BlackRock
Annual Report 2020

Plain-text annual report

B l a c k R o c k E n e r g y a n d R e s o u r c e s I n c o m e T r u s t p l c A n n u a l R e p o r t a n d F n a n c i a i l S t a t e m e n t s 3 0 N o v e m b e r 2 0 2 0 blackrock.com/uk/beri BlackRock Energy and Resources Income Trust plc Annual Report and Financial Statements 30 November 2020 Job No: 43268 Customer: BlackRock Proof Event: 9 Black Line Level: 0 Park Communications Ltd Alpine Way London E6 6LA Project Title: Greater Europe Annual Rpt 2020 T: 0207 055 6500 F: 020 7055 6600 Job No: 43774Proof Event: 11Black Line Level: 0Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Financial highlights 71.40p1 Ordinary share price +16.0%2, 5 80.76p NAV per ordinary share +13.9%2, 5 £91.6m4 Net assets 4.00p Total dividends No change 5.6%3, 5 Yield As at 30 November 2020. Percentage comparisons are year on year against 30 November 2019. 1 2 3 Mid-market. Performance figures are calculated in sterling terms with dividends reinvested. The yield has been calculated using the share price at 30 November 2020 of 71.40p per share; the detailed calculation is set out in the glossary on page 134 and is classified as an Alternative Performance Measure. The change in net assets reflects market movements, the buyback of shares and dividends paid during the year. 4 5 Alternative Performance measures. See Glossary on pages 132 to 134. Rio Tinto is one of the world’s leading mining groups. The group’s primary product is iron ore, but it also produces aluminium, copper, diamonds, gold, industrial minerals and energy products. WEIPA, AUSTRALIA RECLAIMER PHOTO COURTESY OF RIO TINTO. The cover image shows the Sheringham Shoal Offshore Wind Farm, operated by Equinor, located 23 kilometres off the coast of North Norfolk. Section 1: Overview and performance 1 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Why BlackRock Energy and Resources Income Trust plc? 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. Reasons to invest Conviction A conviction-led approach to delivering a high income from the best ideas in the mining, conventional energy and energy transition sectors. Unconstrained by market cap, sector or region, the portfolio managers can invest in a wide range of opportunities. Opportunity Mining and energy companies lie at the heart of the global economy. Without them, countries cannot grow and develop. Mining companies provide everything from materials to build wind turbines to lithium for electric cars. They play an important role in the long- term de-carbonisation of the global economy. Energy companies power our cars, our homes and drive economic development. On the sustainable energy side, the path to a lower carbon global economy is forecast to disrupt many industries and business models. However, this evolution is also expected to create remarkable opportunities. Investment in a specialist trust gives targeted exposure to these important companies, as it is positioned to capture such industry shifts and reap the benefits from this transition. Yield The Company offers an attractive 5.6% dividend yield, as at 30 November 2020, as the managers focus on higher quality companies with strong cash flows that are good allocators of capital. The Company’s global nature means that the large majority of its holdings generate earnings from around the world. Flexibility The Company’s flexibility means that the portfolio will adapt as the demand for mining, energy and energy transition related stocks changes. Over the long-term, the team is able to change the portfolio makeup to select the best stocks to generate a sustainable income. Expertise The Company’s assets are managed by BlackRock’s Natural Resources Team. The team have been running mining funds since 1993, energy funds since 1999 and energy transition funds since 2001. The Team undertakes extensive, proprietary, on-the-ground research to get to know the management of the companies in which they invest. ESG Environmental, Social and Corporate Governance (ESG) is a key consideration and embedded within the investment process. The Team’s philosophy is that whilst ESG is one of many factors that should be considered when making an investment, there is a positive correlation between good ESG and investment performance. Portfolio asset allocation reflects this, with a significant allocation to companies active in the Energy Transition sector. More details in respect of BlackRock’s ESG policies can be found on pages 51 to 53. A member of the Association of Investment Companies Further details about the Company, including the latest annual and half yearly financial reports, fact sheets and stock exchange announcements, are available on the website at blackrock.com/uk/beri 2 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Why BlackRock Energy and Resources Income Trust plc? Contents Section 1: Overview and performance Performance record Chairman’s statement Investment manager’s report Section 2: Portfolio Distribution of investments Ten largest investments Investments Section 3: Governance Governance structure Directors’ biographies Strategic report Directors’ report Directors’ remuneration report Corporate governance statement Report of the audit and management engagement committee Statement of Directors’ responsibilities in respect of the annual report and financial statements Section 4: Financial statements Independent auditor’s report Consolidated statement of comprehensive income Consolidated statement of changes in equity Parent company statement of changes in equity Consolidated and parent company statements of financial position Consolidated and parent company cash flow statements Notes to the financial statements Section 5: Additional information Shareholder information Analysis of ordinary shareholders Historical analysis Management & other service providers AIFMD disclosures Information to be disclosed in accordance with Listing Rule 9.8.4 Information to be disclosed in respect of investment in the People’s Republic of China (PRC) via the Stock Connect Glossary Section 6: Annual general meeting Notice of annual general meeting Share fraud warning 4 5 11 24 26 28 34 35 38 54 63 68 74 79 82 90 91 92 93 94 95 122 125 126 127 128 129 130 132 138 Section 1: Overview and performance 3 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Performance record Net assets (£’000)1 Net asset value (NAV) per ordinary share (pence) – with dividends reinvested2 Ordinary share (mid-market) (pence) – with dividends reinvested2 Discount to net asset value2 Revenue Net profit on ordinary activities after taxation (£’000) Revenue earnings per ordinary share (pence) Dividends (pence) 1st interim 2nd interim 3rd interim 4th interim Total dividends paid and payable As at 30 November 2020 As at 30 November 2019 91,642 80.76 85,945 75.28 71.40 66.00 11.6% 12.3% Change % 6.6 7.3 13.9 8.2 16.0 For the year ended 30 November 2020 For the year ended 30 November 2019 Change % 4,900 4.31 1.00 1.00 1.00 1.00 4.00 4,578 3.97 1.00 1.00 1.00 1.00 4.00 7.0 8.6 – – – – – 1 The change in net assets reflects market movements, the buyback of shares and dividends paid during the year. 2 Alternative Performance Measures, see Glossary on pages 132 to 134. Performance from 30 November 2015 to 30 November 2020 190 180 170 160 150 140 130 120 110 100 90 % 80 Nov 15 Nov 16 Nov 17 Nov 18 Nov 19 Nov 20 NAV performance Share price performance Sources: BlackRock and Datastream. Performance figures are calculated on a mid-market basis in sterling terms, with dividends reinvested. Share prices and NAV at 30 November 2015, rebased to 100. 4 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Chairman’s statement Dear Shareholder Ed Warner Chairman Market overview This year has been challenging for investors with the COVID-19 pandemic creating deep uncertainty about the prospects for economies and triggering extreme volatility in markets. As the pandemic took hold, demand for commodities collapsed and significant operational and supply disruption exacerbated sharp falls in their prices. Stock markets subsequently rallied, aided by positive economic data from China and the oil price staged a partial recovery on the back of Organisation of Petroleum Exporting Countries+ (OPEC+) production cuts. The second half of the year was generally more positive for markets, and the emergence of several successful COVID-19 vaccines in November 2020 further restored investor confidence. Companies in the mining and energy sectors generally had a strong end to 2020, benefiting from the environment of ultra-low interest rates and supportive fiscal policy. However, as the COVID-19 pandemic continues to evolve, some market volatility is expected to remain until vaccines have been rolled out and economic conditions have become somewhat more normal. On a positive note, investment in renewable and sustainable resources has continued to rank highly in terms of fiscal commitment and prioritisation for most governments despite the economic challenges posed by the pandemic. Sustainability trends continued to progress through 2020 with governments across the world announcing new carbon reduction targets and technology advancing in the renewable power and electric vehicles arenas. BlackRock Energy and Resources Income Trust is well positioned to take advantage of these trends with approximately 23.8% of its portfolio invested in energy transition stocks as at the end of the year. Performance During the year ended 30 November 2020 the Company’s net asset value per share (‘NAV’) rose by 13.9% and its share price increased by 16.0% (both percentages in sterling terms with dividends reinvested). The Company’s objectives are to achieve both an annual dividend target and, over the long term, capital growth. Consequently, the Board does not formally benchmark performance against mining and energy sector indices as meeting a specific dividend target is not within the scope of these indices. However, to set the performance above in the context of the market backdrop, the EMIX Global Mining Index rose by 19.6% and the MSCI World Energy Index fell by 32.6% over the same period. The Company now holds up to 30% of its portfolio in energy transition stocks; to give background context to how the renewable energy sector has performed, since the portfolio was realigned with effect from 1 June 2020, the S&P Global Clean Energy Index rose by 84.8% over the six months ended 30 November 2020 and the WilderHill Clean Energy Index rose by 143.5% (all percentages in sterling terms with Section 1: Overview and performance 5 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 The shift to a lower carbon economy and the amount of capital that is being committed to this presents a significant investment opportunity. Performance to 30 November 2020 Net Asset Value (with dividends reinvested) 1 Share price (with dividends reinvested) 1 1 Year change % 13.9 16.0 3 Years change % 23.2 13.5 5 Years change % 81.2 64.2 Since inception2 % 82.2 60.7 1 Alternative Performance Measures. Further details of the calculation of performance with dividends reinvested are given in the Glossary on pages 132 to 134. 2 The Company was launched on 13 December 2005. dividends reinvested). It should be noted that these comparisons are given for illustrative purposes only. Further information on investment performance is given in the Investment Manager’s Report. Since the period end and up until close of business on 2 February 2021 the Company’s NAV has increased by 10.2% and the share price has risen by 14.0% (with dividends reinvested). Focus on energy transition The Board announced on 17 March 2020 that, within the parameters of the Company’s existing investment policy, it was the Board’s intention to increase the focus on exposure to stocks that were benefiting from the transition in the energy sector, away from carbon- based energy supplies towards alternative and renewable sources, such that these would represent a greater proportion of the stocks held within the portfolio in the medium term, subject to market conditions. The implementation of this transition began with effect from 1 June 2020, and as at 30 November 2020 23.8% of the Company’s portfolio was held in energy transition stocks. The Board views the global transition to a low-carbon economy as a secular trend and an investment opportunity that demands inclusion in the Company’s portfolio in a significant way. This view is borne out by the initial performance of this part of the portfolio; between 1 June 2020 and 30 November 2020 the transition energy and mining portion of the Company’s portfolio contributed 8.3% to an overall increase in the NAV per share over the same period of 26.6%. Although the Board does not formally benchmark the Company’s performance against mining and energy sector indices, it does compare the performance of the portfolio against a bespoke mining and energy composite index for internal purposes and this has evolved in line with portfolio changes. The neutral sector weightings of 50% mining and 50% traditional energy in the current composite internal index have been changed to 40% mining, 30% traditional energy and 30% energy transition sector weightings. In addition, with effect from September 2020, the Board have moved to use a version of the mining index that excludes gold companies as this sector is of limited relevance as the portfolio moves to focus more on stocks benefiting from the transition in the energy sector away from carbon-based energy supplies towards alternative and renewable sources. 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 for the year to 30 November 2020 was 4.31 pence per share (2019: 3.97 pence), boosted by an uplift of 0.83 pence per share in respect of corporation tax refunds of £945,614 which were repaid to the Company in August 2020 as part of the Franked Investment Income (FII) Group Litigation Order (GLO) vs HMRC (further details of which are set out in note 7 on page 101). The Board’s current target is to declare quarterly dividends of at least 1.00 pence per share for the year to 30 November 2021, making a total of at least 4.00 pence. This target represents a yield of 5.6% based on the share price of 71.40 pence per share as at 30 November 2020. The Board does not expect the shift in focus away from carbon-based energy supplies towards alternative and renewable sources 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 undertake option transactions to the extent that the overall contribution is beneficial to total return. Changes to portfolio management and fees Given the Company’s increased focus on energy transition stocks, it was 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 ten years of experience directly managing energy stocks and is co-manager of BlackRock’s all-cap Energy strategy. 6 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600The Board would like to take the opportunity to thank Olivia for her excellent contribution in managing the Company’s portfolio over the last six years. The Directors are very mindful of the need to ensure that shareholders receive good value from the operations of the Company and regularly review all its costs. To that end, as also announced on 17 March 2020, 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 with effect from the same date. More information is set out in note 4 on page 99. 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 14.7%, and the level of gearing at 30 November 2020 was 6.5%. Average gearing over the year to 30 November 2020 was 5.2%. For calculations, see the Glossary on page 132. 