdowns.

Since the trough in late March, markets have rebounded despite the unsurprising slowdown in global economic activity and sharp rise in unemployment as a result of the lockdowns. Throughout the period, stock markets have swung from responding favourably to signs of easing restrictions and positive updates in relation to potential vaccines, to heightened levels of volatility as spikes in case numbers continued to see regional lockdowns reinstated across the world. The year ended with the significant announcement of effective vaccines against COVID-19, which at the time of writing are now starting to be administered to the most vulnerable in certain countries, including the UK. This sparked an extreme reversal towards value and away from growth shares.

PERFORMANCE REVIEW
As stated in the half yearly financial report, 2020 has been an extremely challenging year to navigate. However, despite the challenges brought on by the pandemic, we are very pleased to report that the year has been a success for our strategy. At the six month stage when our benchmark had fallen -14.8%, the Company had outperformed the market by +2.8%. The short book (something that truly differentiates this Company from its peers) had contributed +2.5% to relative performance, and stock specifics within the long book had added to further outperformance of the Benchmark Index. Following an extremely strong second half of the year, the Company has delivered a total return of 9.1% (NAV net of fees) during the year and outperformed the Benchmark Index by 5.3%. This level of outperformance has certainly exceeded our expectations given the extreme circumstances experienced during the year, however, we believe that this result once again is proof that stock and industry specifics can triumph over the macro conditions, even in the midst of a global pandemic. Put simply, great companies with compelling offerings can continue to deliver great things regardless of what is thrown at them.

The strong outperformance during the year we believe is a testament to the superior toolkit that this Company has available with a combination of both the long and short books returning +9.5% and +1.8% respectively, emphasising the advantages of the Company’s unique structure of being able to generate alpha from shares that can fall as well as rise.

Despite the positive contribution from the short book, the top 10 largest contributors for the financial period were all long positions. As we discuss further below, these are very different businesses operating in different markets. The common theme is that these are all differentiated companies with compelling product offerings that in many cases have been able to leverage the power of technology to enhance their digital offerings. A great example of this is Games Workshop which was the largest positive contributor to performance during the year. This is a share that we discussed at length in the half yearly financial report, but since then the company has continued to grow its sales and profits through this crisis, with three upgrades to guidance, and all despite having to close operations completely at the beginning of the pandemic. It has been very successful in investing in its product offering, expanding its digital capabilities, and attracting increasing levels of new customers, which we believe will lead to a higher volume of repeat ordering. Games Workshop has undoubtedly had a stellar 2020 but we think the outlook is very positive and it remains the largest position in the portfolio.

YouGov, another long-term holding has continued to deliver strong growth in revenues and profits. The company continues to deliver on its strategy to monetise its online panel data across an increasing array of industries seeking data insights. Indeed, we expect strong and enduring demand for digital marketing and data analytics and believe YouGov’s differentiated and compelling offering is well placed to benefit. Shares in Avon Rubber performed well, with the business demonstrating resilience during the Coronavirus crisis. The company delivered strong organic revenue and profit growth throughout, and its long-term contracts provide a high level of earnings visibility. In addition, the sale of its dairy business has enabled greater focus on the protection business, and has strengthened its balance sheet, providing the business with the firepower for value-enhancing acquisitions to aid growth. Shares in specialist sustainable investing fund manager, Impax Asset Management were strong as the business has continued to generate strong inflows, benefiting from top performing strategies and increasing investor demand for sustainable products.

The Company’s ability to invest in non-UK listed shares has once again helped deliver outperformance to shareholders, with three of the top 10 contributors coming from international holdings: Masimo, Chegg and Xero. Masimo, a US listed medical device company has delivered strong revenue growth through the year, with upgrades to guidance. Chegg, as discussed in the half yearly financial report is an online educational platform that has seen subscriber growth accelerate as a result of COVID-19 as well as delivering increasing success in monetising its offering through study “bundles”. Chegg benefits from a subscription-based model providing high levels of recurring revenues, and we think is well placed to continue to monetise the virtual education environment over the coming years. Xero, the Australian-listed, cloud-based accounting software business, has continued to trade extremely well with strong subscriber additions across multiple geographies. What’s more, the capital-light business model and high gross margin ensures an accelerating drop through of revenues to profits and with the large and growing addressable market for cloud-based accounting software, we believe the multi-year opportunity for this business remains significant.

The largest detractors have been companies most heavily impacted during the early stages of the pandemic, notably within Consumer Services. As a result of lockdowns, travel bans and social distancing measures, several companies that we own/owned were mandated to suspend operations which had a significant financial impact. To hold ourselves to account, with hindsight we were too slow to reduce our exposure here in aggregate. The largest two detractors in this area were WH Smith and Jet2, both of which were victims of airline travel disruption. The inability to predict the duration of route closures for Jet2 or concession/shop closures in transportation hubs for WH Smith, and what the longer-term impact will be on air passenger volumes, has created enormous uncertainty over the profit outlook and cash drain on both businesses. Both businesses we believe are well managed companies with strong track records of value creation that have proved themselves as good operators and market share winners. However, due to the increased uncertainty facing these industries in the medium-term we have exited the position in Jet2 and significantly reduced the holding in WH Smith. Other detractors which have been similarly affected by pandemic related disruption include IWG, Vistry and JDWetherspoon.

ACTIVITY
The total number of holdings in the Company has increased modestly since the half yearly financial report and is currently 136; interestingly shorts remain low, at only 9 positions, which is far lower than shareholders should expect under normal market conditions. However, as previously discussed, we took the decision earlier in the year to close a significant number of our short positions which had fallen materially during February and March thereby locking in those gains ahead of a potential market recovery. This significant decision has certainly benefitted the Company this year.

Within the long book we have continued to increase our exposure to many of the long-term secular industrial trends that we have spoken about in the past which in many cases have been ‘turbo-charged’ as a result of the COVID-19 pandemic. For example, in digital payments through adding new holdings in Adyen and Boku; in video gaming we purchased Keywords Studios, Codemasters and added to Team17; and in cloud-enabled audio and visual communications we purchased SpirentCommunications and added to Gamma Communications.

We have also increased our exposure to fiscal and infrastructure related investment in the UK and US, given our belief in governments’ willingness to stimulate economic growth. We purchased a new holding in BalfourBeatty, and added to Breedon, Grafton and Morgan Sindall. We also took advantage of the market volatility to buy back into Howden Joinery at a depressed share price. We have owned Howden Joinery historically and know the company and the industry well and saw an opportunity to purchase a high-quality market-leading company at an attractive valuation. We think they will emerge with an even stronger competitive offering from this pandemic as they take market share.

Given that shorts in the portfolio remain low and the additions we have made within the long book, the Company is currently operating with a gross market exposure of around 123% and a net market exposure of around 119%.

PORTFOLIO POSITIONING
As a reminder, portfolio positioning will be driven by our focus on only two types of company. First would be what we define as having quality differentials, which are essentially differentiated long-term growth investments. These we would characterise as companies that have strong management teams, with a protected market position, a unique and compelling product offering with an attractive route to market, maybe benefitting from structural growth, and that are well financed with clean accounting. The second type of company relates to those that are leading industry change, the ‘disruptors’, and alternatively on the short side it would be the victims of industry change, the ‘disrupted’.

We think the Digital Transformation is a long-term structural growth trend, and where COVID-19 has accelerated corporate and government spend in recent months in their desire to reduce cost and complexity and embrace new methods of digital working and collaboration. It remains a key focus for every board globally. We have deliberately sought exposure to these trends in recent years, and have increased our exposure recently, as we think the growth outlook has improved, notably in digital payments, software-as-a-service, online learning, and cloud-enabled audio and visual communications.

Video Gaming is another industry where we think the outlook for growth has improved, where we see the value for content appreciating, a growing installed base of players and a long-term increase in player time and in-play monetisation. With major US tech companies launching streaming services for video gaming and acquiring games studios we see a positive outlook for the industry, and the UK is fortunate to possess some attractive companies at the forefront of this rapidly evolving and growing industry. We think the recent bidding war that has emerged for one of our holdings, Codemasters, highlights the value in the sector amidst a growing content “arms race” between global developers.

As discussed earlier, the short book has been reduced significantly. Where we have retained positions, they continue to be targeted in companies or industry profit pools, that we see as over-earning or under structural or cyclical pressure. Many of our short positions are within Consumer Services, which are either facing structural headwinds (digital disruption, low cost or specialised formats) or cyclical pressures (weakening consumer demand, rising costs). Both categories can be overlaid with a financial framework centred on weak balance sheets and poor cash conversion.

OUTLOOK
The economic outlook remains highly uncertain, however, we remain very excited about the opportunities ahead.

The Brexit resolution is the removal of a huge cloud of uncertainty that has significantly impacted valuations across the small and mid-cap universe, and so it would not surprise us at all to see more inflows into this universe. If anything, COVID-19 really should illustrate the attractions of investing in UK small and medium sized companies as so many businesses have performed so strongly through the pandemic, reflecting the strength of their offering and the global universe they serve.

Both of these make us think this rising tide should lead to a re-rating in valuations for many of our holdings. Furthermore the UK is leading the charge on rolling out its vaccinations, and while there is clearly potential for spikes in cases of the virus in the short-term, a viable vaccine provides light at the end of the tunnel for the world to emerge from the pandemic and return to normality.

History has shown that crises accelerate industrial trends, market share shifts, and changes in consumer behaviour. We thought this would be the case with COVID-19, but we have been surprised by the sheer speed and scale of the level of dispersion of financial performance that it has created across industries and companies. Some companies have been hit hard while others have been able to take market share at an accelerated rate. We remain of the firm belief that there are sizeable opportunities for companies that can differentiate themselves and/or are exposed to long-term secular trends, while the pressure on balance sheets and cashflows for struggling companies is intensifying. This dispersion of returns between sectors and intra-sectors is likely to persist.

Going forward, we expect two major trends to dominate at the stock and industry level. First is our belief in the acceleration of many secular trends catalysed by COVID-19, e.g. digital transformation, and as we have discussed in this report we believe we own many companies well placed to benefit from this. Second is our belief in the “Corporate Darwinism” unfolding across many industries as the differentiated and financially strong take market share at an accelerated rate from the weak and solidify their market leading positions. In fact we can already see growing evidence of this across retail, veterinary services, electrical component distribution, building materials to name just a few. What has been remarkable about this crisis is the level of dispersion of financial performance that it has created across industries and companies.

In summary, we remain very excited about the opportunities ahead. We think that the dispersion we have already seen is likely to be enduring because it is causing actual changes at the industry level: changes in market share and changes to profits and cashflows. By focusing on stock and industry analysis and backing the advantaged and the differentiated, we believe the Company remains well set to capitalise on the opportunities ahead. 2020 has been a year of extreme challenges but we truly believe that the successful result that has been delivered continues to support our belief that stock and industry specifics can triumph over macroeconomic factors, and most importantly, that this Company has a superior toolkit to take advantage of the full opportunity set presented by our universe. We thank shareholders for your ongoing support.

DAN WHITESTONE
BLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED
9 February 2021

PORTFOLIO OF INVESTMENTS

1 + Games Workshop (2019: 12th)
Leisure Goods
Market value: £19,534,000
Share of net assets: 3.4% (2019: 2.0%)

Developer, publisher and manufacturer of miniature war games.

2 + YouGov* (2019: 4th)
Media
Market value: £17,023,000
Share of net assets: 2.9% (2019: 2.8%)

Provider of survey data and specialist data analytics.

3 + Watches of Switzerland (2019: 13th)
Personal Goods
Market value: £16,604,000
Share of net assets: 2.8% (2019: 1.9%)

Retailer of luxury watches.

4 + Gamma Communications* (2019: 11th)
Mobile Telecommunications
Market value: £15,185,000
Share of net assets: 2.5% (2019: 2.0%)

Provider of communication services to UK businesses.

5 + Breedon* (2019: 16th)
Construction & Materials
Market value: £14,069,000¹
Share of net assets:2.4% (2019: 1.8%)

British construction materials group.

