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 2022

PERFORMANCE RECORD

	As at 30 November 2022	As at 30 November 2021

Net assets (£000)¹	633,357	935,148
Net asset value per ordinary share (pence)	626.10	921.91
Ordinary share price (mid-market) (pence)	595.00	935.00
Benchmark Index²	15,652.96	18,968.77
(Discount)/premium to cum income net asset value³	(5.0)%	1.4%
Average (discount)/premium to cum income net asset value for the year³	(3.5)%	1.2%
	----------------	----------------
Performance (with dividends reinvested)
Net asset value per share³	(31.1)%	37.0%
Ordinary share price³	(35.5)%	38.8%
Benchmark Index²	(17.5)%	24.5%
	=========	=========

	For the year ended 30 November 2022	For the year ended 30 November 2021	Change %
Revenue
Net revenue profit after taxation (£000)	13,257	11,446	+15.8%
Revenue earnings per ordinary share (pence)⁴	12.95	12.15	+6.6%
	----------------	----------------	----------------
Dividends per ordinary share (pence)
Interim	2.60	2.50	+4.0%
Final	8.50	8.00	+6.3%
	----------------	----------------	----------------
Total dividends paid and payable	11.10	10.50	+5.7%
	=========	=========	=========

Annual performance for the five years to 30 November 2022

	Benchmark Index⁵	NAV per share	Ordinary share price (mid-market)
2018	(9.0)	(2.7)	1.8
2019	8.0	24.4	42.8
2020	3.8	9.1	8.2
2021	24.5	37.0	38.8
2022	(17.5)	(31.1)	(35.5)

Annual performance figures to 30 November change %, calculated in Sterling terms with dividends reinvested.
Sources: BlackRock and Datastream.

¹ The change in net assets reflects portfolio movements, dividends paid, share issues and share buybacks during the year.
² The Company’s Benchmark Index is the Numis Smaller Companies plus AIM (excluding Investment Companies) Index.
³ Alternative Performance Measures, see Glossary contained within the Annual Report and Financial Statements.
⁴ Further details are given in the Glossary contained within the Annual Report and Financial Statements.
⁵ 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.

CHAIRMAN'S STATEMENT

YEAR’S HIGHLIGHTS

NAV underperformed the Benchmark Index over one year by 13.6 percentage points;
Share price underperformed the Benchmark Index over one year by 18.0 percentage points;
Stronger NAV performance in the six months to 30 November 2022, outperforming the Benchmark Index by 2.4 percentage points;
1,773,900 new shares were issued for a total consideration of £16,550,000 and 2,051,000 ordinary shares were bought back into treasury for a total consideration of £11,544,000, helping to reduce the volatility of the Company’s share rating;
Share Price has remained close to NAV through most of a challenging year, trading at an average discount of -3.5%; and
Final dividend declared of 8.50p per share (2021: 8.00p)

(All returns are in Sterling terms with dividends reinvested.)

OVERVIEW
In the Half-Yearly Report, the Board recognised that it had been a particularly challenging period, the NAV having underperformed the benchmark by 16.9 percentage points over the six months to 31 May 2022. Our Manager’s growth style remained firmly out of favour throughout as investors switched allocations from strongly performing growth companies into energy, lower growth value and defensive stocks. The market rotation witnessed in the first quarter of 2022 therefore saw many of our high-quality growth portfolio holdings de-rate sharply and in many cases, with no material change in the investment thesis, trading or outlook. However, the Company has had a stronger second half of the financial year, regaining some ground and outperforming the index by 2.4 percentage points. This meant the full year result was largely a product of the underperformance seen in the first six months of the year. For the year to 30 November 2022, the Company’s NAV underperformed the benchmark by 13.6 percentage points.

MARKET BACKGROUND
In my report to shareholders this time last year, the UK had led the developed world with a successful vaccine roll-out and there was, to some extent, a degree of optimism as the spectre of COVID-19 dissipated and economic activity returned to more normal levels. However, although the uncertainty caused by COVID-19 related lockdowns had been removed, there were indications that there had been more longer-term structural damage to the UK economy. This damage became evident as companies reported supply chain bottle necks, labour shortages and rising operating costs, which were either absorbed, or in many cases, passed onto the consumer.

As the UK economy struggled with the challenge of transitioning from a COVID-19 driven demand for goods over services model, to a more balanced goods and services-based economy, this supply pressure inevitably led to rising prices and in turn rising inflation. These inflationary forces were then exacerbated by Russia’s invasion of Ukraine in early 2022, triggering an energy supply shock, with Europe being hit hardest given its reliance on Russian gas. The resultant spike in wholesale energy prices, coupled with price hikes for agricultural commodities, pushed up the cost of many food staples, driving up two of the key elements of inflation to levels not seen in over 40 years. The notion of ‘transitionary inflation’ was now firmly discredited and inflation not only persisted but continued to rise unabated throughout the financial year. At the time of writing UK inflation, as measured by the Consumer Price Index, is at 9.2%, having peaked at 11.1% in October 2022.

The Bank of England took decisive action to combat soaring inflation by reiterating its commitment to the 2% inflation target “at all costs” and implemented tighter monetary policy through several interest rate hikes during the year. Similar action was seen globally, as central banks sought to unwind decades of accommodating monetary policy resulting in excess market liquidity which has acted to stoke inflation. However, this action has negatively impacted UK growth forecasts and raised the likelihood of a more prolonged economic recession. The stock market responded by adjusting valuations downward to reflect this more challenging economic back drop and the compounding effect of a weakening pound, higher input costs and rising wages on corporate profit margins. This downward revaluation was particularly acute in the high-quality growth stocks within our portfolio, and many were materially re-rated, despite posting strong results and material trading updates.

PERFORMANCE
The Board has been in close dialogue with our investment manager, Dan Whitestone, throughout the year. He has approached this challenging backdrop by reducing gearing in the portfolio, while continuing to focus on the high quality, financially strong, highly profitable, cash generative growth companies that can weather the storm and deliver for shareholders over the longer term.

Over the twelve months to 30 November 2022, the Company’s NAV returned -31.1%, compared with a total return of -17.5% from the Company’s Benchmark Index, the Numis Smaller Companies plus AIM (excluding Investment Companies) Index, an underperformance of 13.6 percentage points. At the share price level, the return was -35.5%, resulting in an underperformance against the benchmark index of 18.0 percentage points during the year as the Company’s discount to NAV moved from a premium of 1.4% at the start of the financial year to a discount of 5.0% at the period end.

This underperformance of the Benchmark Index will be very disappointing for shareholders but the Board is reassured by a stronger second half of the year in which our investment manager recouped some of the underperformance versus our benchmark index, outperforming the index by 2.4 percentage points. Moreover, as you will read in the Investment Manager’s report which follows, our portfolio manager is firmly of the view that the share price weakness experienced in the portfolio is not reflective of a material deterioration in the investment case for the stocks but a reflection of the market turbulence of 2022, where companies with higher growth prospects and more expensive valuations fell harder.

This weak one year return should also be viewed in the context of strong results last year, with the Company returning +37.0%, and the longer-term performance delivered by the Company. Our NAV return has underperformed the Benchmark Index by -3.7% over three years, outperformed by 19.9% over five years and by 108.3% over ten years. The share price underperformed the Benchmark Index by -9.8% over three years, outperformed by 36.1% over five years and 166.2% over ten years. (All percentages calculated in Sterling terms with dividends reinvested.)

As at close of business on 7 February 2023, the Company’s NAV had increased by 6.0%, compared to the Benchmark Index which increased by 3.7%. The share price over the same period increased by 9.2%. Further information on portfolio performance, positioning and the outlook for the forthcoming year can be found in the Investment Manager’s report below.

I would like to take this opportunity to assure shareholders that although our full year results have been disappointing, both the Board and our Manager remain focused on achieving the Company’s objectives of providing shareholders with long-term capital growth and an attractive total return and remain confident in the investment approach and process. We thank shareholders for your loyalty and support.

POLICY ON SHARE PRICE DISCOUNT/PREMIUM
We recognise that a widening of, and volatility in, the Company’s discount is viewed by some investors as a key disadvantage of investments trusts. The Board believes that the best way to address any discount over the longer term is to generate good performance and to create demand for the Company’s shares in the secondary market through effective marketing to drive awareness of the Company’s unique structure, robust investment process and long term investment track record in an attractive sector that is difficult to navigate.

In support of this activity, and where deemed to be in shareholders’ long-term interests, the Board may exercise its powers to issue or buy back shares with the objective of ensuring that neither an excessive discount or premium to NAV arises.

The Board considers several factors in determining whether the discount or premium to NAV at which the Company’s shares trade is excessive or otherwise. These may include but are not limited to: whether the share rating is commensurate with the peer group of UK Smaller Companies and whether the Company’s shares are trading in normal market conditions; the ongoing attractiveness of the investment proposition, in particular the strength of the portfolio management team and process; and the strong long-term performance delivered for shareholders, both in absolute and relative terms.

SHARE ISSUANCE AND BUY BACK ACTIVITY
During the year to 30 November 2022 the Company’s share rating ranged between a discount to NAV of 14.3% and a premium to NAV of 2.7% and ended the year at a discount of 5.0% (30 November 2021: premium of 1.4%). The 12-month average discount as at 30 November 2022 was 3.5% (average premium 2021: 1.2%).

During the first three months of the financial year, the Company issued a total of 1,773,900 new shares in response to market demand (2021: 13,917,035), for a total consideration of £16,550,000 including costs. As the UK equity market declined after Russia’s invasion of Ukraine, the Company’s share rating moved from a premium to a discount to NAV and continued to widen. Following consultation with the Manager and the Company’s corporate broker, the Board determined that it was in shareholders’ interests to buy back shares with the objective of ensuring that an excessive discount to NAV did not arise. The Company subsequently bought back a total of 2,051,000 ordinary shares for a total consideration of £11,757,360. All shares were bought back at a discount to the prevailing NAV, were therefore accretive to existing shareholders, and were placed into Treasury for future re-issue.

Since 30 November 2022 and up to the latest practicable date of 7 February 2023, a further 45,000 shares have been bought back for a total consideration of £276,000. As at this date, the Company’s shares were trading at a discount of 2.0%.

Despite what has been a challenging and volatile year, it is pleasing that the Company’s share rating has been relatively stable and has traded within a fairly tight range for most of the year. The Board believes that the issuance and buy back activity undertaken has been beneficial in reducing the volatility of our share rating and has been in shareholders’ interest.

As set out in the most recent Annual and Half Yearly reports, the extent and speed of further share issuance, especially given the recent volatility in markets, will be kept under review and there can therefore be no certainty that issuance will continue at the same level as it has in the past.