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 year to 30 November 2020, the Company’s shares have traded at an average discount of 13.7%, 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 466,000 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 not been active in buying back shares over the second half of the period under review and into December 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. Board composition The Board supports the increasing focus on independence, tenure and succession planning set out in the updated Financial Reporting Council’s review of the UK Corporate Governance Code, which applies for periods commencing on or after 1 January 2019. With this in mind, the Board commenced a search during the year to identify a new Director to join the Board, assisted by a third-party recruitment firm. Following a detailed evaluation of each of the candidates, the Board selected Mr Andrew Robson who was subsequently appointed with effect from 8 December 2020. Mr Robson brings a wealth of financial sector experience and expertise, both complementing and enhancing the skills and experience of the existing Board. Mr Robson will stand for election at the forthcoming Annual General Meeting and will then assume the role of Chairman of the Audit and Management Engagement Committee. Further information on Mr Robson and all of the Directors can be found in their biographies on pages 35 to 37. Information on the recruitment and selection process undertaken and details of the Board’s policy on director tenure and succession planning can be found in the Directors’ Report on page 57. After many years of excellent service to the Company, Michael Merton is standing down from the Board at this AGM. Michael joined the Board in July 2010 and has acted as the Chairman of the Audit and Management Engagement Committee since March 2014. On behalf of all shareholders, and my fellow Directors, I would like to thank Michael for all his hard work and wise counsel over the years. Following Mr Merton’s retirement, Mr Robson will take over the role of Chairman of the Audit and Management Engagement Committee. Changes to Articles of Association The Board is proposing to make amendments to the Articles to enable the Company to hold general meetings partially by electronic means and to give additional powers in respect of postponing or adjourning meetings in appropriate circumstances. The amendments are being sought to introduce flexibility to respond to challenges such as those posed by government restrictions on social interactions as a result of the COVID-19 pandemic, which have made it impossible at times for shareholders to attend physical general meetings. The principal changes proposed to be introduced in the Articles, and their effect, are set out in more detail in the Directors’ report on pages 60 to 61. Annual general meeting arrangements The AGM will be held at 10:00 a.m. on Tuesday, 16 March 2021 at the offices of BlackRock at 12 Throgmorton Avenue, London EC2N 2DL. At the time of writing, various guidances have been issued by the UK, Scottish and Welsh Section 1: Overview and performance 7 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 governments, respectively, regarding measures to reduce the transmission of COVID-19 in the UK. These measures are, and will continue to be, subject to periodic amendment and currently impose rules on social distancing and limitations on, among other things, public gatherings. Accordingly, in view of this guidance, the Board is changing the format of the AGM this year to follow the minimum legal requirements for an AGM. Only the formal business set out in the Notice will be considered, with no live presentation by the Investment Manager. A presentation from the Investment Manager will be made available on the Company’s website following the conclusion of the AGM. In line with this guidance, shareholders are strongly discouraged from attending the meeting and indeed entry will be refused if current UK Government guidance is unchanged. As shareholders will not be able to attend the Annual General Meeting, the Board strongly encourages all shareholders to exercise their votes by completing and returning their proxy forms in accordance with the notes to the Notice of Meeting on pages 140 to 141. If there are any changes to the arrangements for the Annual General Meeting as a result of changes to government guidance, the Company will update shareholders through the Company’s website and, if appropriate, through an announcement on the London Stock Exchange. The Board of course welcomes questions from shareholders and, given the format and prevailing circumstances, shareholders are asked to submit any questions they may have to the Board in advance of the AGM. The Board or the Investment Manager will respond to all questions received. Shareholders may submit questions to the Board before 12 March 2021 by email at: cosec@blackrock.com. The Board would like to thank shareholders for their understanding and co-operation at this difficult time and look forward to meeting you at some safer stage in future. The Board is aware that many shareholders look forward to hearing the views of the Investment Managers and may have questions for the Investment Managers and the Board. Accordingly, the Annual General Meeting will be immediately followed by a webinar, to include a presentation from the portfolio managers, followed by a live question and answer session. Shareholders are invited to join the webinar and address any questions they have either by submitting questions during the webinar or in advance by writing to the Company Secretary at the address on page 127 or by email to: cosec@blackrock.com. Details on how to register for this event can be found on the Company’s website, or obtained by writing to the Company Secretary. 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 these sectors. In the mining sector in particular, free cash flow yields are high and companies are delivering strong returns. As economic activity normalises with the rolling out of COVID-19 vaccines and as governments, companies and consumers strive to decarbonise economic activity over the coming years, mining companies will play an important role in providing the materials required to enable the growth of the lower carbon economy and our portfolio managers are positive about the prospects for the mining sector for 2021. The shift to a lower carbon economy and the amount of capital that is being committed to its development also presents a significant investment opportunity, although it will be critical to be highly selective in choosing the industries and companies that form part of the energy transition portion of the portfolio. The Board is confident that the Company is currently well placed to benefit from this key investment trend. Ed Warner 4 February 2021 8 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 660010 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Investment manager’s report Tom Holl Mark Hume Market Overview The word ‘unprecedented’ is often overused for dramatic effect but its frequency of use in 2020 has been unsurprising and usually justifiable. As we discussed in the Interim Report, the COVID-19 induced demand collapse across the commodity space as well as significant operational and supply disruption caused market volatility last seen in the global financial crisis of 2008. The second half of the year has been no less challenging for many people across different regions and businesses have seen wildly varying fortunes, but the mining sector and broad energy space (including companies focused on energy transition) have had a strong end to 2020. Risk assets more broadly have continued to benefit from an environment of ultra-low nominal interest rates and supportive monetary and fiscal stimulus from central banks and governments respectively. At the mid-point of the year we noted the strength of China’s economic recovery and this has continued with great momentum through the second half of the year. Significant credit growth supported a strong rebound in fixed asset investment across the three major areas of manufacturing, real estate and infrastructure, and we expect this impulse to continue to support strong commodity demand going into 2021. As we look to 2021 in China, a key event will be the launch of the 14th Five Year Plan in March 2021. There has already been some insight into the notable features with the proposals being approved at the Fifth Plenum in October 2020 – we were particularly excited by some of the sustainability aspects such as peak carbon by 2030, as well as the goal of continued economic growth with the aim of per capita Gross Domestic Product (GDP) to match that of moderately developed nations by 2035. These ambitions not only support commodity demand but will change the composition of that demand – something we have written about previously and a Chinese President Xi Jinping recently announced that China will increase its installed wind and solar capacity to at least 1,200GW by 2030 from a current capacity of over 450GW. Taken together this should pave the way for strong growth in renewable energy demand as well as other areas of decarbonisation. The image is of an aerial hillside solar photovoltaic power station in Baoding, Hebei, China. Section 1: Overview and performance 11 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 One of the key features of the year has been the acceleration of government commitments to transition economic activity to be less carbon intensive. key driver behind the evolution of the Company to substantially increase its exposure to companies driving the energy transition. One of the key features of the year has been the acceleration of government commitments to transition economic activity to be less carbon intensive. In previous times of economic and market turmoil, matters of sustainability have often been deprioritised but it has been great to see in 2020 that many sustainability trends have continued to advance. There have been a succession of announcements from governments across the world on new carbon reduction targets, continued rapid technology development in renewable power and electric vehicles, and significant increase in investment demand across various aspects of the transition to a lower carbon economy. We have continued to evolve the Company to take advantage of the array of investment opportunities we see as a result of the transition and this exciting move is detailed in the sections that follow. Commodity Base Metals (US$/tonne) Aluminium Copper Lead Nickel Tin Zinc Precious Metals (US$/oz) Gold Silver Platinum Palladium Energy Oil (WTI) (US$/Bbl) Oil (Brent) (US$/Bbl) Natural Gas (US$/MMBTU) Uranium (US$/lb) Bulk Commodities (US$/tonne) Iron ore Coking coal Thermal coal Equity Indices EMIX Global Mining Index (US$) EMIX Global Mining Index (£) MSCI World Energy Index (US$) MSCI World Energy Index (£) 30 November 2020 30 November 2019 % change 2020 on 2019 Average Price % Change1 2,036 7,569 2,062 15,985 18,642 2,776 1,792 5,843 1,923 13,618 16,504 2,300 1,774.4 1,461.5 22.6 979.0 17.0 894.0 2,400.0 1,832.0 45.3 47.6 2.9 29.5 130.5 435.0 63.9 964.4 728.5 211.4 158.3 55.2 62.4 2.3 26.0 87.0 260.0 69.4 787.9 609.2 303.6 234.7 13.6 29.5 7.2 17.4 13.0 20.7 21.4 32.9 9.5 31.0 -17.9 -23.7 26.1 13.5 50.0 67.3 -7.9 22.4 19.6 -30.4 -32.6 -6.8 0.5 -9.3 -0.9 -10.1 -13.7 26.5 24.0 2.6 45.1 -27.4 -29.8 -21.4 11.2 12.0 51.0 -26.8 n/a n/a n/a n/a Source: Datastream 1 Average of 30/11/18-30/11/19 to average of 30/11/19-30/11/20 12 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Governments across the world are announcing new carbon reduction targets, with a significant increase in investment to drive the transition to a lower carbon economy. LONDON POWER TUNNELS PHOTO COURTESY OF NATIONAL GRID. Portfolio Activity & Investment Performance The second half of 2020 saw a step- change in the pace of the evolution of the portfolio. By July we had moved around 30% of the NAV into companies across the energy transition spectrum. Insight into the companies added to the portfolio is given in the relevant section below but the exposure was not confined to just solar and wind companies. We initiated positions in a select number of utilities who are driving their business forward with significant expansion of their renewables generation capacity. We also invested in a number of semiconductor companies whose products are vital enablers of key components in electric vehicles, as well as having many other applications in the energy transition. As can be seen in the charts on the following page, the investments in energy transition companies were funded by selling positions in the mining and conventional energy sectors. We did not do this on a “pro rata” basis but exited some lower conviction positions entirely in order to maintain a focused portfolio of stocks. Also we reduced our conventional energy exposure by a greater amount than we did our mining exposure – the rapid recovery in the Chinese economy we viewed as being more supportive for mining commodities and their producers than for the oil and gas companies, where demand is less China-centric. Although some of the energy companies were at the time cheaper on a variety of valuation metrics, we wanted to be more forward-looking and anticipate mined commodity outperformance. Secondly we wanted to take into consideration that many mining companies had an increasing ESG narrative both around the use of their products in the decarbonisation of economic activity and their approach to managing climate risk on a company level basis. The conventional energy sector underperformed the mining and energy transition sectors materially from June through to November, which was a benefit to the portfolio given our positioning. However, when the first vaccine announcements were made in early November, we took the view that this removed the most bearish scenario for the oil price and energy companies in 2021. Given the share price falls of many energy companies, we took our weighting in conventional energy companies from below 20% to around 30%. This was funded through a combination of profit taking in some sustainable energy companies that had performed exceptionally well in the run up to the US election, the reduction in the gold company positions and the use of gearing. This swift and decisive move allowed the portfolio to capture a large part of the strong rally that followed in the energy equities. The Company delivered a NAV total return of 26.5% over the six month period to end November 2020, and 13.9% for the Company’s financial year ended 30 November 2020. Income 2020 was a challenging year for dividends in the market as a whole and whilst some parts of the portfolio – the conventional energy sector – also had to make some tough decisions, other parts of the portfolio fared rather better. The mining sector largely abandoned progressive dividend policies a few years ago, which pretty much marked the bottom of the last cycle. Since then they have moved to a pay out ratio approach but the cashflows generated with recent iron ore prices etc. have enabled them to maintain, and in some cases increase, strong dividends and return cash via buybacks. Another positive in 2020 was the improving attitude of gold mining companies towards dividends. Whilst they are never likely to be a core holding for a generalist income fund, the substantial dividend increases of portfolio holdings such as Newmont not only bolstered the portfolio’s income but were a strong signal of capital discipline by these companies to the market. Section 1: Overview and performance 13 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Portfolio asset allocation¹ 100 90 80 70 60 % 50 40 30 20 10 Gearing² 4.0 2.0 0.0 -2.0 -4.0 % -6.0 -8.0 -10.0 -12.0 -14.0 0 N ov-1 9 D ec-1 9 Ja n-2 0 Feb-2 0 M ar-2 0 A pr-2 0 M ay-2 0 Ju n-2 0 Jul-2 0 A u g-2 0 S ep-2 0 O ct-2 0 N ov-2 0 -16.0 N ov-1 9 D ec-1 9 Ja n-2 0 Feb-2 0 M ar-2 0 A pr-2 0 M ay-2 0 Ju n-2 0 Jul-2 0 A u g-2 0 S ep-2 0 O ct-2 0 N ov-2 0 Mining Energy     Energy Transition Net cash/(gearing) ¹ Portfolio positioning is expressed as a percentage of gross assets (as defined in the Glossary on page 132). ² Gearing as a percentage of net assets. Portfolio positioning¹ Portfolio on 30 November 2019 Portfolio on 30 September 2020 Energy Transition Energy 17.8% Energy 48.8% 31.4% 51.2% Mining 50.8% Mining Portfolio on 30 November 2020 Energy Transition 23.8% 31.0% Energy 45.2% Mining Source: BlackRock, November 2020. ¹ Portfolio positioning is expressed as a percentage of total investments. The level of gearing is therefore not shown as a separate item. During the year ended 30 November 2020, gearing ranged between net cash of 3.0% to a net gearing of 14.7% of net assets and averaged 5.2% of net assets during the year. 14 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Expectations for dividends l e v e L x e d n I d n e d i