BERI Blackrock Energy And Resources Income Trust Plc

BLACKROCK ENERGY AND RESOURCES INCOME TRUST PLC (LEI:54930040ALEAVPMMDC31)

INVESTMENT OBJECTIVE
The Company’s objectives are to achieve an annual dividend target and, over the long term, capital growth by investing primarily in securities of companies operating in the mining and energy sectors.

PERFORMANCE RECORD

	31 May  2020  (unaudited)	30 November  2019  (audited)	Change  %
Net asset value per ordinary share (pence)	65.71	75.28	-12.7
– with dividends reinvested1			-10.0
Net assets (£’000)2	74,558	85,945	-13.2
Ordinary share price (mid-market) (pence)	55.20	66.00	-16.4
– with dividends reinvested1			-13.3
Discount to net asset value1	16.0%	12.3%
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	For the six  months  ended  31 May  2020  (unaudited)	For the six  months  ended  31 May  2019  (unaudited)	Change  %
Revenue
Net profit on ordinary activities after taxation (£’000)	2,113	2,282	-7.4
Revenue earnings per ordinary share (pence)	1.86	1.97	-5.6
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Interim dividends (pence)
1st interim	1.00	1.00	–
2nd interim3	1.00	1.00	–
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¹     Alternative Performance Measures, see Glossary included within the interim report (which can be found on the Company’s website at www.blackrock.com/uk/beri).

²     The change in net assets reflects market movements, the buyback of shares and dividends paid during the period.

³     Paid on 17 July 2020.

PERFORMANCE TO 31 MAY 2020

	Six months	One year	Three years	Five years
Net Asset Value (with dividends reinvested)1	-10.0%	-9.3%	4.0%	4.8%
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Share price (with dividends reinvested)1	-13.3%	-16.0%	-10.0%	-13.9%
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¹     Alternative Performance Measure. Further details of the calculation of performance with dividends reinvested are given in the Glossary included within the interim report (which can be found on the Company’s website at www.blackrock.com/uk/beri).

Source: BlackRock.

CHAIRMAN’S STATEMENT FOR THE SIX MONTHS TO 31 MAY 2020

MARKET OVERVIEW
The past six months have been challenging for investors across the globe, with the COVID-19 pandemic creating deep uncertainty about the prospects for economies and triggering extreme volatility in markets. The early weeks of the period under review began promisingly for the mining and energy sectors but this was swept away in mid-February when the extent of the global health crisis became apparent and markets slumped. Shares in oil companies were particularly badly affected as the crisis emerged at the same time as heightened political tensions between the major oil producing nations, which conspired to drive crude oil prices sharply lower. Stock markets have subsequently rallied and oil prices have partially recovered, aided by the eventual implementation of OPEC¹ production cuts. Mined commodity prices have also risen as positive economic data from China indicated some recovery in industrial activity. However, despite these recent promising indications, significant market volatility is expected to remain until there is greater clarity on the likely duration of the COVID-19 outbreak and its effects on the global economy.

PERFORMANCE
During the six months ended 31 May 2020 the Company’s net asset value (‘NAV’) per share fell by 10.0% and its share price fell by 13.3% (both percentages in sterling terms with dividends reinvested). Although the Company does not have a formal benchmark, to set this in the context of the market backdrop, the EMIX Global Mining Index rose by 6.3% and the MSCI World Energy Index fell by 28.3% over the same period (both percentages in sterling terms with dividends reinvested). Further information on investment performance is given in the Investment Manager’s Report.

Since the period end and up until close of business on 28 July 2020 the Company’s NAV has increased by 11.8% and the share price has risen by 17.4% (with dividends reinvested).

FOCUS ON ENERGY TRANSITION
The Board announced on 17 March that, within the parameters of the Company’s existing investment policy, it intended to increase exposure to stocks benefitting from the transition in the energy sector, away from carbon-based energy supplies towards alternative and renewable sources. The Board views the global transition to a low-carbon economy as a secular trend and an investment opportunity that demands inclusion in the portfolio in a significant way. The Company has adopted a balanced approach, and will continue to incorporate traditional energy and mining equity investments in the portfolio, as these continue to have a key role to play in the energy transition theme alongside those in the vanguard of sustainable energy production. As at 28 July 2020, 27.4% of the portfolio is now invested in these transitional energy stocks, with 18.6% invested in traditional energy holdings and 54.0% invested in the mining sector.

The Board does not formally benchmark the Company’s performance against mining and energy sector indices because meeting a specific dividend target is not within the scope of these indices but also because no index that appropriately reflects the Company’s blended exposure to the energy and mining sectors. For internal purposes, however, the Board compares the performance of the portfolio against a bespoke internal mining and energy composite index and this will evolve in line with the portfolio changes described above. The neutral sector weightings of 50% mining and 50% traditional energy in this current bespoke index will evolve to 40% mining, 30% traditional energy and 30% energy transition sector weightings.

REVENUE RETURN AND DIVIDENDS
While dividends have come under pressure in the wider equity markets as a result of the COVID-19 crisis, the income from the investments held by your Company has remained relatively robust. Revenue return per share for the six-month period was 1.86 pence (six months to 31 May 2019: 1.97 pence). The Board’s current target is to declare quarterly dividends of at least 1.00 pence per share in the year to 30 November 2020, making a total of at least 4.00 pence for the year as a whole. This target represents a yield of 7.2% based on the share price of 55.20 pence per share as at 31 May 2020.

The first quarterly dividend of 1.00 pence per share was paid on 18 April 2020 and the second quarterly dividend of 1.00 pence per share was paid on 17 July 2020 (four quarterly interim dividends each of 1.00 pence per share were paid in the twelve months ended 30 November 2019).

We do not expect the shift in focus away from carbon-based energy supplies towards alternative and renewable sources described above to impair the Company’s ability to meet its target dividend, which will be delivered primarily from a mix of dividend income from the portfolio and dividend reserves, supported by the payment of income out of capital if required. The Company may also write options to generate revenue return, although the portfolio managers’ focus is on investing the portfolio to generate an optimal level of total return without striving to meet an annual income target and they will only enter into option transactions to the extent that the overall contribution is beneficial to total return.

FRANKED INVESTMENT INCOME (FII) GROUP LITIGATION ORDER (GLO) V HMRC
In 2003 The Prudential Assurance Company Limited filed a case against HM Revenue & Customs (HMRC) on the treatment of foreign sourced dividends. The litigation concerned the tax treatment of UK-resident companies (including investment funds) that received dividends from portfolio shareholdings in non-UK companies. It had previously been settled that the UK dividend tax regime that applied to portfolio dividends prior to 2009 was contrary to EU law, as UK dividends were not subject to tax whereas non-UK dividends were taxable.

On 25 July 2018 the UK Supreme Court handed down its judgement in the Prudential case, ruling (inter alia) that non-UK dividends remained taxable but that credit should be given for the underlying foreign tax at the foreign nominal corporate income tax rate of the source country. In June 2020, the Company received correspondence from HMRC accepting the entitlement of the Company to claim for double tax relief in the relevant accounting periods in relation to underlying tax suffered on dividends from non-UK companies. While the amount of the repayment has not been formally agreed with HMRC, and as such a degree of uncertainty remains, the Board has been advised that the receipt of a repayment in respect of these amounts had become sufficiently probable to merit recognition in the Company’s NAV, and it announced on 26 June 2020 that an asset of £945,614 had been reflected in the NAV in respect of these claims. As the original tax expense was debited to the revenue column of the income statement, the benefit of this recovery has been credited to the revenue column of the income statement and will result in an uplift of 0.83 pence per share to the Company’s revenue earnings per share for the year to 30 November 2020. More information is given in note 15.

CHANGES TO PORTFOLIO MANAGEMENT AND FEES
Given the Company’s increased focus on energy transition stocks, we announced on 17 March 2020 that BlackRock’s energy specialist Mark Hume would be replacing Olivia Markham as portfolio manager to work alongside Tom Holl. Mark has 10 years of experience directly managing energy stocks and is co-manager of BlackRock’s all-cap Energy strategy. The Board would like to take the opportunity to thank Olivia for her contribution in managing the Company’s portfolio over the last six years.

The Board is very mindful of the need to ensure that shareholders receive good value from the operations of the Company and regularly review all of its costs. To that end, as also announced on 17 March, we agreed a reduction in the management fee payable by the Company to BlackRock Fund Managers Ltd (the “Manager”) to 0.80% on gross assets per annum (previously 0.95% per annum on the first £250 million of gross assets and 0.90% per annum thereafter). In addition, it was agreed that the Company’s Ongoing Charges, as set out and defined in its annual report (and for avoidance of doubt including the management fee), would be capped at 1.25% per annum of average daily net assets. More information is set out in note 4.

