Half-year Report

BLACKROCK THROGMORTON TRUST PLC
(Legal Entity Identifier: 5493003B7ETS1JEDPF59)
Information disclosed in accordance with Article 5 Transparency Directive and DTR 4.2

Half Yearly Financial Report for period ended 31 May 2019

PERFORMANCE RECORD

	31 May 2019  (unaudited)	30 November 2018  (audited)
Net assets (£'000)1	420,012	379,602
Net asset value per ordinary share	574.33p	519.08p
Ordinary share price (mid-market)	532.00p	457.00p
Benchmark Index2	14,224.14	13,589.32
Discount to cum income net asset value3	7.4%	12.0%
Average discount to cum income net asset value3 for the period/year	6.5%	10.7%
Performance
Net asset value per share (total return)4	+12.2%	-2.7%
Benchmark Index2	+4.7%	-9.0%
Ordinary share price (total return)4	+18.2%	+1.8%

	For the  six months ended  31 May 2019  (unaudited)	For the  six months ended  31 May 2018  (unaudited)	Change  %
Revenue
Net profit after taxation (£’000)	3,345	5,214	-35.8
Revenue return per ordinary share	4.57p	7.13p	-35.9
	---------------	---------------	---------------
Dividend per ordinary share
Interim (pence)	2.50p	2.50p	-
	===========	===========	===========

¹   The change in net assets reflects market movements and dividend payments during the period.
²   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. From 1 December 2013 to 21 March 2018, the Company’s benchmark was the Numis Smaller Companies excluding AIM (excluding Investment Companies) Index. Prior to 1 December 2013 the Company’s benchmark was the Numis Smaller Companies plus AIM (excluding Investment Companies) Index. The performance of the benchmark indices during these periods has been blended to reflect these changes.
³ This is the difference between the share price and the NAV per share.
⁴ This measures the Company’s NAV total return and share price, which assumes dividends paid by the Company have been reinvested.

Further information in relation to the calculations above can be found in the Glossary contained within the Half Yearly Financial Report.

CHAIRMAN’S STATEMENT FOR THE SIX MONTHS TO 31 MAY 2019

PERIOD HIGHLIGHTS

• Outperformed the benchmark index by 7.5%

• Ordinary share price up 18.2%

• Discount narrowed from 12.0% (as at 30 November 2018) to 7.4%

• Interim dividend declared of 2.50p per share (2018: 2.50p).

PERFORMANCE
I am pleased to report that during the six months to 31 May 2019, the Company has once again generated strong investment performance for its shareholders, both in relative and absolute terms. The Company’s Net Asset Value (NAV) return for the period was +12.2%, compared with a return of +4.7% from the Company’s benchmark, the Numis Smaller Companies plus AIM (excluding Investment Companies) Index, an outperformance of 7.5%. The Company’s share price rose by an impressive +18.2% which saw the discount to NAV narrow to 7.4% at the period end (all figures in sterling terms with dividends reinvested).

Further information on portfolio activity, the factors that contributed to performance during the period and the outlook for the second half of the financial year are set out in the Investment Manager’s Report.

PERFORMANCE RECORD TO 31 MAY 2019 (WITH DIVIDENDS REINVESTED)

	1 Year change	3 Year change	5 Year Change  %	Since BlackRock take-on change
Benchmark (with dividends reinvested)	-7.0	20.6	31.0	134.4
Share price (with dividends reinvested)	0.8	70.0	100.9	392.2
NAV per share (with dividends reinvested)	-2.2	54.0	86.3	370.5

Since the period end and up to the close of business on 19 July 2019, the NAV has risen by 1.3%, and the benchmark index has fallen by 0.7%. (All figures in sterling terms with dividends reinvested).

REVENUE RETURN AND DIVIDENDS
The revenue return per share for the period amounted to 4.57 pence per share, compared to 7.13 pence per share earned during the comparative period last year. This represents a decrease of 35.9% and results from decreases in the level of both the ordinary and special dividends received during the period. The Board is pleased to declare an interim dividend of 2.50p per share (2018: 2.50p per share) payable on 28 August 2019 to shareholders on the register on 2 August 2019 (the ex-dividend date is 1 August 2019).

SHARE PRICE DISCOUNT
During the six months to 31 May 2019, the Company’s share price discount to NAV ranged between 12.0% and 2.9%, ending the period at 7.4% (30 November 2018: 17.0%, 4.8% and 12.0% respectively). As at 19 July 2019 the discount stood at 6.1%. The constituents of the UK Smaller Companies sector have historically traded at a significant discount to NAV and the Company’s average discount to NAV since 1 July 2008 (the date BlackRock became Manager of the Company) has been 16%. It was pleasing to see that the Company’s discount has narrowed during the period and currently trades below the sector average. The Board will continue to monitor closely the discount to NAV at which the Company’s shares trade.

OUTLOOK
A number of macroeconomic and political risks which could negatively impact performance remain, not least a further deterioration in the economic outlook. Various latent geopolitical risks also exist, including the outcome of the Brexit process, political instability in the UK and a further escalation of US/China trade tensions. The sustained uncertainty around the Brexit outcome also continues to negatively impact economic activity and depress market sentiment and UK GDP growth is expected to remain relatively low during the second half of the year. However, as a result of this uncertainty, valuations in the UK are now low compared with other developed markets such as the Eurozone and the US. Therefore, your portfolio manager believes that value can be selectively found in this market. The dovish stance adopted by European and US central banks more recently has decreased the likelihood of interest rate rises in the near term and has been supportive of equity markets in the short term.

In addition, your portfolio manager’s ability to identify and short companies which are under structural pressure, with high levels of debt and weak balance sheets, or those struggling with rising costs and price pressure from disruptive competitors, is a key differentiator within our sector. Overall, your Board believes the Company is well positioned to continue to meet its objectives of providing shareholders with long-term capital growth and an attractive total return.

CHRISTOPHER SAMUEL
Chairman
23 July 2019

INVESTMENT MANAGER’S REPORT FOR THE SIX MONTHS ENDED 31 MAY 2019

MARKET REVIEW AND OVERALL INVESTMENT PERFORMANCE
Sharp declines in equity markets in the fourth quarter of 2018 have been erased by a strong rally through the start of 2019. Markets shrugged off a host of weak economic data, corporate earnings downgrades and political confusion in the UK. Meanwhile trade tensions continue to pose a risk to global growth and have been a catalyst for short term spikes in market volatility. The Federal Reserve tone became notably more dovish, which drove bond yields back to levels last seen at the beginning of 2018; the European Central Bank’s stance also remained accommodative and Chinese policy was eased on both fiscal and monetary fronts. Brexit has continued to dominate the UK political landscape, culminating in Prime Minister Theresa May announcing her resignation, but the market reaction was relatively muted given the ‘Brexit tax’ that the UK market is already discounting.

PERFORMANCE REVIEW
We feel performance year to date has rewarded our decision not to panic in the fourth quarter of 2018. Encouragingly, the Company’s performance versus the benchmark has strengthened through the calendar year as stock markets have weakened, helped by us running with a lower gross and net market exposure than usual, and a strong period for delivering positive stock and industry specific outcomes. The result is that during the first six months of the Company’s financial year, we have delivered a positive return in both absolute and relative terms, with the NAV rising by 12.2% in sterling terms with dividends reinvested, significantly outperforming our benchmark by over 7.5% after fees.

Returns have been driven predominantly by the long book, supplemented by a number of stock specific wins from short positions. This is a positive result in our opinion against a market that is up almost five percent.