v i D 1 2 0 2 0 0 1 E S T F 350 300 250 200 150 100 50 0 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Source: Bloomberg. The chart above helps give context to the scale of the dividend challenges faced by the broader equity market. It shows the expectations for the dividend payments for the FTSE 100 in 2021 – whilst it is encouraging to see that expectations for next year have recovered from their Q2 lows, they have still fallen by roughly one third compared to what they were at the start of the year. FTSE100 (lhs) The underlying dividend income for the portfolio has shown greater resilience than the dividends for the equity market as a whole and the outlook for 2021 looks strong given the commodity prices and margins being generated, especially in the mining sector. Rider 3 - Page 13 – bottom of page chart It is important to recognise one of the impacts of evolving the portfolio to include a substantial allocation to energy transition companies. Whilst we own some renewables focused utilities that pay an acceptable yield, the shift to greater exposure to energy transition companies is designed to inject a greater element of growth into the portfolio. The trade off for this is that the companies are reinvesting a greater proportion of their cashflow into 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18 Dec-18 Feb-19 Apr-19 Jun-19 Aug-19 Oct-19 Dec-19 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Mining sector dividend yield Global equity markets dividend yield Source: DataStream, 3 December 2020. Mining sector represented by the World DS General Mining Index. Global equity markets represented by the World DS Market Index. Yield data is historic and not indicative of future yield trends. Rider 4 - Page 14 – charts to be inserted under Energy - Markets Section 1: Overview and performance 15 FFiigguurree 11:: GGlloobbaall OOiill DDeemmaanndd,, 22001199--22002211ee FFiigguurree 22:: BBrreenntt CCrruuddee PPrriiccee aanndd SSttrruuccttuurree Source: IEA Oil Market Report [left chart]; Bloomberg [right chart] Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Rider 3 - Page 13 – bottom of page chart 6.0% 5.0% 4.0% 3.0% 2.0% growing their business (as opposed to distributing it to shareholders) so the dividends from these companies are, in general, lower than in the mining and conventional energy sectors. The flexibility to pay dividends from reserves resulted in the level of option writing over the portfolio being lower during the year and just over 25% of our income was generated through the selling of calls and puts. Notable in our option activity was selling puts on a selection of conventional energy companies in October and in September, selling calls on some gold positions that were lacking in short term positive catalysts. Energy The onset of major lockdowns in March 2020, in an effort to contain the COVID-19 pandemic, saw global demand for oil products experience its worst contraction since the Second World War. The International Energy Agency (IEA) estimates that consumption fell by almost 9 million barrels per day year on year and by a staggering 16 million barrels per day in the second quarter 2020 (Figure 1). The sharp, and unexpected, collapse in demand was met with a surprising month-on-month increase in OPEC output of more than 2 million barrels per day in April 2020. Not surprisingly, Brent oil prices plummeted over 70%, bottoming out at $17/barrel later in the month (Figure 2). The dramatic fall in oil prices spurred a historic agreement from OPEC and several other countries to cut output by almost 14 million barrels per day - the lowest level in Rider 4 - Page 14 – charts to be inserted under Energy - Markets It should also be noted that we had a one-off gain on the tax line where a refund of tax resulted in a positive contribution from this line item, which is of course usually a material negative expense. Mining sector dividend yield Aug-19 Aug-18 Feb-19 Feb-18 Jun-19 Jun-18 Dec-19 Dec-17 Dec-18 Apr-19 Apr-18 Oct-19 Oct-18 1.0% nearly a decade. At the time of writing, Brent oil prices have now recovered to $50/barrel. The structure of crude prices (the price today versus the price for delivery in 6 months) is a good barometer of physical market tightness. Brent crude structure recently moved into backwardation (positive), pointing to a significant improvement in supply/ demand fundamentals. Feb-20 Oct-20 Apr-20 Dec-20 Jun-20 Aug-20 From an equity standpoint, the severe turbulence in commodity prices translated into sharp underperformance for energy stocks, with the MSCI ACWI Energy Index falling almost 60%, to its lowest level in over two decades (Figure 3). Despite the precipitous fall in energy equities, swift action to rebalance the market has seen the sector keep pace with the recovery in broader world markets since the March 2020 lows, albeit still some way off the recovery seen in oil prices over the same period Source: DataStream, 3rd of December 2020. Mining sector represented by the World DS General Mining Index. Global equity markets represented by the World DS Market Index. Global equity markets dividend yield FFiigguurree 11:: GGlloobbaall OOiill DDeemmaanndd,, 22001199--22002211ee FFiigguurree 22:: BBrreenntt CCrruuddee PPrriiccee aanndd SSttrruuccttuurree Source: IEA Oil Market Report [left chart]; Bloomberg [right chart]. Source: IEA Oil Market Report [left chart]; Bloomberg [right chart] 16 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 A positive in 2020 was the improving attitude of gold companies towards dividends. The substantial dividend increases of portfolio holdings such as Newmont Mining not only bolstered the portfolio’s income but were a strong signal of capital discipline. KILGOORLIE, AUSTRALIA GOLD PHOTO COURTESY OF NEWMONT MINING. (Figure 4). On a relative basis, we maintained a strong skew away from the traditional energy names and towards mining and energy transition stocks through much of the year. Within the energy sector, it was the larger-cap stocks that fared better with most starting the year with far stronger balance sheets and more diversified cash flows. European large-cap oil companies were down 21% through 30 November 2020 as compared to the global index which was down 31% and US energy stocks down 36%. This helped relative performance within the energy holdings in the Company given a preference for the European names. Importantly, following the announcement of positive news around a COVID-19 vaccine in early November 2020, we took the opportunity to significantly increase the Company’s exposure towards traditional energy names allowing the Company to capture much of the equity price improvement through the month. As we look into 2021 and beyond, we believe that the outlook for traditional energy equities is increasingly positive. This partly reflects a somewhat contrarian view around supply. Much of the narrative throughout the COVID-19 pandemic has focused on demand for hydrocarbons and its impending peak. We have little doubt that the shift of capital towards decarbonisation is very likely to outpace many forecasts, eroding the demand for traditional hydrocarbons. Yet, such has been the Figure 3: Equity performance, 2018-ytd Figure 4: Equity performance, Feb-20-ytd Source: Bloomberg [both charts]. Energy represented by the MSCI ACWI Energy Index. Section 1: Overview and performance 17 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 financial shock across the industry, capital is now (finally) being rationed at a pace that will very likely see a dramatic level of underinvestment in a supply base that is witnessing steep declines. We believe that the energy equities are exhibiting much of the capital discipline enacted by the mining sector back in 2015. This will lead to better capital allocation and increasing returns to shareholders – we are entering the “Era of the Shareholder” for energy equities. the major world economies. The recent confirmation of a Democratic victory in the United States ought to lend credibility to President Biden’s electoral commitments for a $2 trillion investment in clean energy in an effort to catapult the nation towards carbon-free electricity by 2035. Closer to home, the EU has firmed up plans to hit Net Zero by 2050 with the aid of a €7 trillion investment plan, almost half of which could be allocated towards the Utilities sector. Energy Transition Climate change and decarbonisation have been front and centre for corporates, governments and society as a whole. In many ways, the COVID-19 pandemic has helped galvanise global leaders towards ‘building back better’. This is now translating into very firm policy commitments across Perhaps one of the most intriguing outcomes of such a tumultuous year has been the resilience of renewables – particularly in the electricity sector. Based on IEA data, global electricity demand is expected to contract by more than 2% in 2020 compared to the prior year. In contrast, renewables- based generation increased by almost 7% (Figure 5). Cash flows from renewables-based electricity also remained resilient, benefiting from policy-driven, fixed-price long- term contracts. This underlines the importance of government support for continued renewables build-out – both a risk and a reward. We expect another strong year for climate change policy with the US highly likely to re-enter the Paris Climate Agreement paving the way for President Biden’s $2 trillion plans. Further afield, Chinese President Xi Jinping announced in September 2020 that China will strengthen its 2030 climate target to hit peak emissions by 2030 and achieve carbon neutrality by 2060. The President also recently announced that China will increase its installed wind and solar capacity to at least 1,200GW by 2030. This compares Figure 5: Electricity, Heat and Transport Demand Source: IEA, Renewables-based output and total demand change in the electricity, heat and transport sectors, 2019-2020, Source: IEA, Renewables-based output and total demand change in the electricity, heat and transport sectors, 2019-2020, IEA, Paris https://www.iea.org/data-and- IEA, Paris https://www.iea.org/data-and-statistics/charts/renewables-based-output-and-total-demand-change-in-the- statistics/charts/renewables-based-output-and-total-demand-change-in-the-electricity-heat-and-transport-sectors-2019-2020 electricity-heat-and-transport-sectors-2019-2020 to a current capacity of over 450GW. Taken together this should pave the way for strong growth in renewable energy demand as well as other areas of decarbonisation such as energy efficiency and transportation. The Company is well positioned to take advantage of improved global policy certainty. Mining The first half of the year saw exceptional volatility in the mining sector but despite the large drawdown in March, the sector closed the first half of the year slightly in the black – though this was driven by the strength in precious metals prices rather than industrial commodities. The positive momentum from the bounce off the March lows continued strongly through the second half of the year with industrial metals taking market leadership from the precious metals as resurgent economic activity drove better than expected demand and supply continued to fall short of expectations. The chart below (Figure 6) shows one of the key positive drivers for metals demand during the year – the significant easing of credit conditions 18 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Figure 6: Chinese credit growth (RMB bn & 6MMA Y/Y%) Source: Bloomberg. in China, with notable increases in local government debt issuance. This is typically used to fund infrastructure and other commodity intensive activity, and this was reflected in strong growth in steel demand / production in China during the year with over 5% growth year on year. Demand is only one side of the commodity price equation – supply is equally important. The chart overleaf shows some of the supply challenges that occurred during 2020. Some of these have been directly related to COVID-19 lockdowns and disruptions; for example, Peru (a major copper producer) shutdown many mines in the second quarter, as did a number of other key copper producing countries. Elsewhere though it was not just COVID-19 that caused supply to fall short of expectations – in platinum, Anglo Platinum has several issues at its refineries causing cuts to production and in zinc there was a pit wall failure at a major mine in Namibia. The revenue of some major listed mining companies, such as Rio Tinto and Vale, is dominated by iron ore. As shown in the chart overleaf, iron ore supply also fell short of expectations, primarily as Vale struggled to hit its targets with frequent operational disruptions from tailings dam safety checks. With steel production (and therefore iron ore demand) being strong in China, iron ore markets were very tight and prices rose 50% during the year. Following the Company’s year end of November, prices have continued to surge higher and producers are now earning record margins and generating record cashflow from these businesses, which should underpin strong shareholder returns going into the new year. We would expect that supply challenges will continue in 2021 and help maintain the tight balance in many metals markets, which supports prices at elevated levels. Although direct COVID-19 operational disruption will hopefully ease through 2021, many mines reduced maintenance this year as they tried to reduce the number of people at site and supply chains were disrupted. This increases the need for maintenance downtime next year and also increases the risk of breakdowns etc. in equipment that has received less preventive maintenance than it should. Therefore we think that supply in many metals will again be lower than consensus expectations in 2021 and prices have risk skewed asymmetrically to the upside. One of the Company’s largest commodity exposures is copper – a metal that is key to the transition to a lower carbon economy. Copper demand over the next decade will be strongly supported by the electrification of cars; it is estimated that an EV has approximately four times the copper content per vehicle when compared to an internal combustion engine car. Currently copper miners (and companies that produce other metals that are indispensable in the energy transition) trade in the equity market at a substantially lower valuation multiple than companies such as wind turbine manufacturers or renewable energy utilities. Mining companies that are able to operate with respect for their host communities and articulate a credible climate strategy will be set to appeal to investors in the next few years in a way they perhaps haven’t in the past. Market Outlook & Portfolio Positioning After such an eventful and often unpredictable year, making forecasts for the whole year ahead is somewhat daunting. However, the experiences of this year have reinforced for us some key trends that we think will drive our markets and the portfolio in the future. Section 1: Overview and performance 19 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Chart showing 2020 mined production estimates (current vs. start of year) -2.3% -3.1% -3.9% -4.3% -4.9% t n e c r e P 0 -6 -12 -18 -8.9% -14.5% -17.0% Nickel Alumina Aluminium Copper Iron ore Zinc Palladium Platinum Source: WoodMac, Norilsk, Barclays Research. MSCI ESG Ratings for Portfolio Holdings 35% 30% 25% 20% 15% 10% 5% 0% AAA AA A BBB BB B CCC None Nov-19 Nov-20 First is that the drive by Governments, companies and consumers to decarbonise economic activity is a firmly established trend that is only going to accelerate from here. The amount of capital that is being committed to the industries associated with this is greater than we forecast even a year ago and driving growth rates that have remained elevated despite all of the COVID-19 challenges. Whenever an area experiences such a wave of capital, there will almost certainly be capital misallocated and subsequent returns prove disappointing – many will recall such examples from the commodity supercycle of the 2000s. This is why it is critical for us to remain selective in terms of the industries and companies we choose to have exposure to in the energy transition part of the portfolio. The flip side of this paradigm