As it does each year, the Board will once again seek at the Company’s Annual General Meeting (AGM) to renew the authorities granted by shareholders to issue or buy back shares. We encourage shareholders to vote in favour of these resolutions which are described in more detail in the Director’s Report contained within the Annual Report and Financial Statements.

REVENUE RETURN AND DIVIDENDS
The revenue return per share for the year amounted to 12.95 pence per share, compared with 12.15 pence per share for the previous year. 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 8.50 pence per share for the year ended 30 November 2022 (2021: 8.00p). This, together with the interim dividend of 2.60 pence per share paid on 26 August 2022, would give a total dividend for the year of 11.10 pence per share, increasing the total dividend distributed to shareholders in the prior financial year. This dividend will be paid on 31 March 2023, subject to shareholder approval at the forthcoming AGM, to shareholders on the Company’s register on 24 February 2023.

CORPORATE GOVERNANCE MATTERS
As I mentioned in my Chairman’s statement in the Half-yearly Report, the Board recognises the benefits of diversity, including that of ethnicity, and in 2022 has complied with the Parker Review recommendation that FTSE 350 companies have at least one director from an ethnically diverse background by 2024.

The Board has also considered the recommendations of the BEIS-sponsored FTSE Women Leaders Review. The review set new targets for FTSE 350 companies which are designed to achieve boards with 40% female representation (previously 33%) and at least one woman in the role of Chair or Senior Independent Director on the board by the end of 2025. I am pleased to report that the Board is now fully compliant with the recommendations of the Parker Review and the FTSE Women Leaders Review and following the conclusion of the AGM will have a 50:50 gender ratio. For the first time this year, we have also disclosed, amongst other data, the ethnicity of the Board. The disclosure can be found contained within the Annual Report and Financial Statements.

As it does each year, and as required by the Corporate Governance Code, the Company undertook a comprehensive external Board evaluation this year. This resulted in a small number of proposals that the Company will adopt, notwithstanding that the overall conclusion was very positive in terms of the effectiveness of the Board, the skills, expertise and commitment of the Directors. The combination of our succession plan and structured search and selection process through which the Board identifies new appointments to the Board and the annual Board evaluation of their ongoing performance means that the Board remains confident that each Director is effectively discharging their role.

The Board is also cognisant of the concept of “overboarding” and has considered the time commitment required by the Directors’ other roles, taking into account their nature and complexity. The Board reviews this information annually for each Director, including my own as Chairman of the Board, to ensure that all Directors have sufficient capacity to carry out their role effectively. Before recommending a Director for re-election, their independence, attendance record and ongoing commitment to the affairs of the Company is also considered. A formal evaluation of the performance of the Board is also carried out each year, assisted by an external third party firm. Further information on the evaluation of the performance of the Board can be found within the Annual Report and Financial Statements.

BOARD COMPOSITION AND DIVERSITY
The Board regularly considers its composition and that of its committees and has an ongoing succession plan in place designed to ensure that it retains an appropriate balance of skills, knowledge, experience, independence and diversity that meets or exceeds relevant best practice and the requirements of the UK Corporate Governance Code, including guidance on tenure and the composition of the Board’s committees.

In accordance with the Board’s succession plan, and to continue to ensure we retain the experience, expertise and diversity that is expected of a company in the FTSE 250, the Board, through its Nomination Committee, agreed a search process to identify a new director using a third-party recruitment firm, Fletcher Jones. The Nomination Committee determined the selection criteria, the method of selection, and the recruitment and appointment process. Board diversity, including that of age, ethnicity and gender, was taken into account when establishing the search criteria and candidate profile.

Following the completion of a thorough search and selection process, which identified several very high calibre candidates, I am delighted to welcome Glen Suarez to the Board. Glen was appointed on 9 January 2023 and brings a wealth of relevant industry knowledge and experience. He is a highly experienced Non-executive Director and Chairman and his appointment further strengthens and diversifies the existing board. Glen will also serve on the Company’s Audit, Nomination, Remuneration and Management Engagement Committees, and his appointment is subject to approval by shareholders at the forthcoming AGM. Further details of Glen’s background and experience, and that of all the Directors, can be found in their biographies contained within the Annual Report and Financial Statements. The Board’s policy on Board diversity and associated data can be found in the Corporate Governance Statement contained within the Annual Report and Financial Statements.

Following nine years of diligent service on the Board, and having also chaired the Company’s Audit Committee during his tenure, Loudon Greenlees has advised the Board he will step down as a Director of the Company at the conclusion of the forthcoming AGM. I would like to take this opportunity to thank Loudon for his invaluable contribution to the ongoing success of the Company, his wise counsel during his tenure, and in particular for his leadership of the Company’s Audit Committee, an important and demanding role which he has discharged to great effect over many years.

In preparation for Loudon’s departure, the Board, through its Nomination Committee, has appointed Angela Lane as his successor and she will take on the role from the conclusion of the AGM. Angela is both an experienced Non-executive Director and Audit Committee Chairman. She has recent and relevant experience and is a Chartered Accountant. As a result, Angela stood down as Chairman of the Company’s Remuneration Committee and was succeeded in this role by Nigel Burton with effect from 1 December 2022.

At the time of writing, and to facilitate an orderly transition, the Board consists of seven independent Non-executive Directors, a higher number than usual. This will reduce to six following Loudon’s retirement at the AGM. The Board will continue to keep its composition under close review.

OUR APPROACH TO ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) INTEGRATION
Consideration of material ESG issues is built into our Manager’s investment process and climate risk is considered to be a key part of investment risk, an approach your Board supports. The style of our investment manager naturally steers away from companies with weak balance sheets and poor cash flow which is a common characteristic of the few resource stocks in the benchmark index. It should be noted that the Company does not have an explicit mandate for sustainable, ESG or impact-focused investment, nor has it adopted exclusionary screens. The investment manager’s integration of ESG factors into his analysis is, though, an important lens through which to identify long term winners, just as poor ESG outcomes provide a useful tool in establishing candidates for the short book.

Further information on the Manager’s approach to responsible investing can be found within the Annual Report and Financial Statements.

ANNAUL GENERAL MEETING
The Board is pleased to announce that the Company’s Annual General Meeting (AGM) will be held in person on Thursday, 23 March 2023 at 12.00 p.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.

Prior to the formal business of the meeting, our Investment Manager will make a presentation to shareholders. This will be followed by a question and answer session.

Shareholders who are unable to attend the meeting in person but who wish to follow the AGM proceedings can do so via a live webinar this year. Details on how to register, together with access details, will be available shortly on the Company’s website at: www.blackrock.com/uk/thrg or by contacting the Company Secretary at cosec@blackrock.com. It is not possible to attend, speak or vote via this medium and it is solely intended to provide shareholders with the ability to watch the proceedings. Nevertheless, I trust shareholders will find this new facility helpful.

Additionally, if you are unable to attend you can exercise your right to vote by proxy or appoint a proxy to attend in your place. Details of how to do this are included on the AGM Proxy Card provided to shareholders with the annual report. If you hold your shares through a platform or nominees, you will need to contact them and ask them to appoint you as a proxy in respect of your shares in order to attend, speak and vote at the AGM.

Further information on the business of this year's AGM can be found in the Notice of the AGM contained within the Annual Report and Financial Statements.

SHAREHOLDER COMMUNICATION
We appreciate how important access to regular information is to our shareholders. To supplement our Company website, we now therefore offer shareholders the ability to sign up to the Trust Matters newsletter which includes information on the Company as well as news, views and insights on the investment trust market. Information on how to sign up is included on the inside front cover of the Annual Report and Financial Statements.

As I did last year, and in the interest of fostering greater shareholder engagement and participation, I have sought to engage with shareholders who hold their shares through an intermediary or platform via the provisions of section 793 of the Companies Act 2006 and encouraged them to either attend the AGM or exercise their right to vote by proxy. I understand that certain retail platforms are now providing shareholders with the ability to vote electronically. The Board encourages all shareholders to exercise their vote.

OUTLOOK
As we move into 2023, the Board shares our investment manager’s view that company specifics and the strong trading reported by many of the constituents of our portfolio can triumph over the macroeconomic malaise currently weighing heavily on UK smaller company valuations and growth stocks in particular. He continues to believe that we will, in time, see a return to the strong and consistent investment performance delivered to shareholders over many years.

Our investment manager’s fundamental philosophy remains unchanged, with a continued focus on financially strong companies with innovative and disruptive business models and differentiated offerings which are capable of delivering sustained growth over time. This approach has served the Company well over many years and the Board remains fully supportive of our investment manager.

CHRISTOPHER SAMUEL
Chairman
9 February 2023

INVESTMENT MANAGER’S REPORT FOR THE 12 MONTHS ENDED 30 NOVEMBER 2022

MARKET REVIEW AND OVERALL INVESTMENT PERFORMANCE
The past 12 months has been a period characterised by steep market declines and high levels of volatility across many asset classes globally. The notable exception was the FTSE 100 Index which managed a gain of 11.3% in the 12 month period to the end of November 2022. The FTSE 250 Index fell by -12.5% on a total return basis and the Company’s benchmark, the Numis Smaller Companies plus AIM (excluding Investment Companies) Index fell by -17.5% during this period.

As discussed in the Half Yearly Report, the first half of the year saw the UK stock market rotating away from highly priced ‘growth’ shares towards lower growth ‘value’ and defensives. This was driven by concerns of higher inflation and energy supply shocks exacerbated by the war in Ukraine. In the second half of the year, the subsequent response by central bankers to raise interest rates stoked fears of a recession and markets declined further. As concerns around economic growth grew, UK small and mid-caps mirrored their US peers and performed poorly (down by -9.4%) to 31 May 2022. These sections of the market are perceived to be more cyclical and discretionary and were sold off to fund more ‘defensive’ positions. Within the UK equity market, the effect of this can be seen in the gap between the performance year-to-date of the FTSE 100 Index (make up is over 50% in resources, staples and healthcare) and the FTSE 250 Index highlighted above and which is the largest dispersion on record. These numbers should give some measure of the extremes of positioning caused by the events of the past 12 months. The UK also saw notable Sterling weakness during the year, with economic weakness compounded by political uncertainty.

It is disappointing to report a negative return for the Company and underperformance of the benchmark over this period. Many of our investments have been caught up in the market turbulence and fallen sharply regardless of the strength of their underlying operations and financial results. To be clear, we do make mistakes at the individual company level (the consequences of which are often very painful) but this is not a year where our poor performance can be attributed to lots of profit warnings or negative developments to investment theses. The underperformance has been driven by our style bias towards growth – and the market devaluation of growth businesses. This is particularly frustrating as whilst we understand and agree with the logic to devalue loss-making and cash-consumptive speculative businesses as interest rates rise, many profitable and differentiated businesses have been unfairly punished too.