GEARING
The Company operates a flexible gearing policy which depends on prevailing market conditions. It is not intended that gearing will exceed 20% of the gross assets of the Company. The maximum gearing used during the period was 8.5%, and the level of gearing at 31 May 2020 was 3.0%. For calculations, see the Glossary included within the interim report (which can be found on the Company’s website at www.blackrock.com/uk/beri).

SHARE CAPITAL AND DISCOUNT CONTROL
The Directors recognise the importance to investors that the Company’s share price should not trade at a significant premium or discount to NAV, and therefore, in normal market conditions, may use the Company’s share buyback, sale of shares from treasury and share issue powers to ensure that the share price is broadly in line with the underlying NAV. The Company currently has authority to buy back up to 14.99% of the Company’s issued share capital (excluding treasury shares) and to allot ordinary shares representing up to 10% of the Company’s issued ordinary share capital.

Over the six months to 31 May 2020, the Company’s shares have traded at an average discount of 13.5%, and within a range of a 3.6% discount to a 24.6% discount. The Company bought back a total of 700,000 ordinary shares between 1 December 2019 and 20 February 2020 at an average price of 66.06 pence per share, for a total consideration of £462,000 and at an average discount of 12.3%. These shares were placed in treasury for potential reissue, thereby saving the associated costs of an issue of new shares if demand arises. However, as the COVID-19 pandemic took hold and global markets plummeted in March and April 2020, the extreme market volatility created challenges for many investment companies in determining appropriate intraday pricing levels for buy back transactions. Consequently the Board has been less active in buying back shares over the second half of the period under review and into June 2020, but continues to monitor the market and, in conjunction with the Company’s broker, gives consideration to the possibility of buying back shares on a daily basis.

MARKET OUTLOOK AND PORTFOLIO POSITIONING
Recent signs of economic recovery in many of the world’s major nations have boosted oil and mined commodity prices and in turn share prices in our sectors. Deferred infrastructure spending and continued recovery in demand as lockdowns ease create the prospect of a structural upcycle for oil and commodity prices. However, the investment environment remains extremely uncertain. Significant market volatility is expected to remain until there is greater clarity on how long it will take for more accustomed levels of economic activity to resume, which in turn will depend on the extent to which the spread of COVID-19 can be contained.

The Company’s portfolio is focussed on larger market capitalisation, established companies. In addition, the Manager is seeking to enhance the growth element of the portfolio through selective investments in companies that are exposed to energy transition and the decarbonisation of the energy supply chain, where the Manager believes that the long term prospects are compelling.

ED WARNER
30 July 2020

¹     Organization of the Petroleum Exporting Countries.

INVESTMENT MANAGER’S REPORT

MARKET OVERVIEW
The first half of 2020 will be viewed as one of the most extraordinary six months for financial markets and for many aspects of life for all of us. The year started out with economic activity buoyant, and growing modestly in most major economies, and most market debate focused on what might trigger a recession and/or the end of the decade long bull market for equities. The mining companies were generating strong cashflow with a bias to returning it to shareholders. We saw the lack of recent investment in conventional oil projects as being likely to tighten markets towards the end of 2020 and the energy transition accelerating and creating exciting new investment opportunities.

The emergence of COVID-19 and subsequent rapid spread across the world of the virus caused an unprecedented impact on economic activity. This sent shockwaves through the commodity markets as demand collapsed across almost every sector. The hardest hit areas were those where the demand has been “lost” – such as oil; the cancelled flights and missed car journeys will not be caught up, however fast the recovery is. Other commodities that are more exposed to capital expenditure, such as iron ore and steel, fared better as lost time on construction projects can be made up.

Although China was the first country to suffer the effects of the virus, it has also been the first to emerge out the other side. The Chinese Government unleashed economic stimulus that quickly led to a rebound in underlying activity. This can be seen in many data points and the chart on page 8 of the half yearly annual report shows inventories across the metals space in China and shows the effects of lockdown (rising inventories) followed by the swift recovery through April and May.

Although the financial markets in Europe and North America have followed a similar trajectory of sharp decline and rapid rebound, it remains to be seen whether underlying economic activity will follow the same V-shaped recovery. The ability of China to stimulate commodity-intensive activity is significantly higher than that of governments in the West and this is one of the key reasons we have maintained a larger weight in mining (versus energy) during the first half as China accounts for a significantly greater proportion of mined commodity demand than oil (or gas) demand.

The sections on mining, energy and the energy transition describe the first half impacts in greater detail, the response of the companies to the dramatic changes and how we have positioned the portfolio going into the second half of the year.

Commodity	30 November  2019	31 May  2020	%  Change	2020 on 2019  Average Price %  Change  (Average of  31/05/18-31/05/19  to 31/05/19-  31/05/20)
Base Metals (US$/tonne)
Aluminium	1,792	1,526	-14.8	-13.5
Copper	5,843	5,352	-8.4	-8.9
Lead	1,923	1,655	-13.9	-6.3
Nickel	13,618	12,260	-10.0	10.6
Tin	16,504	15,503	-6.1	-16.4
Zinc	2,300	1,993	-13.3	-16.4
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Precious Metals (US$/oz)
Gold	1,461.5	1,731.6	18.5	21.8
Silver	17.0	17.8	4.7	10.2
Platinum	894.0	825.0	-7.7	4.5
Palladium	1,832.0	1,920.0	4.8	55.4
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Energy
Oil (WTI) (US$/Bbl)	55.2	33.7	-38.9	-22.1
Oil (Brent) (US$/Bbl)	64.5	34.2	-47.0	-23.2
Natural Gas (US$/MMBTU)	2.5	1.7	-32.0	-30.1
Uranium (US$/lb)	26.0	34.0	30.8	-2.0
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Bulk Commodities (US$/tonne)
Iron ore	87.0	101.5	16.7	21.0
Coking coal*	141.3	133.3	-5.7	-23.2
Thermal coal	69.4	52.0	-25.1	-35.6
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Equity Indices
EMIX Global Mining Index (US$)	787.9	800.4	1.6	n/a
EMIX Global Mining Index (£)	609.2	647.4	6.3	n/a
MSCI World Energy Index (US$)	303.6	208.0	-31.5	n/a
MSCI World Energy Index (£)	234.7	168.2	-28.3	n/a
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*     Source: Bloomberg.

Source: Datastream.

PORTFOLIO ACTIVITY AND INVESTMENT PERFORMANCE

The chart on page 10 of the half-yearly report sets out in detail the monthly changes in the Company’s portfolio composition between February 2017 and May 2020.

Throughout the first half of 2020 the portfolio had a greater weighting in mining stocks than energy ones given our views on relative commodity price outlook and, importantly, what commodity prices were being priced into the market valuation of the companies. In our view, the market has consistently underestimated the iron price and therefore the major mining companies have appeared relatively attractive.

Gearing in the Company has been used quite sparingly in the first half of the year compared to much of 2018 and 2019. In March we reduced gearing to just over 5% due to the market volatility, but we will look to increase this back to at least match the portfolio’s fixed interest holdings as and when we think appropriate. The energy transition companies that are being integrated into the portfolio typically have lower volatility than the commodity-driven mining and energy companies and this could allow gearing to be used to a modestly higher degree in time too.

Within mining the biggest change in commodity positioning has been in the gold sector where we started the period at around 14.5% and ended at 16.1%. There are two main reasons why we increased the gold exposure. First was the speed and magnitude of the response of Central Banks, most notably the US Federal Reserve (the Fed), to the COVID-19 driven economic shock. The asset purchase programme announced by the Fed and the guidance they have given on interest rates remaining exceptionally low is, we believe, very supportive for gold. Secondly the gold companies have shown a new willingness to act with more capital discipline. Many of the larger, and even mid-size, gold companies have announced dividend increases in the last six months. The gold companies still have lower yields than the diversified mining companies, but it is an important signal to investors that the misallocation of capital that occurred in the last gold cycle is less likely to occur this time around.

Notwithstanding the enormous volatility experienced in global markets in general and energy markets in particular, many of the structural trends in traditional energy markets remain in place. We continue to believe that demand for oil will peak some time in the next ten to fifteen years as society continues to drive towards a lower carbon world. Combined with almost unchecked growth from US shale for the last decade, this has led to increasingly volatile oil prices. This has placed greater value on strong balance sheets, diversified portfolios and stable sources of cash flow – a characteristic more often than not of the larger Integrated Oil Companies (IOCs) and Midstream (Pipelines) businesses. With the outlook for interest rates now looking ‘lower-for-longer’, this should bode well for high quality dividend streams such as those within the Midstream space. This has resulted in a deliberate shift in energy sub-sector allocation over the period with, for instance, Midstream companies making up 8% of the Company’s NAV from less than 3% at the start of the period. Other key changes include reducing the exposure to Exploration and Production companies from almost 14% of NAV to just under 10% by the end of the period. Whilst some of this shift has been driven by underlying market movements a large proportion of the reduction reflects increasing risks around a Democratic Presidential victory in November this year, which may result in less favourable treatment of domestic producers. Finally, the Company has increased its exposure to selected Oilfield Services stocks from zero to just under 2% in the period. Whilst a smaller component of the Company’s NAV, it marks the first foray into the sector since September 2018.