shift in the availability and cost of capital for the energy transition is the conventional energy sector has seen capital withdrawn at an unprecedented rate. As we look to 2021 and beyond, it is likely that the decline in oil supply will be faster than the destruction of demand. This could lead to oil prices being higher than consensus expectations and was one of the 20 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600key factors in having just under a third of the portfolio in conventional energy companies at the start of 2021. Whilst we see the long-term structural growth drivers in the energy transition companies, our flexible approach allows us to take advantage of opportunities in the conventional energy sector. We will continue to engage with company boards and management on all aspects of ESG as we believe the different approaches by various companies is going to be a key determinant in the relative shareholder returns in the coming years. Details of the ESG ratings of the Company’s portfolio holdings are set out in the chart on page 20. The MSCI ESG adjusted score for the portfolio as at 30 November 2020 was 5.7 out of a maximum score of 10, showing the evolution of the portfolio over the last year; this compares to an average portfolio rating of 5.4 at 30 November 2019. The largest sector allocation as we transition into a new year is in mining. The free cash flow yields are the most attractive in our investable universe and the management teams continue to deliver strong returns back to shareholders and are abiding by their stringent capital allocation frameworks. As we have discussed previously, the global economy cannot continue to grow and decarbonise without new materials being mined every year. This makes mining companies critical enablers of the lower carbon economy – a factor that is being underestimated in terms of potential commodity demand growth rates and the perception of many that mining companies have an ESG problem. As the communication and disclosure by mining companies on ESG issues improves and both the positive impact of their community work and benefits of their end products are better captured in data, there is the possibility that mining companies end years of valuation de-rating. Tom Holl and Mark Hume BlackRock Investment Management (UK) Limited 4 February 2021 Section 1: Overview and performance 21 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 22 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Portfolio Vestas is one of the portfolio’s largest transition energy holdings. The company has installed wind turbines in 82 countries, including these high-wind turbines in Macarthur, New South Wales, Australia. PHOTO COURTESY OF VESTAS WIND SYSTEMS A/S Section 2: Portfolio 23 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Distribution of investments as at 30 November 2020 Asset allocation – Geography Global 58.5% United States 11.7% Latin America 9.9% Canada 7.4% Australia 4.2% Germany 2.2% South Africa 1.9% Norway 1.3% France 0.9% Ireland 0.8% United Kingdom 0.7% Brazil 0.3% Africa 0.2% Asset allocation – Commodity Energy Transition (23.8%) Electrification 10.8% Energy Efficiency 7.3% Renewables 3.9% Transport 1.1% Storage 0.7% Mining 45.2% Energy 31.0% Energy Transition 23.8% Energy (31.0%) Mining (45.2%) Integrated 19.1% E&P 10.0% Distribution 1.4% Oil Services 0.5% Refining & Marketing 0.0% Diversified 21.3% Copper 9.6% Industrial Minerals 4.6% Gold 3.3% Iron 1.6% Diamonds 1.6% Platinum 1.2% Steel 1.1% Nickel 0.9% 24 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 66001 3 6 9 2 5 8 4 7 10 Job No: 43774 Customer: BlackRock Proof Event: 18 Project Title: BERI Annual Rpt 2020 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA T: 0207 055 6500 F: 020 7055 6600 Section 2: Portfolio 25 Ten largest investments 1 BHP (2019: 1st) Diversified mining company Market value: £6,135,000 Share of investments: 6.3% (2019: 7.8%) The world’s largest diversified mining group by market capitalisation. The group is an important global player in a number of commodities including iron ore, copper, thermal and metallurgical coal, manganese, nickel, silver and diamonds. The group also has significant interests in oil, gas and liquefied natural gas. (MSCI ESG Rating: BBB) 2 Vale (2019: 12th) Diversified mining company Market value: £5,797,000 Share of investments: 6.0%1 (2019: 3.0%) One of the largest mining groups 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 group also produces manganese ore, ferroalloys, metallurgical and thermal coal, copper, platinum group metals, gold, silver and cobalt. (MSCI ESG Rating: CCC) 3 Rio Tinto (2019: 10th) Diversified mining company Market value: £5,451,000 Share of investments: 5.6% (2019: 3.5%) One of the world’s leading mining groups. The group’s primary product is iron ore, but it also produces aluminium, copper, diamonds, gold, industrial minerals and energy products. (MSCI ESG Rating: A) 26 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 66004 Chevron (2019: 6th) Integrated oil company Market value: £5,098,000 Share of investments: 5.2% (2019: 4.7%) An integrated oil and gas producer engaged in all aspects of the industry. The group has both upstream and downstream operations, as well as alternative energy including solar, wind and biofuels. (MSCI ESG Rating: BBB) 8 First Quantum Minerals (2019: 2nd) Copper producer Market value: £3,055,000 Share of investments: 3.1%2 (2019: 7.4%) An established growing copper mining group operating 7 mines including the ramp up of their newest mine, Cobre Panama, which declared commercial production in September 2019. The company is a significant copper producer and also produces nickel, gold and zinc. (MSCI ESG Rating: BB) 5 Petrobras (2019: n/a) Integrated oil company Market value: £3,811,000 Share of investments: 3.9% (2019: n/a) 9 Exxon Mobil (2019: 7th) Integrated oil company Market value: £2,881,000 Share of investments: 3.0% (2019: 4.2%) Brazil’s national integrated oil group engaged in all facets of the energy value chain including low carbon sources of energy. (MSCI ESG Rating: BB) The group is involved in all phases of the petroleum integration chain, in addition to its ownership of interests in electrical power generation facilities. (MSCI ESG Rating: BBB) 6 Freeport-McMoRan Copper & Gold (2019: n/a) Copper producer Market value: £3,562,000 Share of investments: 3.7% (2019: n/a) A global mining group which operates large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum. (MSCI ESG Rating: BB) 10 Enel (2019: 20th) Electrification company Market value: £2,878,000 Share of investments: 2.9% (2019: 1.9%) Enel is an electric utility and network operator and a leading owner of renewable energy assets. The group operates in more than 30 countries, bringing energy to people through the adoption of new sustainability-oriented technologies. (MSCI ESG Rating: AAA) 7 Anglo American (2019: 29th) Diversified mining company Market value: £3,339,000 Share of investments: 3.4% (2019: 1.4%) A global mining group. The group’s mining portfolio includes bulk commodities including iron ore, manganese, and metallurgical coal, base metals including copper and nickel and precious metals and minerals including platinum and diamonds. Anglo American has mining operations globally, with significant assets in Africa and South America. (MSCI ESG Rating: BBB) 1 0.2% relates to fixed interest holdings in Vale. 2 1.6% relates to fixed interest holdings in First Quantum Minerals. 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. Together, the ten largest investments represented 43.1% of total investments as at 30 November 2020 (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 and 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. Section 2: Portfolio 27 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Investments as at 30 November 2020 Mining Diversified BHP Vale Vale Debentures* Rio Tinto Anglo American Copper Freeport-McMoRan Copper & Gold First Quantum Minerals First Quantum Minerals 6.875% 01/03/26 First Quantum Minerals 7.5% 01/04/25 First Quantum Minerals 7.25% 01/04/23 Lundin Mining OZ Minerals Industrial Minerals CF Industries Bunge Albemarle Trane Technologies Lynas Corporation Gold Newmont Mining Barrick Gold Sibanye Stillwater Wheaton Precious Metals Diamonds Mountain Province Diamonds 8% 15/12/22 Petra Diamonds 7.25% 01/05/22 Iron Fortescue Metals Platinum Impala Platinum Steel Arcelormittal Main geographic exposure Global Latin America Latin America Global Global United States Global Global Global Global Global Australia United States Global Global United States Australia Global Global South Africa Global Canada Africa Australia South Africa Global Market value £’000 6,135 5,650 147 5,451 3,339 20,722 3,562 1,470 887 358 340 2,371 421 9,409 1,201 926 916 880 698 4,621 1,174 977 644 347 3,142 1,395 236 1,631 1,520 1,520 1,138 1,138 1,102 1,102 % of investments 6.3 5.8 0.2 5.6 3.4 21.3 3.7 1.5 0.9 0.4 0.3 2.4 0.4 9.6 1.2 0.9 0.9 0.9 0.7 4.6 1.2 1.0 0.7 0.4 3.3 1.4 0.2 1.6 1.6 1.6 1.2 1.2 1.1 1.1 28 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Nickel Nickel Mines Total Mining Energy Integrated Chevron Petrobras Exxon Mobil Suncor Energy Total Galp Energia E&P ConocoPhillips Canadian Natural Resources Pioneer Natural Resources Hess Aker Solutions Santos Kosmos Energy EOG Resources Put Option 18/12/2020 $35 Distribution TC Energy Corporation Oil Services Baker Hughes Refining & Marketing Main geographic exposure Australia Global Latin America Global Canada Global Global Global Canada United States Global Norway Australia United States United States Canada Global Darling Ingredients Put Option 18/12/2020 $44 United States Total Energy Energy Transition Electrification Enel NextEra Energy RWE EDP Renovaveis Iberdrola National Grid Neoenergia Global United States Germany Global Global United Kingdom Brazil Market value £’000 832 832 44,117 5,098 3,811 2,881 2,771 2,629 1,470 % of investments 0.9 0.9 45.2 5.2 3.9 3.0 2.8 2.7 1.5 18,660 19.1 2,632 1,804 1,616 1,379 1,277 578 444 (2) 9,728 1,331 1,331 449 449 (9) (9) 30,159 2,878 2,169 2,102 1,522 848 689 344 2.7 1.8 1.7 1.4 1.3 0.6 0.5 – 10.0 1.4 1.4 0.5 0.5 – – 31.0 2.9 2.2 2.2 1.6 0.9 0.7 0.3 10,552 10.8 Section 2: Portfolio 29 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Investments continued Energy Efficiency Schneider Electric ON Semiconductor Maxim Integrated Smith (A.O.) Corp Texas Instruments Soitec Kingspan Group Renewables Vestas Sunnova Energy International First Solar Transport Volkswagen Storage Umicore Total Energy Transition Total Portfolio Comprising: Equity and debt investments Derivative financial instruments – written options Main geographic exposure Global Global Global United States Global France Ireland Global United States Global Global Global Market value £’000 1,788 993 935 889 867 856 802 7,130 2,838 560 439 3,837 1,046 1,046 728 728 23,293 97,569 97,580 (11) 97,569 % of investments 1.8 1.0 1.0 0.9 0.9 0.9 0.8 7.3 2.9 0.6 0.4 3.9 1.1 1.1 0.7 0.7 23.8 100.0 100.0 – 100.0 *  The investment in the Vale debenture is illiquid and has been valued using secondary market pricing information provided by the Brazilian Financial and Capital Markets Association (ANBIMA). All investments are ordinary shares unless otherwise stated. The total number of holdings (including options) at 30 November 2020 was 63 (30 November 2019: 49). The total number of open options as at 30 November 2020 was 2 (30 November 2019: 2). The negative valuations of £11,000 (30 November 2019: £30,000) in respect of options held represent the notional cost of repurchasing the contracts at market prices as at 30 November 2020. The equity and fixed income investment total of £97,580,000 (2019: £98,554,000) above before the deduction of the negative option valuations of £11,000 (2019: £30,000) represents the Group’s total investments held at fair value as reflected in the Consolidated and Parent Company Statements of Financial Position on page 93. The table above excludes cash and gearing; the level of the Group’s gearing may be determined with reference to the bank overdraft of £5,745,000 and cash and cash equivalents of £8,000 that are also disclosed in the Consolidated and Parent Company Statements of Financial Position. Details of the AIC methodology for calculating gearing are given in the Glossary on page 132. As at 30 November 2020, the Company did not hold any equity interests comprising more than 3% of any company’s share capital. 30 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 32 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Governance Schneider Electric was the largest of the portfolio’s energy efficiency holdings at the end of the period under review. With operations in more than 100 countries, the company provides sustainable energy and automation solutions, including those aimed at creating zero net energy (ZNE) buildings whose total energy usage is entirely offset by the amount of renewable energy created on-site. PHOTO COURTESY OF SCHNEIDER ELECTRIC Section 3: Governance 33 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Governance structure Responsibility for good governance lies with the Board. The governance framework of the Company reflects that as an investment company the Company has no employees, the Directors are all non-executive and the investment management and administration functions are outsourced to the Manager and other external service providers. Five non-executive Directors (NEDs), all independent of the Investment Manager. Chairman: Ed Warner (since March 2015) Objectives: • To determine and review the investment policy, guidelines, strategy and parameters; • To provide leadership within a framework of prudent and effective controls which enable risk to be assessed and managed and the Company’s assets to be safeguarded; • To challenge constructively and scrutinise performance of all outsourced activities; and • To set the Company’s remuneration policy. Membership: All independent NEDs excluding the Chairman of the Board1 Chairman: Michael Merton (since March 2014) The Board 6 scheduled meetings per annum Audit and management engagement committee 3 scheduled meetings per annum Key objectives: • To oversee financial reporting and the control environment; • To review the performance of the Manager and Investment Manager; and • To review the performance of other service providers. Membership: All independent NEDs Chairman: Ed Warner (since March 2015) Nomination committee 2 scheduled meetings per annum Key objectives: • To review regularly the Board’s structure and composition; • To be responsible for Board succession planning; and • To make recommendations to the Board for any new appointments. 1 The Chairman of the Board is not a member of the Audit and Management Engagement Committee but may attend the Committee meetings by invitation. 