Furthermore, it is with a sense of real irony that many companies with strong pricing power and no debt have fared far worse than peers who have inferior balance sheets and weaker track records of volume growth and margin expansion. Indeed, it is the latter that are far more exposed to inflationary cost pressures and higher interest charges eroding profitability and cashflows. We have continued to apply our robust investment process and most of our companies have continued to execute well operationally and financially through the year. Their share price falls reflect a change in valuation as the market reassesses the appropriate price ‘to pay’ for these type of businesses, in context of greater economic uncertainty and rising interest rates.

We think it is far too simplistic to respond by dismissing the long book with words to the effect of “well surely they were all far too expensive to begin with” as we think this often belies their impressive track records of growth and returns, not to mention underestimating their prospects to grow their earnings significantly in time, and therefore fails to reflect the time horizon one needs to evaluate success of small and mid-cap growth companies. In hindsight, in 2022 the aggregate draw-down in valuation that has occurred was greater than expected, and whilst this has been very frustrating for us this year, it is fortunately also a source of optimism. Earnings expectations and company valuations have fallen a long way. The next few years will present new challenges we have not seen before, but we firmly believe the status quo is unsustainable and that those companies that can continue to deliver will be appropriately rewarded in time. Small and mid-cap does suffer during these market rotations but this asset class has proven to be an excellent driver of long-term investment returns since it was first established in 1955 and we believe that it will continue to support long-term performance.

PERFORMANCE REVIEW
The past 12 months has been an extremely challenging period to navigate, particularly for our quality growth focused investment style. The Company’s NAV total return of -31.1% is disappointing and compares unfavourably to the benchmark total return of -17.5% and for that I would like to apologise to the Company’s loyal shareholders. While the long-term track record of the Company remains strong in both absolute and relative terms, the extent of underperformance has been more than I would have anticipated, particularly given the strength of trading that we have continued to see across a large portion of our long book. There are two broad drivers of the underperformance this year: i) a rotation away from quality growth towards value, and ii) elevated gross and net exposure at the start of the year magnifying the draw-down in performance.

The primary driver of underperformance was the rotation from higher growth companies, and a broad de-rating across the UK small and mid-cap market. Extraordinarily we have had fewer company specific disappointments than usual but in the short-term share prices are also influenced by additional factors, including the macro and political environment, the discount rate, liquidity, and investor sentiment and flows which can override strong company specifics. It is these factors that have hurt. Over the longer-term, we believe growth in absolute value is all about the growth of cash-backed earnings and we take comfort that by continuing to focus on differentiated and profitable growth companies, that continue to meet and beat expectations, our patience will be rewarded with significant share price recoveries in these holdings.

When looking over the second half of the financial year, we can see that performance certainly improved compared to the first half, and the outcome over the last 12 months has really been a result of the market moves that we experienced at the beginning of 2022. The market rotation saw a number of our core holdings, such as Gamma Communications, Auction Technology Group and YouGov, fall significantly due to the de-rating of growth shares, despite all reporting strong results with material upgrades in the case of Gamma and YouGov. The effect of this rotation/de-rating was amplified by the high gross and net exposure that the Company came into the year with. As a reminder, we were not making a call on a rising market. It reflected the strength of trading that many of our long positions had delivered in 2021, along with some huge positive revisions in their forecasts. Following many meetings with management teams, and various channel checks, we felt extremely confident that these companies would continue to deliver (which on average they have done).

We reduced both the gross and net exposures in the summer; in retrospect, I recognise that de-risking sooner would have helped cushion relative performance. Whilst the short book made a positive contribution (+0.6%) the positive impact of this was reduced due to the elevated net positioning of the Company at the start of the year. It is important to note that within the world of UK small and mid-caps, liquidity can disappear just when you need it most. This did hamper us somewhat in the first few months when many of our investments sold off so sharply on low liquidity. At the point that the Company’s exposure had been reduced and de-ricked, we felt it was too risky to shareholders to increase our short exposure materially.

In terms of stock specific detractors during the year, the largest, was IntegraFin, which we mentioned in the Half Yearly Report. It is a UK wealth management platform for financial advisers and disappointed the market over their guidance for costs. An attractive feature of this business had been high levels of recurring (and growing) revenues but the management felt it necessary to increase operating spend to deliver best in class service resulting in margins falling from their historic mid 40% range. This should not really change the fundamental long term investment case as a market share winner, but in the near term does raise questions around what the normalised margin will be. We reduced the position until there is further clarity on the medium-term margin.

Elsewhere within Financials, our holding in ImpaxAsset Management fell as investors adjusted their earning expectations as broader markets fell despite the business continuing to see net inflows. We remain confident in their market leading franchise in sustainable investing, which we think will continue to take market share. Shares in Dechra Pharmaceuticals, a multi-year performer for this Company, were weak and can be attributed to the rising discount rate weighing on its valuation.

In terms of positive contributors, 4imprint Group delivered multiple upgrades during the year, with another 10% in the final month of our financial year, bringing the upgrades to forecasts in 2022 to 115%. 4imprint Group has seen an acceleration in market share gains after increased investment through COVID as well as adjusting their marketing efforts to more prominent ‘above-the-line advertising’ to drive brand awareness. This has driven record revenue levels despite the promotional products industry remaining below its 2019 level. 4imprint still has a single digit percentage market share, leaving lots of runway for future market share gains. Ergomed, a specialist service provider to the pharmaceuticals industry, outperformed the market as it continues to deliver strong sales growth, particularly in North America. Recent acquisitions appear to be integrating well and the management team remain confident in their long-term strategic progress, which includes further expansion into new geographies.

PORTFOLIO POSITIONING & OUTLOOK
Financial markets and macro data remain volatile and markets are likely to continue to be driven by inflation statistics and indications (or not) of slowing the pace of monetary tightening from central banks. This push and pull dynamic is likely to remain a recurring theme in the foreseeable future, but ultimately we continue to see evidence to support our thesis that inflation has peaked and is indeed falling and this will ultimately lead to the Federal Reserve (Fed) to adjust their course. Some of the largest contributors to headline inflation (energy and food) are now showing lower year-on-year increases and might even turn negative year-on- year as we move into the first quarter of 2023.

At the time of writing, four of the seven categories in core inflation (core inflation strips out food and energy from headline inflation) saw price declines in November data. Based on the data we track, we see leading indicators for shelter, the last remaining large positive contributor to core inflation, also reducing. We are not predicting either an imminent pivot by the Fed, nor a return to the ultra-lax monetary policy of the 2020/2021 period. We suspect the Fed will not pivot until there is a CPI data showing inflation close to 2% on a year-on-year basis. Our current best guess is quarter three of 2023, but we are not betting the house on it and will be led by the data. The change from hiking 75bps to hiking only 50bps at the last meeting demonstrates the direction of travel here too. That said, we do not expect this to be a smooth process and the market is likely to remain sensitive to both inflation data and any indications of changes to Fed policy.

Turning attention to the portfolio, we would urge investors not to conflate share price weakness with a deterioration in investment cases. Many of our investments have demonstrated incredible earnings resilience through 2022 despite the challenges they have faced from rising input costs, supply chain pressures and weakening demand. They continue to generate cash and have strong balance sheets. Valuations have been reset and we feel that right now there is an asymmetric risk/reward profile developing within the portfolio. That is not to say that we think the market has definitively bottomed, but we do think very much that the worst is behind us, and share prices are already pricing in extremely bearish scenarios with little attention (and value) ascribed to their long-term prospects, increasing profits and growing cash flows. This will return in time.

Whilst we are always open to adding new short positions to the portfolio, we continue to believe the best value in the market today remains in well-financed companies with enduring long term organic growth prospects that will use this period to enhance their position to win more share. Industrials and Consumer Services are two of the sectors where we think some of the most differentiated and interesting investments reside and where we continue to deploy capital even though they are in the eye of the storm, so to speak, as investors grapple with headwinds to consumption and industrial activity.

We look to the year ahead with optimism and are comforted by the strength of the holdings in the portfolio and our belief in the ability of our companies to navigate the upcoming environment. We will continue to follow our investment process that focuses on profitable, cash generative growth companies, many of which are now trading on low price to earnings multiples, with high single digit free cash flow yields and in many cases large percentages of their market capital in net cash. We believe the recovery potential in these shares is significant: in time share prices will follow earnings. We thank shareholders for your ongoing support.

DAN WHITESTONE
BlackRock Investment Management (UK) Limited
9 February 2023

PORTFOLIO OF INVESTMENTS

1 + Watches of Switzerland (2021: 2nd)
Personal Goods
Market value: £20,601,000
Share of net assets: 3.3% (2021: 3.3%)
Retailer of luxury watches.

2 + Oxford Instruments (2021: 6th)
Electronic & Electrical Equipment
Market value: £19,805,000¹
Share of net assets: 3.1% (2021: 2.7%)
Designer and manufacturer of tools and systems for industry and research.

3 + 4imprint Group (2021: 25th)
Media
Market value: £19,756,000
Share of net assets: 3.1% (2021: 1.5%)
Supplier of promotional merchandise in the US.

4 + RS Group (2021: n/a)
Support Services
Market value: £18,447,000
Share of net assets: 2.9% (2021: n/a)
Distributor of industrial and electronic products.

5 + CVS Group* (2021: 12th)
General Retailers
Market value: £18,348,000
Share of net assets: 2.9% (2021: 1.9%)
Operator of veterinary surgeries.

6 + Ergomed* (2021: 20th)
Pharmaceuticals & Biotechnology
Market value: £18,100,000¹
Share of net assets: 2.9% (2021: 1.7%)
Provider of pharmaceuticals services.

7 - Gamma Communications* (2021: 3rd)
Mobile Telecommunications
Market value: £17,977,000
Share of net assets: 2.8% (2021: 3.1%)
Provider of communication services to UK businesses.

8 + Diploma (2021: 39th)
Support Services
Market value: £16,958,000¹
Share of net assets: 2.7% (2021: 1.2%)
Supplier of specialised technical products and services.

9 + WH Smith (2021: 24th)
General Retailers
Market value: £16,263,000
Share of net assets: 2.6% (2021: 1.5%)
Retailer of books, stationery, magazines, newspapers and confectionery.

10 - Auction Technology Group (2021: 7th)
General Retailers
Market value: £16,202,000
Share of net assets: 2.6% (2021: 2.7%)
Operator of marketplaces for curated online auctions.

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

1 Includes long derivative positions.

Percentages shown are the share of net assets.

