Over the year ended 31 October 2023, BlackRock Income & Growth marginally lagged its benchmark, returning 5.2% to the All-Share’s 5.9%. A narrowing discount helped shareholders to a total return of 8.1%. To help achieve that, 568,428 shares were repurchased at an average price of 182.26p, for a total consideration (including costs) of £1,036,000.
The dividend edged up from 7.3p to 7.4p but this was uncovered by earnings as net revenue per share fell by 3.4% to 6.54p. As at 31 October 2023 the company held £2,131,000 or 10.34p per share in revenue reserves before the payment of final dividend of 4.80p for the year ended 31 October 2023.
Extracts from the manager’s report
While the performance of the portfolio was ahead of the Benchmark Index for much of 2023, the market downturn in October 2023 reversed many of the gains. The portfolio subsequently slightly underperformed its Benchmark Index. We are however, pleased with the positive absolute return of the Company driven by the strong performance from holdings such as 3i Group, Standard Chartered and RELX. As the top positive contributor during the period, 3i Group has continued to report strong results with meaningful net asset value (NAV) growth. 3i Group’s largest portfolio company, the European discount retailer Action, was again the highlight, with impressive growth and cash generation. The shares rose 72% in absolute terms.
Standard Chartered also delivered strong results, beating market expectations as the bank benefited from higher non-interest income and a higher than expected net interest margin (NIM). Credit quality remains strong and provisions for losses were lower than predicted.
The share price of RELX rose strongly during the period reflecting the steady acceleration of its revenue growth across major divisions and for the group as a whole. The company continues to invest in its products and services, with the launch of new AI powered tools being a highlight this year. RELX has been a consistent holding in the Company over the last decade.
Rio Tinto experienced share price volatility given lacklustre economic data out of China earlier in the year and concerns around the health of the property sector. However, the company ended the year higher after posting a steady trading update at the end of the year with production across its mining operations in-line with expectations. Shares in Centrica more than doubled during the year on the back of significant cash generation that led to substantial capital returns. The company was another top positive contributor to performance.
During the year, we saw meaningful impact on the share prices of companies that did not deliver on earnings expectations; Rentokil Initial is an example of this. The company reported a weak trading statement at the end of the year with disappointing organic growth from their US pest control division. This also impacted the margin outlook for the division. The company is making good progress with the integration of its recently acquired Terminix business and the rest of the group is performing strongly. However, the US pest control division is key to the group’s long-term success.
Watches of Switzerland experienced share price weakness after the announcement of the stepping down of its Chief Financial Officer, softer trading in the jewellery business and the announcement by Rolex, one of the world’s largest watch making companies and a key supplier to Watches of Switzerland, of its acquisition of Bucherer, a notable watch retailer. As a result our position was reduced. EuroAPI cut profit expectations due to an issue with documentation at their Budapest site and delivered a weak trading statement later in the year and we have sold the holding. Finally, NatWest detracted from the portfolio after delivering weak results as deposit pricing weighed on the bank’s Net Interest Margin and following the resignation of its CEO, Alison Rose.
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