34 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 41869 Customer: BlackRock Proof Event: 5 Black Line Level: 0 Park Communications Ltd Alpine Way London E6 6LA Project Title: World Mining Annual Rpt 2019 T: 0207 055 6500 F: 020 7055 6600 Directors’ biographies Michael Merton Audit and Management Engagement Committee Chairman Appointed 13 July 2010 is a Chartered Accountant with extensive experience in the international resources industry, having spent the majority of his executive career at Rio Tinto, where he held senior operational roles around the world. Michael is currently a Trustee of the Universities Superannuation Scheme. He was formerly Chairman of the J Sainsbury Pension Scheme and its investment committee and a non- executive director of Cape plc and a director and trustee of the HALO Trust. Attendance record: Board: 6/6 Audit and Management Engagement Committee: 3/3 Nomination Committee: 2/2 Ed Warner Chairman Appointed 1 July 2013 is chairman of Grant Thornton UK LLP’s Partnership Oversight Board, LMAX Ltd, Harbour Vest Global Private Equity and Air Partner plc. He was previously chairman of Panmure Gordon & Co plc and of UK Athletics and a non-executive director of Clarkson plc, BlackRock Emerging Europe plc (formerly The Eastern European Trust plc) and chairman of the Standard Life Private Equity Trust plc. He was also formerly the chief executive of IFX Group and of Old Mutual Financial Services UK, head of Pan European Equities at BT Alex Brown, and head of Global Research at both NatWest Markets and Dresdner Kleinwort Benson. Attendance record: Board: 6/6 Audit and Management Engagement Committee1: n/a Nomination Committee: 2/2 1 The Chairman of the Board is not a member of the Audit and Management Engagement Committee but may attend the Committee meetings by invitation. Section 3: Governance 35 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Dr Carol Bell Appointed 1 December 2014 Adrian Brown Appointed 10 December 2019 is currently a non-executive director of Tharisa plc, Bonheur ASA and TransGlobe Energy Corporation and a Trustee of the National Museum Wales. Dr Bell was formerly a managing director of Chase Manhattan Bank’s Global Oil & Gas Group, head of European equity research at JP Morgan and an equity research analyst in the oil and gas sector at Credit Suisse First Boston and UBS. She has also previously been a non-executive director of Petroleum Geo-Services ASA and a director of Salamander Energy plc, Hardy Oil & Gas plc, Det norske oljeselskap ASA and Caracal Energy Inc. (now Glencore E&P (Canada) Inc.). Attendance record: Board: 6/6 Audit and Management Engagement Committee: 3/3 Nomination Committee: 1/2 is a senior advisor for MJ Hudson Allenbridge. He has a wealth of experience in the financial and commerce sectors, starting his career as an Investment Analyst and Corporate Finance Manager at Morgan Grenfell & Co and then moving to join Pearson plc as a Corporate Resources Executive in the 1990’s. In 1992 he joined Boots plc, holding a range of senior roles before returning to work in the financial services sector in 2006 as a Senior Portfolio Manager in the Equity / Multi- Asset Group at AllianceBernstein LP and subsequently at JPMorgan Asset Management, where he was a Managing Director and Client Portfolio Manager in the Global / International Equity Group from 2011 until his retirement in 2018. Attendance record: Board: 6/6 Audit and Management Engagement Committee: 3/3 Nomination Committee: 2/2 36 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Andrew Robson Appointed 8 December 2020 is a qualified chartered accountant with over 15 years of corporate finance experience, gained at Robert Fleming & Co Limited and SG Hambros. He has considerable experience as a finance director and as chairman of audit committees, including for a number of investment companies, and has a business advisory practice. He is currently a non-executive director of Baillie Gifford China Growth Trust plc. He was also a non-executive director of AVI Global Trust plc (formerly British Empire Trust plc) until 2017, Shires Income plc until July 2020 and JPMorgan Smaller Companies Investment Trust plc until November 2020. Mr Robson has a degree in History from Trinity College, Cambridge. Attendance record: Board: n/a Audit and Management Engagement Committee: n/a Nomination Committee: n/a None of the Directors has a service contract with the Company. The terms of their appointment are detailed in a letter sent to them when they join the Board. These letters are available for inspection at the registered office of the Company and will be available at the Annual General Meeting. Job No: 43774 Customer: BlackRock Proof Event: 1 Project Title: BERI Annual Rpt 2020 Black Line Level: 0 Park Communications Ltd Alpine Way London E6 6LA T: 0207 055 6500 F: 020 7055 6600 Section 3: Governance 37 Strategic report The Directors present the Strategic Report of the Company for the year ended 30 November 2020. The aim of the Strategic Report is to provide shareholders with the information required to enable them to assess how the Directors have performed in their duty to promote the success of the Company for the collective benefit of shareholders. The Chairman’s Statement together with the Investment Manager’s Report and the Section 172 Statement setting out how the Directors promote the success of the Company on pages 46 to 50 form part of the Strategic Report. The Strategic Report was approved by the Board at its meeting on 4 February 2021. Business and management of the Company BlackRock Energy and Resources Income Trust plc (the Company) is an investment trust company that has a premium listing on the London Stock Exchange. Its principal activity is portfolio investment. The Company’s wholly owned subsidiary is BlackRock Energy and Resources Securities Income Company Limited (together ‘the Group’). Its principal activities are option writing and investment dealing. Investment trusts, like unit trusts and Open Ended Investment Companies (OEICs), are pooled investment vehicles which allow exposure to a diversified range of assets through a single investment thus spreading, although not eliminating, investment risk. In accordance with the Alternative Investment Fund Managers’ Directive (AIFMD) the Company is an Alternative Investment Fund (AIF). BlackRock Fund Managers Limited (the Manager) is the Company’s Alternative Investment Fund Manager (AIFM). The management of the investment portfolio and the administration of the Company have been contractually delegated to the Manager. The Manager, operating under guidelines determined by the Board, has direct responsibility for decisions relating to the running of the Company and is accountable to the Board for the investment, financial and operating performance of the Company. The Company delegates fund accounting services to BlackRock Investment Management (UK) Limited (BIM (UK) or the Investment Manager), which in turn subdelegates these services to The Bank of New York Mellon (International) Limited and also sub-delegates registration services to the Registrar, Computershare Investor Services PLC. Other service providers include the Depositary, The Bank of New York Mellon (International) Limited. Details of the contractual terms with these service providers are set out in the Directors’ Report on page 55. Business model The Company invests in accordance with the investment objective. The Board is collectively responsible to shareholders for the long term success of the Company and is its governing body. There is a clear division of responsibility between the Board and the Manager. Matters reserved for the Board include setting the Company’s strategy, including its investment objective and policy, setting limits on gearing, capital structure, governance, and appointing and monitoring of the performance of service providers, including the Manager. As the Company’s business model follows that of an externally managed investment trust, it does not have any employees and outsources its activities to third party service providers including the Manager who is the principal service provider. 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. Investment policy and strategy The Company seeks to achieve its objectives through a focused portfolio, consisting of approximately thirty to one hundred and fifty securities. Although the Company has the flexibility to invest within this range, at 30 November 2020 the portfolio consisted of 63 investments, and the detailed portfolio listing is provided on pages 28 to 30. There are no restrictions on investment in terms of geography or sub-sector and, in addition to equities, other types of securities, such as convertible bonds and debt issued primarily by mining or energy companies, may be acquired. Although most securities will be quoted, listed or traded on an investment exchange, up to 10% of the gross assets of the Group, at the time of investment, may be invested in unquoted securities. Investment in securities may be either direct or through other funds, including other funds managed by BlackRock or its associates, with up to 15% of the portfolio being invested in other listed investment companies, including listed investment trusts. Up to 10% of the gross assets of the Group, at the time of investment, may be invested in physical assets, such as gold and in securities of companies that operate in the commodities sector other than the mining and energy sectors. No more than 15% of the gross assets of the Group will be invested in any one company as at the date any such investment is made and the portfolio will not own more than 15% of the issued shares of any one company, other than the Company’s subsidiary. The Group may deal in derivatives, including options and futures, up to a maximum of 30% of the Group’s assets for the purposes of efficient portfolio management and to enhance portfolio returns. In addition, the Group is also permitted to enter into stock lending arrangements up to a maximum of 331/3% of the total asset value of the portfolio. The Group may, from time to time, use borrowings to gear its investment policy or in order to fund the market purchase of its own ordinary shares. This gearing typically is in the form 38 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600of an overdraft or short term facility, which can be repaid at any time. Under the Company’s Articles of Association, the Board is obliged to restrict the borrowings of the Company to an aggregate amount equal to 40% of the value of the gross assets of the Group. However, borrowings are not anticipated to exceed 20% of gross assets at the time of drawdown of the relevant borrowings. The Group’s financial statements are maintained in sterling. Although many investments are denominated and quoted in currencies other than sterling, the Company does not intend to employ a hedging policy against fluctuations in exchange rates, but may do so in the future if circumstances warrant implementing such a policy. No material change will be made to the investment policy without shareholder approval. Environmental, Social and Governance (“ESG”) impact The Board’s ESG policies are set out on pages 51 to 53. The direct impact of the Company’s activities is minimal as it has no employees, premises, physical assets or operations either as a producer or a provider of goods or services. Neither does it have customers. Its indirect impact occurs through the investments that it makes and this is mitigated through BlackRock’s ESG policies. Performance Details of the Company’s performance for the year are given in the Chairman’s Statement on page 5. The Investment Manager’s Report on pages 11 to 20 includes a review of the main developments during the year, together with information on investment activity within the Company’s portfolio. Results and dividends The Company’s revenue earnings for the year amounted to 4.31p per share (2019: 3.97p). Details of dividends paid and declared in respect of the year, together with the Company’s dividend policy, are set out on page 6 of the Chairman’s Statement. Future Prospects The Board’s main focus is the achievement of an annual dividend target and, over the long term, capital growth. The future of the Company is dependent upon the success of the investment strategy. The outlook for the Company is discussed in both the Chairman’s Statement on page 8 and in the Investment Manager’s Report on pages 11 to 20. Employees, social, community and human rights issues The Company has no employees and all the Directors are non-executive, therefore, there are no disclosures to be made in respect of employees. The Company believes that it is in shareholders’ interests to consider environmental, social and governance factors and human rights issues when selecting and retaining investments. Details of the Company’s policy on socially responsible investment are set out on page 71. Modern Slavery Act As an investment vehicle the Company does not provide goods or services in the normal course of business, and does not have customers. Accordingly, the Directors consider that the Company is not required to make any slavery or human trafficking statement under the Modern Slavery Act 2015. The Board considers the Company’s supply chain, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter. Directors and gender representation The Directors of the Company are set out in the Governance Structure and Directors’ biographies on pages 34 to 37. All the Directors held office throughout the year with the exception of Mr Adrian Brown (who was appointed to the Board on 10 December 2019) and Mr Andrew Robson who was appointed to the Board on 8 December 2020. The Board consists of four male Directors and one female Director. Key performance indicators A number of performance indicators (KPIs) are used to monitor and assess the Company’s success in achieving its objectives and to measure its progress and performance. The principal KPIs are described below: Performance At each meeting the Board reviews the performance of the portfolio as well as the net asset value and share price for the Company and compares this to the performance of other companies in the peer group. The Company does not have a benchmark; however the Board also reviews performance in the context of the blended performance of the EMIX Global Mining (ex Gold) Index, MSCI World Energy Index and the S&P Global Clean Energy Index and a 40:30:30 composite of the three indices effective from 1 June 2020. Information on the Company’s performance is given in the performance record on page 4 and the Chairman’s Statement and Investment Manager’s Report on pages 11 to 20 respectively. Share rating The Board monitors the level of the Company’s premium or discount to NAV on an ongoing basis and considers strategies for managing any premium or discount. In the year to 30 November 2020, the Company’s share price to NAV traded in the range of a discount of 3.6% to 24.6% on a cum income basis. The average discount for the year was 13.7%. No shares were issued during the year. The Company bought back a total of 700,000 shares during the year and further details are given in the Chairman’s Statement on page 7. Details of shares bought back since the year end date are given in note 14 on page 104. Further details setting out how the discount or premium at which the Company’s shares trade is calculated are included in the Glossary on page 132. Section 3: Governance 39 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Strategic report continued Ongoing charges The ongoing charges represent the Company’s management fee and all other recurring operating expenses, excluding finance costs, direct transaction costs, custody transaction charges VAT recovered, taxation and certain non-recurring items, expressed as a percentage of average net assets. The ongoing charges are based on actual costs incurred in the year as being the best estimate of future costs. The Board reviews the ongoing charges and monitors the expenses incurred by the Company on an ongoing basis. A definition setting out in detail how the ongoing charges ratio is calculated is included in the Glossary on pages 133 to 134. Dividend target and income generation The level of income is considered at each meeting and the Board receives detailed income forecasts. The Board also monitors performance relative to a peer group of commodities and natural resources focused open and closed-end funds and also regularly reviews the Company’s performance attribution analysis to understand how performance was achieved. This provides an understanding of how components such as sector exposure, stock selection and asset allocation impacted performance. Further details are provided in the Investment Manager’s Report on pages 11 to 20. The table below sets out the key KPIs for the Company. These KPIs fall within the definition of ‘Alternative Performance Measures’ (APMs) under guidance issued by the European Securities and Markets Authority (ESMA) and additional information explaining how these are calculated is set out in the Glossary on pages 132 to 134. Key Performance Indicators Net asset value total return1,2 Share price total return1,2 Discount to net asset value (at year end)2,3 Revenue return per share4 Ongoing charges2, 5 Year ended 30 November 2020 Year ended 30 November 2019 13.9% 16.0% 11.6% 4.31p 1.25% 4.4% (1.3%) 12.3% 3.97p 1.48% 1 2 3 4 5 This measures the Company’s NAV and share price total returns, which assumes dividends paid by the Company have been reinvested. Alternative Performance Measures, see Glossary on pages 132 to 134. This is the difference between the share price and the cum-income NAV per share. Revenue