#	Company	£000	%	Description

11	YouGov*	15,366	2.4	Provider of survey data and specialist data analytics
	Media
12	Breedon*	14,879	2.4	Supplier of construction materials
	Construction & Materials
13	Grafton Group	13,101	2.1	Builders merchants in the UK, Ireland and Netherlands
	Support Services
14	Dunelm Group	12,836	2.0	Retailer of homeware products
	General Retailers
15	SigmaRoc*	12,555	2.0	Buy-and-build group targeting construction materials assets in the UK and Northern Europe
	Construction & Materials
16	Computacenter	12,396¹	2.0	Computer services
	Software & Computer Services
17	Tatton Asset Management*	12,145	1.9	Provider of discretionary fund management services to the IFA market
	Financial Services
18	Baltic Classifieds Group	11,530¹	1.8	Operator of online classified businesses in the Baltics
	Software & Computer Services
19	Games Workshop	11,079¹	1.8	Developer, publisher and manufacturer of miniature war games
	Leisure Goods
20	Qinetiq Group	11,056	1.7	Provider of scientific and technological services to the defence, security and aerospace markets
	Aerospace & Defence
21	Spirent	10,992	1.7	Multinational telecommunications testing
	Technology Hardware & Equipment
22	Dechra Pharmaceuticals	10,340	1.6	Developer and supplier of pharmaceutical and other products focused on the veterinary market
	Pharmaceuticals & Biotechnology
23	Rotork	9,972	1.6	Manufacturer of industrial flow equipment
	Electronic & Electrical Equipment
24	Impax Asset Management*	9,828	1.6	Provider of asset management services
	Financial Services
25	Mattioli Woods*	9,542	1.5	Provider of wealth management services
	Financial Services
26	Euronext	8,779¹	1.4	European stock exchange
	Financial Services
27	Robert Walters	8,720	1.4	Provider of specialist recruitment services
	Support Services
28	Chemring Group	8,694	1.4	Provider of technology products and services to aerospace, defence and security markets
	Aerospace & Defence
29	Bytes Technology	8,511	1.3	Specialist in software, security and cloud services
	Software & Computer Services
30	Boku*	7,574	1.2	Digital payments platform
	Support Services
31	Workspace Group	7,542	1.2	Supply of flexible workspace to businesses in London
	Real Estate Investment Trusts
32	OSB Group	6,941	1.1	Specialist lending business
	Financial Services
33	Alfa Financial Software	6,482	1.0	Provider of software to the finance industry
	Software & Computer Services
34	Hunting	6,407¹	1.0	Oil services business
	Oil Equipment and Services
35	Leslie’s	6,373¹	1.0	US direct to consumer retailer of swimming pool maintenance products
	Leisure Goods
36	IntegraFin	6,244	1.0	UK savings platform for financial advisors
	Financial Services
37	Hiscox	6,203¹	1.0	Provider of insurance services
	Non-life Insurance
38	Serica Energy*	5,978	0.9	Oil and gas producer
	Oil, Gas & Coal
39	AJ Bell	5,745	0.9	UK savings platform for financial advisors & individual investors
	Financial Services
40	Morgan Sindall	5,719¹	0.9	Supplier of office fit out, construction and urban regeneration services
	Construction & Materials
41	Londonmetric Property	5,690¹	0.9	Investor in, and developer of property
	Real Estate Investment Trusts
42	Axon Enterprise	5,617¹	0.9	US based provider of technology and weapons products
	Support Services
43	Spectris	5,578	0.9	Supplier of productivity enhancing instrumentation and controls
	Electronic & Electrical Equipment
44	Serco Group	5,561	0.9	Provider of public services across health, transport, immigration, defence, justice and citizen services
	Support Services
45	Safestore	5,375	0.8	Provider of self-storage units
	Real Estate Investment Trusts
46	Sirius Real Estate	5,282	0.8	Owner and operator of business parks, offices and industrial complexes in Germany
	Real Estate Investment & Services
47	Gaztransport et Technigaz	5,228	0.8	French multinational naval engineering business
	Oil, Gas & Coal
48	Cranswick	5,036	0.8	Producer of premium, fresh and added-value food products
	Food Producers
49	Hill & Smith Holdings	4,991	0.8	Supplier of infrastructure products and galvanizing services
	Industrial Metals & Mining
50	Restore*	4,981	0.8	Provider of records management services
	Support Services
51	Young & Co’s Brewery*	4,965	0.8	Owner and operator of pubs mainly in the London area
	Travel & Leisure
52	Learning Technologies*	4,961	0.8	Provider of e-learning services
	Software & Computer Services
53	Moneysupermarket.com	4,810¹	0.8	Provider of price comparison website specialising in financial services
	Software & Computer Services
54	Jet2*	4,803	0.8	Low cost tour operator and airline
	Travel & Leisure
55	DiscoverIE	4,732	0.7	International designer, manufacturer and supplier of customised electronics
	Electronic & Electrical Equipment
56	GlobalData*	4,538¹	0.7	Data analytics and consulting
	Media
57	Clarkson	4,474	0.7	Provider of shipping services
	Industrial Transportation
58	Vesuvius	4,339¹	0.7	British engineered ceramics company
	Industrial Engineering
59	Porvair	4,240	0.7	Specialist filtration and environmental technology
	Industrial Engineering
60	Next Fifteen Communications*	4,227	0.7	Provider of digital communication products and services
	Media
61	Accesso Technology*	4,191¹	0.7	Provider of ticketing and virtual queuing solutions
	Software & Computer Services
62	BE Semiconductor	4,093¹	0.6	Dutch company engaged in the development, manufacturing, marketing, sales and service of semiconductor assembly equipment for the global semiconductor and electronics industries
	Technology Hardware & Equipment
63	Judges Scientific*	4,090	0.6	Designer and producer of scientific instruments
	Electronic & Electrical Equipment
64	Zotefoams	3,987¹	0.6	Manufacturer of polyolefin foams used in sport, construction, marine, automation, medical equipment and aerospace
	Chemicals
65	Xero*	3,913¹	0.6	Software company specialising in accounting for small businesses
	Software & Computer Services
66	Ashmore Group	3,874¹	0.6	Emerging market focused investment manager
	Financial Services
67	The Pebble Group*	3,780	0.6	Designer and manufacturer of promotional goods
	Media
68	Polar Capital Holdings*	3,772	0.6	Provider of investment management services
	Financial Services
69	Eckoh*	3,618	0.6	Global provider of secure payments products
	Software & Computer Services
70	TP ICAP	3,529	0.6	Inter-dealer broker
	Investment Banking & Brokerage
71	AB Dynamics*	3,477	0.5	Developer and supplier of specialist automotive testing systems
	Industrial Engineering
72	Kainos Group	3,462¹	0.5	Provider of digital technology solutions
	Software & Computer Services
73	TT Electronics	3,447¹	0.5	Global manufacturer of electronic components
	Electronic & Electrical Equipment
74	Team17*	3,385	0.5	Video game developer and publisher
	Leisure Goods
75	Howden Joinery Group	3,343¹	0.5	Kitchen and joinery product supplier
	General Retailers
76	SThree	3,266	0.5	Provider of specialist professional recruitment services
	Support Services
77	Johnson Service Group*	3,232	0.5	Provider of textile services
	Support Services
78	Advanced Medical Solutions*	3,229¹	0.5	Developer and manufacturer of advanced wound care solutions
	Healthcare Equipment & Services
79	Halfords	3,174	0.5	Retailer of motoring and cycling products
	Specialty Retailers
80	Genuit Group	3,011	0.5	Manufacturer of plastic piping systems
	Construction & Materials
81	Babcock International Group	2,875	0.5	British aerospace, defence and nuclear engineering services company
	Aerospace & Defence
82	Kier Group	2,841	0.4	UK construction, services and property group
	Support Services
83	Victorian Plumbing*	2,794¹	0.4	Online retailer of bathroom products
	Home Improvement Retailers
84	Big Technologies*	2,760	0.4	Provider of remote personal monitoring products
	Software & Computer Services
85	Anpario*	2,705	0.4	Manufacturer and distributor of natural animal feed additives for animal health, nutrition and biosecurity
	Pharmaceuticals & Biotechnology
86	Animalcare Group*	2,530	0.4	Veterinary pharmaceuticals business
	Pharmaceuticals & Biotechnology
87	Cerillion*	2,489	0.4	Provider of billing, charging and customer management systems
	Software & Computer Services
88	Renishaw	2,486	0.4	Engineering and scientific technology company
	Electronic & Electrical Equipment
89	Future	2,335	0.4	Multi-platform media business covering technology, entertainment, creative arts, home interest and education
	Media
90	MaxCyte*	2,306	0.4	Clinical-stage global cell-based therapies and life sciences company
	Pharmaceuticals & Biotechnology
91	Genus	2,166	0.3	Animal genetics company
	Pharmaceuticals & Biotechnology
92	Pets at Home	2,038	0.3	Retailer of pet supplies
	General Retailers
93	Lok’nStore*	2,007	0.3	Provider of self-storage space in the UK
	Real Estate Investment & Services
94	Luceco	1,593	0.3	Supplier & manufacturer of high quality LED lighting products
	Electronic & Electrical Equipment
95	XP Power	1,588	0.3	Leading provider of power solutions
	Electronic & Electrical Equipment
96	Gooch & Housego*	1,359	0.2	Designer and manufacturer of advanced photonic systems
	Electronic & Electrical Equipment
97	Moonpig Group	1,263	0.2	Internet based provider of personalised cards and gifts
	General Retailers
98	Close Brothers Group	951	0.2	UK merchant banking group providing lending, deposit taking, wealth management services and securities trading
	Banks
		----------------	----------------
	Long investment positions (excluding BlackRock’s Institutional Cash Series plc – Sterling Liquid Environmentally Aware Fund)	676,373	106.8
		----------------	----------------
	Short investment positions	(15,637)	(2.5)
		=========	=========

¹ Includes long derivative positions.
* Traded on the Alternative Investment Market (AIM) of the London Stock Exchange.
Percentages shown are the share of net assets.
At 30 November 2022, the Company held equity interests in four companies comprising more than 3% of a company’s share capital as follows: Tatton Asset Management: 4.3%; SigmaRoc: 3.6%; Eckoh: 3.1%; and Mattioli Woods: 3.1%.

FAIR VALUE AND GROSS MARKET EXPOSURE OF INVESTMENTS AS AT 30 NOVEMBER 2022

	Fair value¹ £000	Grossmarket exposure² £000	Gross market exposure as a % of net assets²
	Fair value¹ £000	Grossmarket exposure² £000	2022	2021

Long investment positions (excluding BlackRock’s Institutional Cash Series plc – Sterling Liquid Environmentally Aware Fund)	579,502	676,373	106.8	121.4
Short investment positions¹	(133)	(15,637)	(2.5)	(2.7)
Cash and cash equivalents^1,3	103	(81,264)	(12.8)	(21.1)
BlackRock’s Institutional Cash Series plc – Sterling Liquid Environmentally Aware Fund	58,690	58,690	9.3	2.7
Other net current liabilities	(4,805)	(4,805)	(0.8)	(0.3)
	----------------	----------------	----------------	----------------
Net assets	633,357	633,357	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 2022 were 109.3% and 104.3% respectively (2021: 124.1% and 118.7% 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 investment positions above is determined based on the difference between the purchase price 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 securities held through long derivative positions directly in the market would have amounted to £96,871,000 at the time of purchase, and subsequent market rises in prices have resulted in unrealised gains on the long derivative positions of £2,731,000, resulting in the value of the total market exposure to the underlying securities increasing to £99,602,000 as at 30 November 2022.