The Company delivered a NAV total return of -10.0% over the six month period to 31 May 2020. This compares to a return of -11.0% over the same time period for the reference index (used for internal monitoring purposes), which is a 50/50 split of the EMIX Global Mining Index and the MSCI World Energy Index. Although the Company performed moderately better than UK equity markets (the FTSE All Share returning -16.0% for the six month period), it lagged global equity markets with the MSCI World Index (in GBP) down just 0.5%.

INCOME
During the first half of 2020, the Company generated £2.6 million in gross income. This funded a dividend payment of 1.00p per share for the first and second quarters, for a total of 2.00p per share for the first half of the year.

Although the high level of market volatility was attractive for option writing, we were selective in our option writing, to target the best total return, rather than overwrite the same proportion of the portfolio and generate excess income from options.

The mining companies continued their now-established track record of returning surplus cash to shareholders with companies such as Rio Tinto declaring final year dividends at the upper end of targeted pay out ranges. The gold companies have also shown a notable change in attitude towards dividends – for example Newmont hiked its dividend by almost 80% and guided that it would return around half of its free cashflow to shareholders through time.

The energy companies provided a less positive dividend story during the first half of the year. Whilst some companies opted to use their balance sheet strength to maintain payments despite the very challenging oil price environment, many others took the chance to reset dividends lower. This happened in areas of structural challenge, such as the oil services sector where Schlumberger cut its dividend by 75%. Elsewhere, Royal Dutch Shell cut its dividend by two-thirds, which was the first time it has cut its dividend since World War II.

The energy transition companies under consideration for the portfolio did not experience anything like the financial squeeze the oil companies faced from the collapse in the oil price. Their dividends therefore look more likely to be maintained over the medium term. However some, especially in Europe, may be under political pressure to limit dividend payments in favour of reinvesting as Governments are keen to see a green bias to any economic recovery. Overall for the energy transition companies, their dividend yields are often lower than those in mining and conventional energy as they typically have greater growth opportunities. Thus, the flexibility to pay dividends from capital should allow the portfolio to have an appropriate exposure to Energy Transition stocks without diluting the importance of income within the Company’s Objectives.

ENERGY
The International Energy Agency (IEA) estimates that average oil demand in 2020 will fall by over 8 million barrels per day, equivalent to 8% of total consumption – making it the largest annual contraction in history (the chart on page 13 of the Company's interim report shows the growth in global demand year on year from the first quarter of 2019 and projected forward to the end of 2021).

The timing of this unprecedented collapse in demand came just as the world’s major oil producers (OPEC and Russia) had failed to reach an agreement on supply at the group’s meeting on 6 March 2020. This mismatch between supply and demand caused crude inventories to rise at record rates, in turn, driving Brent oil prices from an early January high of $69/barrel to a low of $19/barrel in late-April. Prompt action by OPEC and Russia (OPEC+) saw the group agree a reduction of almost 10 million barrels per day effective from the start of May.

Elsewhere, US shale producers implemented one of the sharpest reductions in activity in history with the horizontal rig count falling from 701 to 271 over the period. This has translated into budget cuts from producers in the order of 50% on an annualised basis through the balance of the year. As a result, US shale output is forecast to contract by as much as 2 million barrels per day through the second half of 2020 (a chart showing the supply and growth activity for US Natural Gas Liquids and the horizontal rig count since January 2015 is included on page 14 of the half-yearly financial report).

Taken together, these actions helped to drive crude prices back towards $35/barrel by the end of the period and assuming OPEC+ remains focused on managing supply we would expect inventories, and therefore prices, to normalise in the first half of next year.

Turning to equities, the global energy sector fell 30% in the period with the larger companies faring better (-27%) than smaller companies (-50%). From a sub-sector perspective the Midstream (Pipelines) and Downstream (Refining & Marketing) companies held up relatively better – falling by less than 20%. In contrast, Oilfield Services stocks fell by more than one-third over the period. Energy equities touched their lows in mid-March and have since rallied more than 50%. As at the end of May, the sector is still trading at more than 30% below where we started the period with global oil markets continuing to rebalance.

ENERGY TRANSITION
Mitigating climate change is unquestionably the greatest challenge currently facing humanity. In the decades ahead, the entire global energy system needs to decarbonise if we are to limit emissions to tolerable levels. The decarbonisation of the energy system not only covers the power sector, it also touches transportation, buildings materials and petrochemicals all of which have, up until now, been great enablers of a better quality of life. Continuing to deliver affordable, clean and safe energy, whilst reducing carbon emissions presents an immense challenge. A shift away from hydrocarbons is already underway with coal’s share of primary energy consumption, for instance, now at its lowest level in 16 years. Closer to home, policy makers are also stepping up their efforts. For example, in December 2019, the European Commission rolled out its “roadmap for making the EU’s economy sustainable by turning climate change and environmental challenges into opportunities across all policy areas”. The EU plans to hit “Net Zero” emissions by 2050 with the aid of a €7 trillion investment plan. Within this plan as much as 45% could be allocated towards the Utilities sector and will see a massive renovation wave of our buildings and infrastructure, the roll-out of renewable energy projects and cleaner transport. More detail is given in the chart on page 15 of the half-yearly report.

Although the direction of travel is clear for decarbonisation, the pace is not. Nevertheless, in recognition of the momentum building in the Energy Transition, the board announced at the 2020 AGM in March, that the Company would be shifting its investments to reflect this transition. This shift was undertaken more formally on 1 June 2020 with a target neutral portfolio weighting for Energy Transition stocks of 30%.

MINING
The mining sector mirrored similar trends as with the broader equity market, largely recovering its losses following a sharp selloff in March; by the end of the period it had recovered its losses. Within this though there was a wide differential between the performance of the mined commodities, with the safe haven metal gold once again showing its value as a hedge against volatility and iron ore again benefitting from a favourable market structure.

Looking at the industrial mined commodities first, most of the base metals saw price declines in the first half and this contrasted against iron ore, which saw a price rise of over 15%. The chart on page 16 of the Company's interim report for the six months ended 31 May 2020 shows China’s demand (as a share of total global demand) for a sample of mined commodities and the price change from the start of 2020 to early June. China, whilst clearly impacted earlier by the virus, has looked to reverse some of the negative economic impacts by injecting stimulus. Whilst not of the scale seen at the start of 2016 and not entirely focused in resource-intensive areas, it has provided a material boost to steel demand (and hence iron ore demand).

The demand side is just one half of the story – it is important to look at the role of supply in the various mined commodities too. On the supply side, the highly concentrated nature of iron ore supply (both in terms of country of supply and number of companies responsible for it) has caused supply to be more vulnerable to disruption. The biggest source of supply shortfall relative to expectations has come from Brazil where the struggles of Vale (the country’s biggest iron ore producer) to recover from the tailings dam disaster last year have been compounded by the country’s slow response to bring the virus under control. These supply disruptions have coincided with China’s strong stimulus-driven demand and have resulted in a tight iron ore market, hence the robust pricing. Also the supply disruptions from Brazil (relative to expectations at the start of the year) are expected to continue through 2020, maintaining a relatively tight balance between supply and demand in the global iron ore market.

There has also been supply disruption in other commodities, but it has either not been as impactful on overall supply as seen for iron ore, and/or the fall in apparent demand has been even greater than the supply declines. In copper, there were quite a few temporary mine closures in countries such as Peru and Chile but following a number of weeks of suspension, production appears to have ramped back up.

The strong performance of iron ore is a material positive for the major mining companies, which are the core of the mining part of the portfolio. Unlike many other sectors in the market, cashflows for the major miners have remained strong in the first half of 2020 and look set to remain robust for the balance of the year. When combined with the strong balance sheets that the sector had at the start of the year, the stage is set for dividend payments to continue. This is reassuring for the portfolio and there is a possibility that as other sectors see dividend cuts or cancellations, the mining sector re-rates as the dividend yield attracts new investors.

MARKET OUTLOOK & PORTFOLIO POSITIONING
From a conventional energy perspective the recent collapse in oil prices has finally forced a dramatic downturn in US shale growth. The energy industry was already driving towards much needed capital discipline and this downturn has merely accelerated and reinforced this fiscal constraint. We believe that 2020 will mark the end of what has been a multi-year non-OPEC supply-driven bear market. As a result, OPEC’s role will change from needing to cut output to balance the market, to adding barrels back – this will completely change the financial market’s perception that the world is awash with oil. Put another way, despite the near-term challenges for oil markets, we are actually becoming more bullish on the sector on a 2+ year time frame and reaffirm our view that normalised oil prices will return to the $60-70/bbl range – a view we have held since 2017. Our constructive outlook on the sector remains focused on higher quality, globally diversified energy companies that can not only benefit from rising commodity prices but can do so within the framework of the Energy Transition.

