Annual Report and Financial Statements 31 August 2025
Overview and performance
Performance record
| As at 31 August 2025 | As at 31 August 2024 | |
| Net assets (£’000)1 | 569,079 | 640,300 |
| Net asset value per ordinary share (pence) | 598.05 | 644.60 |
| Ordinary share price (pence) | 570.00 | 601.00 |
| Discount to cum income net asset value2 | 4.7% | 6.8% |
| FTSE World Europe ex UK Index3 | 2461.90 | 2219.24 |
| Annual performance (with dividends reinvested) | For the year ended 31 August 2025 | For the year ended 31 August 2024 |
| Net asset value per share2 | -6.1% | 16.4% |
| Ordinary share price2 | -3.9% | 15.5% |
| FTSE World Europe ex UK Index3 | 10.9% | 15.8% |
| Performance since inception4 (with dividends reinvested) | For the period since inception to 31 August 2025 | For the period since inception to 31 August 2024 |
| Net asset value per share2 | 742.7% | 797.6% |
| Ordinary share price2 | 714.0% | 747.3% |
| FTSE World Europe ex UK Index3 | 522.5% | 461.2% |
| For the year ended 31 August 2025 | For the year ended 31 August 2024 | Change % | |
| Revenue | |||
| Net profit on ordinary activities after taxation (£’000) | 6,684 | 7,379 | -9.4 |
| Revenue earnings per ordinary share (pence) | 6.89 | 7.35 | -6.3 |
| Dividends (pence) | |||
| Interim dividend | 1.75 | 1.75 | – |
| Final dividend | 5.40 | 5.25 | +2.9 |
| Total dividends payable/paid | 7.15 | 7.00 | +2.1 |
- The change in net assets reflects payments for shares repurchased into treasury, portfolio movements and dividends paid.
- Alternative Performance Measures.
- Reference index.
- 20 September 2004.
Chairman’s Statement
Performance
For the year ended 31 August 2025, the Company’s net asset value per share (NAV) returned -6.1% and the share price -3.9%.
In comparison, the FTSE World Europe ex UK Index (the Company’s reference index) returned +10.9% (all percentages calculated in Sterling terms with dividends reinvested).
This disappointing performance was driven by a range of sector and stock specific factors, with Novo Nordisk (the portfolio’s largest holding at the end of the prior financial year) being the single largest detractor in the period under review. In addition, the portfolio’s underweight exposure to financials and overweight positioning in technology stocks were also headwinds to relative performance. Part of the broader challenge for the Company this year was the continuing trend for the type of quality growth stocks which have performed so well for your Company over the longer-term to remain out of favour and disappoint. Investors have preferred to focus instead on European value stocks (which they perceive as underpriced). This trend has been ongoing for some time, and the Board notes that the Company’s performance is also behind the reference index over both three years and five years. However, over a ten-year period the Company’s NAV per share has outperformed the reference index by 13.1%.
Market overview
Overall, European equity markets outperformed their US counterparts for much of the first half of 2025. After a period of outflows, European equity funds received inflows from both domestic and international investors. Policy uncertainty, a potentially inflationary trade war, a declining US Dollar and high valuations have led to investors diversifying their portfolios away from US assets, benefiting European markets. One of the advantages in Europe has been the European Central Bank (ECB) anticipating low inflation and cutting interest rates accordingly, whilst the US Federal Reserve is wanting more clarity on whether President Trump’s policy shifts on global trade and tariffs will be inflationary or recessionary.
More details on this and the significant contributors to and detractors from performance during the year are given in the Investment Manager’s Report below.
Portfolio manager changes
The Board notes that the underperformance of growth-oriented funds is a factor of the challenging market backdrop that we are currently facing. With this in mind, our Manager has proposed adopting a more balanced approach by giving greater consideration to investing selectively in quality value ideas, which should help to dampen fund volatility, ultimately resulting in enhanced return outcomes over time. Any changes will be implemented carefully, in line with the opportunity set presenting itself in markets. Importantly, the core of the portfolio will remain invested in Europe’s most compelling quality growth stocks, and the Board are conscious that the Company has outperformed its growth focused peers in the period under review.