The largest positive contributor to performance came from our holding in JD Sports Fashion, which contributed 110bps during the period. JD Sports is a position that we brought back into the portfolio in December 2018, taking advantage of the market volatility to buy into a company that we’ve owned historically, and know well, at a valuation we have rarely seen. JD Sports’ differentiated consumer proposition and multi-channel approach to retailing has enabled it to continue to deliver strong like-for-like sales growth, beating expectations and raising guidance, all without sacrificing their gross margin. The Company owns very few retailers given the myriad of challenges facing bricks and mortar retailing.

4imprint Group, a long-term core holding which we have highlighted many times in the past, has once again delivered another period of strong performance, most recently after reporting strong full year results with upgrades to forward guidance. 4imprint is a UK listed but US focused direct marketing business of promotional goods. It is the market leader in the US by some distance but has less than 4% market share, despite compounding its revenues organically in the mid teens for over 10 years, reflecting not only the size of the market, but just how fragmented the competition is.

Software engineering group Aveva has made a positive start to the year, helped by strong sales execution. This is a company undergoing a sales transition to subscription based sales, which we think improves its quality of earnings, whilst driving operational improvements to lift margins. Following its merger with Schneider Electric, recurring revenues increased as a proportion of the overall business and the company remains on track to meet its medium term targets.

Other notable contributors during the period include Dechra Pharmaceuticals, Xero and IntegraFin, all of which contributed more than 50bps to performance and which all operate in very different industries, but the common theme being their dominant and differentiated positions, which have enabled each to continue to generate strong growth.

While short positions in aggregate were not a meaningful contributor to performance we continue to generate stock specific alpha on the short side. The largest short contributor has been a UK contractor, which despite having completed an emergency fund raise in December, has followed up with a series of negative updates, including a material profit warning in June, after the period covered in this report. We had been increasing this short position during the year as we felt that the company had issues with its balance sheet and cash generating abilities, far beyond what the market was pricing in, and this proved to be a profitable decision.

Given the strong outperformance achieved so far this year, it is unsurprising to see that material detractors have been limited. The largest stock specific detractor was online retailer of musical instruments, Gear4music. This is a company that had previously demonstrated very strong and profitable sales growth. However, early in the period the company provided an update showing that further impressive sales growth had come at the expense of gross margin, with Gear4music reacting to irrational competitor pricing in an attempt to protect market share. This was particularly disappointing as we had discussed the gross margin at length with the management team, and this we felt completely compromised our investment thesis and we therefore sold the holding. Other detractors included short positions in a reseller of IT software and a UK retailer. Against the rising market it is unsurprising that some shorts are buoyed by a general rising tide, however in both cases we have to acknowledge that these companies have delivered better results than we expected. We remain short the IT business as we find it hard to understand how a reseller can justify the current multiple, however we have closed our short in the furniture business.

ACTIVITY
The total number of positions (long and short) in the portfolio has increased over the period to 142 as at 31 May 2019, which simply reflects the strength of the investment universe and an increased amount of new opportunities we continue to discover on both the long and the short side.

As previously mentioned, we purchased the holding in JD Sports at the beginning of this financial year (December 2018). The investment case for owning the business, as set out earlier, and the timing of the trade was driven by the opportunity presented by the market during the spike in volatility during 2018, where, as discussed, a number of companies were severely sold off regardless of the underlying growth prospects for the business. JD Sports is a clear example of our dynamic process in action, where our average purchase price of the shares during the period was £3.70, compared to a market price at the end of May of more than £6.

The Initial Public Offering (“IPO”) market continues to present us with exciting opportunities. Watches of Switzerland, the luxury watch retailer, which conducted an IPO in May of this year, is another great example of this approach where we purchased a holding following an extensive due diligence process.

We also purchased a new holding in Serco, the provider of public services to governments globally. The management team has cleaned up the accounting and fixed the balance sheet, and now recent contract wins are leading to a business that is growing and generating cash. The recent deal predominantly providing support to the US Navy significantly enhances Serco’s US footprint and increases the group’s ability to be more competitive when tendering for new contracts in the region.

Sales during the period have included Accesso Technology, Restore and Boku. Both Accesso and Restore have been long held positions for the Company, but all three fall into the camp of a change in investment thesis from the one we have originally outlined, and as such our discipline is to sell out as we have done.

“We have deliberately reduced some of our growth cyclicals, notably Industrials, reflecting rising headwinds in certain industrial global supply chains.”

Having reduced the portfolio’s gross and net exposure at the tail end of last year we have been gradually adding back to this on both the long and short books. The levels remain below historical average levels at 101% net and 127% gross.

Portfolio Positioning
One of the key messages that we believe it is very important for investors in the Company to appreciate is that our philosophy is based around bottom up stock selection. As a result portfolio positioning is a product (an output) of our stock selection rather than a deliberate decision to take a predetermined sector exposure versus the benchmark. As a reminder, stock positioning will be driven by our focus on only two types of company. First would be what we define as quality differentials, which are essentially differentiated long-term growth investments. These we would characterise as companies that have strong management teams, with a protected market position, a unique and compelling product offering with an attractive route to market, maybe benefitting from structural growth, and that are well financed with clean accounting. The second type of company are those that are leading industry change, the ‘disruptors’ and alternatively on the short side it would be the victims of industry change, the ‘disrupted’.

Relative to our benchmark, our largest overweights are Media, General Retailers and Pharmaceuticals & Biotechnology. Our largest holding in the Media sector is our long term holding in YouGov. This is a company that many people will remember as a traditional market research business, however in reality YouGov has transformed into a data analytics business which now works with some of the world’s largest brands. The company’s suite of data products and services makes YouGov a core partner for their clients with all aspects of marketing workflow in a fast-changing world for consumers.

Within General Retailers our exposure is through companies that are doing something different and not those that are having their profit pools decimated by the backdrop of falling footfall on the high street. For example, as mentioned earlier in this report, JD Sports which has solidified itself as the key route to market for many leading sportswear brands, or WH Smith which is transforming its business to drive growth in its travel business and away from its traditional high street newsagent store formats, and therefore opening up a large international accessible market. Within Healthcare our largest position is Dechra Pharmaceuticals, the veterinary product manufacturer which is also very internationally exposed, has strong products and operates against a positive industry backdrop.

Our exposure to Resources is extremely limited. We do not own any Oil & Gas businesses and our exposure to mining is very limited, because these companies generally fail to meet our investment criteria.

We have also increased our long exposure to disruptive software companies benefitting from the structural trend in corporates investing in “digitisation” to either drive efficiency or yield improvements.

“The long book remains exposed to specific investment cases, often where companies have harnessed the power and convenience of technology in a capital light model that disrupts mature profit pools.”

The short book continues to target the same areas that we see as over-earning or under structural or cyclical pressure. Many of our short positions are within Consumer Services, either facing structural headwinds (digital disruption, low cost or specialised formats) or cyclical (weakening consumer demand, rising cost pressures).

As discussed in previous reports, we are of the view that the market needs to fundamentally reappraise the true value of over-indebted structurally challenged business models, particularly those that are paying dividends they cannot afford. We think there are many of these companies masquerading as “cheap shares” because their “price to adjusted earnings ratio” looks low, and for too long other market participants have championed some of these shares as “value” investments, which we think does a tremendous injustice to the many respected and wealth-creating value managers. There have been signs in recent weeks that our view is now garnering support, no doubt catalysed by the implosion of several high-profile companies which fit the description(s) we have outlined above. We have been short some of these companies and continue to target financially leveraged businesses that are over-distributing (at the expense of investing in their business to generate real long term wealth for their owners).