Following the formal introduction of Energy Transition stocks into the portfolio on 1 June 2020, these stocks now comprise more than a quarter of the total NAV with Utility companies (e.g. Enel, RWE, NextEra Energy and EDP Renovaveis) and Wind Manufacturers (e.g. Vestas) complementing our more traditional energy holdings.

On the mining side, the key determinants of second half performance will be the duration of the steel / commodity intensive stimulus in China and the pace of recovery in economic activity in the rest of the world. The mining holdings remain tilted towards iron ore, through a combination of the majors such as BHP and specialists such as Fortescue, given the ongoing risks to iron ore supply. The outlook for gold remains attractive given the vast quantitative easing and the likely investor demand for risk hedges given how quickly equity markets have rebounded following the March lows and the ongoing risks to the real economy.

MARK HUME AND THOMAS HOLL
BLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED
30 July 2020

TEN LARGEST INVESTMENTS AS AT 31 MAY 2020

BHP: 8.4% (2019: 7.8%) is the world’s largest diversified natural resources company. The company is a major producer of aluminium, iron ore, copper, thermal and metallurgical coal, manganese, uranium, nickel, silver, titanium minerals and diamonds. The company also has significant interests in oil, gas and liquefied natural gas. (MSCI ESG Rating: BBB)

First Quantum Minerals: 6.5%¹ (2019: 7.4%) is an established and rapidly growing mining company operating seven mines and developing five projects worldwide. The company is a significant copper producer and also produces nickel, gold, zinc and platinum group elements. (MSCI ESG Rating: BB)

Barrick Gold: 5.7% (2019: 5.0%) is the world’s second largest gold company by market capitalisation following the merger with Randgold Resources in 2018. Barrick Gold has operations and projects in 15 countries across the world. In 2019 the company successfully established a joint venture with Newmont Mining across both companies’ Nevada assets to maximize the synergies across both sets of assets. (MSCI ESG Rating: BBB)

Chevron: 4.9% (2019: 4.7%) is an integrated oil and gas producer engaged in all aspects of the oil and gas industry. The company has both upstream and downstream operations, as well as alternative energy operations including solar, wind and biofuels. (MSCI ESG Rating: BBB)

Total: 4.6% (2019: 3.6%) is a French multinational and is one of the largest oil companies in the world. This integrated oil and gas company covers the entire oil and gas chain from exploration and production to power generation, transportation, refining and marketing and energy trading. (MSCI ESG Rating: A)

Rio Tinto: 4.5% (2019: 3.5%) is one of the world’s leading mining companies. The company’s primary production is iron ore, but it also produces aluminium, copper, diamonds, gold, industrial minerals and energy products. (MSCI ESG Rating: A)

Newmont Mining: 4.3% (2019: 2.5%) is the only gold producer listed in the S&P 500 Index. The company has operations in Australia, Canada, Ghana, Peru, Suriname, Mexico, Argentina, Dominican Republic and the United States. The company has a commitment to sustainable and responsible mining and has been named the mining industry leader in overall sustainability by the Dow Jones Sustainability World Index in 2015, 2016, 2017 and 2018. (MSCI ESG Rating: A)

Royal Dutch Shell: 4.1% (2019: 6.0%) is one of the world’s leading energy companies. The Anglo-Dutch company is active in every area of the oil and gas industry within exploration and production, refining and marketing, power generation and energy trading. The company also has renewable energy interests in biofuels. (MSCI ESG Rating: A)

Vale: 3.7%² (2019: 3.0%) is one of the largest mining companies in the world, with operations in 30 countries. Vale is the world’s largest producer of iron ore and iron ore pellets, and the world’s largest producer of nickel. The company also produces manganese ore, ferroalloys, metallurgical and thermal coal, copper, platinum group metals, gold, silver, cobalt, potash, phosphates and other fertiliser nutrients. (MSCI ESG Rating: CCC)

Williams Companies: 3.5% (2019: 0.8%) is an American energy company based in Tulsa, Oklahoma. Its core business is natural gas processing and transportation, with additional petroleum and electricity generation assets. (MSCI ESG Rating: BB)

¹     5.2% relates to fixed interest holdings in First Quantum Minerals.

²     0.1% relates to fixed interest holdings in Vale.

All percentages reflect the value of the holding as a percentage of total investments. For this purpose where more than one class of securities is held, these have been aggregated. The percentages in brackets represent the value of the holding as at 30 November 2019. Together, the ten largest investments represent 50.2% of total investments (ten largest investments as at 30 November 2019: 50.6%).

MSCI ESG ratings look to identify environmental, social and governance risks and opportunities for individual stocks. Companies are rated on a scale from AAA to CCC according to their exposure to certain risks and their ability to manage them relative to the industry peers. A stock rated as AAA signifies a company which is leading in terms of ESG factors relative to its industry. On the other hand, a stock with a CCC score is considered a laggard, due to the presence of one or more ESG risks that MSCI perceives to be material. The rating scale is as follows: AAA, AA, A, BBB, BB, B, CCC. From AAA to AA a company is considered to be an ESG leader in its respective industry, A to BB is deemed to be an average score, whilst B and CCC represents a below average score.

DISTRIBUTION OF INVESTMENTS AS AT 31 MAY 2020

ASSET ALLOCATION – GEOGRAPHY
 

Global	62.4%
USA	15.0%
Canada	7.7%
Australia	6.6%
Latin America	4.8%
Asia	2.4%
South Africa	0.8%
Africa	0.3%

Source: BlackRock.

ASSET ALLOCATION – COMMODITY
 

Mining	53.9%
Energy	46.1%

   

Integrated Oil, Gas and Energy Transition	37.0%
Distribution	5.2%
Exploration & Production	3.9%

   

Diversified Mining	20.6%
Gold	16.1%
Copper	8.6%
Silver	3.0%
Diamonds	1.5%
Iron Ore	1.5%
Steel	1.3%
Platinum Group Metals	0.8%
Nickel	0.5%

Source: BlackRock.

INVESTMENTS AS AT 31 MAY 2020

	Main  geographic  exposure	Market  value  £’000	% of  investments
Integrated Oil and Energy Transition
Chevron	Global	3,795	4.9
Total	Global	3,498	4.6
Royal Dutch Shell 'B'	Global	3,140	4.1
BP Group	Global	2,642	3.4
ConocoPhillips	USA	2,433	3.2
Enel	Global	1,965	2.6
Suncor Energy	Canada	1,813	2.4
Pilgangoora 12% 21/06/22	Australia	1,654	2.2
Pioneer Natural Resources	USA	1,514	2.0
Albemarle	Global	1,371	1.8
Marathon Petroleum	USA	1,359	1.8
Schlumberger	USA	1,177	1.5
Petrobras	Latin America	850	1.1
Umicore	Global	631	0.8
Santos	Australia	478	0.6
		--------------	--------------
		28,320	37.0
		--------------	--------------
Diversified Mining
BHP	Global	6,437	8.4
Rio Tinto	Global	3,493	4.5
Vale	Latin America	2,735	3.6
Vale Debentures*	Latin America	105	0.1
Anglo American	Global	1,785	2.3
KAZ Minerals	Asia	1,140	1.5
Teck Resources	Canada	150	0.2
		--------------	--------------
		15,845	20.6
		--------------	--------------
Gold
Barrick Gold	Global	4,346	5.7
Barrick Gold Call Option 19/06/20 $27	Global	(12)	–
Newmont Mining	Global	3,317	4.3
Agnico Eagle Mines	Canada	1,328	1.7
Franco-Nevada	Global	1,269	1.7
Newcrest Mining	Australia	985	1.3
AngloGold Ashanti	Global	722	0.9
Osisko Gold Royalties Convertible Bond 4% 31/12/22	Canada	414	0.5
Kirkland Lake Gold Put Option 19/06/20 $35	Canada	(14)	–
		--------------	--------------
		12,355	16.1
		--------------	--------------
Copper
First Quantum Minerals 7.25% 15/05/22	Global	2,535	3.3
First Quantum Minerals	Global	990	1.3
First Quantum Minerals 6.875% 01/03/26	Global	833	1.1
First Quantum Minerals 7.5% 01/04/25	Global	338	0.4
First Quantum Minerals 7.25% 01/04/23	Global	332	0.4
Freeport-McMoRan Copper & Gold	Global	1,100	1.4
OZ Minerals	Australia	361	0.5
Lundin Mining	Global	185	0.2
		--------------	--------------
		6,674	8.6
		--------------	--------------
Distribution
Williams Companies	USA	2,707	3.5
TC Energy Corporation	Canada	1,305	1.7
		--------------	--------------
		4,012	5.2
		--------------	--------------
Exploration & Production
Hess	USA	1,151	1.5
EOG Resources	USA	717	0.9
CNOOC	Asia	660	0.9
Kosmos Energy	USA	438	0.6
		--------------	--------------
		2,966	3.9
		--------------	--------------
Silver
Wheaton Precious Metals	Global	2,308	3.0
Fresnillo	Latin America	36	–
		--------------	--------------
		2,344	3.0
		--------------	--------------
Diamonds
Mountain Province Diamonds 8% 15/12/22	Canada	898	1.2
Petra Diamonds 7.25% 01/05/22	Africa	231	0.3
		--------------	--------------
		1,129	1.5
		--------------	--------------
Iron Ore
Fortescue Metals	Australia	1,119	1.5
		--------------	--------------
		1,119	1.5
		--------------	--------------
Steel
ArcelorMittal	Global	1,014	1.3
		--------------	--------------
		1,014	1.3
		--------------	--------------
Platinum Group Metals
Impala Platinum	South Africa	617	0.8
		--------------	--------------
		617	0.8
		--------------	--------------
Nickel
Nickel Mines	Australia	391	0.5
		--------------	--------------
		391	0.5
		--------------	--------------
Portfolio		76,786	100.0
		--------------	--------------
Comprising
Equity and fixed income investments		76,812	100.0
Derivative financial instruments – written options		(26)	–
		--------------	--------------
		76,786	100.0
		========	========