The Board believes the adoption of this approach is in the best interests of shareholders, and to facilitate this Brian Hall will be appointed as a co-portfolio manager. Brian is a multi-award-winning portfolio manager with 26 years of investment experience, and has worked with Stefan for nearly 19 years having joined BlackRock in 2007. Brian runs the European Core strategy which has returned 4.3% annualised relative outperformance since inception in 2019. His detailed biography can be found within the Investment Manager’s report below. The Board believes that the addition of Brian as an experienced investor with a quality value focus will bring the flexibility needed to ensure future success of the portfolio. These changes will take immediate effect. No changes are proposed to the Company’s investment objective and policy. Alexandra Dangoor will step down as co-manager and the Board thank her for her commitment and contribution to the Company.
Reduction in management fee
I am pleased to report that, following a further review of management fees and engagement with BlackRock, and as announced on 30 September 2025, the Board reached an agreement to amend the Company’s management fee arrangements. With effect from 1 September 2025, the Company’s annual management fee, which is payable quarterly in arrears, reduced from 0.85% per annum of net asset value on net assets up to £350 million and 0.75% per annum of net asset value above £350 million to 0.65% of net assets up to and including £400 million, 0.60% of net assets in excess of £400 million up to and including £1 billion and 0.525% of net assets in excess of £1 billion, representing a significant decrease.
This revised fee will result in a blended annual management fee rate for the Company of 0.634% based on the Company’s average net assets for the year to 31 August 2025 of £593.3 million. It is estimated that the Company’s ongoing charges ratio (OCR) will reduce, allowing it to achieve an illustrative OCR of 0.775%1 (based on average net assets for the year ended 31 August 2025), representing a material improvement to the Company’s OCR of 0.95% for the year ended 31 August 2025.
Revenue earnings and dividends
Your Company’s total revenues each year are a reflection of the dividends we receive from portfolio companies. The revenue return per share for the year ended 31 August 2025 amounted to 6.89p per share, which compares with 7.35p per share for the previous year, a decrease of 6.3%.
At present, the dividends paid from the Russian securities in the Company’s portfolio are held in a custody ‘S’ account in Moscow. The balance as at 31 August 2025 was equivalent to approximately £2.69 million at the exchange rate applicable on that date. As there is significant uncertainty that the sums in the ‘S’ account will ever be received by the Company, they are not recognised in the Company’s net asset value or in its income statement.
The Board also monitors the underlying local value of the Russian securities on the Moscow Stock Exchange which at 31 August 2025 were approximately £29.0 million at the exchange rate applicable on that date, although again there is much uncertainty of these values ever being realisable by the Company. These investments have been held at a nominal value of £0.01 in the net asset value at 31 August 2025.
In May the Board declared an interim dividend of 1.75p per share (2024: 1.75p) and the Board is proposing the payment of a final dividend of 5.40p per share for the year (2024: 5.25p). This, together with the interim dividend, makes a total dividend for the year of 7.15p per share (2024: 7.00p), an increase of 2.1% and the 19th successive increase, meaning that the Company has now increased its dividend every year since inception. The dividend will be funded from revenue received in the year together with a transfer from revenue reserves of £74,000. Subject to shareholder approval, the dividend will be paid on 19 December 2025 to shareholders on the Company’s register on 21 November 2025, the ex-dividend date being 20 November 2025.
Management of share rating
Over the year to 31 August 2025, the Company’s shares have traded at an average discount of 6.2%. During the year, the Company purchased 4,176,739 ordinary shares at an average price of 579.18p per share and an average discount of 6.2% for a total cost of £24,191,000. Since the year end up to 31 October 2025, a further 1,171,315 ordinary shares have been bought back at an average price of 589.72p per share for a total cost of £6,908,000. All shares have been placed in treasury. To put this in context, share buy back activity remains elevated across the closed end fund sector as a whole as boards grapple with investor selling pressure, reaching a record high of £6.6 billion for 2025 year to date (an increase of 40% from the equivalent period in 2024).
As reported in the Half Yearly Financial Report, the Directors exercised their discretion not to operate the half yearly tender offers in November 2024 and May 2025. It was also announced on 22 September 2025 that the Board had decided not to proceed with the semi-annual tender offer in November 2025. The Board believes that the share buyback activity undertaken has been beneficial in improving the Company’s share rating and is in shareholders’ interests. As the Company’s discount was trading at 5.0% on 19 September 2025 and trading within the discount range of its peer group, the Board concluded that it was not in the interests of shareholders as a whole to implement the November 2025 semi-annual tender offer.