OUTLOOK
Equity markets globally have made a strong start to the year, in many cases shrugging off the ongoing geopolitical uncertainty, softening global economic data and increasing trade tensions. However, while the signs have been encouraging, we continue to recognise that at this point in the cycle, the market can be febrile and there is always potential for sudden spikes in volatility and large swings in sentiment. We will therefore continue to manage the net and gross exposure accordingly, happy to add risk as opportunities present themselves.

Despite these risks, we continue to believe that the cycle has room to run. While this has been a long cycle, there are few signs that we would expect to see at the beginning of a bear market or sustained period of GDP weakness. Low inflation and accommodative monetary policy provides support for equity markets, and importantly we continue to believe that there is sufficient growth for differentiated companies to prosper. To that end, we continue to highlight the importance of stock specifics in the current environment, and the greater dispersion in winners and losers that this market regime and political backdrop can generate.

Escalating trade tensions clearly present a risk to global growth and potentially to stock markets, but we feel well positioned to deliver a good investment outcome whatever happens next. Any global cyclical exposure in the long book has been moderated (despite many structural trends that benefit our long positions here regardless) and our long book is comprised of many advantaged business models with robust finances. The pace of industry change is not slowing and multi-year secular trends, like the need for corporates to invest in digital transformation, show no signs of slowing and benefit many of our holdings. On the flip side, we remain short financial leverage, and continue to identify lots of opportunities to short commoditised businesses with weakening demand, as well as structurally flawed businesses models, which we believe will be the first and real victims of any global slowdown.

DAN WHITESTONE
BlackRock Investment Management (UK) Limited
23 July 2019

PORTFOLIO HOLDINGS AS AT 31 MAY 2019

1
YouGov*
Media
Market value £13,158,000
Share of net assets 3.1%
Provision of survey data and specialist data analytics

2
Aveva
Software & Computer Services
Market value £12,981,000
Share of net assets 3.1%
Engineering and industrial software business

3
JD Sports Fashion
General Retailers
Market value £12,799,000
Share of net assets 3.0%
Leading trainer and sports fashion retailer in the UK

4
Dechra Pharmaceuticals
Pharmaceuticals & Biotechnology
Market value £12,776,000
Share of net assets 3.0%
Development and supply of pharmaceutical and other products focused on the veterinary market

5
4imprint Group
Media
Market value £12,342,000
Share of net assets 2.9%
Supply of promotional merchandise in the US

6
SSP
Travel & Leisure
Market value £12,092,000
Share of net assets 2.9%
Operator of food and beverage concessions in travel locations

7
IntegraFin
Financial Services
Market value £11,836,000
Share of net assets 2.8%
UK savings platform for financial advisors

8
Watches of Switzerland
Personal Goods
Market value £11,404,000
Share of net assets 2.7%
Retailer of luxury watches

9
Serco
Support Services
Market value £9,862,000
Share of net assets 2.3%
Provision of public services across health, transport, immigration, defence, justice and citizen services

10
Bodycote
Industrial Engineering
Market value £9,754,000
Share of net assets 2.3%
Provision of thermal processing services