*     Includes investments held at Directors’ valuation.

All investments are ordinary shares unless otherwise stated. The total number of holdings (including options) at 31 May 2020 was 53 (30 November 2019: 49).

The total number of open options as at 31 May 2020 was 2 (30 November 2019: 2).

The negative valuations of £26,000 (30 November 2019: £30,000) in respect of options held represent the notional cost of repurchasing the contracts at market prices as at 31 May 2020.

As at 31 May 2020, the Company did not hold any equity interests comprising more than 3% of any company’s share capital.

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:

• Investment performance;

• Income/dividend;

• Gearing;

• Legal and regulatory compliance;

• Operational;

• Market; and

• Financial

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 2019. A detailed explanation can be found in the Strategic Report on pages 36 to 39 and in note 16 on pages 88 to 99 of the Annual Report and Financial Statements which are available on the website at blackrock.com/uk/beri.

In the view of the Board, the outbreak of the COVID-19 pandemic has fundamentally altered the nature of the risks reported in the Annual Report and Financial Statements. COVID-19 has resulted in travel restrictions, closed international borders, enhanced health screenings at ports of entry and elsewhere, disruption of and delays in healthcare service preparation and delivery, prolonged quarantines, cancellations, supply chain disruptions and lower consumer demand, as well as general concern and uncertainty. The impact of COVID-19 has adversely affected the global economy, individual issuers and capital markets, and could continue with a degree of severity and duration which cannot be predicted. In addition, the impact of infectious illnesses in emerging market countries may be greater due to generally less established healthcare systems. Public health crises caused by the COVID-19 outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally.

GOING CONCERN
The Board is mindful of the uncertainty surrounding the potential duration of the COVID-19 pandemic and its impact on the global economy, the Company’s assets and the potential for the level of revenue derived from the portfolio to reduce versus the prior year. The Directors, having considered the nature and liquidity of the portfolio, the Company’s investment objective, the Company’s projected income and expenditure and the Company’s substantial distributable reserves, are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future and is financially sound. The Board believes that the Company and its key third party service providers have in place appropriate business continuity plans and will be able to maintain service levels through the COVID-19 pandemic.

The Company has a portfolio of investments which are considered to be readily realisable and is able to meet all of its liabilities from its assets and income generated from these assets. Ongoing charges (excluding finance costs, direct transaction costs, custody transaction charges, nonrecurring charges and taxation) have been capped by the Manager at 1.25% of net asset value with effect from 17 March 2020, and were approximately 1.48% of net assets for the year ended 30 November 2019. Based on the above, the Board is satisfied that it is appropriate to continue to adopt the going concern basis in preparing the financial statements.

RELATED PARTY DISCLOSURE AND TRANSACTIONS WITH THE INVESTMENT MANAGER
BlackRock Fund Managers Limited (BFM) is the Company’s Alternative Investment Fund Manager (AIFM) and 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 management fee payable are set out in note 4 and note 13. The related party transactions with the Directors are set out in note 12.

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.

This half yearly report has not been audited or reviewed by the Company’s Auditor. The half yearly financial report was approved by the Board on 30 July 2020 and the above responsibility statement was signed on its behalf by the Chairman.

ED WARNER
For and on behalf of the Board
30 July 2020

FINANCIAL STATEMENTS

Consolidated statement of comprehensive income for the six months ended 31 May 2020

	Notes	Revenue £’000			Capital £’000			Total £’000
		Six months ended			Six months ended			Six months ended
		31.05.20  (unaudited)	31.05.19  (unaudited)	Year ended  30.11.19  (audited)	31.05.20  (unaudited)	31.05.19  (unaudited)	Year ended  30.11.19  (audited)	31.05.20  (unaudited)	31.05.19  (unaudited)	Year ended  30.11.19  (audited)
Income from investments held at fair value through profit or loss	3	1,975	2,154	4,336	–	–	658	1,975	2,154	4,994
Other income	3	620	671	1,308	–	–	–	620	671	1,308
		------------	------------	------------	------------	------------	------------	------------	------------	------------
Total income		2,595	2,825	5,644	–	–	658	2,595	2,825	6,302
		------------	------------	------------	------------	------------	------------	------------	------------	------------
Net (loss)/profit on investments and options held at fair value through profit or loss		–	–	–	(10,475)	1,215	(585)	(10,475)	1,215	(585)
Net (loss)/profit on foreign exchange		–	–	–	(98)	36	25	(98)	36	25
		------------	------------	------------	------------	------------	------------	------------	------------	------------
Total		2,595	2,825	5,644	(10,573)	1,251	98	(7,978)	4,076	5,742
		------------	------------	------------	------------	------------	------------	------------	------------	------------
Expenses
Investment management fee	4	(74)	(116)	(237)	(209)	(348)	(711)	(283)	(464)	(948)
Other operating expenses	5	(173)	(199)	(404)	(1)	(1)	(5)	(174)	(200)	(409)
		------------	------------	------------	------------	------------	------------	------------	------------	------------
Total operating expenses		(247)	(315)	(641)	(210)	(349)	(716)	(457)	(664)	(1,357)
		------------	------------	------------	------------	------------	------------	------------	------------	------------
Net profit/(loss) on ordinary activities before finance costs and taxation		2,348	2,510	5,003	(10,783)	902	(618)	(8,435)	3,412	4,385
Finance costs	6	(5)	(23)	(49)	(15)	(67)	(148)	(20)	(90)	(197)
		------------	------------	------------	------------	------------	------------	------------	------------	------------
Net profit/(loss) on ordinary activities before taxation		2,343	2,487	4,954	(10,798)	835	(766)	(8,455)	3,322	4,188
Taxation		(230)	(205)	(376)	38	27	42	(192)	(178)	(334)
		------------	------------	------------	------------	------------	------------	------------	------------	------------
Net profit/(loss) on ordinary activities after taxation	8	2,113	2,282	4,578	(10,760)	862	(724)	(8,647)	3,144	3,854
		------------	------------	------------	------------	------------	------------	------------	------------	------------
Earnings/(loss) per ordinary share (pence)	8	1.86	1.97	3.97	(9.47)	0.74	(0.63)	(7.61)	2.71	3.34
		=========	=========	=========	=========	=========	=========	=========	=========	=========

The total column of this statement represents the Group’s Consolidated 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 Group.