6 + Pets at Home (2019: 61st)
General Retailers
Market value: £14,050,000¹
Share of net assets: 2.4% (2019: 0.7%)

Retailer of pet supplies.

7 + Avon Rubber (2019: 20th)
Aerospace & Defence
Market value: £13,118,000
Share of net assets: 2.2% (2019: 1.6%)

Producer of safety masks.

8 – Dechra Pharmaceuticals (2019: 7th)
Pharmaceuticals & Biotechnology
Market value: £13,102,000
Share of net assets: 2.2% (2019: 2.5%)

Developer and supplier of pharmaceutical and other products focused on the veterinary market.

9 + Impax Asset Management* (2019: 33rd)
Financial Services
Market value: £12,272,000
Share of net assets: 2.1% (2019: 1.2%)

Provider of asset management.

10 – IntegraFin (2019: 3rd)
Financial Services
Market value: £11,942,000¹
Share of net assets: 2.0% (2019: 2.8%)

UK savings platform for financial advisors.

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

¹ Includes long derivative positions.

#	Company	£000	%	Description

11	Chegg General Retailers	11,459¹	1.9	Provider of education related services
12	CVS Group* General Retailers	11,231	1.9	Operator of veterinary surgeries
13	Learning Technologies* Software & Computer Services	10,973¹	1.8	Provider of e-learning services
14	Oxford Instruments Electronic & Electrical Equipment	10,674¹	1.8	Designer and manufacturer of tools and systems for industry and research
15	Ergomed* Pharmaceuticals & Biotechnology	10,317¹	1.8	Provider of pharmaceuticals services
16	4imprint Group Media	10,199	1.7	Supplier of promotional merchandise in the US
17	Grafton Group Support Services	10,019	1.7	Builders merchants in the UK, Ireland and Netherlands
18	Sumo Group* Leisure Goods	9,984	1.7	Provider of creative and development services to the video games and entertainment industries
19	Liontrust Asset Management Financial Services	9,795	1.6	Provider of asset management services
20	Team 17* Leisure Goods	9,745¹	1.6	British video game developer and publisher
21	RWS Holdings* Support Services	9,648	1.6	Provider of language support services
22	Qinetiq Group Aerospace & Defence	9,448	1.6	Provider of scientific and technological services to the defence, security and aerospace markets
23	Balfour Beatty Construction & Materials	9,080¹	1.5	Multinational infrastructure group
24	Spectris Electronic & Electrical Equipment	8,949	1.5	Supplier of productivity enhancing instrumentation and controls
25	Treatt Chemicals	8,700	1.5	Developer and manufacturer of ingredients for the flavour and fragrance industry
26	GB Group* Software & Computer Services	8,504	1.5	Developer and supplier of identity verification solutions
27	Spirent Technology Hardware & Hardware Equipment	8,477	1.4	Multinational telecommunications testing
28	Howden Joinery Group Support Services	8,426¹	1.4	Kitchen and joinery product supplier
29	Electrocomponents Support Services	8,332	1.4	Distributor of industrial and electronics products
30	Safestore Holdings Real Estate Investment Trusts	7,974	1.3	Provider of self-storage units
31	OSB Group Financial Services	7,841	1.3	Specialist lending business
32	XP Power Electronic & Electrical Equipment	7,804	1.3	Leading provider of power solutions
33	IMImobile* Software & Computer Services	7,666	1.3	Provider of cloud communication software
34	Diploma Support Services	7,665¹	1.3	Supplier of specialised technical products and services
35	Masimo Health Care Equipment & Services	7,507¹	1.3	Developer and manufacturer of non-invasive patient monitoring technologies
36	Sirius Real Estate Real Estate Investment & Services	7,327	1.2	Owner and operator of business parks, offices and industrial complexes in Germany
37	TT Electronics Electronic & Electrical Equipment	7,049	1.2	Global manufacturer of electronic components
38	S4 Capital Media	6,977	1.2	Digital advertising and marketing services business
39	Alliance Pharma* Pharmaceuticals & Biotechnology	6,726	1.1	Distributor of pharmaceutical and healthcare products
40	Morgan Sindall Construction & Materials	6,570¹	1.1	Office fit out, construction and urban regeneration services
41	Bodycote Non-Life Insurance	6,543	1.1	Provider of thermal processing services
42	Xero Software & Computer Services	6,430¹	1.1	Software company specialising in accounting for small businesses
43	Lancashire Holding Non-Life Insurance	6,221	1.0	Insurance company
44	Computacenter Software & Computer Services	5,932¹	1.0	Computer services
45	Scapa* Chemicals	5,914	1.0	Healthcare and industrial group
46	Wizz Air Holdings Travel & Leisure	5,884	1.0	Low cost airline
47	Kainos Group Software & Computer Services	5,816¹	1.0	Provider of digital technology solutions
48	Euronext Financial Services	5,660¹	0.9	European stock exchange
49	Keywords Studios* Support Services	5,641¹	0.9	Provider of video games technical services
50	Luceco Electronic & Electrical Equipment	5,616	0.9	Supplier & manufacturer of high quality LED lighting products
51	Next Fifteen Communications* Media	5,434	0.9	Provider of digital communication products and services
52	Codemasters Group Holdings* Leisure Goods	5,401	0.9	British video game developer and publisher
53	Close Brothers Group Banks	5,316¹	0.9	UK merchant banking group providing lending, deposit taking, wealth management services and securities trading
54	Robert Walters Support Services	5,182	0.9	Provider of specialist recruitment services
55	Londonmetric Property Real Estate Investment Trusts	5,116¹	0.9	Investment in, and development of property
56	888 Travel & Leisure	5,099	0.9	Operator and platform for online gaming
57	Fevertree Drinks* Beverages	5,048¹	0.8	Developer and seller of soft drinks and mixers
58	Workspace Group Real Estate Investment Trusts	4,754	0.8	Supply of flexible workspace to businesses in London
59	Polar Capital Holdings* Financial Services	4,753	0.8	Provider of investment management services
60	Trade Desk Inc Media	4,727¹	0.8	Digital advertising software
61	Accesso Technology* Software & Computer Services	4,657¹	0.8	Provider of ticketing and virtual queuing solutions
62	RHI Magnesita Industrial Engineering	4,650¹	0.8	Global supplier of refractory products, systems and services
63	Boku* Support Services	4,568	0.8	Digital payments platform
64	Mattioli Woods* Financial Services	4,451¹	0.7	Provider of wealth management services
65	Draper Esprit* Financial Services	4,448	0.7	Technology focused venture capital firm
66	Worldline Software & Computer Services	4,333¹	0.7	Digital payments company
67	Tatton Asset Management* Financial Services	4,330	0.7	Provider of discretionary fund management services to financial advisors
68	AB Dynamics* Industrial Engineering	4,278	0.7	Developer and supplier of specialist automotive testing systems
69	Eckoh* Software & Computer Services	4,229¹	0.7	Global provider of secure payments products
70	Vesuvius Industrial Engineering	4,190	0.7	British engineered ceramics company
71	Young & Co's Brewery* Travel & Leisure	4,102	0.7	Owner and operator of pubs mainly in the London area
72	Joules* General Retailers	3,971	0.7	Clothing retailer inspired by British country lifestyles
73	HomeServe General Retailers	3,939	0.7	Multinational home emergency repairs and improvements
74	Renishaw Electronic & Electrical Equipment	3,836	0.6	Engineering and scientific technology company
75	AJ Bell Financial Services	3,752	0.6	UK savings platform for financial advisors & individual investors
76	B&M European Value General Retailers	3,728	0.6	European value retailer
77	DiscoverIE Electronic & Electrical Equipment	3,703	0.6	International designer, manufacturer and supplier of customised electronics
78	Clarkson Industrial Transportation	3,693	0.6	Provider of shipping services
79	Take-Two Interactive Software Leisure Goods	3,641	0.6	Developer and publisher of video games
80	Serco Group Support Services	3,594	0.6	Provider of public services across health, transport, immigration, defence, justice and citizen services
81	Gooch & Housego* Electronic & Electrical Equipment	3,533	0.6	Designer and manufacturer of advanced photonic systems
82	SThree Support Services	3,469¹	0.6	Provider of specialist professional recruitment services
83	Vistry Group Household Goods & Home Construction	3,446	0.6	UK housebuilder
84	The Pebble Group* Media	3,268	0.5	Designer and manufacturer of promotional goods
85	Frontier Developments* Leisure Goods	3,236	0.5	British developer and publisher of video games
86	Alfa Financial Software Software & Computer Services	3,220	0.5	Provider of software to the finance industry
87	ITM Power* Alternative Energy	3,097	0.5	British manufacturer of polymer electrolyte membrane electrolyzers for hydrogen production via electro-chemical splitting of water into hydrogen and oxygen
88	St. Modwen Properties Real Estate Investment & Services	3,021	0.5	Investment in, and development of property
89	Novacyt* Health Care Equipment & Services	2,998	0.5	Pharmaceutical company focused on the sale of diagnostic and pathogen testing kits
90	Judges Scientific* Electronic & Electrical Equipment	2,995	0.5	Designer and producer of scientific instruments
91	Greggs Food & Drug Retailers	2,992	0.5	Bakery chain
92	DSV Industrial Transportation	2,964¹	0.5	Danish transport and logistics company
93	Ubisoft Entertainment Leisure Goods	2,957¹	0.5	Video game developer
94	WH Smith General Retailers	2,938	0.5	British retailer of books, stationery, magazines and confectionery
95	Five9 Software & Computer Services	2,923	0.5	Provider of cloud-based contact centre software
96	Jet2* Travel & Leisure	2,907	0.5	UK airline & tour operator
97	Clipper Logistics Support Services	2,799	0.5	Retail logistics business
98	Cranswick Food Producers	2,758	0.5	Producer of premium, fresh and added-value food products
99	Citrix Systems Software & Computer Services	2,737¹	0.5	Provider of software and cloud computing technologies
100	ECO Animal Health* Pharmaceuticals & Biotechnology	2,715	0.5	Developer of pharmaceuticals products for the animal health market
101	Aptitude Software Software & Computer Services	2,705	0.5	Provider of specialist finance software and technology
102	Abcam* Pharmaceuticals & Biotechnology	2,566	0.4	Producer, distributor and seller of protein research tools
103	Marshalls Construction & Materials	2,554	0.4	British construction materials group
104	Craneware* Software & Computer Services	2,519	0.4	Provider of financial business software for US hospitals
105	NCC Group Software & Computer Services	2,501	0.4	Cyber security business
106	MarketAxess Financial Services	2,498¹	0.4	International electronic trading platform for institutional credit markets
107	Medpace Holdings Health Care Equipment & Services	2,418¹	0.4	Clinical research organization (CRO) conducting global clinical research for the development of drugs and medical devices
108	Beazley Non-Life Insurance	2,381	0.4	Specialist insurance businesses
109	GlobalData* Media	2,377¹	0.4	Data analytics and consulting
110	Chapel Down^† Beverages	2,369	0.4	UK producer of sparkling and still wines, and Curious beers and ciders
111	Freshpet Food Producers	2,347¹	0.4	Producer of fresh, refrigerated food and treats for dogs and cats
112	Adyen Software & Computer Services	2,220¹	0.4	Digital payments company
113	Okta Software & Computer Services	2,188¹	0.4	Identity and access management company
114	Fuller Smith & Turner - A Shares Travel & Leisure	2,140	0.4	Owner and operator of pubs mainly in the London area
115	MongoDB Software & Computer Services	2,003¹	0.3	Global cloud-based database
116	Bellway Household Goods & Home Construction	1,901	0.3	UK housebuilder
117	Anpario* Pharmaceuticals & Biotechnology	1,895	0.3	Manufacturer and distributor of natural animal feed additives for animal health, nutrition and biosecurity
118	Future Media	1,856	0.3	Multi-platform media business covering technology, entertainment, creative arts, home interest and education services
119	Advanced Medical Solutions* Health Care Equipment & Services	1,848	0.3	Developer and manufacturer of wound care and closure products
120	City Pub Group* Travel & Leisure	1,711	0.3	Pub operator across southern England and Wales
121	Coupa Software Software & Computer Services	1,677¹	0.3	Provider of cloud-based platform for business spend
122	Keller Group Construction & Materials	1,411	0.2	Ground engineering business
123	MaxCyte* Pharmaceuticals & Biotechnology	1,398	0.2	Clinical-stage global cell-based therapies and life sciences company
124	Vertex Software & Computer Services	1,387	0.2	American biopharmaceutical company
125	Wix.com Software & Computer Services	1,318¹	0.2	Cloud-based web development business
126	Porvair Industrial Engineering	1,316	0.2	Specialist filtration and environmental technology
127	De La Rue Support Services	537	0.1	Manufacturer of polymer and security printed products
		--------------	--------------
	Long investment positions (excluding BlackRock’s Institutional Cash Series plc - Sterling Liquid Environmentally Aware Fund)	719,559	120.7
		========	========
	Short investment positions	(11,123)	(1.9)
		========	========

¹ Includes long derivative positions.