– The notional price of selling the securities to which exposure was gained via the short derivative positions would have been £15,504,000 at the time of entering into the contract, and subsequent price rises have resulted in unrealised losses on the short derivative positions of £133,000 and the value of the market exposure of these investments increasing to £15,637,000 at 30 November 2022. If the short derivative positions had been closed on 30 November 2022 this would have resulted in a loss of £133,000 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 2022

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

Aerospace & Defence	3.4	0.0	3.4
Construction & Materials	5.5	(0.5)	5.0
Electronic & Electrical Equipment	8.3	0.0	8.3
Industrial Engineering	1.8	0.0	1.8
Industrial Support Services	0.0	(0.2)	(0.2)
Industrial Transportation	0.7	0.0	0.7
Support Services	13.7	(0.2)	13.5
	----------------	----------------	----------------
Industrials	33.4	(0.9)	32.5
	=========	=========	=========
General Retailers	10.6	0.0	10.6
Home Improvement Retailers	0.4	0.0	0.4
Household Furnishings	0.0	(0.2)	(0.2)
Leisure Goods	3.2	0.0	3.2
Media	7.6	0.0	7.6
Specialty Retailers	0.5	(0.3)	0.2
Travel & Leisure	1.5	0.0	1.5
	----------------	----------------	----------------
Consumer Discretionary	23.8	(0.5)	23.3
	=========	=========	=========
Software & Computer Services	10.5	(0.6)	9.9
Technology Hardware & Equipment	2.3	0.0	2.3
	----------------	----------------	----------------
Technology	12.8	(0.6)	12.2
	=========	=========	=========
Banks	0.1	0.0	0.1
Closed End Investments	0.0	(0.3)	(0.3)
Financial Services	10.1	0.0	10.1
Investment Banking & Brokerage	0.5	0.0	0.5
Non-life Insurance	0.9	0.0	0.9
	----------------	----------------	----------------
Financials	11.6	(0.3)	11.3
	=========	=========	=========
Healthcare Equipment & Services	0.5	0.0	0.5
Pharmaceuticals & Biotechnology	5.8	0.0	5.8
	----------------	----------------	----------------
Health Care	6.3	0.0	6.3
	=========	=========	=========
Real Estate Investment & Services	1.1	0.0	1.1
Real Estate Investment Trusts	2.8	0.0	2.8
	----------------	----------------	----------------
Real Estate	3.9	0.0	3.9
	=========	=========	=========
Beverages	0.0	(0.2)	(0.2)
Food Producers	0.8	0.0	0.8
Personal Goods	3.1	0.0	3.1
	----------------	----------------	----------------
Consumer Staples	3.9	(0.2)	3.7
	=========	=========	=========
Oil, Gas & Coal	1.7	0.0	1.7
Oil Equipment and Services	1.0	0.0	1.0
	----------------	----------------	----------------
Oil & Gas	2.7	0.0	2.7
	=========	=========	=========
Mobile Telecommunications	2.7	0.0	2.7
	----------------	----------------	----------------
Telecommunications	2.7	0.0	2.7
	=========	=========	=========
Chemicals	0.6	0.0	0.6
Industrial Metals & Mining	0.8	0.0	0.8
	----------------	----------------	----------------
Basic Materials	1.4	0.0	1.4
	----------------	----------------	----------------
Total Investments	102.5	(2.5)	100.0
	=========	=========	=========

The above percentages are calculated on the net portfolio as at 30 November 2022. The net portfolio is calculated as long equity and derivative positions, less short derivative positions as at 30 November 2022.

ANALYSIS OF THE PORTFOLIO

Market capitalisation as at 30 November 2022

	Long positions¹ % of net portfolio	Short positions % of net portfolio
£10bn+	0.9%	0.0%
£5bn – £10bn	1.9%	0.0%
£2.5bn – £5bn	12.6%	-0.3%
£2bn – £2.5bn	13.9%	0.0%
£1.5bn – £2bn	11.3%	-0.6%
£1bn – £1.5bn	24.7%	-0.2%
£500m – £1bn	18.2%	-1.1%
£0m – £500m	19.0%	-0.3%

¹ The above investments may comprise exposures to long equity and long derivative positions.

Source: BlackRock.

Position size as at 30 November 2022

Market value	Long positions¹	Short positions
£20m +	1	0
£15m – £20m	10	0
£10m – £15m	11	0
£5m – £10m	26	0
£2.5m – £5m	38	0
£0m – £2.5m	12	-11

¹ The above investments may comprise exposures to long equity and long derivative positions.

Source: BlackRock.

PORTFOLIO HOLDINGS WITHIN KEY BENCHMARK INDICES

	Gross Basis¹	Net Basis²
FTSE 250	51.4%	50.7%
FTSE AIM	33.5%	33.5%
FTSE Small Cap	6.6%	6.9%
FTSE 100	4.2%	4.3%
Other	4.3%	4.6%

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.

PORTFOLIO HOLDINGS WITHIN BENCHMARK INDEX (THE NUMIS SMALLER COMPANIES PLUS AIM (EXCLUDING INVESTMENT COMPANIES) INDEX)

	Gross Basis^1,3	Net Basis^2,3
Within Benchmark	58.6%	56.8%
Off-Benchmark	41.4%	43.2%

Source: BlackRock.

STRATEGIC REPORT

The Directors present the Strategic Report of the Company for the year ended 30 November 2022.

PRINCIPAL ACTIVITIES
The Company is a public company limited by shares which 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 contained within the Annual Report and Financial Statements.

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.

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 to the normal long only portfolio, the Company will likely hold a mixture of long and short contracts for difference (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 also invest up to 2.5% of its net assets (measured at the time of investment) in unquoted securities, including securities issued by companies incorporated outside the United Kingdom. However, the Company may invest more than 2.5%, but no more than 3.75%, of its net assets (both measured at the time of investment), in unquoted securities in circumstances where such investment is in an existing investee company and, in the Investment Manager’s opinion, a failure of the Company to make such investment would have a material adverse effect on the value of the Company’s investment in such investee company.

In addition, the Company is permitted to employ leverage up to 30% of net assets, which it does primarily through the use of CFDs and/or comparable equity derivatives, rather than bank borrowings, therefore enabling the Company to have a maximum net market exposure of 130%.

In normal circumstances 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%*.

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.

* The AIC measures gearing at gross level, rather than net market exposure level (i.e. gearing is calculated as borrowings + long CFDs and/or comparable equity derivatives + short CFDs and/or comparable equity derivatives) and therefore the published gearing figures will be higher than the typical net market exposure of between 100% and 115%.

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 an exposure to the market, as shown in the chart within the Annual Report and Financial Statements. In the course of their research the investment management team 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.

ESG INTEGRATION
The Manager defines Environmental, Social and Governance (ESG) integration as the practice of incorporating material ESG information and consideration of sustainability risks into investment decisions in order to enhance risk-adjusted returns. 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 insight, as well as internal engagement commentary and input from BlackRock Investment Stewardship (BIS) on governance issues. The Investment Manager conducts regular portfolio reviews with the BlackRock Risk and Quantitative Analysis (RQA) team.

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, traditional financial risks 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. The Investment Manager works closely with BIS to assess the governance quality of companies and understand any potential issues, risks or opportunities.

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 RQA team are an integral part of the investment process. The RQA team 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.

The Company does not meet the criteria for Article 8 or 9 products under the EU Sustainable Finance Disclosure Regulation (SFDR) and the investments underlying this financial product do not take into account the EU criteria for environmentally sustainable economic activities. The Investment Manager has access to a range of data sources, including principal adverse indicator (PAI) data, when making decisions on the selection of investments. However, whilst BlackRock considers ESG risks for all portfolios and these risks may coincide with environmental or social themes associated with the PAIs. The Company does not commit to considering PAIs in driving the selection of its investments.

Further information on the Manager’s approach to ESG and sustainability can be found in the report on Responsible Investing contained within the Annual Report and Financial Statements.

PERFORMANCE
The Investment Manager’s report above 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 loss for the year, after taxation, was £295,888,000 (2021: a profit of £223,334,000) of which the revenue return amounted to £13,257,000 (2021: £11,446,000) and a capital loss of £309,145,000 (2021: profit of £211,888,000).

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

KEY PERFORANCE 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 2022	Year ended 30 November 2021

Net asset value total return^1,2	(31.1)%	37.0%
Share price total return^1,2	(35.5)%	38.8%
Benchmark Index total return³	(17.5)%	24.5%
(Discount)/premium to cum income net asset value²	(5.0)%	1.4%
Revenue return per share	12.95p	12.15p
Total dividend per share	11.10p	10.50p
Ongoing charges^2,4	0.54%	0.57%
Ongoing charges including performance fees^2,5	0.54%	1.38%

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, prior year expenses written back 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, prior year expenses written back 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 14.3% and a premium of 2.7%, with the average being a discount of 3.5%. The shares ended the year at a discount of 5.0% on a cum income basis. As at 7 February 2023 the discount was 2.0%.

As it does each year, the Board will also be seeking to renew the authority from shareholders at the AGM to issue new shares (or to reissue shares held in treasury) and to buy back shares. Further information on these powers and the Board's policy in this respect can also be found in the Chairman's Statement above.

PRINCIPAL RISKS
As required by the 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. Emerging risks are considered by the Board as they come into view and are incorporated into the Company’s risk register where applicable. Additionally, the Manager considers emerging risks in numerous forums and the Risk and Quantitative Analysis team produces an annual risk survey. Any material risks of relevance to the Company identified through the annual risk survey will be communicated to the Board.