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

Consolidated statement of changes in equity for the six months ended 31 May 2020

	Notes	Called up  share capital  £’000	Share  premium  account  £’000	Special  reserve  £’000	Capital  reserve  £’000	Revenue  reserve  £’000	Total  £’000
For the six months ended 31 May 2020 (unaudited)
At 30 November 2019		1,190	46,977	67,241	(33,604)	4,141	85,945
Total comprehensive income/(loss):
Net (loss)/profit for the period		–	–	–	(10,760)	2,113	(8,647)
Transactions with owners, recorded directly to equity:
Ordinary shares purchased into treasury	9	–	–	(462)	–	–	(462)
Share purchase costs		–	–	(4)	–	–	(4)
Dividends paid1	7	–	–	–	–	(2,274)	(2,274)
		------------	------------	------------	------------	------------	------------
At 31 May 2020		1,190	46,977	66,775	(44,364)	3,980	74,558
		------------	------------	------------	------------	------------	------------
For the six months ended 31 May 2019 (unaudited)
At 30 November 2018		1,190	46,977	68,873	(32,880)	3,949	88,109
Total comprehensive income:
Net profit for the period		–	–	–	862	2,282	3,144
Transactions with owners, recorded directly to equity:
Ordinary shares purchased into treasury	9	–	–	(389)	–	–	(389)
Share purchase costs		–	–	(3)	–	–	(3)
Dividends paid2	7	–	–	(232)	–	(2,090)	(2,322)
		------------	------------	------------	------------	------------	------------
At 31 May 2019		1,190	46,977	68,249	(32,018)	4,141	88,539
		------------	------------	------------	------------	------------	------------
For the year ended 30 November 2019 (audited)
At 30 November 2018		1,190	46,977	68,873	(32,880)	3,949	88,109
Total comprehensive income/(loss):
Net (loss)/profit for the year		–	–	–	(724)	4,578	3,854
Transactions with owners, recorded directly to equity:
Ordinary shares purchased into treasury	9	–	–	(1,390)	–	–	(1,390)
Share purchase costs		–	–	(10)	–	–	(10)
Dividends paid3	7	–	–	(232)	–	(4,386)	(4,618)
		------------	------------	------------	------------	------------	------------
At 30 November 2019		1,190	46,977	67,241	(33,604)	4,141	85,945
		=========	=========	=========	=========	=========	=========

¹     4th interim dividend of 1.00p per share for the year ended 30 November 2019, declared on 10 December 2019 and paid on 20 January 2020 and 1st interim dividend of 1.00p per share for the year ended 30 November 2020, declared on 17 March 2020 and paid on 23 April 2020.

²     4th interim dividend of 1.00p per share for the year ended 30 November 2018, declared on 11 December 2018 and paid on 18 January 2019 and 1st interim dividend of 1.00p per share for the year ended 30 November 2019, declared on 12 March 2019 and paid on 18 April 2019.

³     4th interim dividend of 1.00p per share for the year ended 30 November 2018, declared on 11 December 2018 and paid on 18 January 2019; 1st interim dividend of 1.00p per share for the year ended 30 November 2019, declared on 12 March 2019 and paid on 18 April 2019, 2nd interim dividend of 1.00p per share for the year ending 30 November 2019, declared on 11 June 2019 and paid on 19 July 2019 and 3rd interim dividend of 1.00p per share for the year ended 30 November 2019, declared on 17 September 2019 and paid on 22 October 2019.

The transaction costs relating to the acquisition and disposal of investments amounted to £57,000 and £15,000 respectively for the six months ended 31 May 2020 (six months ended 31 May 2019: £23,000 and £8,000; year ended 30 November 2019: £67,000 and £9,000). All transaction costs have been included within the capital reserve.

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

Consolidated statement of financial position as at 31 May 2020

	Notes	31 May  2020  £’000  (unaudited)	31 May  2019  £’000  (unaudited)	30 November  2019  £’000  (audited)
Non current assets
Investments held at fair value through profit or loss	10	76,812	94,423	98,554
		------------	------------	------------
Current assets
Other receivables		763	5,017	519
Cash collateral held with brokers		249	634	218
Cash and cash equivalents		104	–	–
		------------	------------	------------
		1,116	5,651	737
		------------	------------	------------
Total assets		77,928	100,074	99,291
		------------	------------	------------
Current liabilities
Other payables		(1,052)	(742)	(727)
Derivative financial liabilities held at fair value through profit or loss	10	(26)	(203)	(30)
Bank overdraft		(2,292)	(10,590)	(12,589)
		------------	------------	------------
		(3,370)	(11,535)	(13,346)
		------------	------------	------------
Net assets		74,558	88,539	85,945
		=========	=========	=========
Equity attributable to equity holders
Called up share capital	9	1,190	1,190	1,190
Share premium account		46,977	46,977	46,977
Special reserve		66,775	68,249	67,241
Capital reserve		(44,364)	(32,018)	(33,604)
Revenue reserve		3,980	4,141	4,141
		------------	------------	------------
Total equity		74,558	88,539	85,945
		=========	=========	=========
Net asset value per ordinary share (pence)	8	65.71	76.60	75.28
		=========	=========	=========

Consolidated cash flow statement for the six months ended 31 May 2020

	Six months  ended  31 May  2020  £’000  (unaudited)	Six months  ended  31 May  2019  £’000  (unaudited)	Year  ended  30 November  2019  £’000  (audited)
Operating activities:
Net (loss)/profit on ordinary activities before taxation	(8,455)	3,322	4,188
Add back finance costs	20	90	197
Net loss/(profit) on investments and options held at fair value through profit or loss (including transaction costs)	10,475	(1,215)	585
Net loss/(profit) on foreign exchange	98	(36)	(25)
Sales of investments held at fair value through profit or loss	37,875	25,933	34,855
Purchases of investments held at fair value through profit or loss	(26,613)	(24,804)	(39,831)
Decrease/(increase) in other receivables	10	(36)	(43)
(Decrease)/increase in other payables	(242)	35	23
Increase in amounts due from brokers	(258)	(4,507)	–
Increase in amounts due to brokers	502	–	–
Net movement in cash collateral held with brokers	(31)	1,379	1,795
	------------	------------	------------
Net cash inflow from operating activities before taxation	13,381	161	1,744
	------------	------------	------------
Taxation paid	(45)	(191)	(245)
Taxation on investment income included within gross income	(77)	(103)	(209)
	------------	------------	------------
Net cash inflow/(outflow) from operating activities	13,259	(133)	1,290
	------------	------------	------------
Financing activities
Interest paid	(20)	(90)	(197)
Payments for share purchases	(462)	(389)	(1,390)
Share purchase costs paid	(4)	(3)	(10)
Dividends paid	(2,274)	(2,322)	(4,618)
	------------	------------	------------
Net cash outflow from financing activities	(2,760)	(2,804)	(6,215)
	------------	------------	------------
Increase/(decrease) in cash and cash equivalents	10,499	(2,937)	(4,925)
Effect of foreign exchange rate changes	(98)	36	25
	------------	------------	------------
Change in cash and cash equivalents	10,401	(2,901)	(4,900)
Cash and cash equivalents at start of period	(12,589)	(7,689)	(7,689)
	------------	------------	------------
Cash and cash equivalents at end of period	(2,188)	(10,590)	(12,589)
	------------	------------	------------
Comprised of:
Cash at bank	104	–	–
Bank overdraft	(2,292)	(10,590)	(12,589)
	------------	------------	------------
	(2,188)	(10,590)	(12,589)
	=========	=========	=========

NOTES TO THE FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 MAY 2020

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

The principal activity of the subsidiary, BlackRock Energy and Resources Securities Income Company Limited, is investment dealing and options writing.

2. BASIS OF PREPARATION
The half yearly financial statements for the period ended 31 May 2020 have been prepared in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the Financial Conduct Authority and with International Accounting Standard 34 (IAS 34), ’Interim Financial Reporting’, as adopted by the European Union (EU). The half yearly financial statements should be read in conjunction with the Company’s Annual Report and Financial Statements for the year ended 30 November 2019, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and as applied in accordance with the provisions of the Companies Act 2006 and in accordance with IAS 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) in October 2019 is compatible with IFRS, the financial statements have been prepared in accordance with guidance set out in the SORP.

The revised SORP issued in October 2019 is applicable for accounting periods beginning on or after 1 January 2019, therefore the Company has adopted the new SORP for the accounting year beginning 1 December 2019. As a result, there will be an amended presentation of movements in investments held at fair value through profit or loss in the notes to the financial statements, which will be included as part of the 2020 Annual Report and Financial Statements. As this note is not included as part of the Interim Report and Financial Statements, there is no impact on the Interim Report and Financial Statements as a result of the adoption of the revised SORP.

The taxation charge has been calculated by applying an estimate of the annual effective tax rate to any profit for the period.

Adoption of new and amended standards and interpretations
IFRS 16 Leases
The Group adopted IFRS 16 as of the date of initial application of 1 December 2019. IFRS 16 specifies accounting for leases and removes the distinction between operating and finance leases. This standard is not applicable to the Group as it has no leases.

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

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

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

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

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

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

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

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

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

3. INCOME

	Six months  ended  31 May  2020  £’000  (unaudited)	Six months  ended  31 May  2019  £’000  (unaudited)	Year  ended  30 November  2019  £’000  (audited)
Investment income:
UK dividends	709	716	1,485
UK special dividends	–	–	57
Overseas dividends	827	778	1,707
Overseas special dividends	–	179	178
Fixed interest	439	481	909
	--------------	--------------	--------------
	1,975	2,154	4,336
	--------------	--------------	--------------
Other income:
Deposit interest	10	1	14
Option premium income	610	670	1,294
	--------------	--------------	--------------
	620	671	1,308
	--------------	--------------	--------------
Total income	2,595	2,825	5,644
	========	========	========

During the period, the Group received option premium income in cash totalling £644,000 (six months ended 31 May 2019: £604,000; year ended 30 November 2019: £1,156,000) for writing put and covered call options for the purposes of revenue generation.