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

^† Traded on NEX exchange.

Percentages shown are the share of net assets.

At 30 November 2020, the Company held an equity interest comprising more than 3.0% in only one company: Accesso Technology (3.01%).

FAIR VALUE AND GROSS MARKET EXPOSURE OF INVESTMENTS AS AT 30 NOVEMBER 2020

	Fair value¹ £000	Gross market exposure² £000	Gross market exposure as a % of net assets²
	Fair value¹ £000	Gross market exposure² £000	2020	2019

Long investment positions (excluding BlackRock’s Institutional Cash Series plc - Sterling Liquid Environmentally Aware Fund)	594,601	719,559	120.7	103.2
Short investment positions	(373)	(11,123)	(1.9)	(7.4)
Cash and cash equivalents^1,3	101	(114,107)	(19.1)	(0.4)
BlackRock’s Institutional Cash Series plc - Sterling Liquid Environmentally Aware Fund	11,541	11,541	1.9	6.2
Other net current liabilities	(9,655)	(9,655)	(1.6)	(1.6)
	--------------	--------------	--------------	--------------
Net assets	596,215	596,215	100.0	100.0
	========	========	========	========

The Company uses gearing through the use of long and short CFD positions. Gross and Net Gearing as at 30 November 2020 were 122.6% and 118.8% respectively (2019: 110.6% and 95.8% respectively). Gross and Net Gearing are Alternative Performance Measures, see Glossary contained within the Annual Report and Financial Statements.

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 values of the long and short derivative positions above is determined based on the difference between the purchase or transaction 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 investment positions directly in the market would have amounted to £124,958,000 at the time of purchase, and subsequent market rises in prices have resulted in unrealised gains on the long investment positions of £4,376,000, resulting in the value of the total market exposure to the underlying securities increasing to £129,334,000 as at 30 November 2020.

– The notional price of selling the securities to which exposure was gained via the short investment positions would have been £10,750,000 at the time of entering into the contract, and subsequent price rises have resulted in unrealised losses on the short investment positions of £373,000 and the value of the market exposure of these investments increasing to £11,123,000 at 30 November 2020. If the short investment positions had been closed on 30 November 2020 this would have resulted in a loss of £373,000 for the Company.

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

³ The gross market exposure column for cash and cash equivalents has been adjusted to assume the Company traded direct holdings rather than exposure being gained through long and short derivative positions.

DISTRIBUTION OF INVESTMENTS AS AT 30 NOVEMBER 2020

Sector	% of long portfolio	% of short portfolio	% of net portfolio

Chemicals	2.1	(0.2)	1.9
Mining	0.0	0.0	0.0
	--------------	--------------	--------------
Basic Materials	2.1	(0.2)	1.9
	========	========	========
Aerospace & Defence	3.2	0.0	3.2
Alternative Energy	0.4	0.0	0.4
Construction & Materials	4.8	0.0	4.8
Electronic & Electrical Equipment	7.6	0.0	7.6
Industrial Engineering	3.0	0.0	3.0
Industrial Transportation	0.9	0.0	0.9
Support Services	9.9	(0.3)	9.6
	--------------	--------------	--------------
Industrials	29.8	(0.3)	29.5
	========	========	========
Beverages	1.0	0.0	1.0
Food Producers	0.7	0.0	0.7
Household Goods & Home Construction	0.8	0.0	0.8
Leisure Goods	7.7	0.0	7.7
Personal Goods	2.3	0.0	2.3
	--------------	--------------	--------------
Consumer Goods	12.5	0.0	12.5
	========	========	========
Health Care Equipment & Services	2.1	0.0	2.1
Pharmaceuticals & Biotechnology	5.6	(0.3)	5.3
	--------------	--------------	--------------
Health Care	7.7	(0.3)	7.4
	========	========	========
Food & Drug Retailers	0.4	0.0	0.4
General Retailers	7.3	(0.2)	7.1
Media	7.3	0.0	7.3
Travel & Leisure	3.1	(0.2)	2.9
	--------------	--------------	--------------
Consumer Services	18.1	(0.4)	17.7
	========	========	========
Financial Services	10.9	0.0	10.9
Non-Life Insurance	1.2	0.0	1.2
Real Estate Investment & Services	1.5	0.0	1.5
Real Estate Investment Trusts	2.5	(0.2)	2.3
	--------------	--------------	--------------
Financials	16.1	(0.2)	15.9
	========	========	========
Software & Computer Services	12.0	(0.2)	11.8
Technology Hardware & Hardware Equipment	1.2	0.0	1.2
	--------------	--------------	--------------
Technology	13.2	(0.2)	13.0
	========	========	========
Mobile Telecommunications	2.1	0.0	2.1
	--------------	--------------	--------------
Telecommunications	2.1	0.0	2.1
	========	========	========
Total Investments	101.6	(1.6)	100.0
	========	========	========

The above percentages are calculated on the net portfolio as at 30 November 2020. The net portfolio is calculated as long equity and derivative positions, less short derivative positions as at 30 November 2020.

ANALYSIS OF THE PORTFOLIO
Gross Basis ¹

FTSE 250	45.4%
FTSE AIM	35.0%
International	10.0%
FTSE Small Cap	7.3%
Other	1.3%
FTSE 100	1.0%

Net Basis ²

FTSE 250	45.0%
FTSE AIM	35.5%
International	10.4%
FTSE Small Cap	6.7%
Other	1.3%
FTSE 100	1.1%

The above tables include holdings that are included within the Benchmark Index of 60.6% on a Gross Basis and 61.0% on a Net Basis.

Source: BlackRock.

¹ Long exposure plus short exposure as a percentage of the portfolio in aggregate excluding investment in BlackRock’s Institutional Cash Series plc – Sterling Liquid Environmentally Aware Fund.
² Long exposure less short exposure as a percentage of the portfolio excluding investment in BlackRock’s Institutional Cash Series plc – Sterling Liquid Environmentally Aware Fund.

MARKET CAPITALISATION AS AT 30 NOVEMBER 2020

	% of net portfolio Long Positions*	% of net portfolio Short Positions
£1bn+	65.0	-0.8
£400m - £1bn	22.6	-0.3
£100m - £400m	13.1	-0.4
£0m - £100m	0.8	0.0

* The above investments may comprise exposures to long equity and long derivative positions.

Source: BlackRock.

POSITION SIZE AS AT 30 NOVEMBER 2020

Market value	Number of positions Long Positions*	Number of positions Short Positions

£10m+	17	0
£5m – £10m	40	0
£2.5m - £5m	48	0
£0m - £2.5m	22	-9

* The above investments may comprise exposures to long equity and long derivative positions.

Source: BlackRock.

STRATEGIC REPORT

The Directors present the Strategic Report of the Company for the year ended 30 November 2020.

PRINCIPAL ACTIVITY
The Company is a public company limited by shares, carries on business as an investment trust and its principal activity is portfolio investment.

OBJECTIVE
The Company’s objective is to provide shareholders with long term capital growth and an attractive total return through investment primarily in UK smaller and mid-capitalisation companies traded on 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 BFM. 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, The 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 performance is measured against the Numis Smaller Companies plus AIM (excluding Investment Companies) Index (the Benchmark Index). The Investment Manager, BlackRock Investment Management (UK) Limited (BIM (UK)), may invest in companies outside the Benchmark Index without restriction, subject to the following limits.

In addition to the normal long only portfolio, the Company will likely hold a mixture of long and short CFDs and/or comparable equity derivatives that would result in a typical net market exposure of between 100% and 115%. In extremis, the Company could deploy the full 30% of permissible leverage into short CFDs and/or comparable equity derivatives, thereby reducing its overall net market exposure to 70%.

The Company may hold up to 15% of its gross assets, at the time of acquisition, in securities of companies which are listed or traded on a stock exchange outside the UK. In addition, the Company is permitted to employ leverage up to 30% of net assets, which it does primarily through the use of contracts for difference (CFDs) and/or comparable equity derivatives, rather than bank borrowings.

This can be deployed into either long or short CFDs and/or comparable equity derivatives, therefore enabling the Company to have a maximum net market exposure of 130%.

Portfolio risk will be mitigated by investment in a diversified portfolio of holdings. No more than 5% of the Company’s gross assets, at the time of acquisition, may be invested in any one single holding, excluding holdings in cash or money market funds, where up to 10% of the Company’s gross assets may be held. The Company may also invest in collective investment vehicles. However, 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, borrowings less cash, should not exceed 20% of gross assets. The Company expects to employ any leverage primarily through its use of CFDs and/or comparable equity derivatives.

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 the ability to go both long and short up to approximately 30% of the Company’s net assets.

Notwithstanding recent positive returns from UK small and mid-capitalisation companies, the sector has demonstrated considerable volatility over the past 20 years. Such an environment provides an attractive opportunity to add value via derivatives: instruments which can exploit share price moves whether up or down. 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. In the course of their research the Portfolio Manager comes 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 exposure exceeds the short exposure 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 equity positions, plus the net of long and short derivative positions expressed as a percentage of net assets. In a recessionary environment the Portfolio Manager has 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.

ESG AND SOCIALLY RESPONSIBLE INVESTING
The Manager defines Environmental, Social and Governance (ESG) integration as the practice of incorporating material ESG information or insights alongside traditional measures into the investment decision-making process to improve long-term financial outcomes of portfolios. Inclusion of this statement does not imply that the Company has an ESG-aligned investment objective, but rather describes how ESG information is considered as part of the overall investment process.

Of course, ESG information is not the sole consideration for investment decisions; instead, the Manager assesses a variety of economic and financial indicators; which include ESG considerations in combination with other information in the research phase of the investment process to make investment decisions appropriate to their client’s objectives. This may also include relevant third-party insights, as well as internal engagement commentary and input from BlackRock Investment Stewardship on governance issues. The Portfolio Manager conducts regular portfolio reviews with the BlackRock Risk and Quantitative Analysis (RQA) group and with the Chief Investment Officers. These reviews include discussion of the portfolio's exposure to material ESG risks, as well as exposure to sustainability-related business involvements, climate-related metrics, and other factors.

The Manager’s approach to ESG integration is to broaden the total amount of information its investment professionals consider in order to improve investment analysis, seeking to meet or exceed economic return and financial risk targets. ESG factors can be useful and relevant indicators for investment purposes and can help portfolio managers with their decision-making through identifying potentially negative events or corporate behaviour. This results in the expectation that there will be an outperformance bias towards better governed companies in the long-run. The Portfolio Manager works closely with BlackRock’s Investment Stewardship team (BIS) to assess the governance quality of companies and investigate any potential issues, risks or opportunities.

Specific to corporate governance, the Portfolio Manager leverages expertise (BIS and investors) in its proprietary, risk-based approach. Financial statement integrity is central to the analysis, where BIS applies a range of systematic measures to highlight companies’ accounting ratios in its assessment of balance sheet and earnings quality risks. For other categories under the corporate governance umbrella (e.g. audit quality, board accountability, executive pay and ownership and control), BIS flags risks based on internal research, including regulatory filings announcements and public news feeds. Governance (G) data may also be employed for supporting consideration. Environmental (E) and Social (S) factors are primarily assessed using MSCI data, examining whether specific E&S exposure exists, and if so, to determine how well such exposure is being managed.