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

	Company	£’000	% of  net assets	Description
11	Craneware* Software & Computer Services	9,610	2.3	Provision of financial business software for US hospitals
12	Workspace Group Real Estate Investment Trust	8,828	2.1	Provision of flexible workspace to businesses in London
13	WH Smith General Retailers	8,688	2.1	Widespread British retailer of books, stationery, magazines, newspapers, entertainment products and confectionery
14	Beazley Non-life Insurance	8,669	2.1	Specialist insurance businesses
15	Advanced Medical Solutions* Health Care Equipment & Services	8,439	2.0	Development and manufacture of wound care and closure products
16	Big Yellow Real Estate Investment Trust	8,233	2.0	Provision of self-storage services
17	Hiscox Non-life Insurance	7,608	1.8	Provision of insurance services
18	Robert Walters Support Services	7,520	1.8	Provision of specialist recruitment services
19	Breedon* Construction & Materials	6,912	1.6	British construction materials group
20	Chegg General Retailers	6,815	1.6	Provision of education related services
21	Straumann Holding Health Care Equipment & Services	6,697	1.6	Swiss listed provider of products and services for the dental industry
22	Masimo Health Care Equipment & Services	6,546	1.6	Developer and manufacturer of non-invasive patient monitoring technologies
23	Gamma Communications* Mobile Telecommunications	6,520	1.6	Provision of communication services to UK businesses
24	RWS Holdings* Support Services	6,457	1.5	Provision of language support services
25	Future Media	6,413	1.5	Multi-platform media business covering technology, entertainment, creative arts, home interest and education
26	Zotefoams Chemicals	5,975	1.4	Manufactures polyolefin foams used in sport, construction, marine, automation, medical equipment and aerospace
27	Alliance Pharma* Pharmaceuticals & Biotechnology	5,919	1.4	Distributor of pharmaceutical and healthcare products
28	Polar Capital Holdings* Financial Services	5,856	1.4	Provision of investment management services
29	Qinetiq Group Aerospace & Defence	5,792	1.4	Provision of scientific and technological services to the defence, security and aerospace markets
30	Fuller Smith & Turner – A Shares Travel & Leisure	5,719	1.4	Ownership and operation of pubs mainly in the London area
31	Avon Rubber Aerospace & Defence	5,659	1.4	Production of safety masks and dairy related products
32	Next Fifteen Communications* Media	5,544	1.3	Provision of digital communication products and services
33	Sumo Group* Leisure Goods	5,407	1.3	Provision of creative and development services to the video games and entertainment industries
34	Wetherspoon (J.D) Travel & Leisure	5,400	1.3	Ownership and management of pubs in the UK
35	Games Workshop Leisure Goods	5,394	1.3	Developer, publisher and manufacturer of miniature war games
36	Bellway Household Goods & Home Construction	5,301	1.3	UK housebuilder
37	Liontrust Asset Management Financial Services	5,217	1.2	Provision of asset management services
38	James Fisher and Sons Industrial Transportation	5,104	1.2	Provision of innovative marine solutions and specialised engineering services
39	Ryanair Travel & Leisure	5,093	1.2	European low cost airline
40	Grafton Support Services	5,027	1.2	Distribution of building materials
41	Cineworld Group Travel & Leisure	4,993	1.2	Global cinema chain
42	Oxford Instruments Electronic & Electrical Equipment	4,970	1.2	Designs and manufactures tools and systems for industry and research
43	Mattioli Woods* Financial Services	4,868	1.2	Provision of asset management services
44	Young & Co’s Brewery* Travel & Leisure	4,750	1.1	Ownership of pubs in the London area
45	Xero Software & Computer Services	4,678	1.1	Australian listed software company specialising in accounting for small businesses
46	ECO Animal Health* Pharmaceuticals & Biotechnology	4,672	1.1	Development, registration and marketing of pharmaceutical products for global animal health markets
47	Sika Construction & Materials	4,549	1.1	Development and production of products for the building and motor industry
48	Spirax-Sarco Engineering Industrial Engineering	4,508	1.1	Manufacturer of steam management systems and peristaltic pumps and associated fluid path technologies
49	Impax Asset Management* Financial Services	4,452	1.1	Provision of asset management services
50	Bovis Homes Group Household Goods & Home Construction	4,411	1.1	UK housebuilder
51	Premier Asset Management Group* Financial Services	4,398	1.0	Provision of retail asset management services
52	Aptitude Software Software & Computer Services	4,341	1.0	Provision of specialist finance software and technology
53	Sirius Real Estate Real Estate Investment & Services	4,193	1.0	Owner and operator of business parks, offices and industrial complexes in Germany
54	Derwent London Real Estate Investment Trust	3,971	0.9	British property investment company
55	Learning Technologies* Support Services	3,896	0.9	Provision of e-learning services
56	Savills Real Estate Investment & Services	3,861	0.9	Provision of specialist real estate services
57	Tarsus Media	3,821	0.9	Organisation of exhibitions, conferences, education, publishing and online media
58	Great Portland Estates Real Estate Investment Trust	3,817	0.9	British property development and investment company
59	GB Group* Software & Computer Services	3,648	0.9	Development and supply of identity verification solutions
60	Clarkson Industrial Transportation	3,554	0.8	Provision of shipping services
61	Chapel Down† Beverages	3,480	0.8	UK producer of sparkling and still wines, beers and ciders
62	Etsy Inc General Retailers	3,436	0.8	Global marketplace for unique and creative goods
63	Huntsworth Media	3,249	0.8	Provision of marketing and research services principally to the pharmaceuticals sector
64	Fevertree Drinks* Beverages	3,136	0.8	Development and sale of soft drinks and mixers
65	Tatton Asset Management* Financial Services	3,116	0.7	Provision of discretionary fund management services to IFA market
66	Entertainment One Media	2,884	0.7	Global independent studio that specialises in the development, acquisition, production, financing, distribution and sales of entertainment content
67	FairFX* Financial Services	2,863	0.7	Provision of international payments services
68	XPS Pensions Group Financial Services	2,846	0.7	Pension consulting and administration business
69	Gooch & Housego* Electronic & Electrical Equipment	2,750	0.7	Designer and manufacturer of advanced photonic systems
70	888 Travel & Leisure	2,675	0.6	Operator and platform for online gaming
71	SThree Support Services	2,641	0.6	Provision of specialist professional recruitment services
72	Draper Esprit* Financial Services	2,573	0.6	Technology focused venture capital firm
73	Team 17* Leisure Goods	2,522	0.6	British video game developer and publisher
74	Trifast Industrial Engineering	2,461	0.6	Manufacture and distribution of industrial fastenings
75	New Relic Software & Computer Services	2,274	0.5	Provision of cloud-based instrumentation platform for complex software environments
76	Treatt Chemicals	2,254	0.5	Development and manufacture of ingredients for the flavour and fragrance industry
77	Five9 Software & Computer Services	2,119	0.5	Provision of cloud-based contact centre software
78	Renishaw Electronic & Electrical Equipment	2,033	0.5	Engineering and scientific technology company, with expertise in precision measurement and healthcare
79	Central Asia Metals* Mining	2,005	0.5	Production of base metals with operations in Kazakhstan and North Macedonia
80	Spectris Electronic & Electrical Equipment	1,986	0.5	Supplier of productivity enhancing instrumentation and controls
81	CVS Group* General Retailers	1,952	0.5	Operation of veterinary surgeries
82	Frontier Developments* Leisure Goods	1,924	0.5	British video game developer and publisher
83	Stock Spirits Group Beverages	1,901	0.5	Development and manufacture of branded spirits mainly in Eastern Europe
84	Diploma Support Services	1,830	0.4	Supplier of specialised technical products and services
85	Ringcentral Mobile Telecommunications	1,792	0.4	Provision of cloud-based communications and collaboration solutions
86	ASOS* General Retailers	1,784	0.4	British online fashion and cosmetic retailer
87	Zendesk Software & Computer Services	1,695	0.4	Provision of cloud-based customer service software
88	AB Dynamics* Industrial Engineering	1,694	0.4	Development and supply of specialist automotive testing systems
89	Coupa Software Software & Computer Services	1,616	0.4	Provision of cloud-based platform for business spend
90	Rathbone Brothers Financial Services	1,510	0.4	Provision of wealth management services
91	Kainos Software & Computer Services	1,368	0.3	Provision of digital technology solutions for government, finance and health industries
92	St. Modwen Properties Real Estate Investment & Services	1,280	0.3	Investment in, and development of property
93	Computacenter Software & Computer Services	1,212	0.3	Provision of computer services to private and public sector clients
94	Park Group* Financial Services	1,044	0.3	Provision of multi-retailer gift cards and vouchers and digital rewards services
95	Joules* General Retailers	979	0.2	Clothing retailer inspired by British country lifestyles
		----------------	----------------
	Long investment positions (excluding BlackRock’s Institutional Cash Series plc – Sterling Liquidity Fund)	478,601	113.9
		----------------	----------------
	Short investment positions	(55,526)	(13.2)
		=========	=========

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

†     Traded on NEX exchange.

Percentages shown are the share of net assets.

At 31 May 2019, the Company did not hold any equity interest representing more than 3% of any company’s share capital.

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

FAIR VALUE AND GROSS MARKET EXPOSURE OF INVESTMENTS AS AT 31 MAY 2019

	Fair value1  £’000	Market  exposure2  £’000	Market  exposure as a  % of net  assets3
Long investment positions (excluding BlackRock’s Institutional Cash Series plc – Sterling Liquidity Fund)	419,100	478,601	113.9
Short investment positions	2,348	(55,526)	(13.2)
	----------------	----------------	----------------
Total exposure	421,448	423,075	100.7
	----------------	----------------	----------------
BlackRock’s Institutional Cash Series plc – Sterling Liquidity Fund	14,247	14,247	3.4
Cash at bank4	224	(1,403)	(0.3)
Other net current liabilities	(15,907)	(15,907)	(3.8)
	----------------	----------------	----------------
Net assets	420,012	420,012	100.0
	=========	=========	=========

¹     Fair value is determined as follows:

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

–     The sum of the fair values of the long and short derivative positions is determined based on the difference between the purchase/sale price and value of the underlying shares in the contract (in effect the unrealised gains/(losses) on the exposed positions). The cost of purchasing the securities held through long derivative positions directly in the market would have amounted to £59,501,000 at the time of purchase, and subsequent market falls in prices have resulted in unrealised losses on the long derivative positions of £308,000, resulting in the value of the total market exposure to the underlying securities decreasing to £59,193,000 as at 31 May 2019. The notional price of selling the securities to which exposure was gained via the short derivative positions would have been £57,874,000 at the time of entering into the contract, and subsequent price falls have resulted in unrealised gains on the short derivative positions of £2,348,000 and the value of the market exposure of these investments decreasing to £55,526,000 at 31 May 2019. If the short derivative positions had been closed on 31 May 2019 this would have resulted in a gain of £2,348,000 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        % based on the total market exposure.