Option premium income is amortised evenly over the life of the option contract and accordingly, during the period option premiums of £610,000 (six months ended 31 May 2019: £670,000; year ended 30 November 2019: £1,294,000) were amortised to revenue.

At 31 May 2020, there were 2 (31 May 2019: 3; 30 November 2019: 2) open positions with an associated liability of £26,000 (31 May 2019: £203,000; 30 November 2019: £30,000).

Dividends and interest received in cash in the period amounted to £1,473,000 and £380,000 (six months ended 31 May 2019: £1,533,000 and £427,000; year ended 30 November 2019: £3,167,000 and £836,000) respectively.

No special dividends have been recognised in capital during the period (six months ended 31 May 2019: £658,000; year ended 30 November 2019 £658,000).

4. INVESTMENT MANAGEMENT FEE

	Six months ended 31 May 2020 (unaudited)			Six months ended 31 May 2019 (unaudited)			Year ended 30 November 2019 (audited)
	Revenue  £’000	Capital  £’000	Total  £’000	Revenue  £’000	Capital £’000	Total £’000	Revenue  £’000	Capital  £’000	Total  £’000
Investment management fee	78	234	312	116	348	464	237	711	948
Expense rebate due from Manager	(4)	(25)	(29)	–	–	–	–	–	–
	--------------	--------------	--------------	--------------	--------------	--------------	--------------	--------------	--------------
Total	74	209	283	116	348	464	237	711	948
	========	========	========	========	========	========	========	========	========

Up to 16 March 2020, the investment management fee was levied at the rate of 0.95% of gross assets per annum on the first £250 million of the Company’s gross assets reducing to 0.90% thereafter. With effect from 17 March 2020, the investment management fee is levied at 0.80% of gross assets per annum.

Gross assets are calculated based on net assets before the deduction of the bank overdraft.

The fee is allocated 25% to the revenue column and 75% to the capital column of the Consolidated Statement of Comprehensive Income.

In addition, effective from 17 March 2020 the Company is entitled to a rebate from the investment management fee charged by the Manager in the event the Company’s Ongoing Charges exceeds the cap of 1.25% per annum of average daily net assets. The amount of rebate accrued as at 31 May 2020 amounted to £29,000 and has been adjusted in the investment management fee charged by the Manager.

5. OTHER OPERATING EXPENSES

	Six months  ended  31 May  2020  £’000  (unaudited)	Six months  ended  31 May  2019  £’000  (unaudited)	Year  ended  30 November  2019  £’000  (audited)
Allocated to revenue:
Custody fee	2	2	4
Auditor's remuneration – audit services	13	13	27
Registrar’s fee	16	13	30
Directors’ emoluments	69	62	124
Broker fees	11	12	23
Depositary fees	4	5	9
Marketing fees	11	12	29
Printing and postage fees	13	17	31
Legal and professional fees	1	13	21
Directors search fees	–	–	26
Bank charges	3	11	15
Stock exchange listings fees	4	4	7
Other administration costs	26	35	58
	--------------	--------------	--------------
	173	199	404
	--------------	--------------	--------------
Allocated to capital:
Custody transaction charges	1	1	5
	--------------	--------------	--------------
	174	200	409
	========	========	========

Effective 17 March 2020 the Company’s Ongoing Charges, as defined in the Glossary included within the interim report (which can be found on the Company’s website at www.blackrock.com/uk/beri) (including the investment management fee), will be capped at 1.25% per annum of average daily net assets. The Company is entitled to a rebate from the investment management fee charged by the Manager in the event the Company’s Ongoing Charges exceeds the cap. The rebate will apply to Ongoing Charges incurred by the Company from 17 March 2020. No cap was in place for Ongoing Charges incurred up to 16 March 2020.

The overall cap on Ongoing Charges and any applicable rebate is calculated and accrued on a daily basis and will be adjusted in the investment management fees charged up to 30 November every year.

6. FINANCE COSTS

	Six months ended 31 May 2020 (unaudited)			Six months ended 31 May 2019 (unaudited)			Year ended 30 November 2019 (audited)
	Revenue  £’000	Capital  £’000	Total  £’000	Revenue  £’000	Capital  £’000	Total  £’000	Revenue  £’000	Capital  £’000	Total  £’000
Interest payable – bank overdraft	5	15	20	23	67	90	49	148	197
	--------------	--------------	--------------	--------------	--------------	--------------	--------------	--------------	--------------
Total	5	15	20	23	67	90	49	148	197
	========	========	========	========	========	========	========	========	========

Finance costs for the Company are charged 25% to the revenue column and 75% to the capital column of the Consolidated Statement of Comprehensive Income. Subsidiary finance costs are charged 100% to the revenue column of the Consolidated Statement of Comprehensive Income.

At 31 May 2020, 31 May 2019 and 30 November 2019, the Group had an overdraft facility of the lower of £17.5 million or 20% of the Group’s net assets.

7. DIVIDENDS
The Board’s current dividend target is to declare quarterly dividends of 1.00 pence per share in the year to 30 November 2020, making a total of at least 4.00 pence for the year as a whole.

A first interim dividend for the period ending 29 February 2020 of £1,139,000 (1.00p per share) was paid on 23 April 2020 to shareholders on the register on 27 March 2020.

The Directors have declared a second interim dividend for the year ended 30 November 2020 of 1.00p per ordinary share. The total cost of the dividend was £1,350,000 and was paid on 17 July 2020 to shareholders on the Company’s register on 19 June 2020. This dividend has not been accrued in the financial statements for the six months ended 31 May 2020, as under IFRS, interim dividends are not recognised until paid. Dividends are debited directly to reserves.

The third and fourth interim dividends will be declared in September 2020 and December 2020 respectively.

Dividends on equity shares paid during the period were:

	Six months  ended  31 May  2020  £’000  (unaudited)	Six months  ended  31 May  2019  £’000  (unaudited)	Year  ended  30 November  2019  £’000  (audited)
Second interim dividend for the year ended 30 November 2019 of 1.00p (2018: 1.00p)	–	–	1,151
Third interim dividend for the year ended 30 November 2019 of 1.00p (2018: 1.00p)	–	–	1,145
Fourth interim dividend for the year ended 30 November 2019 of 1.00p (2018: 1.00p)	1,139	1,161	1,161
First interim dividend for the year ending 30 November 2020 of 1.00p (2019: 1.00p);
– Distributed from Revenue	1,135	929	929
– Distributed from Special Reserve	–	232	232
	--------------	--------------	--------------
	2,274	2,322	4,618
	========	========	========

8. CONSOLIDATED 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  2020  (unaudited)	Six months  ended  31 May  2019  (unaudited)	Year  ended  30 November  2019  (audited)
Net revenue profit attributable to ordinary shareholders (£’000)	2,113	2,282	4,578
Net capital (loss)/profit attributable to ordinary shareholders (£’000)	(10,760)	862	(724)
	----------------	----------------	----------------
Total (loss)/profit attributable to ordinary shareholders (£’000)	(8,647)	3,144	3,854
	----------------	----------------	----------------
Equity shareholders’ funds (£’000)	74,558	88,539	85,945
	----------------	----------------	----------------
The weighted average number of ordinary shares in issue during each period on which the return per ordinary share was calculated was:	113,656,537	116,096,755	115,379,743
	----------------	----------------	----------------
The actual number of ordinary shares in issue (excluding treasury shares) at the period end on which the net asset value was calculated was:	113,470,349	115,580,243	114,170,349
	----------------	----------------	----------------
Earnings per share
Revenue earnings per share (pence)	1.86	1.97	3.97
Capital (loss)/earnings per share (pence)	(9.47)	0.74	(0.63)
	----------------	----------------	----------------
Total (loss)/earnings per share (pence)	(7.61)	2.71	3.34
	=========	=========	=========

There were no dilutive securities at the period end (six month ended 31 May 2019: nil; year ended 30 November 2019: nil).