The Manager’s research team monitors differing levels of risk throughout the process and believes that avoiding major downside events can generate significant outperformance over the long-term. Inputs from the Manager’s RQA Team are an integral part of the investment process. RQA analyse market and portfolio risk factors including stress tests, correlations, factor returns, cross-sectional volatility and attributions. The Manager’s evaluation procedures and financial analysis of the companies within the portfolio also take into account environmental, social and governance matters and other business issues.

Further information on the Manager’s approach to ESG and sustainability can be found in the report on Responsible Investing below.

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 below. The total profit for the year, after taxation, was £50,795,000 (2019: a profit of £91,395,000) of which the revenue return amounted to £5,379,000 (2019: £6,265,000), and a capital profit of £45,416,000 (2019: profit of £85,130,000).

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

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, and which are comparable to those reported by other investment trusts, are set out in the table below. These KPIs fall within the definition of ‘Alternative Performance Measures’ (APMs) under guidance issued by the European Securities and Markets Authority (ESMA), and additional information explaining how these are calculated is set out in the Glossary contained within the Annual Report and Financial Statements.

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.

	Year ended 30 November 2020	Year ended 30 November 2019

Net asset value total return^1,2	9.1%	24.4%
Share price total return^1,2	8.2%	42.8%
Benchmark Index total return³	3.8%	8.0%
Premium to cum income net asset value²	0.1%	0.9%
Revenue return per share	6.57p	8.56p
Total dividend per share	10.20p	10.20p
Ongoing charges^2,4	0.60%	0.59%
Ongoing charges including performance fees^2,5	1.60%	1.75%

¹ This measures the Company’s share price and NAV total return, which assumes dividends paid by the Company have been reinvested.
² Alternative Performance Measures, see Glossary contained within the Annual Report and Financial Statements.
³ The Company's Benchmark Index is the Numis Smaller Companies plus AIM (excluding Investment Companies) Index.
⁴ Ongoing charges represent the management fee and all other operating expenses, excluding the performance fee, finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain non-recurring items as a % of average daily net assets.
⁵ Ongoing charges represent the management fee, performance fee and all other operating expenses, excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain non-recurring items as a % of average daily net assets.

SHARE PRICE DISCOUNT/PREMIUM
The Directors recognise that it is in the long-term interests of shareholders that the Company’s shares do not trade at an excessive discount or premium to their prevailing NAV for any material length of time. In the year under review the discount/premium to NAV of the ordinary shares on a cum income basis has ranged between a discount of 12.0% and a premium of 4.9%, with the average being a premium of 0.2%. The shares ended the year at a premium of 0.1% on a cum income basis. As at 5 February 2021 the premium was 1.3%.

Your Board believes that the best way of ensuring that the Company’s shares trade at as close to NAV as possible 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 at the AGM to buy back shares.

PRINCIPAL RISKS
As required by the 2018 UK Code of Corporate Governance, the Board has in place a robust, ongoing process to identify, assess and monitor the principal and emerging risks of the Company, including those that they consider would threaten its business model, future performance, solvency or liquidity. The COVID-19 pandemic has given rise to unprecedented challenges for businesses across the globe and the Board has taken into consideration the risks posed to the Company by the crisis.

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 current risk register includes a range of risks spread between investment performance risk, income/dividend risk, legal & regulatory risk, counterparty risk, operational risk, market risk, political risk and financial risk.

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 Service Organisation Control (SOC1) reports from the Company’s service providers.

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 in the table 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 Index, 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; 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; and monitors the share price discount or premium to NAV.
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 and derivatives. 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 the 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. The Board also recognises the benefits of a closed-end fund structure in extremely volatile markets such as those experienced with the COVID-19 pandemic. Unlike open-ended counterparts, closed-end funds are not obliged to sell-down portfolio holdings at low valuations to meet liquidity requirements for redemptions. During times of elevated volatility and market stress, the ability of a closed-end fund structure to remain invested for the long-term enables the Portfolio Manager to adhere to disciplined fundamental analysis from a bottom-up perspective and be ready to respond to dislocations in the market as opportunities present themselves.
Income/dividend risk The amount of dividends and future dividend growth will depend on the performance of the Company’s underlying portfolio holdings. Changes in the composition of the portfolio and 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 2020, the Company had approximately 30.7% of its gross asset value invested in AIM traded equity securities and 2.3% of its gross assets in international markets, 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 long and short investment positions. Details are disclosed in note 11 contained within the Annual Report and Financial Statements, together with a summary of the policies for managing and controlling these risks in note 10 (below).
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 AIFM) and The 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 Board also considers the business continuity arrangements of the Company’s key service providers on an ongoing basis and reviews these as part of its review of the Company’s risk register. In respect of the unprecedented and emerging risks posed by the COVID-19 pandemic in terms of the ability of service providers to function effectively, the Board has received reports from key service providers setting out the measures that they have put in place to address the crisis, in addition to their existing business continuity framework. Having considered these arrangements and reviewed service levels since the crisis has evolved, the Board are confident that a good level of service has and will be maintained. The Board also receives regular reports from BlackRock’s internal audit function.
Legal and regulatory risk The Company has been approved 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 Guidance and 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. The Market Abuse Regulation came into force across the EU on 3 July 2016. The Board has taken steps to ensure that individual Directors (and their Persons Closely Associated) are aware of their obligations under the regulation and has updated internal processes, where necessary, to ensure the risk of non-compliance is effectively mitigated.
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 Depositary 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.

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 2026, 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 above;
the impact of a significant fall in UK equity markets on the value of the Company’s investment portfolio in the light of the heightened volatility resulting from the impact of the COVID-19 pandemic;
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 (please see the disclosure in the Directors’ Report contained within the Annual Report and Financial Statements), 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;
counterparty exposure and liquidity risk in the light of the COVID-19 pandemic;
the operational resilience of the Company and its key service providers and their ability to continue to provide a good level of service for the foreseeable future; and
the effectiveness of business continuity plans in place for the Company and key service providers.

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 (0.60% excluding performance fees, 1.60% including performance fees). The effective performance fee cap in the event that the NAV return exceeds the Benchmark Index return over the performance period is 0.90% of the average gross assets over the two years and the applicable percentage to be applied to the outperformance of the NAV total return over the Benchmark Index return is 15%. In addition, the maximum cap on total management and performance fees is 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 considered the potential impact on the Company of the UK’s decision to leave the European Union (the ‘EU’) following a referendum held on 23 June 2016 (‘Brexit’). On 31 January 2020, the United Kingdom (the “UK”) formally withdrew and ceased being a member of the EU. Following this, the UK entered into a transition period which lasted for the remainder of 2020, during which period the UK was subject to applicable EU laws and regulations. The transition period expired on 31 December 2020, and EU law no longer applies in the UK.

On 30 December 2020, the UK and the EU signed an UK-EU Trade and Cooperation Agreement (“UK/EU Trade Agreement”), which applies from 1 January 2021 and sets out the foundation of the economic and legal framework for trade between the UK and the EU. The UK’s exit from the EU is expected to result in additional trade costs and disruptions in this trading relationship. While the UK/EU Trade Agreement provides for the free trade of goods, it provides only general commitments on market access in services together with a “most favoured nation” provision which is subject to many exceptions. Furthermore, there is the possibility that either party may impose tariffs on trade in the future in the event that regulatory standards between the EU and the UK diverge. The terms of the future relationship may cause continued uncertainty in the global financial downgrading markets, and adversely affect the performance of the Company. Volatility resulting from this uncertainty may mean that the returns of the Company’s investments are affected by market movements, the potential decline in the value of sterling or euro, and the potential downgrading of UK sovereign credit rating.

The Board has also considered the impact of potential changes in law, regulation and taxation and the matter of foreign exchange risk. They have determined that although there are a number of new potential risks associated with the legal, fiscal and regulatory landscape they do not believe that this represents a material threat to the Company’s strategy and business model, nor do they believe that the Investment Manager will be materially impeded in achieving the Company’s investment objective. The longer-term process of implementing the political, economic and legal framework that is to be agreed between the UK and the EU is likely to lead to ongoing uncertainty and periods of exacerbated volatility in both the UK and in wider European markets.

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.

Section 172 statement: Promoting the success of BlackRock Throgmorton Trust plc
New regulations (The Companies (Miscellaneous Reporting) Regulations 2018) require directors to explain more fully how they have discharged their duties under section 172(1) of the Companies Act 2006 in promoting the success of their companies for the benefit of members as a whole. This enhanced disclosure covers how the Board has engaged with and understands the views of stakeholders and how stakeholders’ needs have been taken into account, the outcome of this engagement and the impact that it has had on the Board’s decisions.

As the Company is an externally managed investment company and does not have any employees or customers, the Board consider the main stakeholders in the Company to be the shareholders and the key service providers (being the Manager and Investment Manager, the Custodian, Depositary, Registrar and Broker). The reasons for this determination, and the Board’s overarching approach to engagement, are set out in the table below:

Stakeholders
Shareholders	Manager and Investment Manager	Other key service providers
Continued shareholder support and engagement are critical to the continued existence of the Company and the successful delivery of its long-term strategy. The Board is focused on fostering good working relationships with shareholders and on understanding the views of shareholders in order to incorporate them into the Board’s strategy and objectives in delivering long-term growth and income. In turn, portfolio holdings are ultimately shareholders’ assets, and the Board recognises the importance of good stewardship and communication with investee companies in meeting the Company’s investment objective and strategy.	The Board’s main working relationship is with the Manager, who is responsible for the Company’s portfolio management (including asset allocation, stock and sector selection) and risk management, as well as ancillary functions such as administration, secretarial, accounting and marketing services. The Manager has sub-delegated portfolio management to the Investment Manager. Successful management of shareholders’ assets by the Investment Manager is critical for the Company to successfully deliver its investment strategy and meet its objective. The Company is also reliant on the Manager as AIFM to provide support in meeting relevant regulatory obligations under the AIFMD and other relevant legislation.	In order for the Company to function as an investment trust with a listing on the premium segment of the official list of the FCA and trade on the London Stock Exchange’s (LSE) main market for listed securities, the Board relies on a diverse range of advisors for support in meeting relevant obligations and safeguarding the Company’s assets. For this reason, the Board considers the Company’s Custodian, Depositary, Registrar and Broker to be stakeholders. The Board, either directly or through the Manager, maintains regular contact with its key external providers and receives regular reporting from them through the Board and Committee meetings, as well as outside of the regular meeting cycle.

A summary of the key areas of engagement undertaken by the Board with its key stakeholders in the year under review and how Directors have acted upon this to promote the long-term success of the Company are set out in the table below.