⁴        The market exposure column for cash at bank 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 31 MAY 2019

Sector	% of long  portfolio	% of short  portfolio	% of net  portfolio
Chemicals	1.9	(0.7)	1.2
Mining	0.5	0.0	0.5
	----------------	----------------	----------------
Basic Materials	2.4	(0.7)	1.7
	----------------	----------------	----------------
Aerospace & Defence	2.7	0.0	2.7
Construction & Materials	2.7	(0.8)	1.9
General Industrials	0.0	(0.2)	(0.2)
Electronic & Electrical Equipment	2.8	0.0	2.8
Industrial Engineering	4.4	0.0	4.4
Industrial Transportation	2.0	0.0	2.0
Support Services	8.8	(2.7)	6.1
	----------------	----------------	----------------
Industrials	23.4	(3.7)	19.7
	----------------	----------------	----------------
Automobiles	0.0	(0.3)	(0.3)
Beverages	2.0	0.0	2.0
Food Producers	0.0	(1.1)	(1.1)
Household Goods & Home Construction	2.3	0.0	2.3
Leisure Goods	3.6	0.0	3.6
Personal Goods	2.7	(0.7)	2.0
	----------------	----------------	----------------
Consumer Goods	10.6	(2.1)	8.5
	----------------	----------------	----------------
Health Care Equipment & Services	5.1	(1.0)	4.1
Pharmaceuticals & Biotechnology	5.5	(1.4)	4.1
	----------------	----------------	----------------
Health Care	10.6	(2.4)	8.2
	----------------	----------------	----------------
General Retailers	8.6	(1.0)	7.6
Media	11.2	0.0	11.2
Travel & Leisure	9.6	(1.2)	8.4
	----------------	----------------	----------------
Consumer Services	29.4	(2.2)	27.2
	----------------	----------------	----------------
Equity Investment Instruments	0.0	(0.4)	(0.4)
Financial Services	12.0	(0.4)	11.6
Non-life Insurance	3.8	0.0	3.8
Real Estate Investment & Services	2.2	0.0	2.2
Real Estate Investment Trusts	5.9	(0.3)	5.6
	----------------	----------------	----------------
Financials	23.9	(1.1)	22.8
	----------------	----------------	----------------
Software & Computer Services	10.8	(0.9)	9.9
	----------------	----------------	----------------
Technology	10.8	(0.9)	9.9
	----------------	----------------	----------------
Mobile Telecommunications	2.0	0.0	2.0
	----------------	----------------	----------------
Telecommunications	2.0	0.0	2.0
	----------------	----------------	----------------
Total Investments	113.1	(13.1)	100.0
	=========	=========	=========

The above percentages are calculated on the net portfolio as at 31 May 2019. The net portfolio is calculated as long equity and derivative positions, less short derivative positions as at 31 May 2019.

ANALYSIS OF THE PORTFOLIO BY MAIN INDEX MEMBERSHIP

	Gross basis1	Net basis2
FTSE 250	40.0%	38.5%
FTSE AIM	25.8%	30.1%
FTSE Small Cap	17.6%	14.2%
International	7.9%	9.9%
Other	6.5%	4.4%
FTSE 100	2.2%	2.9%

Source: BlackRock.

¹               Long exposure plus short exposure in aggregate excluding investment in BlackRock’s Institutional Cash Series plc – Sterling Liquidity Fund.

²               Long exposure less short exposure excluding investment in BlackRock’s Institutional Cash Series plc – Sterling Liquidity Fund.

MARKET CAPITALISATION AS AT 31 MAY 2019

	Long positions* % of net portfolio	Short positions % of net portfolio
£1bn+	65.0%	-4.6%
£400m-£1bn	29.8%	-5.6%
£100m-£400m	18.3%	-2.9%
£0m-£100m	0.0%	0.0%

Source: BlackRock.

POSITION SIZE AS AT 31 MAY 2019

	Long positions* Number of positions	Short positions Number of positions
£2m+	79	-2
£1m-£2m	15	-31
£0m-£1m	1	-14

Source: BlackRock.

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

INTERIM MANAGEMENT REPORT AND RESPONSIBILITY STATEMENT

The Chairman’s Statement and the Investment Manager’s report give details of the important events which have occurred during the period and their impact on the financial statements.

PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks faced by the Company can be divided into various areas as follows:

• Performance;

• Market;

• Income/dividend;

• Financial;

• Operational; and

• Regulatory.

The Board reported on the principal risks and uncertainties faced by the Company in the Annual Report and Financial Statements for the year ended 30 November 2018. A detailed explanation can be found in the Strategic Report on pages 21 and 22 and in note 16 on pages 82 to 94 of the Annual Report and Financial Statements which are available on the website maintained by BlackRock at blackrock.co.uk/thrg.

In the view of the Board, there have been no changes to the fundamental nature of the principal risks and uncertainties since the previous report and these are equally applicable to the remaining six months of the financial year as they were to the six months under review.

RELATED PARTY DISCLOSURE AND TRANSACTIONS WITH THE INVESTMENT MANAGER
BlackRock Fund Managers Limited (BFM) was appointed as the Company’s Alternative Investment Fund Manager (“AIFM”) with effect from 2 July 2014. BFM has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services, to BlackRock Investment Management (UK) Limited (BIM (UK)). Both BFM and BIM (UK) are regarded as related parties under the Listing Rules. Details of the fees payable are set out in note 4 and note 10 of the financial statements.

The related party transactions with the Directors are set out in note 11 of the financial statements.

GOING CONCERN
The Directors are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future (being a period of at least twelve months from the date that this half-yearly financial report is approved) and is financially sound. For this reason, they continue to adopt the going concern basis in preparing the financial statements. The Company has a portfolio of investments which is considered to be readily realisable and is able to meet all of its liabilities from its assets and the income generated from these assets. Ongoing charges (excluding transaction costs, performance fee and finance costs) for the year ended 30 November 2018 were approximately 0.57% of net assets.

DIRECTORS’ RESPONSIBILITY STATEMENT
The Disclosure Guidance and Transparency Rules (DTR) of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Interim Management Report and Financial Statements.

The Directors confirm to the best of their knowledge that:

• the condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with International Accounting Standard 34 ‘Interim Financial Reporting’; and

• the Interim Management Report, together with the Chairman’s Statement and Investment Manager’s report, include a fair review of the information required by 4.2.7R and 4.2.8R of the FCA’s Disclosure Guidance and Transparency Rules.

The half yearly financial report has not been audited or reviewed by the Company’s Auditor.

The half yearly financial report was approved by the Board on 23 July 2019 and the above responsibility statement was signed on its behalf by the Chairman.

CHRISTOPHER SAMUEL
For and on behalf of the Board
23 July 2019

STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 31 MAY 2019

	Notes	Revenue £’000			Capital £’000			Total £’000
		Six months ended  31.05.19  (unaudited)	Six months ended  31.05.18  (unaudited)	Year ended  30.11.18  (audited)	Six months ended  31.05.19  (unaudited)	Six months ended  31.05.18  (unaudited)	Year ended  30.11.18  (audited)	Six months ended  31.05.19  (unaudited)	Six months ended  31.05.18  (unaudited)	Year ended  30.11.18  (audited)
Income from investments held at fair value through profit or loss	3	4,496	5,463	9,281	–	–	–	4,496	5,463	9,281
Net (expense)/income from derivatives	3	(738)	228	(247)	–	–	–	(738)	228	(247)
Other income	3	111	23	40	–	–	–	111	23	40
		---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------
Total income		3,869	5,714	9,074	–	–	–	3,869	5,714	9,074
		---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------
Net profit/(loss) on investments held at fair value through profit or loss		–	–	–	44,065	38,542	(18,705)	44,065	38,542	(18,705)
Net (loss)/profit on foreign exchange		–	–	–	(44)	42	(67)	(44)	42	(67)
Net profit from derivatives		–	–	–	3,939	6,756	4,863	3,939	6,756	4,863
		---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------
Total		3,869	5,714	9,074	47,960	45,340	(13,909)	51,829	51,054	(4,835)
		---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------
Expenses
Investment management and performance fees	4	(214)	(229)	(467)	(5,394)	(4,812)	(4,417)	(5,608)	(5,041)	(4,884)
Other operating expenses	5	(295)	(261)	(537)	(14)	(8)	(21)	(309)	(269)	(558)
		---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------
Total operating expenses		(509)	(490)	(1,004)	(5,408)	(4,820)	(4,438)	(5,917)	(5,310)	(5,442)
		---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------
Net profit/(loss) on ordinary activities before finance costs and taxation		3,360	5,224	8,070	42,552	40,520	(18,347)	45,912	45,744	(10,277)
Finance costs		(1)	–	(2)	(2)	(1)	(6)	(3)	(1)	(8)
		---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------
Net profit/(loss) on ordinary activities before taxation		3,359	5,224	8,068	42,550	40,519	(18,353)	45,909	45,743	(10,285)
Taxation		(14)	(10)	(12)	–	–	–	(14)	(10)	(12)
		---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------
Profit/(loss) for the period	7	3,345	5,214	8,056	42,550	40,519	(18,353)	45,895	45,733	(10,297)
		---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------
Earnings/(loss) per ordinary share (pence)	7	4.57	7.13	11.02	58.19	55.41	(25.10)	62.76	62.54	(14.08)
		=========	=========	=========	=========	=========	=========	=========	=========	=========

The total column of this statement represents the Company’s Statement of Comprehensive Income, prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union (EU). The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies (AIC). All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period. All income is attributable to the equity holders of the Company.