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, Russia's invasion of Ukraine and the impacts of climate change.	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, and key market risk factors are discussed. 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 and more recently the impact of Russia’s invasion of Ukraine on the global economy. 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 Investment 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 2022, the Company had approximately 33.5% of its gross asset value invested in AIM traded equity securities and 4.3% 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 of the Annual Report and Financial Statements, together with a summary of the policies for managing and controlling these risks in note 16 of the Annual Report and Financial Statements.
Operational risk In common with most other investment trust companies, the Company has no employees. The Company therefore relies upon the services provided by BlackRock (the Manager and 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 financial instruments held in custody are subject to a strict liability regime and in the event of a loss of such financial instruments 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 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 is confident that a good level of service has and will be maintained. The Board also receives regular updates from BlackRock’s internal audit function and the Company’s Audit Committee Chairman attends an annual briefing from the head of BlackRock’s internal audit function once a year. This is supplemented by a written report which describes the progress made against the current internal audit plan, any issues identified and the plan for the forthcoming year.
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. Risk of regulatory change 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 (as retained and onshored in the UK), the Market Abuse Regulation (also as retained and onshored in the UK), 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 as retained and onshored in the UK (AIFMD), the Company and its appointed Alternative Investment Fund Manager (AIFM) are subject to the risks that the requirements of the AIFMD 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 and has been retained and onshored in the UK following Brexit. 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 2028, 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. The Board is cognisant of the uncertainty surrounding the potential duration of the Russia/Ukraine conflict, its impact on the global economy, and the prospects for the Company’s portfolio holdings. In making its assessment the Board has also 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 ongoing COVID-19 pandemic and the impact on the global economy, inflation and interest rates, of Russia’s invasion of Ukraine;

· 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 ongoing 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 (0.54% excluding performance fees, 0.54% including performance fees in 2022). The effective performance fee cap in the event that the NAV return exceeds the Benchmark Index return over the performance period is circa. 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.

On 30 December 2020, the UK and the EU signed the UK/EU Trade and Cooperation Agreement (UK/EU Trade Agreement), which applied from 1 January 2021 and set out the foundation of the economic and legal framework for trade between the UK and the EU. The UK’s exit from the EU has resulted in additional trade costs and disruptions in this trading relationship. The terms of the future relationship may cause continued uncertainty in the global financial markets, and could potentially 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 Directors have 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 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.

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

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 considers 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 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 matters 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 above. The portfolio activities undertaken by the Manager can be found in the Investment Manager’s Report above.
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.	The average discount for the year to 30 November 2022 was 3.5%. During the year the Company’s share price has traded at a maximum discount of 14.3% and a maximum premium of 2.7%.
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 Depositary in respect of its 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, 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.	Performance evaluations were performed on a timely basis and the Board concluded that all third party service providers, including the Manager, 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 UK Corporate Governance Code, including guidance on tenure and the composition of the Board’s committees.	During the year the Board undertook a review of succession planning arrangements and identified the need for action to ensure that the composition of the Board remained 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 factors such as age, ethnicity, and 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 2022 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.	On 9 January 2023 the Board announced the appointment of a new Non-executive Director, Glen Suarez, further strengthening and divesifying the existing Board. Further information on Mr Suarez’s background and experience, and that of all the Directors, can be found within the Annual Report and Financial Statements. As mentioned in the Chairman’s Statement above, following nine years of diligent service on the Board Mr Greenlees has decided to step down as a Director at the conclusion of this year’s AGM. He will be suceeded as Chairman of the Company’s Audit Committee by an existing Director, Angela Lane. The Directors are not aware of any issues that have been raised directly by shareholders in respect of Board composition in 2022. Details for the proxy voting results in favour and against individual Directors’ re-election at the 2022 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, where deemed appropriate, may be supported from 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 engaging with shareholders and 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 Investment Manager as opposed to members of the Board. As well as attending regular investor meetings the Investment 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 Investment Manager and relevant industry publications to set out their vision for the portfolio strategy and outlook for the UK equity market. The Manager releases the daily NAV and 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 Investment 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	Consideration of material Environmental, Social and Governance (ESG) information and sustainability risks are considered when 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 ESG factors in respect of the Company’s information and consideration of sustainability risks. and are kept under review by the Board. The Investment Manager reports to the Board in respect of its consideration of sustainability risks and these are integrated into the investment process; a summary of BlackRock’s approach to ESG integration is contained within the Annual Report and Financial Statements. The Investment Manager’s engagement and voting policy is detailed within the Annual Report and Financial Statements.	The Investment Manager believes there is often a positive correlation between good ESG practices on the part of portfolio companies and investment performance. Details of the Company’s performance in the year are given in the Chairman’s Statement above and the Performance Record contained within the Annual Report and Financial Statements.

THE BOARD’S APPROACH TO ESG

Environmental, Social and Governance (ESG) issues can present both opportunities and threats to long term investment performance. The Company does not have an ESG mandate (and accordingly does not have an ESG or impact focused investment strategy and has not adopted any exclusionary screens) but our Investment Manager does take ESG factors into account as part of the investment process as these elements can significantly influence a company’s valuation. These ESG 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 is aware of the Company’s long term underweight position in extractive industries, where innovative and disruptive business models are rare and the non-participation in some capital raises where ESG factors have been a concern.

The Board believes multi-year engagement and dialogue with management is, in most cases, the most constructive way of building understanding of an investee company’s approach to addressing material business risks and opportunities. This is particularly true for our Manager given the extent of BlackRock’s shareholder engagement. Further detail of how our Manager has voted and engaged with the companies in our portfolio can be found within the Annual Report and Financial Statements.

As well as the understanding afforded by its sheer scale, the Board believes that BlackRock is well placed as Manager to fulfil these requirements due to its approach to ESG integration and its application of this to the Company’s 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 and investment stewardship 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 above.

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, and environmental, social and governance factors when selecting and retaining investments. Details of the Company’s approach to socially responsible investment is set out above and 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 AND EMPLOYEES
The Directors of the Company on 30 November 2022, all of whom, with the exception of Glen Suarez who was appointed after the year end on 9 January 2023, 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 2022, the Board consisted of three men and three women, resulting in 50% female representation. Following Glen’s appointment this fell to 42% female representation. Following the retirement of Loudon Greenlees at the forthcoming AGM to be held on 23 March 2023 there will be 50:50 ratio of male and female Directors. 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 above form part of this Strategic Report.

The Strategic Report was approved by the Board at its meeting on 9 February 2023.

By order of the Board

KEVIN MAYGER
for and on behalf of
BlackRock Investment Management (UK) Limited
Company Secretary
9 February 2023

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 2022 amounted to £3,025,000 (2021: £3,652,000). In addition, there was no performance fee (2021: £6,655,000) payable for the year. At the year end, £1,272,000 was outstanding in respect of management fees (2021: £2,923,000) and £nil (2021: £6,655,000) outstanding in respect of performance fees.

In addition to the above services, BIM (UK) has provided marketing services. The total fees paid or payable for these services for the year ended 30 November 2022 amounted to £153,000 excluding VAT (2021: £157,000). Marketing fees of £120,000 (2021: £120,000) were outstanding at the year end.

The Company has an investment in the BlackRock Institutional Cash Series plc - Sterling Liquid Environmentally Aware Fund of £58,690,000 (2021: £25,080,000) which for the year ended 30 November 2022 and 30 November 2021 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.

As at 30 November 2022, the Board consisted of six non-executive Directors, all of whom were considered to be independent by the Board*. None of the Directors has a service contract with the Company. For the year ended 30 November 2022, the Chairman received an annual fee of £44,000, the Chairman of the Audit and Management Engagement Committee received an annual fee of £35,000 and each other Director received an annual fee of £30,000. With effect from 1 December 2022 the Chairman will receive an annual fee of £46,700, the Chairman of the Audit and Management Engagement Committee will receive an annual fee of £37,000 and each other Director will receive an annual fee of £31,700.

As at 30 November 2022, all members of the Board held shares in the Company. Christopher Samuel held 64,294 ordinary shares, Loudon Greenlees held 15,000 ordinary shares, Louise Nash held 3,900 ordinary shares, Angela Lane held 11,614 ordinary shares, Nigel Burton held 16,238 ordinary shares and Merryn Somerset Webb held 3,727 ordinary shares. Mr Suarez (who joined the Board on 9 January 2023) does not currently hold any shares in the Company.

All of the holdings of the Directors are beneficial. Since the year end there have been no further changes to the Directors’ share interests.

* With effect from 9 January 2023, the number of non-executive Directors increased to seven with the appointment of Mr Suarez. This number will reduce back to six non-executive Directors following the retirement of Mr Greenlees after the AGM on 23 March 2023.

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 IAS 8, ‘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 within 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 loss 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 2022, 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 2023

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 NOVEMBER 2022

		2022			2021
	Notes	Revenue £000	Capital £000	Total £000	Revenue £000	Capital £000	Total £000
Income from investments held at fair value through profit or loss	3	12,585	91	12,676	12,188	–	12,188
Net income from derivatives	3	1,526	–	1,526	1,272	–	1,272
Other income	3	749	–	749	7	–	7
		------------------	------------------	------------------	------------------	------------------	------------------
Total income		14,860	91	14,951	13,467	–	13,467
		===========	===========	===========	===========	===========	===========
Net (loss)/profit on investments held at fair value through profit or loss		–	(250,583)	(250,583)	–	192,102	192,102
Net (loss)/profit on foreign exchange		–	(676)	(676)	–	141	141
Net (loss)/profit from derivatives		–	(55,673)	(55,673)	–	29,070	29,070
		------------------	------------------	------------------	------------------	------------------	------------------
Total		14,860	(306,841)	(291,981)	13,467	221,313	234,780
		===========	===========	===========	===========	===========	===========
Expenses
Investment management and performance fees	4	(756)	(2,269)	(3,025)	(913)	(9,394)	(10,307)
Other operating expenses	5	(843)	(20)	(863)	(1,078)	(27)	(1,105)
		------------------	------------------	------------------	------------------	------------------	------------------
Total operating expenses		(1,599)	(2,289)	(3,888)	(1,991)	(9,421)	(11,412)
		===========	===========	===========	===========	===========	===========
Net profit/(loss) on ordinary activities before finance costs and taxation		13,261	(309,130)	(295,869)	11,476	211,892	223,368
Finance costs		(5)	(15)	(20)	(1)	(4)	(5)
		------------------	------------------	------------------	------------------	------------------	------------------
Net profit/(loss) on ordinary activities before taxation		13,256	(309,145)	(295,889)	11,475	211,888	223,363
Taxation		1	–	1	(29)	–	(29)
		------------------	------------------	------------------	------------------	------------------	------------------
Net profit/(loss) on ordinary activities after taxation		13,257	(309,145)	(295,888)	11,446	211,888	223,334
		===========	===========	===========	===========	===========	===========
Earnings/(loss) per ordinary share (pence)	7	12.95	(302.05)	(289.10)	12.15	224.96	237.11
		===========	===========	===========	===========	===========	===========

The total columns of this statement represents the Company’s Statement of Comprehensive Income, prepared in accordance with UK-adopted International Accounting Standards (IASs). The supplementary revenue and capital accounts 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/(loss). The net profit/(loss) for the year disclosed above represents the Company’s total comprehensive income/(loss).