Area of Engagement	Issue	Engagement	Impact
Investment mandate and objective	The Board is committed to promoting the role and success of the Company in delivering on its investment mandate to shareholders over the long-term. The Board also has responsibility to shareholders to ensure that the Company’s portfolio of assets is invested in line with the stated investment objective and in a way that ensures an appropriate balance between spread of risk and portfolio returns.	The Board works closely with the Investment Manager throughout the year in further developing our investment strategy and underlying policies, not simply for the purpose of achieving the Company’s investment objective but in the interests of shareholders and future investors. The Manager’s approach to the consideration of ESG factors in respect of the Company’s portfolio, as well as its engagement with investee companies is to encourage the adoption of sustainable business practices which support long- term value creation. The Board is kept advised in respect of the Manager’s consideration of ESG factors as part of the investment process; a summary of BlackRock’s approach to ESG and sustainability is set out within the Annual Report and Financial Statements.	Details regarding the Company’s NAV and share price performance can be found in the Chairman’s Statement and in the Strategic Report. The portfolio activities undertaken by the Manager can be found in the Investment Manager’s Report.
Management of the share rating	The 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 broadening awareness of the Company’s unique structure. The Board believes that it is in shareholders’ interests that the share price does not trade at an excessive premium or discount to NAV. Therefore, where deemed to be in shareholders’ long-term interests, it may exercise its powers to issue shares or buy back shares with the objective of ensuring that an excessive premium or discount does not arise.	The Manager reports total return performance statistics to the Board on a regular basis, along with the portfolio yield and the impact of dividends paid on brought forward distributable reserves. The Board reviews the Company’s discount/premium to NAV on a regular basis and holds regular discussions with the Manager and the Company’s broker regarding the discount/premium level. The Board believes that the best way of maintaining the share rating at an optimal level over the long-term is to create demand for the shares in the secondary market. To this end the Investment Manager is devoting considerable effort to broadening the awareness of the Company, particularly to wealth managers and to the wider retail shareholder market. The Manager provides the Board with feedback and key performance statistics regarding the success of the Company’s marketing initiatives. Notwithstanding the issues posed by the COVID-19 pandemic, in normal operating conditions, shareholders may attend the Company’s annual general meeting where formal questions may be put to the Board around the management of any premium/discount.	The average premium for the year to 30 November 2020 was 0.2%. During the year the Company’s share price has traded at a maximum discount of 12.0% and a maximum premium of 4.9%. Market demand for the Company’s shares has been strong and between 1 December 2019 and the date of this report the Company has issued 15,440,074 shares for proceeds of £99 million, improving the Company’s liquidity and resulting in a lower operating charges ratio.
Service levels of third-party providers	The Board acknowledges the importance of ensuring that the Company’s principal suppliers are providing a suitable level of service: including the Manager in respect of investment performance and delivering on the Company’s investment mandate; the Custodian and Depositary in respect of their duties towards safeguarding the Company’s assets; the Registrar in its maintenance of the Company’s share register and dealing with investor queries and the Company’s Brokers in respect of the provision of advice and acting as a market maker for the Company’s shares.	The Manager reports to the Board on the Company’s performance on a regular basis. The Board carries out a robust annual evaluation of the Manager’s performance, their commitment and available resources. The Board performs an annual review of the service levels of all third party service providers and concludes on their suitability to continue in their role. The Board has received updates in respect of business continuity planning from the Company’s Manager, Custodian, Depositary, Fund Administrator, Brokers, Registrar and Printers, and is confident that arrangements are in place to ensure that a good level of service will continue to be provided despite the impact of the COVID-19 pandemic. Since the financial year end, in light of the challenges presented by the COVID-19 pandemic to the operation of business across the globe, the Board has worked closely with the Manager to gain comfort that relevant business continuity plans are operating effectively for all of the Company’s service providers.	Performance evaluations were performed on a timely basis and the Board concluded that all third -party service providers, including the Manager, Custodian, Depositary and Fund Administrator were operating effectively and providing a good level of service.
Board composition	The Board is committed to ensuring that its own composition brings an appropriate balance of knowledge, experience and skills, and that it is compliant with best corporate governance practice under the new UK Code, including guidance on tenure and the composition of the Board’s committees.	Over recent years the Board undertook a review of succession planning arrangements and identified the need for action to ensure that the composition of the Board was appropriate and that there was an ongoing process of refreshment, bringing in new ideas and different perspectives. The Board, through its Nomination Committee, agreed the selection criteria and the method of selection, recruitment and appointment. Board diversity, including gender, was taken into account when establishing the criteria. All Directors are subject to a formal evaluation process on an annual basis (more details and the conclusions in respect of the 2020 evaluation process are given within the Annual Report and Financial Statements). All Directors stand for re-election by shareholders annually. Shareholders may attend the AGM and raise any queries in respect of Board composition or individual Directors in person or may contact the Company Secretary or the Chairman using the details provided within the Annual Report and Financial Statements if they wish to raise any issues.	The Board announced on 10 June 2020 that Angela Lane would join the Board with effect from that date. On 21 December 2020 the Board announced the appointment of Nigel Burton. Jean Matterson advised the Board that she would stand down as a Director from the conclusion of this year’s AGM. Following the year end, the Board resolved to appoint Merryn Somerset Webb to the Board to replace Jean Matterson with effect from 24 March 2021. The Directors are not aware of any issues that have been raised directly by shareholders in respect of Board composition in 2020. Details for the proxy voting results in favour and against individual Directors’ re-election at the 2020 AGM are given on the Company’s website at www.blackrock.com/uk/thrg.
Shareholders	Continued shareholder support and engagement are critical to the continued existence of the Company and the successful delivery of its long-term strategy. The dividend is funded out of current year revenue and revenue reserves if current year revenue is insufficient. The Company does not have a policy of seeking income, however, the portfolio has, to date, continued to deliver a level of income such that the Board is able to pay an attractive dividend.	The Board is committed to maintaining open channels of communication and to engage with shareholders. Notwithstanding the challenges posed by the COVID-19 pandemic, in normal operating circumstances the Company welcomes and encourages attendance and participation from shareholders at its Annual General Meetings. Shareholders therefore have the opportunity to meet the Directors and Investment Manager and to address questions to them directly. The Annual Report and half yearly financial report are available on the BlackRock website and are also circulated to shareholders either in printed copy or via electronic communications. In addition, regular updates on performance, monthly factsheets, the daily NAV and other information are also published on the website at www.blackrock.com/uk/thrg. The Board also works closely with the Manager to develop the Company’s marketing strategy, with the aim of ensuring effective communication with shareholders in respect of the investment mandate and objective. Unlike trading companies, shareholder meetings usually take the form of a meeting with the Portfolio Manager as opposed to members of the Board. As well as attending regular investor meetings the portfolio manager holds regular discussions with wealth management desks and offices to build on the case for, and understanding of, long-term investment opportunities in the UK smaller companies sector. However, the Board is ultimately responsible for communication with shareholders and all substantive matters arising from such communication are referred to the Board. The Manager also coordinates public relations activity, including meetings between the Portfolio Manager and relevant industry publications to set out their vision for the portfolio strategy and outlook for the UK equity market. The Manager releases monthly portfolio updates to the market to ensure that investors are kept up to date in respect of performance and other portfolio developments and maintains a website on behalf of the Company that contains relevant information in respect of the Company’s investment mandate and objective. If shareholders wish to raise issues or concerns with the Board, they are welcome to do so at any time. The Chairman is available to meet directly with shareholders periodically to understand their views on governance and the Company’s performance where they wish to do so. He may be contacted via the Company Secretary whose details are given within the Annual Report and Financial Statements.	The Board values any feedback and questions from shareholders ahead of and during Annual General Meetings in order to gain an understanding of their views and will take action when and as appropriate. Feedback and questions will also help the Company evolve its reporting, aiming to make reports more transparent and understandable. Feedback from all substantive meetings between the Investment Manager and shareholders will be shared with the Board. The Directors will also receive updates from the Company’s broker on any feedback from shareholders, as well as share trading activity, share price performance and an update from the Investment Manager. The Portfolio Manager attended professional investor meetings and held discussions with a range of different wealth management desks and offices in respect of the Company during the year under review. Investors were also impressed with the wide pool of resource available through BlackRock’s Emerging Companies team, and the rigorous ‘bottom- up’ investment approach.
Responsible Investing	More than ever, good governance and consideration of sustainable investment is a key factor in making investment decisions. Climate change is becoming a defining factor in companies’ long-term prospects across the investment spectrum, with significant and lasting implications for economic growth and prosperity.	The Board believes that responsible investment and sustainability are integral to the longer-term delivery of the Company’s success. The Board works closely with the Investment Manager to regularly review the Company’s performance, investment strategy and underlying policies to ensure that the Company’s investment objective continues to be met in an effective, responsible and sustainable way in the interests of shareholders and future investors. The Investment Manager’s approach to the consideration of Environmental, Social and Governance (‘ESG’) factors in respect of the Company’s portfolio, as well as the Investment Manager’s engagement with investee companies to encourage the adoption of sustainable business practices which support long-term value creation are kept under review by the Board. The Investment Manager reports to the Board in respect of its ESG policies and how these are integrated into the investment process; a summary of BlackRock’s approach to ESG and sustainability is set out within the Annual Report and Financial Statements. The Investment Manager’s engagement and voting policy is detailed within the Annual Report and Financial Statements and on the BlackRock website at www.blackrock.com/corporate/en-gb/about-us/investment-stewartship/votingguidelines-reports-position-papers.	The Board and the Investment Manager believe there is a positive correlation between strong ESG practices and investment performance. Details of the Company’s performance in the year are given in the Chairman’s Statement and the Performance Record.

Sustainability and our ESG policies: The Board’s approach
Environmental, social and governance (ESG) issues can present both opportunities and threats to long-term investment performance. The securities within the Company’s investment remit may involve significant additional risk due to the political volatility and ESG concerns. These ethical and sustainability issues are a key focus of the Board, and the Board is committed to a diligent oversight of the activities of the Manager in these areas. The Board believes effective engagement with management is, in most cases, the most effective way of driving meaningful change in the behaviour of investee company management. This is particularly true for the Manager given the extent of BlackRock’s shareholder engagement (BlackRock held 3,000 engagements with 2,000 companies globally for the year to 30 June 2020). As well as the influence afforded by its sheer scale, the Board believes that BlackRock is well placed as Manager to fulfil these requirements due to the integration of ESG into its investment processes, the emphasis it places on sustainability, its collaborative approach in its investment stewardship activities and its position in the industry as one of the largest suppliers of sustainable investment products in the global market. More information on BlackRock’s approach to sustainability is set out within the Annual Report and Financial Statements.

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 within the Annual Report and Financial Statements.

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

DIRECTORS’ GENDER REPRESENTATION
The Directors of the Company on 30 November 2020, all of whom, with the exception of Angela Lane, held office throughout the year, are set out within 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, independence and diversity to enable it to fulfil its obligations. As at 30 November 2020, the Board consisted of two men and three women, resulting in 60% female representation. 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 Chairman’s Statement and the Investment Manager’s Report form part of this Strategic Report.

The Strategic Report was approved by the Board at its meeting on 9 February 2021.

BY ORDER OF THE BOARD
KEVIN MAYGER,
FOR AND ON BEHALF OF
BLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED
Company Secretary
9 February 2021

The following report has been prepared by the Company’s Manager and sets out its approach to responsible investing.

RESPONSIBLE OWNERSHIP: BLACKROCK’S APPROACH TO SUSTAINABLE INVESTING

RESPONSIBLE OWNERSHIP – BLACKROCK’S APPROACH
As a fiduciary to its clients, BlackRock has built its business to protect and grow the value of clients’ assets. From BlackRock’s perspective, business-relevant sustainability issues can contribute to a company’s long-term financial performance, and thus further incorporating these considerations into the investment research, portfolio construction, and stewardship process as this can enhance long-term risk adjusted returns. By expanding access to data, insights and learning on material ESG risks and opportunities in investment processes across BlackRock’s diverse platform, BlackRock believes that the investment process is greatly enhanced. The Company’s Portfolio Manager works closely with BlackRock’s Investment Stewardship team to assess the governance quality of companies and sustainable business practices, and investigate any potential issues, risks or opportunities. The Portfolio Manager uses ESG information when conducting research and due diligence on new investments and again when monitoring investments in the portfolio.

BLACKROCK’S APPROACH TO SUSTAINABLE INVESTING
Considerations about sustainability have been at the centre of BlackRock’s investment approach for many years and the firm offers more than 200 sustainable products and solutions. BlackRock believes that climate change is now a defining factor in companies’ long-term prospects, and that it will have a significant and lasting impact on economic growth and prosperity. BlackRock believes that climate risk now equates to investment risk, and this will drive a profound reassessment of risk and asset values as investors seek to react to the impact of climate policy changes. This in turn is likely to drive a significant reallocation of capital away from traditional carbon intensive industries over the next decade.

A detailed summary of the actions taken by BlackRock in 2020 on making sustainability the new standard for investing can be found at https://www.blackrock.com/corporate/literature/publication/our-2020-sustainability-actions.pdf.