return per share of 4.31 pence per share for the year to 30 November 2020 includes an amount of 0.83 pence per share in respect of withholding tax rebates that are non-recurring. See page 101 for additional information. Ongoing charges represent the management fee and all other recurring operating expenses excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain non-recurring items, expressed as a percentage of daily average net assets. Principal risks The Company is exposed to a variety of risks and uncertainties. The Board has in place a robust process to identify, assess and monitor the principal risks of the Company. A core element of this process is the Company’s risk register which identifies the risks facing the Company and assesses the likelihood and potential impact of each risk and the controls established for mitigation. A residual risk rating is then calculated for each risk. The risk register is regularly reviewed and the risks reassessed. The risk environment in which the Company operates is also monitored and regularly appraised. New risks are also added to the register as they are identified which ensures that the document continues to be an effective risk management tool. The risk register, its method of preparation and the operation of key controls in the Manager’s and third party service providers’ systems of internal control are reviewed on a regular basis by the Audit and Management Engagement Committee. In order to gain a more comprehensive understanding of the Manager’s and other third party service providers’ risk management processes, and how these apply to the Company’s business, BlackRock’s internal audit department provides an annual presentation to the Audit and Management Engagement Committee Chairman setting out the results of testing performed in relation to BlackRock’s internal control processes. The Audit and Management Engagement Committee also periodically receives presentations from BlackRock’s Risk & Quantitative Analysis teams, and reviews Service Organisation Control (SOC 1) reports from BlackRock and from the Company’s custodian (The Bank of New York Mellon (International) Limited). The custodian is appointed by the Company’s Depositary and does not have a direct contractual relationship with the Company. The Board has undertaken a robust assessment of both the principal and emerging risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. The COVID-19 pandemic has given rise to unprecedented challenges for businesses across the globe and the Board has taken into consideration the risks posed to the Company by the crisis and incorporated these into the Company’s risk register. The risks identified by the Board have been described in the table that follows, together with an explanation of how they are managed and mitigated. Emerging risks are considered by the Board as they come into view and are incorporated into the existing review of the Company’s risk register. Additionally, the Manager considers emerging risks in numerous forums and the Risk and Quantitative Analysis team produces an annual risk survey. Any material risks of relevance to the Company identified through the annual risk survey will be communicated to the Board. The Board will continue to assess these risks on an ongoing basis. In relation to the UK Code, the Board is confident that the procedures that the Company has put in place are sufficient to ensure that the necessary monitoring of risks and controls has been carried out throughout the reporting period. The principal risks and uncertainties faced by the Company during the financial year, together with the potential effects, controls and mitigating factors are set out in the following table. 40 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Principal risk Investment performance The returns achieved are reliant primarily upon the performance of the portfolio. The Board is responsible for: •  setting the investment strategy to fulfil the Company’s objective; and •  monitoring the performance of the Investment Manager and the implementation of the investment strategy. An inappropriate investment strategy may lead to: •  poor performance; •  a reduction or permanent loss of capital; and •  dissatisfied shareholders and reputational damage. Income/dividend The ability to pay dividends, and future dividend growth, is dependent on a number of factors including the level of dividends earned from the portfolio and income generated from the option writing strategy. Income returns from the portfolio are dependent, among other things, upon the Company successfully pursuing its investment policy. Any change in the tax treatment of dividends or interest received by the Company including as a result of withholding taxes or exchange controls imposed by jurisdictions in which the Company invests may reduce the level of dividends received by shareholders. Gearing The Company’s investment strategy may involve the use of gearing, including borrowings. Gearing may be generated through borrowing money or increasing levels of market exposure through the use of derivatives. The Company currently has an uncommitted overdraft facility with The Bank of New York Mellon (International) Limited. The use of gearing exposes the Company to the risk associated with borrowing. Gearing provides an opportunity for greater returns where the return on the Company’s underlying assets exceeds the cost of borrowing. It is likely to have the opposite effect where the return on the underlying assets is below the cost of borrowings. Consequently, the use of borrowings by the Company may increase the volatility of the NAV. Mitigation/control To manage this risk the Board: •  regularly reviews the Company’s investment mandate and long term strategy; •  has set investment restrictions and guidelines which the Investment Manager monitors and regularly reports on; •  receives from the Investment Manager a regular explanation of stock selection decisions, portfolio exposure, gearing and any changes in gearing and the rationale for the composition of the investment portfolio; •  monitors the maintenance of an adequate spread of investments in order to minimise the risks associated with factors specific to particular sectors, based on the diversification requirements inherent in the investment policy. The Board monitors this risk through the receipt of detailed income forecasts and considers the level of income at each meeting. The Company has the ability to make dividend distributions out of special reserves and capital reserves as well as revenue reserves to support any dividend target. These reserves totalled £43.5 million at 30 November 2020. In setting the dividend target each year, the Board is mindful of the balance of shareholder returns between income and capital. The Company’s Articles of Association limit borrowings to an aggregate amount equal to 40% of the value of the gross assets of the Group. However, to further manage this risk the Board does not anticipate borrowings will exceed 20% of gross assets at the time of drawdown. The use of derivatives, including options and futures has been limited to a maximum of 30% of the Group’s assets. The Investment Manager will only use gearing when confident that market conditions and opportunities exist to enhance investment returns. The Investment Manager reports to the Board on a regular basis the levels of gearing in place as compared to limits set by the Board under the investment policy and by the Manager as Alternative Investment Fund Manager (AIFM) under the Alternative Investment Fund Managers’ Directive (AIFMD). The Board monitor gearing levels and will raise any queries or concerns in respect of changes in the gearing level with the Investment Manager. Section 3: Governance 41 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Strategic report continued Principal risk Mitigation/control Legal and regulatory compliance The Company has been approved by HM Revenue & Customs as an investment trust, subject to continuing to meet the relevant eligibility conditions and operates as an investment trust in accordance with Chapter 4 of Part 24 of the Corporation Tax Act 2010. As such, the Company is exempt from capital gains tax on the profits realised from the sale of its investments. Any breach of the relevant eligibility conditions could lead to the Company losing investment trust status and being subject to corporation tax on capital gains realised within the Company’s portfolio. Any serious breach could result in the Company and/or the Directors being fined or the subject of criminal proceedings or the suspension of the Company’s shares which would in turn lead to a breach of the Corporation Tax Act 2010. Amongst other relevant laws and regulations the Company is required to comply with the provisions of the Companies Act 2006, the Alternative Investment Fund Managers’ Directive, the Market Abuse Regulation, the UK Listing Rules and the FCA’s Disclosure Guidance and Transparency Rules. The Investment Manager monitors investment movements and the amount of proposed dividends, if any, to ensure that the provisions of Chapter 4 of Part 24 of the Corporation Tax Act 2010 are not breached. The results are reported to the Board at each meeting. Compliance with the accounting rules affecting investment trusts is carefully and regularly monitored. The Company Secretary and the Company’s professional advisers provide regular reports to the Board for their review in respect of compliance with all applicable rules and regulations. Following authorisation under the AIFMD, the Company and its appointed AIFM are subject to the risks that the requirements of this Directive are not correctly complied with. The Board and the AIFM also monitor changes in government policy and legislation which may have an impact on the Company. The Market Abuse Regulation came into force across the EU on 3 July 2016. The Board has taken steps to ensure that individual Directors (and their Persons Closely Associated) are aware of their obligations under the regulation and has updated internal processes, where necessary, to ensure the risk of non-compliance is effectively mitigated. 42 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Principal risk Mitigation/control Operational The Company relies on the services provided by third parties. Accordingly, it is dependent on the control systems of the Manager and The Bank of New York Mellon (International) Limited (who act as both Depositary and Fund Accountant and who maintain the Company’s assets, settlement and accounting records). The security of the Company’s assets, dealing procedures, accounting records and adherence to regulatory and legal requirements depend on the effective operation of the systems of the third party service providers. Failure by any service provider to carry out its obligations to the Company could have a material adverse effect on the Company’s performance. Disruption to the accounting, payment systems or custody records could prevent the accurate reporting and monitoring of the Company’s financial position. Due diligence is undertaken before contracts are entered into with third party service providers. Thereafter, the performance of the provider is subject to regular review and reported to the Board. The Fund Accountant’s and the Manager’s internal control processes are regularly tested and monitored throughout the year and are evidenced through their SOC 1 reports, which are subject to review by an Independent Service Assurance Auditor. The SOC 1 reports provide assurance in respect of the effective operation of internal controls. These reports are provided to the Audit and Management Engagement Committee. The Company’s financial assets are subject to a strict liability regime and in the event of a loss of assets, the Depositary must return assets of an identical type or the corresponding amount, unless able to demonstrate the loss was a result of an event beyond its reasonable control. The Board reviews the overall performance of the Manager, Investment Manager and all other third party service providers on a regular basis. The Board also considers the business continuity arrangements of the Company’s key service providers on an ongoing basis and reviews these as part of its review of the Company’s risk register. In respect of the unprecedented and emerging risks posed by the COVID-19 pandemic in terms of the ability of service providers to function effectively, the Board has received reports from key service providers setting out the measures that they have put in place to address the crisis, in addition to their existing business continuity framework. Having considered these arrangements and reviewed service levels since the crisis has evolved, the Board are confident that a good level of service has and will be maintained. Section 3: Governance 43 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Strategic report continued Principal risk Mitigation/control Market Market risk arises from volatility in the prices of the Company’s investments. The price of shares of companies in the mining, conventional energy and energy transition sectors can be volatile and this may be reflected in the NAV and market price of the Company’s shares. The Board considers the diversification of the portfolio, asset allocation, stock selection, and levels of gearing on a regular basis and has set investment restrictions and guidelines which are monitored and reported on by the Investment Manager. The Board monitors the implementation and results of the investment process with the Investment Manager. The Company invests in the mining, conventional energy and energy transition sectors in many countries globally and will also be subject to country-specific risk. A lack of growth in world or country-specific industrial production may adversely affect metal and energy prices. Under the Company’s investment policy, the Investment Manager has the ability to invest in energy transition stocks and is mindful of the impact of any shift in energy consumption towards less carbon intensive energy supply. This is taken into account by the Investment Manager in building a well diversified portfolio. Companies operating within the sectors in which the Company invests may be impacted by new legislation governing climate change and environmental issues, which may have a negative impact on their valuation and share price. There is the potential for the Company to suffer loss through holding investments in the face of negative market movements. Financial The Company’s investment activities expose it to a variety of financial risks that include interest rate risk and foreign currency risk. The Company invests in both sterling and non-sterling denominated securities. Consequently, the value of investments in the portfolio made in non-sterling currencies will be affected by currency movements. The Board also recognises the benefits of a closed-end fund structure in extremely volatile markets such as those experienced with the COVID-19 pandemic. Unlike open- ended counterparts, closed-end funds are not obliged to sell- down portfolio holdings at low valuations to meet liquidity requirements for redemptions. During times of elevated volatility and market stress, the ability of a closed-end fund structure to remain invested for the long term enables the Portfolio Managers to adhere to disciplined fundamental analysis from a bottom-up perspective and be ready to respond to dislocations in the market as opportunities present themselves. Details of these risks are disclosed in note 16 to the Financial Statements, together with a summary of the policies for managing these risks. Viability statement In accordance with provision 31 of the 2018 UK Corporate Governance Code, the Directors have assessed the prospects of the Company over a longer period than the twelve months referred to by the ‘Going Concern’ guidelines. The Board is cognisant of the uncertainty surrounding the potential duration of the COVID-19 pandemic, its impact on the global economy and the prospects for many of the Company’s portfolio holdings. Notwithstanding this crisis, and given the factors stated below, the Board expects the Company to continue for the foreseeable future and has therefore conducted this review for a period of