	As at  31 May  2020  (unaudited)	As at  31 May  2019  (unaudited)	As at  30 November  2019  (audited)
Net asset value per ordinary share (pence)	65.71	76.60	75.28
	--------------	--------------	--------------
Ordinary share price (pence)	55.20	70.00	66.00
	========	========	========

9. CALLED UP SHARE CAPITAL

	Ordinary  shares  number	Treasury  shares  number	Total  shares  number	Nominal  value  £’000
Allotted, called up and fully paid share capital comprised:
Ordinary shares of 1 pence each:
At 30 November 2019	114,170,349	4,795,651	118,966,000	1,190
Shares purchased and held in treasury	(700,000)	700,000	–	–
	----------------	----------------	----------------	----------------
At 31 May 2020	113,470,349	5,495,651	118,966,000	1,190
	=========	=========	=========	=========

During the period 700,000 shares were bought back and transferred to treasury (six months ended 31 May 2019: 546,272; year ended 30 November 2019: 1,956,166) for a total consideration of £462,000 (six months ended 31 May 2019: £389,000; year ended 30 November 2019: £1,390,000). Since 31 May 2020, no additional shares have been bought back.

10. VALUATION OF FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are either carried in the Consolidated 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 Group 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 Group are explained in the accounting policies note 2(h) as set out in the Group’s Annual Report and Financial Statements for the year ended 30 November 2019.

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 price for an identical instrument in an active market
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 Group 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.

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.

Over-the-counter derivative option contracts have been classified as Level 2 investments as their valuation has been based on market observable inputs represented by the underlying quoted securities to which these contracts expose the Group.

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 31 May 2020 (unaudited)	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Assets:
Equity investments	69,472	–	–	69,472
Fixed income investments	7,235	105	–	7,340
Liabilities:
Derivative financial instruments – written options	–	(26)	–	(26)
	--------------	--------------	--------------	--------------
	76,707	79	–	76,786
	========	========	========	========

   

Financial assets/(liabilities) at fair value through profit or loss at 31 May 2019 (unaudited)	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Assets:
Equity investments	84,660	–	–	84,660
Fixed income investments	9,763	–	–	9,763
Liabilities:
Derivative financial instruments – written options	–	(203)	–	(203)
	--------------	--------------	--------------	--------------
	94,423	(203)	–	94,220
	========	========	========	========

   

Financial assets/(liabilities) at fair value through profit or loss at 30 November 2019 (audited)	Level 1  £’000	Level 2  £’000	Level 3  £’000	Total  £’000
Assets:
Equity investments	89,223	–	–	89,223
Fixed income investments	9,331	–	–	9,331
Liabilities:
Derivative financial instruments – written options	–	(30)	–	(30)
	--------------	--------------	--------------	--------------
	98,554	(30)	–	98,524
	========	========	========	========

There were no transfers between levels for financial assets and financial liabilities during the period recorded at fair value as at 31 May 2020, 31 May 2019 and 30 November 2019. The Group did not hold any Level 3 securities throughout the financial period under review or as at 31 May 2019 and 30 November 2019.

11. FINANCIAL RISKS
The Group’s investment activities expose it to the various types of risk which are associated with the financial instruments and markets in which it invests. The risks are substantially consistent with those disclosed in the previous annual financial statements with the exception of those outlined below.

Market risk arising from price risk
Price risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting similar financial instruments traded in the market. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, recessions, or other events could have a significant impact on the Group and the market price of its investments and could result in increased premiums or discounts to the Group’s net asset value. In the view of the Board, the outbreak of the COVID-19 pandemic has fundamentally altered the nature of the risks facing the Group as reported in the Annual Report and Financial Statements. More detail is set out in the Interim Management and Responsibility Statement.

A key metric used by the BlackRock Risk and Quantitative Analysis Group to measure market risk is Value-at-Risk (“VaR”) which encompasses currency, interest rate and price risk. VaR is a statistical risk measure that estimates the potential portfolio loss from adverse market movements in an ordinary market environment. VaR analysis reflects the interdependencies between risk variables, unlike a traditional sensitivity analysis.

The one-day VaR as of 31 May 2020 and 30 November 2019 based on a 99% confidence level was 9.71% and 2.66%.

12. RELATED PARTY DISCLOSURE: DIRECTORS’ EMOLUMENTS
The Board consists of four non-executive Directors all of whom are considered to be independent of the Manager by the Board.

None of the Directors has a service contract with the Company. For the six months ended 31 May 2020, the Chairman receives an annual fee of £38,000, the Chairman of the Audit and Management Engagement Committee receives an annual fee of £32,000 and each other Director receives an annual fee of £27,000.

As at 31 May 2020: £10,000 (31 May 2019: £10,000; 30 November 2019: £10,000) was outstanding in respect of Directors fees.

At the period end, interests of the Directors in the ordinary shares of the Company are as set out below:

	31 May  2020	31 May  2019	30 November  2019
Ed Warner (Chairman)	94,000	94,000	94,000
Carol Bell	33,500	33,500	33,500
Michael Merton	17,000	17,000	17,000
Adrian Brown1	14,603	N/A	N/A
Jonathan Ruck Keene2	N/A	14,000	14,000
	========	========	========

¹     Adrian Brown was appointed as a Director of the Board on 10 December 2019.

²     Jonathan Ruck Keene retired as a Director of the Board on 17 March 2020.

Since the period end and up to the date of this report there have been no changes in Directors’ holdings.

13. TRANSACTIONS WITH THE AIFM AND THE INVESTMENT MANAGER
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 in the Company’s Annual Report and Financial Statements for the year ended 30 November 2019.

The investment management fee due to BFM for the six months ended 31 May 2020 amounted to £283,000 (six months ended 31 May 2019: £464,000; year ended 30 November 2019: £948,000). At the period end £210,000 was outstanding in respect of these fees (six months ended 31 May 2019: £393,000; year ended 30 November 2019: £389,000).

Effective from 17 March 2020 the Company is entitled to a rebate from the investment management fee charged by the Manager in the event the Company’s Ongoing Charges exceeds the cap of 1.25% per annum of average daily net assets. The amount of rebate accrued as at 31 May 2020 amounted to £29,000 and has been adjusted in the investment management fee charged by the Manager.

In addition to the above services, BlackRock has provided the Company with marketing services. The total fees paid or payable for these services for the period ended 31 May 2020 amounted to £11,000 excluding VAT (six months ended 31 May 2019: £12,000; year ended 30 November 2019: £29,000). Marketing fees of £30,000 (31 May 2019: £33,000; 30 November 2019: £19,000) were outstanding at 31 May 2020.

The ultimate holding company of the Manager and the Investment Manager is BlackRock, Inc. a company incorporated in Delaware USA. During the period, PNC Financial Services Group, Inc. (“PNC”) was a substantial shareholder in BlackRock, Inc.

PNC did not provide any services to the Company during the financial year ended 30 November 2019 and the period up to 11 May 2020.

On 11 May 2020, PNC announced its intent to sell its investment in BlackRock, Inc. through a registered offering and related buyback by BlackRock, Inc.

14. CONTINGENT LIABILITIES
There were no contingent liabilities at 31 May 2020 (31 May 2019: nil; 31 November 2019: nil).

15. POST BALANCE SHEET EVENTS
Subsequent to the period end, the Company received correspondence from HMRC accepting the entitlement of the Company to make a claim for double tax relief in the relevant accounting periods in relation to underlying tax suffered on dividends from non-UK companies. This double tax relief will reduce the corporation tax liability to nil for all periods resulting in a repayment of the corporation tax suffered in the relevant accounting periods. While the amount of the repayment has not been formally agreed with HMRC, and as such a degree of uncertainty remains, the Company now considers receipt of a repayment is sufficiently probable that it should make an accrual for accounting purposes to reflect such treatment.

The IFRS accounting rules applicable to the Company determine that an uncertain tax receivable shall be accrued in the NAV of the Company when, in the view of the Board, the successful future receipt of such receivable is probable. The Board’s current assessment is that the future receipt of the tax reclaims described above is probable and so meets this threshold.

The corporation tax refund expected to be received by the Company following HMRC’s acceptance of the claims for the relevant accounting periods amounts to £945,614 and has been recognised in the NAV and has been applied as revenue through the Company’s profit and loss account with effect from 25 June 2020.

16. 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 2020 and 31 May 2019 has not been reviewed or audited by the auditor.

The information for the year ended 30 November 2019 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies unless otherwise stated. The report of the Auditors on those accounts contained no qualification or statement under sections 498(2) or 498(3) of the Companies Act 2006.

17. ANNUAL RESULTS
The Board expects to announce the annual results for the year ending 30 November 2020 in January 2021.

Copies of the annual results announcement can be obtained from the Secretary on 020 7743 3000 or at cosec@blackrock.com. The Annual Report and Financial Statements should be available at the beginning of February 2021, with the Annual General Meeting being held in March 2021.

For further information please contact:

Melissa Gallagher, Managing Director Investment Trusts - 020 7743 3000

Tom Holl/Mark Hume, Fund Managers - 020 7743 3000

Press enquires:

Lansons Communications – Tel:  020 7294 3689

E-mail: BlackRockInvestmentTrusts@lansons.com

30 July 2020

BlackRock Investment Management (UK) Limited

12 Throgmorton Avenue

London EC2N 2DL

END