The net profit/(loss) for the period disclosed above represents the Company’s total comprehensive income/(loss). The Company does not have any other comprehensive income.

STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 31 MAY 2019

	Note	Called up  share capital  £’000	Share  premium  account  £’000	Capital  redemption  reserve  £’000	Special  reserve  £’000	Capital  reserves  £’000	Revenue  reserve  £’000	Total  £’000
For the six months ended 31 May 2019 (unaudited)
At 30 November 2018		4,026	21,049	11,905	35,272	294,594	12,756	379,602
Total comprehensive income:
Net profit for the period		–	–	–	–	42,550	3,345	45,895
Transactions with owners, recorded directly to equity:
Dividends paid(a)	6	–	–	–	–	–	(5,485)	(5,485)
		---------------	---------------	---------------	---------------	---------------	---------------	---------------
At 31 May 2019		4,026	21,049	11,905	35,272	337,144	10,616	420,012
		---------------	---------------	---------------	---------------	---------------	---------------	---------------
For the six months ended 31 May 2018 (unaudited)
At 30 November 2017		4,026	21,049	11,905	35,272	312,947	11,647	396,846
Total comprehensive income:
Net profit for the period		–	–	–	–	40,519	5,214	45,733
Transactions with owners, recorded directly to equity:
Dividends paid(b)	6	–	–	–	–	–	(5,119)	(5,119)
		---------------	---------------	---------------	---------------	---------------	---------------	---------------
At 31 May 2018		4,026	21,049	11,905	35,272	353,466	11,742	437,460
		---------------	---------------	---------------	---------------	---------------	---------------	---------------
For the year ended 30 November 2018 (audited)
At 30 November 2017		4,026	21,049	11,905	35,272	312,947	11,647	396,846
Total comprehensive income:
Net (loss)/profit for the year		–	–	–	–	(18,353)	8,056	(10,297)
Transactions with owners, recorded directly to equity:
Dividends paid(c)		–	–	–	–	–	(6,947)	(6,947)
		---------------	---------------	---------------	---------------	---------------	---------------	---------------
At 30 November 2018		4,026	21,049	11,905	35,272	294,594	12,756	379,602
		=========	=========	=========	=========	=========	=========	=========

^(a)      Final dividend of 7.50p per share for the year ended 30 November 2018, declared on 12 February 2019 and paid on 28 March 2019.
^(b)      Final dividend of 7.00p per share for the year ended 30 November 2017, declared on 9 February 2018 and paid on 29 March 2018.
^(c)      Final dividend of 7.00p per share for the year ended 30 November 2017, declared on 9 February 2018 and paid on 29 March 2018 and interim divided of 2.50p per share for the year ended 30 November 2018, declared on 25 July 2018 and paid on 29 August 2018.

Costs related to the acquisition and disposal of investments amounted to £495,000 and £72,000 respectively for the six months ended 31 May 2019 (six months ended 31 May 2018: £453,000 and £98,000; year ended 30 November 2018: £935,000 and £223,000). All transaction costs have been included within capital reserves.

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

STATEMENT OF FINANCIAL POSITION AS AT 31 MAY 2019

	Notes	31 May 2019  £’000  (unaudited)	31 May 2018  £’000  (unaudited)	30 November 2018  £’000  (audited)
Non current assets
Investments held at fair value through profit or loss	9	419,408	431,684	344,478
		---------------	---------------	---------------
Current assets
Other receivables		3,781	3,149	3,183
Derivative financial assets held at fair value through profit or loss		2,100	4,554	1,719
Cash collateral held with brokers in respect of derivatives		350	450	1,410
Cash and cash equivalents		14,471	10,500	34,081
		---------------	---------------	---------------
		20,702	18,653	40,393
		---------------	---------------	---------------
Total assets		440,110	450,337	384,871
		---------------	---------------	---------------
Current liabilities
Other payables		(19,678)	(9,919)	(5,152)
Derivative financial liabilities held at fair value through profit or loss		(60)	(38)	(117)
Cash collateral received in respect of derivatives		(360)	(2,920)	–
		---------------	---------------	---------------
		(20,098)	(12,877)	(5,269)
		---------------	---------------	---------------
Net assets		420,012	437,460	379,602
		=========	=========	=========
Equity attributable to equity holders
Called up share capital	8	4,026	4,026	4,026
Share premium account		21,049	21,049	21,049
Capital redemption reserve		11,905	11,905	11,905
Special reserve		35,272	35,272	35,272
Capital reserves		337,144	353,466	294,594
Revenue reserve		10,616	11,742	12,756
		---------------	---------------	---------------
Total equity	7	420,012	437,460	379,602
		---------------	---------------	---------------
Net asset value per ordinary share (pence)	7	574.33	598.19	519.08
		=========	=========	=========

CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 31 MAY 2019

	Six months ended  31 May 2019  £’000  (unaudited)	Six months ended  31 May 2018  £’000  (unaudited)	Year ended  30 November 2018  £’000  (audited)
Operating activities
Net profit/(loss) on ordinary activities before taxation	45,909	45,743	(10,285)
Add back finance costs	3	1	8
Net (profit)/loss on investments and derivatives held at fair value through profit or loss (including transaction costs)	(48,261)	(45,536)	13,343
Net loss/(profit) on foreign exchange	44	(42)	67
Sales of investments held at fair value through profit or loss	104,144	122,762	298,720
Purchases of investments held at fair value through profit or loss	(135,008)	(125,579)	(271,577)
Net payments on closure of derivatives	3,758	1,786	3,066
Net movement in cash collateral held with brokers in respect of derivatives	1,420	2,307	(1,573)
Increase in other receivables	(582)	(2,388)	(32)
Increase/(decrease) in other payables	2,800	(14)	(2,944)
(Increase)/decrease in amounts due from brokers	(5)	942	(1,437)
Increase in amounts due to brokers	11,725	2,558	721
	---------------	---------------	---------------
Net cash (outflow)/inflow from operating activities before interest and taxation	(14,053)	2,540	28,077
	---------------	---------------	---------------
Taxation on investment income included within gross income	(25)	(10)	(22)
	---------------	---------------	---------------
Net cash (outflow)/inflow from operating activities	(14,078)	2,530	28,055
	---------------	---------------	---------------
Financing activities
Interest paid	(3)	(1)	(8)
Dividends paid	(5,485)	(5,119)	(6,947)
	---------------	---------------	---------------
Net cash outflow from financing activities	(5,488)	(5,120)	(6,955)
	---------------	---------------	---------------
(Decrease)/increase in cash and cash equivalents	(19,566)	(2,590)	21,100
Effect of foreign exchange rate changes	(44)	42	(67)
	---------------	---------------	---------------
Change in cash and cash equivalents	(19,610)	(2,548)	21,033
Cash and cash equivalents at start of period	34,081	13,048	13,048
	---------------	---------------	---------------
Cash and cash equivalents at end of the period	14,471	10,500	34,081
	---------------	---------------	---------------
Comprised of:
Cash at bank	224	1,290	132
Cash Fund*	14,247	9,210	33,949
	---------------	---------------	---------------
	14,471	10,500	34,081
	=========	=========	=========