BlackRock also announced in January 2021 that it was committed to supporting the goal of ‘net zero’(building an economy that emits no more carbon dioxide than it removes from the atmosphere) by 2050 (the scientifically-established threshold necessary to keep global warming well below 2ºC). BlackRock is taking a number of steps to help investors prepare their portfolios for a net zero world, including capturing opportunities created by the net zero transition.

INVESTMENT STEWARDSHIP
BlackRock Investment Stewardship (BIS) plays a fundamental role in the activation of BlackRock’s purpose of helping more and more people experience financial well-being. As a fiduciary, we have a responsibility to our clients to make sure companies are adequately managing and disclosing environmental, social, and governance (ESG) risks and opportunities that can impact their ability to generate long-term financial performance - and to hold them accountable through our vote if they are not. BlackRock’s BIS team - the largest and most global team spread across 8 global offices, actively engaging in 54+ markets and voting in 85+ markets - has been focusing on sustainability issues for years. Each year, we prioritize our work around several engagement themes that we believe will encourage sound governance practices and deliver sustainable long-term financial performance for our clients. For each of our engagement priorities we have provided a high level, globally relevant Key Performance Indicator (KPI) so companies are aware of our expectations.

In 2020, BIS put an increased focus on ESG-related issues and relevant disclosures, given the growing impact of these issues on long-term value creation. To that end, we made an explicit ask that companies align their disclosures to the Task Force on Climate-related Financial Disclosures (TCFD) framework and the Sustainability Accounting Standards Board (SASB) standards. This includes each company’s plan for operating under a scenario where the Paris Agreement’s goal of limiting global warming to less than two degrees is fully realised, as expressed by the TCFD guidelines. BlackRock is greatly encouraged by the progress we have seen over the past year – a 363% increase in SASB disclosures and more than 1,700 organizations expressing support for the TCFD.

As reported in the BIS 2020 annual report, in the year from 1 July 2019 to 30 June 2020 we held over 3,000 engagements globally with over 2,000 companies covering 61% by value of our clients’ equity investments. In terms of voting, BIS voted at approximately 16,200 shareholder meetings and on 153,000 proposals. Voting is how we hold companies accountable when they fall short of our expectations. BIS might vote against directors or other management proposals or might vote to support a shareholder proposal. BIS views holding directors accountable as one of the most effective ways to encourage change at a company. Given the groundwork already laid through past engagements and the growing investment risks surrounding sustainability, BIS will be increasingly disposed to vote against the re-election of directors when companies have not made sufficient progress. In the year to 30 June 2020, BIS opposed the re-election of over 5,100 directors — more than ever before — sending a strong signal of concern when companies did not make sufficient progress on issues that are central to long-term value creation. BIS raised questions on board quality, taking voting action against directors for lack of independence on the board, insufficient board diversity, and overcommitment. BIS also held directors to account for not meeting our expectations on climate risk management or disclosures, and for management and compensation policies inconsistent with sustainable long-term financial performance.

As the past year has only intensified BlackRock’s conviction that sustainability risk – and climate risk in particular – is investment risk, our stewardship team is continuing to increase its focus on how sustainability-related factors are impacting a company’s ability to generate shareholder returns. As detailed in the 2021 BIS Stewardship Expectations special report, for this year we explicitly ask that all companies disclose a business plan aligned with the goal of limiting global warming to well below 2ºC, consistent with achieving net zero global greenhouse gas (GHG) emissions by 2050. These disclosures are essential to helping investors assess a company’s ability to transition its business to a low-carbon world and to capture value-creation opportunities created by the climate transition. BlackRock is also committed to transparency in terms of disclosure on its engagement with companies and voting rationales. More details about BlackRock Investment Stewardship can be found on BlackRock’s website at www.blackrock.com/corporate/about-us/investmentstewardship.

In terms of its own reporting, BlackRock believes that the SASB provides a clear set of standards for reporting sustainability information across a wide range of issues, from labour practices to data privacy to business ethics. For evaluating and reporting climate-related risks, as well as the related governance issues that are essential to managing them, the TCFD provides a valuable framework.

BlackRock recognise that reporting to these standards requires significant time, analysis, and effort. BlackRock’s own SASB-aligned disclosure is available on its website at www.blackrock.com/corporate/literature/continuousdisclosure-andimportant-information/blackrock-2019-sasb-disclosure.pdf and BlackRock published a detailed TCFD-aligned report on its 2020 activities. More information on BlackRock’s policies on Corporate Sustainability can be found on BlackRock’s website at www.blackrock.com/corporate/sustainability.

The above forms part of the Strategic Report.

RELATED PARTY AND TRANSACTIONS WITH THE INVESTMENT MANAGER AND AIFM

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 contained within the Annual Report and Financial Statements. The investment management fee due for the year ended 30 November 2020 amounted to £2,097,000 (2019: £1,784,000). In addition, a performance fee is payable of £4,890,000 (2019: £4,756,000). At the year end, £1,113,000 was outstanding in respect of management fees (2019: £932,000) and £4,890,000 (2019: £4,756,000) 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 2020 amounted to £174,000 excluding VAT (2019: £202,000). Marketing fees of £132,000 (2019: £122,000) were outstanding at the year end.

The Company has an investment in BlackRock Institutional Cash Series plc - Sterling Liquid Environmentally Aware Fund of £11,541,000 (2019: £28,977,000 which for the year ended 30 November 2020 and 30 November 2019 has been presented in the financial statements as a cash equivalent.

The ultimate holding company of the Manager and the Investment Manager is BlackRock, Inc. a company incorporated in Delaware USA. During the period, PNC Financial Services Group, Inc. (“PNC”) was a substantial shareholder in BlackRock, Inc. PNC did not provide any services to the Company during the financial year ended 30 November 2019 and the period up to the 11 May 2020, when PNC announced its intent to sell its investment in BlackRock, Inc. through a registered offering and related buyback by BlackRock, Inc.

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 contained within the Annual Report and Financial Statements. At 30 November 2020 £13,000 (2019: £10,000) was outstanding in respect of Directors’ fees.

The Board consists of six 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 2020, the Chairman received an annual fee of £39,500, the Chairman of the Audit and Management Engagement Committee received an annual fee of £31,000 and each other Director received an annual fee of £27,000. With effect from 1 December 2020 the Chairman will receive an annual fee of £41,000, the Chairman of the Audit and Management Engagement Committee will receive an annual fee of £32,500 and each other Director will receive an annual fee of £28,000.

As at 30 November 2020, all members of the Board held shares in the Company. Christopher Samuel held 62,647 ordinary shares, Loudon Greenlees held 15,000 ordinary shares, Jean Matterson held 46,000 ordinary shares, Louise Nash held 1,000 ordinary shares and Angela Lane held 5,253 ordinary shares.

All of the holdings of the Directors are beneficial. Since the year end Angela Lane’s holding has increased to 9,375 ordinary shares and Nigel Burton, who joined the Board on 21 December 2020, holds 16,000 ordinary shares. There have been no other changes to the Directors’ share interests.

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, (including the Directors’ Remuneration Report) 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 international accounting standards in conformity with the requirements of the Companies Act 2006. 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 international accounting standards in conformity with the requirements of the Companies Act 2006, subject to any material departures disclosed and explained in the Financial Statements;
provide additional disclosures when compliance with the specific requirements in international accounting standards in conformity with the requirements of the Companies Act 2006, 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 Guidance 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 with 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 international accounting standards in conformity with the requirements of the Companies Act 2006, give a true and fair view of the assets, liabilities, financial position and net profit 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 2018 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 fulfil these requirements. The process by which the Committee has reached these conclusions is set out in the Audit Committee’s report contained within 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 2020, taken as a whole, are fair, balanced and understandable and provided 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 2021

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 NOVEMBER 2020

	Notes	Revenue 2020 £000	Revenue 2019 £000	Capital 2020 £000	Capital 2019 £000	Total 2020 £000	Total 2019 £000

Income from investments held at fair value through profit or loss	3	6,387	8,531	–	–	6,387	8,531
Net income/(expense) from derivatives	3	323	(1,352)	–	–	323	(1,352)
Other income	3	60	191	–	–	60	191
		---------------	---------------	---------------	---------------	---------------	---------------
Total revenue		6,770	7,370	–	–	6,770	7,370
		=========	=========	=========	=========	=========	=========
Net profit on investments held at fair value through profit or loss		–	–	25,656	78,040	25,656	78,040
Net loss on foreign exchange		–	–	(234)	(4)	(234)	(4)
Net profit from derivatives		–	–	26,495	13,212	26,495	13,212
		---------------	---------------	---------------	---------------	---------------	---------------
Total		6,770	7,370	51,917	91,248	58,687	98,618
		=========	=========	=========	=========	=========	=========
Expenses
Investment management and performance fees	4	(524)	(446)	(6,463)	(6,094)	(6,987)	(6,540)
Other operating expenses	5	(822)	(635)	(33)	(17)	(855)	(652)
		---------------	---------------	---------------	---------------	---------------	---------------
Total operating expenses		(1,346)	(1,081)	(6,496)	(6,111)	(7,842)	(7,192)
		=========	=========	=========	=========	=========	=========
Net profit on ordinary activities before finance costs and taxation		5,424	6,289	45,421	85,137	50,845	91,426
Finance costs		(2)	(2)	(5)	(7)	(7)	(9)
		---------------	---------------	---------------	---------------	---------------	---------------
Net profit on ordinary activities before taxation		5,422	6,287	45,416	85,130	50,838	91,417
		---------------	---------------	---------------	---------------	---------------	---------------
Taxation		(43)	(22)	–	–	(43)	(22)
		---------------	---------------	---------------	---------------	---------------	---------------
Profit for the year		5,379	6,265	45,416	85,130	50,795	91,395
		=========	=========	=========	=========	=========	=========
Earnings per ordinary share (pence)	7	6.57	8.56	55.45	116.39	62.02	124.95
		=========	=========	=========	=========	=========	=========

The total column of this statement represents the Company’s Statement of Comprehensive Income, prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. 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 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 2020

	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 2020
At 30 November 2019		4,026	26,169	11,905	36,525	379,724	11,708	470,057
Total comprehensive income:
Net profit for the year		–	–	–	–	45,416	5,379	50,795
Transactions with owners, recorded directly to equity:
Ordinary shares issued from treasury	8, 9	–	34,741	–	8,099	–	–	42,840
Ordinary shares issued	8, 9	350	40,683	–	–	–	–	41,033
Share issue costs - treasury	9	–	–	–	(44)	–	–	(44)
Share issue costs	9	–	(225)	–	–	–	–	(225)
Dividends paid¹	6	–	–	–	–	–	(8,241)	(8,241)
		---------------	---------------	---------------	---------------	---------------	---------------	---------------
At 30 November 2020		4,376	101,368	11,905	44,580	425,140	8,846	596,215
		=========	=========	=========	=========	=========	=========	=========
For the year ended 30 November 2019
At 30 November 2018		4,026	21,049	11,905	35,272	294,594	12,756	379,602
Total comprehensive income:
Net profit for the year		–	–	–	–	85,130	6,265	91,395
Transactions with owners, recorded directly to equity:
Ordinary shares issued from treasury		–	5,120	–	1,266	–	–	6,386
Share issue costs		–	–	–	(13)	–	–	(13)
Dividends paid²	6	–	–	–	–	–	(7,313)	(7,313)
		---------------	---------------	---------------	---------------	---------------	---------------	---------------
At 30 November 2019		4,026	26,169	11,905	36,525	379,724	11,708	470,057
		=========	=========	=========	=========	=========	=========	=========

¹ Final dividend of 7.70p per share for the year ended 30 November 2019, declared on 6 February 2020 and paid on 2 April 2020 and interim dividend of 2.50p per share for the year ended 30 November 2020, declared on 23 July 2020 and paid on 28 August 2020.

² Final dividend of 7.50p per share for the year ended 30 November 2018, declared on 12 February 2019 and paid on 28 March 2019 and interim dividend of 2.50p per share for the year ended 30 November 2019, declared on 23 July 2019 and paid on 28 August 2019.