The Directors recognise the importance to investors that the market price of the Company’s shares should not trade at a significant premium or discount to the underlying NAV. Accordingly, in normal market conditions, the Board may use the Company’s share buy back and share issue powers, or operate six monthly tender offers, to ensure that the share price does not go to an excessive discount or premium to the underlying NAV. Resolutions to renew the Company’s semi-annual tender offers and the authorities to issue and buy back shares will be put to shareholders at the forthcoming Annual General Meeting.
Board composition
I previously advised that it was my intention to step down from the Board, subject to a suitable successor being identified. As announced in March, Andrew Impey was appointed as a non-executive Director of the Company with effect from 28 April 2025 and I am now very pleased to report that it has been agreed he will succeed me as Chairman following the conclusion of the Annual General Meeting in December. Andrew is currently non-executive chair of the Pacific Assets Trust plc and has over 34 years’ experience in institutional investment management and wealth management.
It has been a privilege to be Chairman of your Company for the past nine years. I would like to thank all shareholders for their support, as well as thanking my Board colleagues and the team at BlackRock for making my tenure as Chairman as rewarding and enjoyable as it has undoubtedly been. I leave the Company in the capable hands of the Board and Investment Manager and wish it every success for the future.
Board engagement
The Board takes its governance duties very seriously and in June 2025 joined representatives of the Investment Manager on a three-day trip to Amsterdam to meet the management teams of some of the companies we invest in. The aim of the trip, which represented a significant time commitment from the Board, was to gain a deeper understanding of the Portfolio Manager’s due diligence processes when meeting with investee companies, as well as gaining enhanced knowledge of these companies, their governance policies and business models and the operational challenges that they are facing in current markets. During the course of the visit the Board undertook site tours and met with representatives from Adyen, ASM International, IMCD, ASML and BE Semiconductor Industries (collectively representing 12.9% of the Company’s portfolio as at 31 August 2025).
Shareholder communications
The Board appreciates how important access to regular information is to our shareholders. To supplement our website, we offer shareholders the ability to sign up to the Trust Matters newsletter which includes information on the Company, as well as news, views and insights. Further information on how to sign up is included on the inside cover of the Annual Report and Financial Statements.
Outlook
Since the financial year end and up to close of business on 31 October 2025, the Company’s NAV has increased by 5.7% compared with a rise in the reference index of 5.6% over the same period.
After a good start to the year, European equities are more expensive than they were earlier in 2025 but still remain at a considerable discount to US stocks. Additionally, although the US has been favoured for a long time, policy uncertainty under President Trump means that view is being reassessed and Europe has a good selection of attractively valued leading global businesses.
The ECB has halved its interest rate to 2% and monetary policy will contribute to the region’s growth outlook. Germany’s fiscal package and increased defence spending in the European Union are also likely to support growth from 2026 onwards and greater unity and a pro-growth agenda across Europe could also boost activity. There is, however, a question mark over the speed and extent to which these will feed through into growth.
The Board is aware that after a period of exceptionally strong performance, the Company’s performance in recent years has been less successful, as growth has significantly underperformed value in European markets and there have been some stock-specific disappointments. Despite this, the portfolio managers are long-term investors and follow a well-defined investment process. Their focus will continue to be on selecting high-quality companies with a unique product or service that generate high and predictable returns on capital and capable management teams with a track record of value creation.
Annual General Meeting (AGM) arrangements
The Annual General Meeting of the Company will be held in person at the offices of BlackRock at 12 Throgmorton Avenue, London EC2N 2DL on Thursday, 11 December 2025 at 12 noon. Details of the business of the meeting are set out in the Notice of Annual General Meeting within the Annual Report. The Board very much looks forward to meeting shareholders and answering any questions you may have on the day.
For the benefit of shareholders who are unable to attend this year’s AGM in person, we have arranged for the proceedings to be viewed via a webinar. You can register to watch the AGM by scanning the QR Code inside the cover of the Annual Report or by visiting our website at www.blackrock.com/uk/brge and clicking on the registration banner.
Please note that it is not possible to speak or vote at the AGM via this medium and joining the webinar does not constitute attendance at the AGM. Shareholders wishing to exercise their right to attend, speak and vote at the AGM should either attend in person or exercise their right to appoint a proxy to do so on their behalf. For further details please refer to the Annual Report.
1Alternative Performance Measure.
ERIC SANDERSON
Chairman
4 November 2025