three years. This is generally the investment holding period investors consider while investing in the sector. • the Company predominantly invests in highly liquid, large listed companies so its assets are readily realisable; • the Company has gearing and no concerns around facilities, headroom or covenants; • the Company’s forecasts for revenues, expenses and liabilities are relatively stable and it has largely fixed overheads which comprise a small percentage of net assets (1.25%); and • the business model should remain attractive for longer than three years, unless there is significant economic or regulatory change. In its assessment of the viability of the Company the Directors have noted that: The Directors have also reviewed: • the impact of a significant fall in global commodity equity markets on the value of the Company’s investment 44 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600portfolio, factoring in the volatility seen over the course of the year under review related to the COVID-19 pandemic; • the potential impact of the COVID-19 pandemic on the ability of portfolio companies to pay dividends, and the consequent impact on the Company’s portfolio yield and ability to pay dividends; • the ongoing relevance of the Company’s investment objective, business model and investment policy in the current environment; and • the level of demand for the Company’s shares. The Board has also considered a number of other factors in its assessment, including: • portfolio liquidity in light of the COVID-19 pandemic on global market liquidity. As at 13 January 2021, 99.9% of the portfolio was estimated as being capable of being liquidated within 2 to 7 days; • the Company’s revenue and expense forecasts in light of the COVID-19 pandemic and its anticipated impact on dividend income and market valuations. The Board is confident that the Company’s business model remains viable and that there are sufficient resources to meet all liabilities as they fall due for the period under review; • the Company’s borrowing facility and the fact that the Company continues to meet its financial covenants in respect of this facility; • the principal risks and uncertainties as set out above and the fact that the Company has appropriate controls and processes in place to manage these and to maintain its operating model, even given the challenges posed by COVID-19; • the operational resilience of the Company and its key service providers and their ability to continue to provide a good level of service for the foreseeable future; • the effectiveness of business continuity plans in place for the Company and key service providers; and • the level of income generated by the Company and future income forecasts. Based on the results of their analysis, the Directors have concluded that there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment. Section 3: Governance 45 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Strategic report continued Section 172 Statement: promoting the success of BlackRock Energy and Resources Income Trust plc The Companies (Miscellaneous Reporting) Regulations 2018 require Directors to explain in detail how they have discharged their duties under section 172(1) of the Companies Act 2006 in promoting the success of their companies for the benefit of members as a whole. This enhanced disclosure covers how the Board has engaged with and understands the views of stakeholders and how stakeholders’ needs have been taken into account, the outcome of this engagement and the impact that it has had on the Board’s decisions. As the Company is an externally managed investment company and does not have any employees or customers, the Board consider the main stakeholders in the Company to be the shareholders, key service providers (being the Manager and Investment Manager, the Custodian, Depositary, Registrar and Broker) and investee companies. The reasons for this determination, and the Board’s overarching approach to engagement, are set out in the table below. Stakeholders Shareholders Continued shareholder support and engagement are critical to the continued existence of the Company and the successful delivery of its long-term strategy. The Board is focused on fostering good working relationships with shareholders and on understanding the views of shareholders in order to incorporate them into the Board’s strategy and objectives in delivering long-term growth and income. Manager and Investment Manager The Board’s main working relationship is with the Manager, who is responsible for the Company’s portfolio management (including asset allocation, stock and sector selection) and risk management, as well as ancillary functions such as administration, secretarial, accounting and marketing services. The Manager has sub-delegated portfolio management to the Investment Manager. Successful management of shareholders’ assets by the Investment Manager is critical for the Company to successfully deliver its investment strategy and meet its objective. The Company is also reliant on the Manager as AIFM to provide support in meeting relevant regulatory obligations under the AIFMD and other relevant legislation. Other key service providers Investee companies Portfolio holdings are ultimately shareholders’ assets, and the Board recognise the importance of good stewardship and communication with investee companies in meeting the Company’s investment objective and strategy. The Board monitors the Manager’s stewardship arrangements and receives regular feedback from the Manager in respect of meetings with the management of portfolio companies. In order for the Company to function as an investment trust with a listing on the premium segment of the official list of the FCA and trade on the London Stock Exchange’s (LSE) main market for listed securities, the Board relies on a diverse range of advisors for support in meeting relevant obligations and safeguarding the Company’s assets. For this reason the Board consider the Company’s Custodian, Depositary, Registrar and Broker to be stakeholders. The Board maintains regular contact with its key external service providers and receives regular reporting from them through the Board and committee meetings, as well as outside of the regular meeting cycle. 46 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600A summary of the key areas of engagement undertaken by the Board with its key stakeholders in the year under review and how Directors have acted upon this to promote the long term success of the Company are set out in the table below. Area of Engagement Issue Engagement Impact Investment Mandate and Objective The Board is committed to promoting the role and success of the Company in delivering on its investment mandate to shareholders over the long term. However, the Board recognises that the sectors in which the Company invests are undergoing structural changes, with a shift in the energy sector away from carbon based energy supplies towards alternative and renewable energy sources. The extractive industries in which the companies in the Company’s investment universe operate are facing ethical and sustainability issues that cannot be ignored by asset managers and investment companies alike. More than ever, consideration of sustainable investment is a key factor in making investment decisions. The Board also has responsibility to shareholders to ensure that the Company’s portfolio of assets is invested in line with the stated investment objective and in a way that ensures an appropriate balance between spread of risk and portfolio returns. The Board believes that responsible investment and sustainability are integral to the longer term delivery of growth in capital and income and has worked very closely with the Manager throughout the year to regularly review the Company’s performance, investment strategy and underlying policies to ensure that the Company’s investment objective continues to be met in an effective, responsible and sustainable way that is transparent to current and future investors. This culminated with an announcement on 17 March 2020 that, within the parameters of the Company’s existing investment policy, it was the Board’s intention to increase the focus on exposure to stocks that are benefitting from the transition in the energy sector, away from carbon-based energy supplies towards alternative and renewable sources, such that these would represent a greater proportion of the stocks held within the portfolio in the medium term (subject to market conditions). The Manager’s approach to the consideration of ESG factors in respect of the Company’s portfolio, as well as its engagement with investee companies to encourage the adoption of sustainable business practices which support long term value creation, are kept under review by the Board. The Manager reports to the Board in respect of its consideration of ESG factors and how these are integrated into the investment process; a summary of BlackRock’s approach to ESG and sustainability is set out on pages 51 to 53. With effect from 1 June 2020 the Manager began to transition the Company’s portfolio to reflect an increased focus on investments that would benefit from the transition in the energy sector (including alternative and renewable energy stocks). Although 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 and there is not an index that appropriately reflects the Company’s blended exposure to the energy and mining sectors) for internal purposes, the Board has historically compared the performance of the portfolio against a bespoke internal 50:50 mining and energy composite index. This internal reference index has been amended in line with portfolio changes noted above such that the neutral sector weightings of 50% mining and 50% traditional energy have been altered to 40% mining, 30% traditional energy and 30% sustainable energy sector weightings. The Board believes that this shift will enable shareholders to benefit from investment opportunities in well-established, high quality dividend paying renewable energy companies as well as companies set to benefit from changing energy consumption and structural changes in the energy sector. More details on the portfolio transition and the impact on performance can be found in the investment manager’s report on pages 11 to 20. Section 3: Governance 47 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Strategic report continued Area of Engagement Issue Engagement Impact Discount Management The Board recognizes the importance to shareholders that the market price of the Company’s shares should not trade at either a significant discount or premium to the NAV. One of the Board’s long- term strategic aspirations is that the Company’s shares should trade consistently at a price close to the NAV per share. For much of the second half of the year, the shares traded consistently at a discount. Between 1 December 2019 and 30 November 2020 the Company bought back 700,000 shares at a cost of £466,000. Since the year end and up to the date of this report, the Company has not bought back any further shares. The Company contributed during the year to a focused investment trust sales and marketing initiative operated by BIM (UK) on behalf of the investment trusts under its management. For the year ended 30 November 2020, the Group’s contribution to the consortium element of the initiative, which enables the trusts to achieve efficiencies by combining certain sales and marketing activities, represented 0.025% per annum of its net assets (£88.5million) as at 31 December 2019, and this contribution was matched by BIM (UK). The Company’s average discount for the year to 30 November 2020 was 13.7% and as at 2 February 2021 the discount stands at 8.6%. The Board monitors the Company’s discount on an ongoing basis and has met with the Manager and the Company’s Broker on a regular basis to discuss methods to manage the discount. A range of discount control mechanisms have been considered and the benefits and disadvantages of these have been discussed at length. The Board has the ability to buy back up to 14.99% of the Company’s share capital with pre- emption rights disapplied, and will seek to renew this authority at the forthcoming AGM. Although the Board is committed to making share purchases where appropriate and has done so in the past, the Board must balance this against the impact such action has on further reducing the overall size of the Company, which could exacerbate any discount issues. The Board is prepared to undertake share buybacks in normal market conditions and during the period from 1 December 2019 to 29 February 2020, the Company bought back a total of 700,000 shares; however, with the exceptional global market volatility experienced this year driven by the COVID-19 pandemic, from March 2020 the Board has been less active in buying back the Company’s shares as a result, acting on advice from its broker (Winterflood) that share buybacks in these prevailing market conditions will not have a material impact on the discount. The Board continues to monitor the Company’s discount on a daily basis and consider whether it should take action in terms of buybacks as market conditions evolve. In addition, the Board has worked closely with the Manager to develop the Company’s marketing strategy, with the aim of ensuring effective communication with existing shareholders and to attract new shareholders to the Company in order to improve liquidity in the Company’s shares and to sustain the share rating of the Company. 48 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Area of Engagement Issue Engagement Impact Dividend target Service levels of third party providers A key element of the Company’s investment objective is to achieve an annual dividend target. The Board is cognisant that portfolio investments with a high yield may have lower capital growth, and that seeking to ensure that any dividend target is covered by current year dividend revenue may result in a lower total return. Conversely, a move to invest a higher proportion of the portfolio in higher growth investments (including certain Energy Transition stocks) may result in a lower yielding portfolio. In previous years the Manager has written options to generate premium income to ensure that the dividend is covered. The Board acknowledges the importance of ensuring that the Company’s principal suppliers are providing a suitable level of service: this includes the Manager in respect of investment performance and delivering on the Company’s investment mandate; the Custodian and Depositary in respect of their duties towards safeguarding the Company’s assets; the Registrar in its maintenance of the Company’s share register and dealing with investor queries and the Company’s Brokers in respect of the provision of advice and acting as a market maker for the Company’s shares. The Board undertook a review of option writing activity in conjunction with the Manager to determine the most effective approach for meeting the dividend target whilst generating the optimal level of total return for shareholders. The Manager reports to the Board on the Company’s performance on a regular basis. The Board carries out a robust annual evaluation of the Manager’s performance, its commitment and available resources. The Board performs an annual review of the service levels of all third party service providers and concludes on their suitability to continue in their role. The Board receives regular updates from the AIFM, Depositary, Registrar and Brokers on an ongoing basis. In light of the challenges presented by the COVID-19 pandemic to the operation of businesses across the globe, the Board has worked closely with the Manager to gain comfort that relevant business continuity plans are operating effectively for all of the Company’s key service providers. In January 2019 the Board announced that it was adopting a more flexible approach, recognising that it was possible to generate similar or improved returns for the Company with a lower level of option writing (particularly in rising markets where returns might be curtailed by writing call options). The Board has committed to the use of revenue reserves and capital reserves as necessary to meet the current dividend target of 4.00 pence per share (a yield of 5.6% based on the share price at 30 November 2020) to the extent that current year revenue is not sufficient. For the year to 30 November 2020, total dividends of 4.00p per share paid were covered by current year revenue (which included a one- off boost of 0.83p per share as a result of a tax recovery as a result of the FII GLO litigation; more details are given on page 101. All performance evaluations were performed on a timely basis and the Board concluded that all key third-party service providers, including the Manager were operating effectively and providing a good level of service. The Board has received updates in respect of business continuity planning from the Company’s Manager, Custodian, Depositary, Fund Accountant, Registrar, Printer and Broker and is confident that arrangements are in place to ensure a good level of service will continue to be provided despite the impact of the COVID-19 pandemic. Section 3: Governance 49 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Strategic report continued Area of Engagement Issue Engagement Impact Board composition The Board is committed to ensuring that its own composition brings an appropriate balance of knowledge, experience and skills, and that it is compliant with best corporate governance practice under the UK Code, including guidance on tenure and the composition of the Board’s committees. The Board undertook a review of succession planning arrangements in the year and identified the need for a new Director. The Nomination Committee agreed the selection criteria and the method of selection, recruitment and appointment. Board diversity, including gender, was taken into account when establishing the criteria. The services of an external search consultant, Cornforth Consulting Limited, was used to identify potential candidates. Mr Ruck Keene, whose tenure exceeded nine years, retired from the Board on 17 March 2020. The Board appointed Mr Andrew Robson as a Director of the Company with effect from 8 December 2020. Mr Robson’s biography is set out on page 37. Details of each Directors’ contribution to the success and promotion of the Company are set out in the Directors’ report on pages 59 and 60. Mr Merton, whose tenure exceeds nine years, has announced his intention to retire at the 2021 AGM and he will not be standing for re-election. 