*     Cash Fund represents funds held on deposit with the BlackRock Institutional Cash Series plc – Sterling Liquidity Fund.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 MAY 2019

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. BASIS OF PREPARATION
The half yearly financial statements have been prepared using the same accounting policies as set out in the Company’s Annual Report and Financial Statements for the year ended 30 November 2018 which were prepared in accordance with International Financial Reporting Standards (‘IFRS’) as adopted by the European Union and applied in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’. Insofar as the Statement of Recommended Practice (‘SORP’) for investment trust companies and venture capital trusts issued by the Association of Investment Companies (‘AIC’), revised in November 2014 and updated in January 2017 and February 2018 is compatible with IFRS, the Financial Statements have been prepared in accordance with the guidance set out in the SORP.

Adoption of new and amended standards and interpretations

IFRS 9 Financial Instruments
The classification and measurement requirements of IFRS 9 have been adopted retrospectively as of the date of initial application on 1 December 2018, however, the Company has chosen to take advantage of the option not to restate comparatives. Therefore, the 2018 comparative figures are presented and measured under IAS 39. All financial assets previously held at fair value continue to be measured at fair value and accordingly there has been no impact as a result of the adoption of IFRS 9. All financial assets that were classified as loans and receivables and measured at amortised cost continue to be.

IFRS 15 Revenue from contracts with customers
The Company adopted IFRS 15 as of the date of initial application of 1 December 2018. IFRS 15 replaces IAS 18 Revenue and establishes a model to account for revenue arising from contracts with customers. In addition, guidance on interest and dividend income have been moved from IAS 18 to IFRS 9 without significant changes to the requirements. Therefore, there was no impact of adopting IFRS 15 for the Company.

3. INCOME

	Six months ended  31 May 2019  £’000  (unaudited)	Six months ended  31 May 2018  £’000  (unaudited)	Year ended  30 November 2018  £’000  (audited)
Investment income:
UK dividends	2,892	3,449	6,421
UK special dividends	870	1,068	1,232
UK stock dividends	–	40	40
UK REIT dividends	319	249	570
Overseas dividends	390	553	914
Overseas special dividends	25	62	62
Overseas stock dividends	–	42	42
	---------------	---------------	---------------
	4,496	5,463	9,281
Net (expense)/income from derivatives	(738)	228	(247)
	---------------	---------------	---------------
	3,758	5,691	9,034
	---------------	---------------	---------------
Other income:
Deposit interest	4	1	4
Interest from Cash Fund	107	22	36
	---------------	---------------	---------------
	111	23	40
	---------------	---------------	---------------
Total income	3,869	5,714	9,074
	=========	=========	=========

Dividends and interest received in cash in the six months ended 31 May 2019 amounted to £3,780,000 and £99,000 (six months ended 31 May 2018: £4,267,000 and £23,000; year ended 30 November 2018: £9,161,000 and £45,000) respectively.

There are no special dividends recognised in capital in the six months ended 31 May 2019 (six months ended 31 May 2018: £nil; year ended 30 November 2018: £nil).

Comparative figures
Interest of £22,000 from the BlackRock Institutional Cash Series plc – Sterling Liquidity Fund (Cash Fund) has been reclassified from “Income from investments held at fair value through profit or loss” to “Other Income” in the Statement of Comprehensive Income for the six months ended 31 May 2018. This reclassification had no impact on the revenue return for the respective periods or the net assets as at 31 May 2018.

4. INVESTMENT MANAGEMENT AND PERFORMANCE FEES

	Six months ended 31 May 2019 (unaudited)			Six months ended 31 May 2018 (unaudited)			Year ended 30 November 2018 (audited)
	Revenue  £’000	Capital  £’000	Total  £’000	Revenue  £’000	Capital  £’000	Total  £’000	Revenue  £’000	Capital  £’000	Total  £’000
Investment management fee	214	640	854	229	686	915	467	1,399	1,866
Performance fee	–	4,754	4,754	–	4,126	4,126	–	3,018	3,018
	---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------	---------------
Total	214	5,394	5,608	229	4,812	5,041	467	4,417	4,884
	=========	=========	=========	=========	=========	=========	=========	=========	=========

With effect from 1 December 2017, the performance fee is 15% of Net Asset Value total return outperformance of the benchmark measured over a two year rolling basis and is applied on the average Gross Assets over two years. Gross Assets are defined as the gross asset value of the long only portfolio plus the gross value of the underlying equities, long and short, to which the Company is exposed through CFDs. There is a cap on total management and performance fees of 1.25% of average gross assets over a two year period which has the effect of capping performance fees at circa 0.9% of average gross assets over two years.

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

Performance fees have been wholly allocated to the capital column of the Statement of Comprehensive Income as the performance has been predominantly generated through capital returns from the investment portfolio. For the six months ended 31 May 2019, a performance fee of £4,754,000 has been accrued (six months ended 31 May 2018: £4,126,000; year ended 30 November 2018: £3,018,000).

The investment management fee is calculated at the rate of 0.35% per annum on month end Gross Assets. The management fee is charged 25% to revenue and 75% to capital.

5. OTHER OPERATING EXPENSES

	Six months ended  31 May 2019  £’000  (unaudited)	Six months ended  31 May 2018  £’000  (unaudited)	Year ended  30 November 2018  £’000  (audited)
Allocated to revenue:
Custody fee	5	5	11
Auditor’s remuneration:
– audit services	18	16	37
– other assurance services	–	6	7
Registrar’s fee	17	19	39
Directors’ emoluments	68	68	139
Broker fees	18	18	36
Depositary fees	23	28	58
Marketing fees	63	35	79
FCA Fees	6	6	12
Printing and postage fees	21	16	23
AIC fees	14	10	20
Other administrative costs	42	34	76
	---------------	---------------	---------------
	295	261	537
	=========	=========	=========
Allocated to capital:
Custody transaction charges	14	8	21
	---------------	---------------	---------------
	309	269	558
	=========	=========	=========

6. DIVIDENDS
The Board has declared an interim dividend of 2.50p per share payable on 28 August 2019 to shareholders on the register at 2 August 2019 (six months ended 31 May 2018: interim dividend of 2.50p per share paid on 29 August 2018 to shareholders on the register at 3 August 2018). This dividend has not been accrued in the financial statements for the six months ended 31 May 2019 as, under IFRS, interim dividends are not recognised until paid. Dividends are debited directly to reserves.