For information on the Company’s distributable reserves please refer to note 15 contained within the Annual Report and Financial Statements.

STATEMENT OF FINANCIAL POSITION AS AT 30 NOVEMBER 2020

	Notes	2020 £000	2019 £000
Non current assets
Investments held at fair value through profit or loss		590,225	444,604
Current assets
Other receivables		5,794	3,682
Derivative financial assets held at fair value though profit or loss		4,108	2,923
Cash collateral held with brokers		1,050	310
Cash and cash equivalents		11,642	30,398
		---------------	---------------
Total current assets		22,594	37,313
		---------------	---------------
Total assets		612,819	481,917
		=========	=========
Current liabilities
Other payables		(14,289)	(8,875)
Derivative financial liabilities held at fair value through profit or loss		(105)	(365)
Cash collateral received		(2,210)	(2,620)
		---------------	---------------
Total current liabilities		(16,604)	(11,860)
		---------------	---------------
Net assets		596,215	470,057
		=========	=========
Equity attributable to equity holders
Called up share capital	8	4,376	4,026
Share premium account	9	101,368	26,169
Capital redemption reserve	9	11,905	11,905
Special reserve	9	44,580	36,525
Capital reserves	9	425,140	379,724
Revenue reserve	9	8,846	11,708
		---------------	---------------
Total equity		596,215	470,057
		=========	=========
Net asset value per ordinary share (pence)	7	681.24	634.10
		=========	=========

CASH FLOW STATEMENT FOR THE YEAR ENDED 30 NOVEMBER 2020

	2020 £000	2019 £000
Operating activities
Net profit on ordinary activities before taxation	50,838	91,417
Add back finance costs	7	9
Profit on investments and contracts for difference held at fair value through profit or loss (including transaction costs)	(52,573)	(91,876)
Net loss on foreign exchange	234	4
Special dividends allocated to capital	83	1,109
Sales of investments held at fair value through profit or loss	274,350	210,451
Purchases of investments held at fair value through profit or loss	(394,398)	(233,646)
Net receipts on closure of derivatives	25,472	12,880
Decrease/(increase) in other receivables	604	(807)
Increase in other payables	362	2,135
(Increase)/decrease in amounts due from brokers	(3,966)	1,543
Increase in amounts due to brokers	5,052	1,588
Net movement in cash collateral held with/received from brokers in respect of derivatives	(1,150)	3,720
	---------------	---------------
Net cash outflow from operating activities before taxation	(95,085)	(1,473)
	=========	=========
Taxation	(18)	(32)
	---------------	---------------
Net cash outflow from operating activities	(95,103)	(1,505)
	=========	=========
Financing activities
Interest paid	(7)	(9)
Cash proceeds from ordinary shares issued from treasury	44,021	5,148
Cash proceeds from ordinary shares issued	40,808	–
Dividends paid	(8,241)	(7,313)
	---------------	---------------
Net cash inflow/(outflow) from financing activities	76,581	(2,174)
	=========	=========
Decrease in cash and cash equivalents	(18,522)	(3,679)
Effect of foreign exchange rate changes	(234)	(4)
	---------------	---------------
Change in cash and cash equivalents	(18,756)	(3,683)
	=========	=========
Cash and cash equivalents at start of year	30,398	34,081
	---------------	---------------
Cash and cash equivalents at end of year	11,642	30,398
	=========	=========
Comprised of:
Cash at bank	101	1,421
Cash Fund¹	11,541	28,977
	---------------	---------------
	11,642	30,398
	=========	=========

¹ Cash Funds represent funds held on deposit with the BlackRock Institutional Cash Series plc – Sterling Liquid Environmentally Aware Fund.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 NOVEMBER 2020

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 have been applied consistently, other than where new policies have been adopted and are set out below.

(a) Basis of preparation
The financial statements have been prepared under the historic cost convention modified by the revaluation of financial assets and financial liabilities held at fair value through profit or loss and in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 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) in October 2019, is compatible with international accounting standards in conformity with the requirements of the Companies Act 2006, the financial statements have been prepared in accordance with the guidance set out in the SORP.

The revised SORP issued in October 2019 is applicable for accounting periods beginning on or after 1 January 2019. As a result, the loss arising from disposals of investments of £22,466,000 (2019: gain of £29,473,000) and gain on revaluation of investments of £48,039,000 (2019: gain of £47,458,000) have now been combined, as shown in note 10 to the financial statements, contained withing the Annual Report and Financial Statements. The result of this change in presentation has no impact on the net asset value or total return for both the current year and prior year. No other accounting policies or disclosures have changed as a result of the revised 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 Directors have considered any potential impact of the COVID-19 pandemic and the mitigation measures which key service providers, including the Manager, have in place to maintain operational resilience on the going concern of the Company. The Directors have reviewed income and expense projections and the liquidity of the investment portfolio in making their assessment.

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.

IFRS standards that have recently been adopted:
IFRS 16 – Leases
The Company adopted IFRS 16 as at the date of initial application of 1 December 2019. IFRS 16 specifies accounting for leases and removes the distinction between operating and finance leases. This standard is not applicable to the Company as it has no leases.

IFRIC 23 – Uncertainty over Income Tax Treatments
The Company adopted IFRIC 23 as at the date of initial application of 1 December 2019. IFRIC 23 seeks to provide clarity on how to account for uncertainty over income tax treatments and specifies that an entity must consider whether it is probable that the relevant tax authority will accept each tax treatment or group of tax treatments, that it plans to use in its income tax filing. The interpretation also requires companies to reassess the judgements and estimates applied if facts and circumstances change. The interpretation would require the Company to recognise uncertain tax positions which are more than probable within its financial statements and it could potentially require the Company to recognise tax reclaims filed with HMRC if their recoverability becomes more than probable. The adoption of this interpretation has had no impact on the financial statements of the Company.

IFRS standards that have yet to be adopted:
Amendments to IFRS 3 – definition of a business (effective 1 January 2020). This amendment revises the definition of a business. According to feedback received by the International Accounting Standards Board, application of the current guidance is commonly thought to be too complex and it results in too many transactions qualifying as business combinations. The standard has been endorsed by the EU. This standard is unlikely to have any impact on the Company.

Amendments to IAS 1 and IAS 8 – definition of material (effective 1 January 2020). The amendments to IAS 1, ‘Presentation of Financial Statements’, and IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, and consequential amendments to other IFRSs require companies to:

(i) use a consistent definition of materiality throughout IFRSs and the Conceptual Framework for Financial Reporting;

(ii) clarify the explanation of the definition of material; and

(iii) incorporate some of the guidance of IAS 1 about immaterial information.

This standard has been endorsed by the EU. This standard is unlikely to have any impact on the Company.

Amendments to IFRS 9, IAS 39 and IFRS 7 – interest rate benchmark reform (effective 1 January 2020). These amendments provide certain reliefs in connection with the interest rate benchmark reform. The reliefs relate to hedge accounting and have the effect that the Inter Bank Offer Rate (IBOR) reform should not generally cause hedge accounting to terminate. However, any hedge ineffectiveness should continue to be recorded in the income statement. Given the pervasive nature of hedges involving IBOR based contracts, the reliefs will affect companies in all industries.

This standard has been endorsed by the EU. This standard is unlikely to have any significant impact on the Company.

IFRS 17 – insurance contracts (effective 1 January 2021). This standard replaces IFRS 4, which currently permits a wide variety of practices in accounting for insurance contracts. IFRS 17 will fundamentally change the accounting by all entities that issue insurance contracts and investment contracts with discretionary participation features. The standard has not been endorsed by the EU. This standard is unlikely to have any impact on the Company as it has no insurance contracts.

(b) Presentation of the 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 dividend. The return on a debt security is recognised on a time apportionment basis so as to reflect the effective yield on the debt security.

Deposit interest receivable is accounted for on an accruals basis. Interest income from the Cash Fund is accounted for on an accruals basis.

Where the Company has elected to receive its dividends in the form of additional shares rather than in cash, the cash equivalent of the dividend is recognised as revenue. 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 contained within 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; and
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 expenses is allocated between capital and revenue returns on the marginal basis using the Company’s effective rate of corporation tax for the accounting period.

Deferred taxation is recognised in respect of all 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 taxation in the future or right to pay less taxation 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
In accordance with IFRS 9, the Company classifies its investments at initial recognition as held at fair value through profit or loss and are managed and evaluated on a fair value basis in accordance with its investment strategy and business model.

All investments are measured initially and subsequently at fair value through profit or loss. Purchases of investments are recognised on a trade date basis. Sales of investments are recognised at the trade date of the disposal.

The fair value of the financial investments is based on their quoted bid price at the financial reporting date, without deduction for the estimated 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 profits or losses on investments held at fair value through profit or loss”. Also included within the heading are transaction costs in relation to the purchase or sale of investments.

For all financial instruments not traded in an active market, the fair value is determined by using various valuation techniques. Valuation techniques include market approach (i.e. using recent arm’s length market transactions adjusted as necessary and reference to the current market value of another instrument that is substantially the same) and the income approach (e.g. discounted cash flow analysis and option pricing models making use of available and supportable market data where possible). See note 2(o) below.

(h) Derivatives
The Company can hold long and short positions in contracts for difference (CFDs) 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. Derivative assets and derivative liabilities that are subject to netting arrangements are offset in the Statement of Financial Position.

(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 on an amortised cost basis.

(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 the 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 on 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.

The Cash Fund is managed by BlackRock Asset Management Ireland Limited and is subject to fees and expenses which are capped at 0.03% of the NAV. The investment is managed as part of the Company’s cash and cash equivalents as defined under IAS 7 and is presented as a cash equivalent in the Financial Statements.

(m) Bank borrowings
Bank overdrafts are recorded as the proceeds 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.

(n) Share repurchases, share reissues and new share issues
Shares repurchased and subsequently cancelled – share capital is reduced by the nominal value of the shares repurchased, and the capital redemption reserve is correspondingly increased in accordance with section 733 of the Companies Act 2006. The full cost of the repurchase is charged to the special reserve.

Shares repurchased and held in treasury – the full cost of the repurchase is charged to the special reserve. Where treasury shares are subsequently reissued:

amounts received to the extent of the repurchase price are credited to the special reserve; and
any surplus received in excess of the repurchase price is taken to the share premium account.

Where new shares are issued, amounts received to the extent of any surplus received in excess of the par value are taken to the share premium account.

Share issue costs are charged to the share premium account.

(o) Critical accounting estimates and judgements
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates and assumptions will, by definition, seldom equal the related actual results. Estimates and judgements are regularly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Directors do not believe that any accounting judgements or estimates have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year.

3. INCOME

	2020 £000	2019 £000
Investment income:
UK dividends	4,535	6,251
UK special dividends	427	934
UK stock dividends	207	–
UK REIT dividends	491	655
Overseas dividends	491	666
Overseas special dividends	236	25
	--------------	--------------
Total Investment Income	6,387	8,531
	--------------	--------------
Net income/(expense) from derivatives	323	(1,352)
Other income:
Deposit interest	4	7
Interest from Cash Funds	56	184
	--------------	--------------
	60	191
	========	========
Total income	6,770	7,370
	========	========

Dividends and interest received in cash during the year amounted to £6,985,000 and £60,000 (2019: £8,538,000 and £172,000).

Special dividends of £83,000 have been recognised in capital (2019: £1,109,000) and deducted from investment costs.

4. INVESTMENT MANAGEMENT AND PERFORMANCE FEES

	2020			2019
	Revenue £000	Capital £000	Total £000	Revenue £000	Capital £000	Total £000
Investment management fee	524	1,573	2,097	446	1,338	1,784
Performance fee	–	4,890	4,890	–	4,756	4,756
	--------------	--------------	--------------	--------------	--------------	--------------
	524	6,463	6,987	446	6,094	6,540
	========	========	========	========	========	========

The performance fee is 15% of Net Asset Value total return outperformance of the Benchmark Index measured on a two-year rolling basis and is applied on the average Gross Assets over two years. The performance fee is calculated and accrued on a daily basis and payable on 30 November each year. Gross Assets are defined as the gross asset value of the long only portfolio plus the gross value of the underlying equities, long and short, to which the Company is exposed through CFDs. There is 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 circa 0.9% of average Gross Assets over two years.