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 NOVEMBER 2022

	Notes	Called up share capital £000	Share premium account £000	Capital redemption reserve £000	Special reserve £000	Capital reserve £000	Revenue reserve £000	Total £000
For the year ended 30 November 2022
At 30 November 2021		5,072	225,660	11,905	44,582	637,028	10,901	935,148
Total comprehensive (loss)/income:
Net (loss)/profit for the year		–	–	–	–	(309,145)	13,257	(295,888)
Transactions with owners, recorded directly to equity:
Ordinary shares issued	8, 9	88	16,479	–	–	–	–	16,567
Share issue costs	9	–	(17)	–	–	–	–	(17)
Ordinary shares bought back into treasury	9	–	–	–	(11,487)	–	–	(11,487)
Share purchase costs	9	–	–	–	(57)	–	–	(57)
Dividends paid¹	6	–	–	–	–	–	(10,909)	(10,909)
		------------------	------------------	------------------	------------------	------------------	------------------	------------------
At 30 November 2022		5,160	242,122	11,905	33,038	327,883	13,249	633,357
		===========	===========	===========	===========	===========	===========	===========
For the year ended 30 November 2021
At 30 November 2020		4,376	101,368	11,905	44,580	425,140	8,846	596,215
Total comprehensive income:
Net profit for the year		–	–	–	–	211,888	11,446	223,334
Transactions with owners, recorded directly to equity:
Ordinary shares issued		696	124,418	–	–	–	–	125,114
Share issue costs		–	(126)	–	–	–	–	(126)
Tender costs written back		–	–	–	2	–	–	2
Dividends paid²		–	–	–	–	–	(9,391)	(9,391)
		------------------	------------------	------------------	------------------	------------------	------------------	------------------
At 30 November 2021		5,072	225,660	11,905	44,582	637,028	10,901	935,148
		===========	===========	===========	===========	===========	===========	===========

1 Final dividend of 8.00p per share for the year ended 30 November 2021, declared on 7 February 2022 and paid on 31 March 2022 and interim dividend of 2.60p per share for the year ended 30 November 2022, declared on 20 July 2022 and paid on 26 August 2022.

2 Final dividend of 7.70p per share for the year ended 30 November 2020, declared on 10 February 2021 and paid on 1 April 2021 and interim dividend of 2.50p per share for the year ended 30 November 2021, declared on 23 July 2021 and paid on 27 August 2021.

STATEMENT OF FINANCIAL POSITION AS AT 30 NOVEMBER 2022

	Notes	2022 £000	2021 £000
Non current assets
Investments held at fair value through profit or loss	10	576,771	921,204
		---------------	---------------
Current assets
Current tax asset		174	81
Other receivables		3,131	2,984
Derivative financial assets held at fair value through profit or loss	10	4,800	–
Cash collateral pledged with brokers		–	7,380
Cash and cash equivalents		58,793	25,223
		------------------	------------------
Total current assets		66,898	35,668
		------------------	------------------
Total assets		643,669	956,872
		===========	===========
Current liabilities
Other payables		(2,240)	(13,008)
Derivative financial liabilities held at fair value through profit or loss	10	(2,202)	(8,716)
Liability for cash collateral received		(5,870)	–
		------------------	------------------
Total current liabilities		(10,312)	(21,724)
		------------------	------------------
Net assets		633,357	935,148
		===========	===========
Equity attributable to equity holders
Called up share capital	8	5,160	5,072
Share premium account	9	242,122	225,660
Capital redemption reserve	9	11,905	11,905
Special reserve	9	33,038	44,582
Capital reserves	9	327,883	637,028
Revenue reserve	9	13,249	10,901
		------------------	------------------
Total equity		633,357	935,148
		===========	===========
Net asset value per ordinary share (pence)	7	626.10	921.91
		===========	===========

CASH FLOW STATEMENT FOR THE YEAR ENDED 30 NOVEMBER 2022

	2022 £000	2021 £000
Operating activities
Net (loss)/profit on ordinary activities before taxation	(295,889)	223,363
Add back finance costs	20	5
Loss/(profit) on investments held at fair value through profit or loss (including transaction costs)	250,583	(192,102)
Net loss/(profit) from derivatives (including transaction costs)	55,673	(29,070)
Financing costs on derivatives	(1,101)	(516)
Net loss/(profit) on foreign exchange	676	(141)
Sales of investments held at fair value through profit or loss	325,600	322,822
Purchases of investments held at fair value through profit or loss	(231,750)	(461,699)
Net (payments)/receipts on closure of derivatives	(65,886)	42,306
Increase in other receivables	(279)	(64)
(Decrease)/increase in other payables	(8,169)	3,517
(Increase)/decrease in amounts due from brokers	(998)	3,977
Decrease in amounts due to brokers	(2,599)	(4,798)
Net cash collateral received/(pledged)	13,250	(8,540)
	------------------	------------------
Net cash inflow/(outflow) from operating activities before taxation	39,131	(100,940)
	------------------	------------------
Taxation paid	(92)	(83)
	------------------	------------------
Net cash inflow/(outflow) from operating activities	39,039	(101,023)
	===========	===========
Financing activities
Interest paid	(20)	(5)
Cash proceeds from ordinary shares issued	17,680	123,859
Cash paid for ordinary shares bought back into treasury	(11,544)	–
Dividends paid	(10,909)	(9,391)
	------------------	------------------
Net cash (outflow)/inflow from financing activities	(4,793)	114,463
	===========	===========
Increase in cash and cash equivalents	34,246	13,440
Effect of foreign exchange rate changes	(676)	141
	------------------	------------------
Change in cash and cash equivalents	33,570	13,581
	------------------	------------------
Cash and cash equivalents at start of year	25,223	11,642
	------------------	------------------
Cash and cash equivalents at end of year	58,793	25,223
	===========	===========
Comprised of:
Cash at bank	103	143
Cash Fund¹	58,690	25,080
	------------------	------------------
	58,793	25,223
	===========	===========

1 Cash Fund represents 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 2022

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
On 31 December 2020, International Financial Reporting Standards (IFRS) as adopted by the European Union at that date was brought into UK law and became UK-adopted International Accounting Standards, with future changes being subject to endorsement by the UK Endorsement Board and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. The Company transitioned to UK-adopted International Accounting Standards in its Financial Statements with effect from 1 December 2021. There was no impact or changes in accounting policies from the transition.

The Financial Statements have been prepared under the historic cost convention modified by the revaluation of certain financial assets and financial liabilities held at fair value through profit or loss and in accordance with UK-adopted International Accounting Standards (IASs). 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 and updated in July 2022 is compatible with UK-adopted International Accounting Standards, the Financial Statements have been prepared in accordance with the guidance set out in the SORP.

Substantially all of the assets of the Company consist of securities that are readily realisable and, accordingly, the Directors believe that the Company has adequate resources to continue in operational existence for the period for the foreseeable future, for the period to 9 February 2024, being a period of at least twelve months from the date of approval of the Financial Statements and therefore consider the going concern assumption to be appropriate. The Directors have considered any potential impact of the COVID-19 pandemic, its potential longer-term effects on the global economy 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 the income and expense projections and the liquidity of the investment portfolio in making their assessment.

The Directors have considered the impact of climate change on the value of the investments included in the Financial Statements and have concluded that there was no further impact of climate change to be considered as the investments are valued based on market pricing as required by IFRS 13.

None of the Company’s other assets and liabilities were considered to be potentially impacted by climate change.

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.

Relevant International Accounting Standards that have yet to be adopted:

IFRS 17 – Insurance contracts (effective 1 January 2023). This standard replaces IFRS 4, which currently permits a wide range of accounting 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.

This standard is unlikely to have any impact on the Company as it has no insurance contracts.

IAS 12 - Deferred tax related to assets and liabilities arising from a single transaction (effective 1 January 2023). The International Accounting Standards Board (IASB) has amended IAS 12 Income taxes to require companies to recognise deferred tax on particular transactions that, on initial recognition, give rise to equal amounts of taxable and deductible temporary differences. According to the amended guidance, a temporary difference that arises on initial recognition of an asset or liability is not subject to the initial recognition exemption if that transaction gave rise to equal amounts of taxable and deductible temporary differences. These amendments might have a significant impact on the preparation of financial statements by companies that have substantial balances of right-of-use assets, lease liabilities, decommissioning, restoration and similar liabilities. The impact for those affected would be the recognition of additional deferred tax assets and liabilities.

The amendment of this standard is unlikely to have any significant impact on the Company.

None of the standards that have been issued but are not yet effective are expected to have a material impact on the Company.

(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 particular case. 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 income. Any excess in the value of the shares received over the amount of the cash dividend is recognised in capital.

(e) Expenses
All expenses, including finance costs, are accounted for on an accruals basis. Expenses have been charged wholly to the revenue column of the Statement of Comprehensive Income, except as follows:

· expenses which are incidental to the acquisition or sale of an investment are charged to the capital column of the Statement of Comprehensive Income. Details of transaction costs on the purchases and sales of investments are disclosed within note 10 to the Financial Statements 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 accounts, 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 taxation assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the temporary differences can be deducted. Deferred taxation 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 profit/(loss) 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 IASs, 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 recognised 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 gain 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, including any premium payable on settlement or redemption and direct issue costs, 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 re-issued:

· 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, the par value is taken to called up share capital and 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. Costs on share reissues are charged to the special reserve and capital reserves.

(o) Critical accounting estimates and judgements
The Directors of the Company make 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. There are no critical accounting estimates or judgements.

3. INCOME

	2022 £000	2021 £000
Investment income:
UK dividends	9,654	8,940
UK special dividends	839	1,320
UK stock dividends	68	108
UK REIT dividends	509	464
Overseas dividends	1,515	1,186
Overseas special dividends	–	170
	---------------	---------------
Total investment income¹	12,585	12,188
	=========	=========
Net income from derivatives	1,526	1,272
Other income:
Deposit interest	111	–
Interest from Cash Fund	594	7
Collateral interest	44	–
	749	7
	---------------	---------------
Total income	14,860	13,467
	=========	=========

¹ UK and overseas dividends are presented based on the country of domicile of the respective underlying portfolio company.
Dividends and interest received in cash during the year amounted to £12,223,000 and £615,000 (2021: £11,919,000 and £6,000).
Special dividends of £91,000 have been recognised in capital during the year (2021: £nil).

4. INVESTMENT MANAGEMENT AND PERFORMANCE FEES

	2022			2021
	Revenue £000	Capital £000	Total £000	Revenue £000	Capital £000	Total £000
Investment management fee	756	2,269	3,025	913	2,739	3,652
Performance fee	–	–	–	–	6,655	6,655
	---------------	---------------	---------------	---------------	---------------	---------------
Total	756	2,269	3,025	913	9,394	10,307
	=========	=========	=========	=========	=========	=========

The performance fee is 15% of the Net Asset Value total return outperformance of the Benchmark Index, measured and annualised over a two year rolling basis and applied on the average Gross Assets of that period. Outperformance is the amount by which the Fund Return arithmetically exceeds the Benchmark Return.