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

	Six months ended  31 May 2019  £’000  (unaudited)	Six months ended  31 May 2018  £’000  (unaudited)	Year ended  30 November 2018  £’000  (audited)
Net revenue profit attributable to ordinary shareholders (£’000)	3,345	5,214	8,056
Net capital profit/(loss) attributable to ordinary shareholders (£’000)	42,550	40,519	(18,353)
	--------------------	--------------------	--------------------
Total profit/(loss) attributable to ordinary shareholders (£’000)	45,895	45,733	(10,297)
	============	============	============
Equity shareholders’ funds (£’000)	420,012	437,460	379,602
	--------------------	--------------------	--------------------
The weighted average number of ordinary shares in issue during the period on which the earnings per ordinary share was calculated was:	73,130,326	73,130,326	73,130,326
	--------------------	--------------------	--------------------
The actual number of ordinary shares in issue at the end of each period on which the net asset value per ordinary share was calculated was:	73,130,326	73,130,326	73,130,326
	--------------------	--------------------	--------------------
Returns per share
Revenue earnings per share (pence)	4.57	7.13	11.02
Capital earnings/(loss) per share (pence)	58.19	55.41	(25.10)
	--------------------	--------------------	--------------------
Total earnings/(loss) per share (pence)	62.76	62.54	(14.08)
	============	============	============

	As at  31 May 2019  £’000  (unaudited)	As at  31 May 2018  £’000  (unaudited)	As at  30 November 2018  £’000  (audited)
Net asset value per ordinary share (pence)	574.33	598.19	519.08
	---------------	---------------	---------------
Ordinary share price (pence)	532.00	538.00	457.00
	=========	=========	=========

The Company does not have any dilutive securities.

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 5p each:
At 1 December 2018 and 31 May 2019	73,130,326	7,400,000	80,530,326	4,026

There has been no change in the Company’s share capital during the period or as at the date of this report.

9. 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 and cash equivalents 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) as set out on page 73 in the Company’s Annual Report and Financial Statements for the year ended 30 November 2018.

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

The fair value hierarchy has the following levels:

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

Level 2 – Valuation techniques 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 period end the CFDs were valued using the underlying equity bid price and the contract price at the inception of the CFD trade or at the trade reset date. There have been no changes to the valuation technique since the previous year or as at the date of this report.

Level 3 – Valuation techniques using significant unobservable inputs
This category includes all instruments where the valuation technique includes inputs not based on observable data and these inputs could have a significant impact on the instrument’s valuation. This category also includes instruments that are valued based on quoted prices for similar instruments where significant entity determined adjustments or assumptions are required to reflect differences between the instruments and instruments for which there is no active market. The Investment Manager considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

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

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

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

The table below sets out fair value measurements using IFRS 13 fair value hierarchy.

Financial assets/(liabilities) at fair value through profit or loss as at 31 May 2019 (unaudited)	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Assets:
Equity investments	419,408	–	–	419,408
Contracts for difference (gross exposure on long positions)	–	59,193	–	59,193
Liabilities:
Contracts for difference (gross exposure on short positions)	–	(55,526)	–	(55,526)
	-------------------	-------------------	-------------------	-------------------
	419,408	3,667	–	423,075
	===========	===========	===========	===========

Financial assets/(liabilities) at fair value through profit or loss as at 31 May 2018 (unaudited)	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Assets:
Equity investments	431,684	–	–	431,684
Contracts for difference (gross exposure on long positions)	–	78,645	–	78,645
Liabilities:
Contracts for difference (gross exposure on short positions)	–	(43,851)	–	(43,851)
	-------------------	-------------------	-------------------	-------------------
	431,684	34,794	–	466,478
	===========	===========	===========	===========

Financial assets/(liabilities) at fair value through profit or loss as at 30 November 2018 (audited)	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Assets:
Equity investments	344,478	–	–	344,478
Contracts for difference (gross exposure on long positions)	–	49,464	–	49,464
Liabilities:
Contracts for difference (gross exposure on short positions)	–	(39,884)	–	(39,884)
	-------------------	-------------------	-------------------	-------------------
	344,478	9,580	–	354,058
	===========	===========	===========	===========

There were no transfers between levels for financial assets and financial liabilities during the period recorded at fair value as at 31 May 2019, 31 May 2018 and 30 November 2018. The Company did not hold any Level 3 securities throughout the financial period under review or as at 31 May 2019, 31 May 2018 or 30 November 2018.

10. TRANSACTIONS WITH THE AIFM AND INVESTMENT MANAGER
BlackRock Fund Managers Limited (BFM) is the Company’s Alternative Investment Fund Manager (AIFM). 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)).

The investment management fee due for the six months ended 31 May 2019 amounted to £854,000 (six months ended 31 May 2018: £915,000; year ended 30 November 2018: £1,866,000). In addition a performance fee of £4,754,000 (six months ended 31 May 2018: £4,126,000, year ended 30 November 2018: £3,018,000) was accrued for the six months ended 31 May 2019.

At the period end £854,000 was outstanding in respect of management fees (31 May 2018: £915,000; 30 November 2018: £441,000). Any final performance fee for the full year ending 30 November 2019 will not crystallise and fall due until the calculation date of 30 November 2019.

In addition to the above services, BlackRock has provided the Company with marketing services. The total fees paid or payable for these services to 31 May 2019 amounted to £63,000 excluding VAT (six months ended 31 May 2018: £35,000; year ended 30 November 2018: £79,000). Marketing fees of £145,000 excluding VAT (31 May 2018: £117,000; 30 November 2018: £82,000) were outstanding at 31 May 2019.

The Company has an investment in BlackRock’s Institutional Cash Series plc – Sterling Liquidity Fund of £14,247,000 as at 31 May 2019 (31 May 2018: £9,210,000; 30 November 2018: £33,949,000).

11. RELATED PARTY DISCLOSURE: DIRECTORS’ EMOLUMENTS
The Board consists of four non-executive Directors, all of whom are considered to be independent by the Board. None of the Directors has a service contract with the Company. With effect from 1 December 2018, the remuneration of the Chairman was increased from £36,000 to £38,500, the remuneration of the Chairman of the Audit Committee was increased from £28,000 to £30,000 and for the other Directors the remuneration was increased from £24,000 to £26,000.

As at 31 May 2019, an amount of £10,000 (31 May 2018: £11,000; 30 November 2018: £11,000) was outstanding in respect of Directors’ fees.

At the period end and at 23 July 2019, the interests of the Directors in the ordinary shares of the Company were as follows:

	Ordinary shares  31 May 2019	Ordinary shares  23 July 2019
Christopher Samuel (Chairman)	24,960	24,960
Loudon Greenlees	15,000	15,000
Jean Matterson	46,000	46,000
Louise Nash – appointed 21 March 2019	nil	nil

12. CONTINGENT LIABILITIES
There were no contingent liabilities as at 31 May 2019 (31 May 2018 and 30 November 2018: nil).

13. PUBLICATION OF NON STATUTORY ACCOUNTS
The financial information contained in this half yearly financial report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the six months ended 31 May 2019 has not been audited or reviewed by the Auditor. The financial information for the six months to 31 May 2018 was reviewed by Company's Auditor.

The information for the year ended 30 November 2018 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies. The report of the previous Auditor on those financial statements contained no qualification or statement under sections 498(2) or 498(3) of the Companies Act 2006.

14. ANNUAL RESULTS
The Board expects to announce the annual results for the year ending 30 November 2019 in February 2020. Copies of the results announcement can be obtained from the Secretary on 020 7743 3000 or by email at [e-mail]. The Annual Report and Financial Statements should be available by the beginning of February 2020, with the Annual General Meeting expected to be held in March 2020.

For further information, please contact:

Simon White, Managing Director, Investment Companies, BlackRock Investment Management (UK) Limited
Tel: [phone]

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

23 July 2019

12 Throgmorton Avenue
London EC2N 2DL

END

The Half Yearly Financial Report will also be available on the BlackRock website at http://www.blackrock.co.uk/thrg.  Neither the contents of the Manager’s website nor the contents of any website accessible from hyperlinks on the Manager’s website (or any other website) is incorporated into, or forms part of, this announcement.