On the first day of the financial year, outperformance from the previous financial year (if any) is carried forward and accrued in the daily NAV released to the London Stock Exchange on that day.

With effect from 22 March 2018, the Company’s Benchmark Index was changed from the Numis Smaller Companies excluding AIM (excluding Investment Companies) Index to the Numis Smaller Companies plus AIM (excluding Investment Companies) Index. For the purposes of calculation of the performance fee for each period, the outperformance of the Net Asset Value total return has been measured against the performance of the Benchmark Indices on a blended basis during each period.

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. For the year ended 30 November 2020, a performance fee of £4,890,000 has been accrued (2019: £4,756,000).

The investment management fee is calculated at the rate of 0.35% per annum on month end Gross Assets. The management fee is charged 25% to revenue and 75% to capital. There is no additional fee for company secretarial and administration services.

5. OTHER OPERATING EXPENSES

	2020 £000	2019 £000
Allocated to revenue:
Custody fee	15	8
Auditor’s remuneration¹	44	35
Registrar’s fee	43	37
Directors’ emoluments²	137	133
Broker fees	54	33
Depositary fees	55	47
Marketing fees³	174	202
FCA Fees	16	13
Printing and postage fees	25	33
AIC fees	22	27
Stock exchange listing fees	134	13
Other administrative costs	103	54
	--------------	--------------
	822	635
	--------------	--------------
Allocated to capital:
Custody transaction charges⁵	33	17
	--------------	--------------
	855	652
	========	========
The Company’s ongoing charges⁴, calculated as a percentage of average daily net assets and using the management fee and all other operating expenses, excluding performance fees, finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain non–recurring items, were:	0.60%	0.59%
	========	========
The Company’s ongoing charges⁴, calculated as a percentage of average daily net assets and using the management fee and all other operating expenses and including performance fees but excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain non–recurring items, were:	1.60%	1.75%
	========	========

¹ No non-audit services were provided by auditors.

² Further information on Directors’ emoluments can be found in the Directors’ Remuneration Report contained within the Annual Report and Financial Statements. The Company has no employees.

³ Marketing fees for 2019 reflect an under accrual of £69,000 for these fees in 2018.

⁴ Alternative Performance Measures, see Glossary contained within the Annual Report and Financial Statements .

⁵ For the year ended 30 November 2020, expenses of £33,000 (2019: £17,000) 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.

6. DIVIDENDS

Dividends paid on equity shares	Record date	Payment date	2020 £000	2019 £000

Final dividend of 7.70p per share for the year ended 30 November 2019 (2018: 7.50p)	21 February 2020	2 April 2020	6,150	5,485
Interim dividend of 2.50p per share for the year ended 30 November 2020 (2019: 2.50p)	31 July 2020	28 August 2020	2,091	1,828
			--------------	--------------
			8,241	7,313
			========	========

The total dividends payable in respect of the year ended 30 November 2020 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 or declared on equity shares:	2020 £000	2019 £000

Interim dividend of 2.50p per share for the year ended 30 November 2020 (2019: 2.50p)	2,091	1,828
Final dividend of 7.70p per share for the year ended 30 November 2020¹ (2019: 7.70p)	6,897	6,150
	--------------	--------------
	8,988	7,978
	========	========

¹ Based on 89,570,400 ordinary shares in issue on 5 February 2021.

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

	Year ended 30 November 2020	Year ended 30 November 2019

Net revenue profit attributable to ordinary shareholders (£000)	5,379	6,265
Net capital profit attributable to ordinary shareholders (£000)	45,416	85,130
	--------------	--------------
Total profit attributable to ordinary shareholders (£000)	50,795	91,395
	========	========
Equity shareholders’ funds (£000)	596,215	470,057
	========	========
The weighted average number of ordinary shares in issue during the year, on which the earnings per ordinary share was calculated was:	81,902,632	73,146,571
The actual number of ordinary shares in issue at the year end, on which the net asset value per ordinary share was calculated was:	87,518,929	74,130,326
Earnings per share
Revenue earnings per share (pence)	6.57	8.56
Capital earnings per share (pence)	55.45	116.39
	========	========
Total earnings per share (pence)	62.02	124.95
	========	========

	As at 30 November 2020	As at 30 November 2019

Net asset value per ordinary share (pence)	681.24	634.10
Ordinary share price (pence)	682.00	640.00
	========	========

There were no dilutive securities at the year end.

8. CALLED UP SHARE CAPITAL

	Number of shares in issue	Treasury shares	Total shares	Nominal value £000
Allotted, called up and fully paid share capital comprised:
Ordinary shares of 5 pence each
At 30 November 2019	74,130,326	6,400,000	80,530,326	4,026
Ordinary shares reissued from treasury	6,400,000	(6,400,000)	–	–
New ordinary shares issued	6,988,603	–	6,988,603	350
	---------------	---------------	---------------	---------------
At 30 November 2020	87,518,929	–	87,518,929	4,376
	=========	=========	=========	=========

During the year ended 30 November 2020, the Company issued 6,400,000 (2019: 1,000,000) shares from treasury for a total consideration of £42,796,000 (2019: £6,373,000) including costs and issued 6,988,603 new shares (2019: nil) for a total consideration of £40,808,000 (2019: nil) including costs.

Since 30 November 2020, and up to the latest practicable date of 5 February 2021, 2,051,471 shares have been issued for a total gross consideration of £15,458,000.

The Ordinary Shares give shareholders voting rights, the entitlement to all of the capital growth in the Company’s assets, and to all income from the Company that is resolved to be distributed.

9. RESERVES

			Distributable 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 2019	26,169	11,905	36,525	281,175	98,549	11,708
Movement during the year:
Total Comprehensive Income:
Net capital (loss)/profit for the year	–	–	–	(4,069)	49,485	–
Net revenue profit for the year	–	–	–	–	–	5,379
Transactions with owners recorded directly to equity:
Ordinary shares issued from treasury	34,741	–	8,099	–	–	–
Ordinary shares issued	40,683	–	–	–	–	–
Share issue costs	(225)	–	–	–	–	–
Share issue costs – treasury	–	–	(44)	–	–	–
Dividends paid	–	–	–	–	–	(8,241)
	--------------	--------------	--------------	--------------	--------------	--------------
At 30 November 2020	101,368	11,905	44,580	277,106	148,034	8,846
	========	========	========	========	========	========

The share premium account and capital redemption reserve are not distributable profits under the Companies Act 2006. In accordance with ICAEW Technical Release 02/17BL on Guidance on Realised and Distributable Profits under the Companies Act 2006, the special reserve and capital reserves 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. The £148,034,000 of capital reserve arising on the revaluation of investments is subject to fair value movements and may not be readily realisable at short notice, as such it may not be entirely distributable.

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 contained within the Notes to the Financial Statements above.

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 or liability.

The fair value hierarchy has the following levels:

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

Level 2 – Valuation techniques using observable inputs
This category includes instruments valued using quoted 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 long and short derivative positions were valued using the underlying equity bid price (offer price in respect of short positions) and the contract price at the inception of the 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 market data and these inputs could have a significant impact on the instrument’s valuation.

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

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

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

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.

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 2020	Level 1 £000	Level 2 £000	Level 3 £000	Total £000
Assets:
Equity investments	590,225	–	–	590,225
Contracts for difference (fair value)	–	4,108	–	4,108
Liabilities:
Contracts for difference (fair value)	–	(105)	–	(105)
	--------------	--------------	--------------	--------------
	590,225	4,003	–	594,228
	========	========	========	========

Financial assets/(liabilities) at fair value through profit or loss at 30 November 2019	Level 1 £000	Level 2 £000	Level 3 £000	Total £000
Assets:
Equity investments	444,604	–	–	444,604
Contracts for difference (fair value)	–	2,923	–	2,923
Liabilities:
Contracts for difference (fair value)	–	(365)	–	(365)
	--------------	--------------	--------------	--------------
	444,604	2,558	–	447,162
	========	========	========	========

There were no transfers between levels for financial assets and financial liabilities during the year recorded at fair value as at 30 November 2020 and 30 November 2019. The Company did not hold any Level 3 securities throughout the financial year or as at 30 November 2020 (2019: nil).

11. RELATED PARTY DISCLOSURE
Directors’ emoluments
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 contained within the Annual Report and Financial Statements . At 30 November 2020 £13,000 (2019: £10,000) was outstanding in respect of Directors’ fees.

Significant Holdings
The following investors are:

a. funds managed by the BlackRock Group or are affiliates of BlackRock Inc. (“Related BlackRock Funds”) or
b. investors (other than those listed in (a) above) who held more than 20% of the voting shares in issue in the Company and are as a result, considered to be related parties to the Company (“Significant Investors”).

As at 30 November 2020
Total % of shares held by Related BlackRock Funds	Total % of shares held by Significant Investors who are not affiliates of BlackRock Group or BlackRock, Inc.	Number of Significant Investors who are not affiliates of BlackRock Group or BlackRock, Inc.

1.88	N/a	N/a

As at 30 November 2019
Total % of shares held by Related BlackRock Funds	Total % of shares held by Significant Investors who are not affiliates of BlackRock Group or BlackRock, Inc.	Number of Significant Investors who are not affiliates of BlackRock Group or BlackRock, Inc.

1.16	N/a	N/a

12. TRANSACTIONS WITH THE INVESTMENT MANAGER AND AIFM
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 contained within the Annual Report and Financial Statements. The investment management fee due for the year ended 30 November 2020 amounted to £2,097,000 (2019: £1,784,000). In addition, a performance fee is payable of £4,890,000 (2019: £4,756,000). At the year end, £1,113,000 was outstanding in respect of management fees (2019: £932,000) and £4,890,000 (2019: £4,756,000) was outstanding in respect of performance fees.

The ultimate holding company of the Manager and the Investment Manager is BlackRock, Inc. a company incorporated in Delaware, USA. During the period, PNC Financial Services Group, Inc. (“PNC”) was a substantial shareholder in BlackRock, Inc. PNC did not provide any services to the Company during the financial year ended 30 November 2019 and the period up to the 11 May 2020, when PNC announced its intent to sell its investment in BlackRock, Inc. through a registered offering and related buy back by BlackRock, Inc.

13. CONTINGENT LIABILITIES
There were no contingent liabilities at 30 November 2020 (2019: £nil).

14. SUBSEQUENT EVENTS
Following the year end the Company appointed a new Director, Nigel Burton on 21 December 2020. The Company also resolved to appoint Merryn Somerset Webb to the Board with effect from 24 March 2021.

15. PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information contained in this announcement does not constitute statutory accounts as defined in the Companies Act 2006. The Annual Report and Financial Statements for the year ended 30 November 2020 will be filed with the Registrar of Companies after the Annual General Meeting.

The figures set out above have been reported upon by the auditor, whose report for the year ended 30 November 2020 contains no qualification or statement under section 498(2) or (3) of the Companies Act 2006.

The comparative figures are extracts from the audited financial statements of BlackRock Throgmorton Trust plc for the year ended 30 November 2019, which have been filed with the Registrar of Companies. The report of the auditor on those financial statements contained no qualification or statement under section 498 of the Companies Act.

16. 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.

17. ANNUAL GENERAL MEETING
The Annual General Meeting of the Company will be held at 12 Throgmorton Avenue, London EC2N 2DL on Wednesday, 24 March 2021 at 11.00 a.m.

ENDS

The Annual Report will also be available on the BlackRock website at blackrock.com/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: 020 7743 3000

Press Enquiries:
Ed Hooper, Lansons Communications – Tel: 0207 294 3620
E-mail: edh@lansons.com; BlackRockInvestmentTrusts@lansons.com

10 February 2021

12 Throgmorton Avenue
London EC2N 2DL

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Blackrock Throgmorton Trust (THRG)

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