The performance fee is calculated and accrued on a daily basis and payable on 30 November each year in relation to the two year performance period ending on that date. Gross Assets are defined as the value at risk, 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 derivatives including CFDs and index futures. There is a fee Cap (the “Capped amount” or the “Cap”) on the annual total management and performance fees of 1.25% of average Gross Assets over a two year period which has the effect of capping annual performance fees at circa 0.9%. The amount of excess outperformance on which a performance fee has not been paid in a financial year due to the application of the Cap, can be carried forward to offset against future shortfall returns. As at 30 November 2022, the carried forward unpaid outperformance available to offset against future shortfall returns was 10.7% (30 November 2021: 14.6%).

On the first day of the financial year, any performance fee for the ongoing performance period not yet recognised, due to the application of the Cap in the prior financial year, is accrued in the daily NAV released to the London Stock Exchange on that day.

Performance fees have been wholly allocated to the capital account 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 2022, no performance fee has been accrued (2021: £6,655,000).

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 account and 75% to capital account of the Statement of Comprehensive Income. There is no additional fee for company secretarial and administration services.

5. OTHER OPERATING EXPENSES

	2022 £000	2021 £000
Allocated to revenue:
Custody fee	8	12
Auditor’s remuneration¹	52	52
Registrar’s fee	45	47
Directors’ emoluments²	205	184
Broker fees	35	45
Depositary fees	83	92
Marketing fees	153	157
FCA fees	28	19
Printing and postage fees	42	76
AIC fees	21	16
Stock exchange listing fees	102	268
Write back of prior year expenses³	(26)	–
Other administrative costs	95	110
	---------------	---------------
	843	1,078
	=========	=========
Allocated to capital:
Custody transaction charges⁴	20	27
	---------------	---------------
	863	1,105
	=========	=========
The Company’s ongoing charges⁵, 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, prior year expenses written back and certain non-recurring items, were:	0.54%	0.57%
The Company’s ongoing charges⁵, 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, prior year expenses written back and certain non-recurring items, were:	0.54%	1.38%
	=========	=========

¹ No non-audit services were provided by the Company’s 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 Relates to Directors’ expenses, legal fees, registration fees and miscellaneous fees written back during the year (2021: no expenses were written back).
⁴ For the year ended 30 November 2022, expenses of £20,000 (2021: £27,000) were charged to the capital account of the Statement of Comprehensive Income. These relate to transaction costs charged by the Custodian on sale and purchase trades.
⁵ Alternative Performance Measures, see Glossary contained within the Annual Report and Financial Statements.

6. DIVIDENDS

Dividends paid on equity shares:	Record date	Payment date	2022 £000	2021 £000
Final dividend of 8.00p per share for the year ended 30 November 2021 (2020: 7.70p)	18 February 2022	31 March 2022	8,255	6,972
Interim dividend of 2.60p per share for the year ended 30 November 2022 (2021: 2.50p)	29 July 2022	26 August 2022	2,654	2,419
			---------------	---------------
			10,909	9,391
			=========	=========

The total dividends payable in respect of the year ended 30 November 2022 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:	2022 £000	2021 £000
Interim dividend of 2.60p per share for the year ended 30 November 2022 (2021: 2.50p)	2,654	2,419
Final dividend of 8.50p per share for the year ended 30 November 2022¹ (2021: 8.00p)	8,595	8,255
	---------------	---------------
	11,249	10,674
	=========	=========

1 Based on 101,113,864 ordinary shares in issue on 7 February 2023.

7. EARNINGS/(LOSS) AND NET ASSET VALUE PER ORDINARY SHARE
Total revenue, capital (loss)/earnings and net asset value per ordinary share are shown below and have been calculated using the following:

	Year ended 30 November 2022	Year ended 30 November 2021

Net revenue profit attributable to ordinary shareholders (£000)	13,257	11,446
Net capital (loss)/profit attributable to ordinary shareholders (£000)	(309,145)	211,888
	---------------	---------------
Total (loss)/profit attributable to ordinary shareholders (£000)	(295,888)	223,334
	---------------	---------------
Equity shareholders’ funds (£000) as at 30 November	633,357	935,148
	=========	=========
The weighted average number of ordinary shares in issue during the year on which the earnings per ordinary share was calculated was:	102,346,782	94,190,181
The actual number of ordinary shares in issue at the year end on which the net asset value per ordinary share was calculated was:	101,158,864	101,435,964
Earnings/(loss) per ordinary share
Revenue earnings per share (pence) – basic and diluted	12.95	12.15
Capital (loss)/earnings per share (pence) – basic and diluted	(302.05)	224.96
	---------------	---------------
Total (loss)/earnings per share (pence) - basic and diluted	(289.10)	237.11
	=========	=========

	As at 30 November 2022	As at 30 November 2021
Net asset value per ordinary share (pence)	626.10	921.91
Ordinary share price (pence)	595.00	935.00
	=========	=========

There were no dilutive securities at the year end.

8. CALLED UP SHARE CAPITAL

	Ordinary shares in issue number	Treasury shares number	Total shares number	Nominal value £000
Allotted, called up and fully paid share capital comprised:
Ordinary shares of 5 pence each:
At 30 November 2021	101,435,964	–	101,435,964	5,072
Ordinary shares issued	1,773,900	–	1,773,900	88
Ordinary shares bought back into treasury	(2,051,000)	2,051,000	–	–
	---------------	---------------	---------------	---------------
At 30 November 2022	101,158,864	2,051,000	103,209,864	5,160
	=========	=========	=========	=========

During the year ended 30 November 2022, the Company bought back 2,051,000 shares into treasury (2021: nil) for a total consideration of £11,544,000 (2021: £nil) including costs.

During the year ended 30 November 2022, the Company issued 1,773,900 new shares (2021: 13,917,035) for a total consideration of £16,550,000 (2021: £124,988,000) including costs.

Since 30 November 2022 and up to the date of this report, no shares have been reissued. 45,000 shares have been bought back into treasury for a total consideration of £276,000.

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 2021	225,660	11,905	44,582	398,865	238,163	10,901
Movement during the year:
Total comprehensive (loss)/income
(Loss)/profit for the year	–	–	–	(77,591)	(231,554)	13,257
Transactions with owners, recorded directly to equity:
Ordinary shares issued	16,479	–	–	–	–	–
Share issue costs	(17)	–	–	–	–	–
Ordinary shares bought back into treasury	–	–	(11,487)	–	–	–
Share purchase costs	–	–	(57)	–	–	–
Dividends paid	–	–	–	–	–	(10,909)
	---------------	---------------	---------------	---------------	---------------	---------------
At 30 November 2022	242,122	11,905	33,038	321,274	6,609	13,249
	=========	=========	=========	=========	=========	=========

The share premium account and capital redemption reserves are not distributable reserves 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 reserves for all purposes and, in particular, the repurchase by the Company of its ordinary shares and for payments as dividends. In accordance with the Company’s Articles of Association, the special reserve, capital reserves and the revenue reserve may be distributed by way of dividend. The gain on capital reserve arising on the revaluation of investments of £6,609,000 (2021: gain of £238,163,000) is subject to fair value movements and may not be readily realisable at short notice, as such any gains may not be entirely distributable. The investments are subject to financial risks; as such capital reserves (arising on investments sold) and the revenue reserve may not be entirely distributable if a loss occurred during the realisation of these investments.

10. VALUATION OF FINANCIAL INSTRUMENTS

Financial assets and financial liabilities are either carried in the Statement of Financial Position at their fair value (investments and derivatives) or at an amount which is a reasonable approximation of fair value (due from brokers, dividends and interest receivable, due to brokers, accruals, cash at bank and bank overdrafts). IFRS 13 requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The valuation techniques used by the Company are explained in the accounting policies note 2(g) to the Financial Statements 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 and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The Company does not adjust the quoted price for these instruments.

Level 2 – Valuation techniques using observable inputs
This category includes instruments valued using quoted 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.

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.

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.

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 2022	Level 1 £000	Level 2 £000	Level 3 £000	Total £000
Assets:
Equity investments	576,771	–	–	576,771
Contracts for difference (fair value)	–	4,800	–	4,800
	---------------	---------------	---------------	---------------
Liabilities:
Contracts for difference (fair value)	–	(2,202)	–	(2,202)
	---------------	---------------	---------------	---------------
	576,771	2,598	–	579,369
	=========	=========	=========	=========

Financial assets/(liabilities) at fair value through profit or loss at 30 November 2021	Level 1 £000	Level 2 £000	Level 3 £000	Total £000
Assets:
Equity investments	921,204	–	–	921,204
Contracts for difference (fair value)	–	–	–	–
	---------------	---------------	---------------	---------------
Liabilities:
Contracts for difference (fair value)	–	(8,716)	–	(8,716)
	---------------	---------------	---------------	---------------
	921,204	(8,716)	–	912,488
	=========	=========	=========	=========

There were no transfers between levels for financial assets and financial liabilities during the year recorded at fair value as at 30 November 2022 and 30 November 2021. The Company did not hold any Level 3 securities throughout the financial year or as at 30 November 2022 (2021: nil).

For exchange listed equity investments, the quoted price is the bid price. Contracts for difference are valued based on the bid price of the underlying quoted securities that the contracts relate to. Substantially, all investments are valued based on unadjusted quoted market prices. Where such quoted prices are readily available in an active market, such prices are not required to be assessed or adjusted for any business risks, including climate change risk, in accordance with the fair value related requirements of the Company’s financial reporting framework.

11. RELATED PARTY DISCLOSURE
Directors’ emoluments
At the date of this report, the Board consists of seven Non-executive Directors, all of whom are considered to be independent of the Manager by the Board.

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 2022 £17,000 (2021: £15,000) 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 2022

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.
1.84	n/a	n/a

As at 30 November 2021

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.
1.78	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 ultimate holding company of the Manager and the Investment Manager is BlackRock, Inc., a company incorporated in Delaware USA.

13. CONTINGENT LIABILITIES
There were no contingent liabilities at 30 November 2022 (2021: nil).

14. PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information contained in this announcement does not constitute statutory accounts as defined in the Companies Act 2006. The Annual Report and Financial Statements for the year ended 30 November 2022 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 2022 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 2021, 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.

15. 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.

16. ANNUAL GENERAL MEETING
The Annual General Meeting of the Company will be held at 12 Throgmorton Avenue, London EC2N 2DL on Thursday, 23 March 2023 at 12:00 p.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:

Melissa Gallagher, 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 2023

12 Throgmorton Avenue
London EC2N 2DL

Companies

Blackrock Throgmorton Trust (THRG)

Thursday, 21st November 2024

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