50 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Sustainability and our ESG policies The importance of considering ESG when investing in the Natural Resources Sector Environmental Social Corporate Governance BlackRock believes it is vital that natural resources companies maintain their social licence to operate. By this, BlackRock means that companies maintain broad acceptance from their employees, stakeholders, local communities and the national government. The portfolio management team’s site visits to companies’ assets provide them with valuable insight into these issues which often cannot be properly understood from company reports. As with all companies, good corporate governance is critical for natural resources companies. In conjunction with the BlackRock Investment Stewardship team, the portfolio management team actively engage with companies on a wide range of governance issues including board independence, executive compensation, shareholder protection and timely disclosure. As well as the longer term contribution to carbon emissions and the impact on the environment, digging mines and drilling for oil will inevitably have an impact on local surroundings. Key is how companies manage this process ensuring the benefits are appropriately shared amongst all stakeholders. The value wiped off the market cap of companies like BP, after the Macondo oil spill, and BHP and Vale, after the Samarco tailings dam failure, highlights the key role that ESG has on share price performance. As set out in more detail below, BlackRock will be aligning its engagement and stewardship priorities to UN Sustainable Development Goals and is committed to voting against management to the extent that they have not demonstrated sufficient progress in how they manage these environmental impacts and operating events. The Board’s approach Environmental, social and governance (ESG) issues can present both opportunities and threats to long term investment performance. The Company’s investment universe comprises sectors that are undergoing significant structural change and are likely to be highly impacted by increasing regulation as a result of climate change and other social and governance factors. Your Board is committed to ensuring that we have appointed a manager that applies the highest standards of ESG practice, and also one that has the skill and vision to navigate the structural transition that the Company’s investment universe is undergoing. The Board believes effective engagement with management is, in most cases, the most effective way of driving meaningful change in the behaviour of investee company management. This is particularly true for the Company’s Manager given the extent of BlackRock’s shareholder engagement (BlackRock held 3,040 engagements with 2,020 companies based in 54 markets for the year to 30 June 2020). As well as the influence afforded by its sheer scale, the Board believes that BlackRock is well placed as Manager to fulfil these requirements due to the integration of ESG into its investment processes, the emphasis it places on sustainability, its collaborative approach in its investment stewardship activities and its position in the industry as one of the largest suppliers of sustainable investment products in the global market. More information on BlackRock’s approach to sustainability is set out below. Further details of ESG in the Investment Manager's investment process are given on pages 51 to 53. Responsible ownership – BlackRock’s approach As a fiduciary to its clients, BlackRock has built its business to protect and grow the value of clients’ assets. From BlackRock’s perspective, business-relevant sustainability issues can contribute to a company’s long term financial performance, and thus further incorporating these considerations into the investment research, portfolio construction, and stewardship process can enhance long- term risk adjusted returns. By expanding access to data, insights and learning on material ESG risks and opportunities in investment processes across BlackRock’s diverse platform, BlackRock believes that the investment process is greatly enhanced. ESG factors have been a key consideration of the BlackRock Natural Resources Team’s investment process since the team was formed in 1991 and the Company’s portfolio managers work closely with BlackRock’s Investment Stewardship team to assess the governance quality of companies and investigate any potential issues, risks or opportunities. The portfolio managers use ESG information when conducting research and due diligence on new investments and again when monitoring investments in the portfolio. What does the transition to a lower carbon world mean for commodities? The world is moving towards lower carbon solutions to tackle climate change. This will have a major impact on global commodity demand and we recognise that we will need to be adept at positioning the Company for such changes. The Section 3: Governance 51 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Strategic report continued proportion of global electricity generation accounted for by solar and wind is set to rise sharply over the next 20 years. Meanwhile, the rise of electric vehicles will eventually be a headwind for global oil demand. However, while we see electric vehicles as a longer-term problem for oil we do not expect peak oil demand until the 2030’s. We believe this allows oil and traditional energy equities room for at least one more growth cycle. This trend will be negative for some commodities, but it also creates opportunities elsewhere. For example, the electric vehicle theme will drive demand for certain commodities used in the batteries, such as lithium, cobalt and nickel. BlackRock’s approach to sustainable investing Considerations about sustainability have been at the centre of BlackRock’s investment approach for many years and the firm offers more than 200 sustainable products and solutions. BlackRock believes that climate change is now a defining factor in companies’ long term prospects, and that it will have a significant and lasting impact on economic growth and prosperity. BlackRock believes that climate risk now equates to investment risk, and this will drive a profound reassessment of risk and asset values as investors seek to react to the impact of climate policy changes. This in turn is likely to drive a significant reallocation of capital away from traditional carbon intensive industries over the next decade. In January 2020, with this transition in mind, BlackRock announced that it would accelerate its sustainable investing efforts and make a number of enhancements to its investment management and risk processes, including the following: • • • Heightening scrutiny on sectors and issuers with a high ESG risk, such as thermal coal producers, due to the investment risk they present to client portfolios; Putting ESG analysis at the heart of Aladdin (BlackRock’s proprietary trading platform) and using proprietary tools to help analyse ESG risk; and Placing oversight of ESG risk with BlackRock’s Risk and Quantitative Analysis group (RQA), to ensure that ESG risk is given increased weighting as a risk factor and is analysed with the same weight given to traditional measures such as credit or liquidity risk. As part of BlackRock’s structured investment process, ESG risks and opportunities are considered within the portfolio management team’s fundamental analysis of companies and industries. The team aim to assess financial materiality in relation to ESG via data insights integrated into the team’s standard research templates shown in the BlackRock ESG Risk Window. The Risk Window, using MSCI data, flags any stock-specific concerns allowing investors to investigate them further. It screens for Governance, Environment and Social metrics through over 400 single data points and orders potential risks from High to Managed. Investors also have access to other data sources such as RepRisk or SustainAnalytics to complement the Risk Window. The team’s unparalleled access to company management allows it to engage on these issues through questioning management teams and conducting site visits. Team members look to understand how management approaches ESG risks and opportunities and the potential impact this may have on company financials. Further engagement is carried out by the BlackRock Investment Stewardship team (BIS), who meet with boards of companies frequently to evaluate how companies are strategically managing their longer-term issues, including those surrounding ESG. Through this combination of quantitative and qualitative assessment, the team ensure that its understanding of the portfolio’s investments is thorough, reliable and up to date. The team’s understanding of ESG issues is further supported by BlackRock’s Sustainable Investment Team (BSI). BSI look to advance ESG research and integration, active engagement and the development of sustainable investment solutions across the firm. BlackRock believes environmental, social and governance issues have real financial impacts over the long-term. The sustainable investing effort is embedded into BlackRock’s culture from the top down as it believes that a company’s ability to manage environmental, social, and governance matters demonstrates the leadership and good governance that is essential to sustainable growth. Investment Stewardship BlackRock also places a strong emphasis on sustainability in its stewardship activities and has engaged with companies on sustainability-related questions for a number of years. This year we made an explicit ask that companies align their disclosures to the Task Force on Climate-related Financial Disclosures (TCFD) framework and the Sustainability Accounting Standards Board (SASB) standards. This includes each company’s plan for operating under a scenario where the Paris Agreement’s goal of limiting global warming to less than two degrees is fully realised, as expressed by the TCFD guidelines. To this end, BlackRock joined Climate Action 100+, a natural progression in our work to advance sustainable business practices aligned with TCFD. BlackRock has aligned its engagement and stewardship priorities to UN Sustainable Development Goals (including Gender Equality and Affordable and Clean Energy). BlackRock is committed to voting against management to the extent that they have not demonstrated sufficient progress on sustainability issues. BlackRock is committed to transparency in terms of disclosure on its engagement with companies and voting rationales. This year, BlackRock voted against or withheld votes from 5,130 directors at 2,809 different companies driven by concerns regarding director independence, executive compensation, insufficient progress on board diversity, and overcommitted directors reflecting our 52 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600intensified focus on sustainability risks. More details about BlackRock’s investment stewardship process can be found on BlackRock’s website at www.blackrock.com/corporate/ about-us/investment-stewardship. In terms of its own reporting, BlackRock believes that the SASB provides a clear set of standards for reporting sustainability information across a wide range of issues, from labour practices to data privacy to business ethics. For evaluating and reporting climate-related risks, as well as the related governance issues that are essential to managing them, the TCFD provides a valuable framework. BlackRock recognise that reporting to these standards requires significant time, analysis, and effort. BlackRock’s own SASB-aligned disclosure is available on its website at www.blackrock.com/corporate/literature/continuous- disclosure-and-important-information/blackrock-2019- sasb-disclosure.pdf, and BlackRock has published a detailed TCFD-aligned report on its 2020 activities which can be found at https://www.blackrock.com/corporate/literature/ continuous-disclosure-and-important-information/tcfd- report-2020-blkinc.pdf. More information on BlackRock’s policies on Corporate Sustainability can be found on BlackRock’s website at www.blackrock.com/corporate/ sustainability. By order of the Board SARAH BEYNSBERGER For and on behalf of BlackRock Investment Management (UK) Limited Company Secretary 4 February 2021 Section 3: Governance 53 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Directors’ report The Directors present the Annual Report and Financial Statements of the Company and its subsidiary (together the Group) for the year ended 30 November 2020. Status of the Company The Company carries on business as an investment trust. It has been approved by HM Revenue & Customs as an investment trust in accordance with sections 1158 and 1159 of the Corporation Tax Act 2010, subject to the Company continuing to meet eligibility conditions. The Directors are of the opinion that the Company has conducted its affairs in a manner which will satisfy the conditions for continued approval. The Company is domiciled in the UK as an investment company within the meaning of section 833 of the Companies Act 2006. It is not a close company and has no employees. As an investment company that is managed and marketed in the United Kingdom, the Company is an Alternative Investment Fund (AIF) falling within the scope of, and subject to, the requirements of the Alternative Investment Fund Managers’ Directive (AIFMD). The Company is governed by the provisions of the European Union (Alternative Investment Fund Managers) Regulations 2013 (the Regulations) and is required to be authorised by the Financial Conduct Authority (FCA). It must comply with a number of obligations, including the appointment of an Alternative Investment Fund Manager (AIFM) and a Depositary to carry out certain functions. The AIFM must also comply with the Regulations in respect of leverage, outsourcing, conflicts of interest, risk management, valuation, remuneration and capital requirements and must also make additional disclosures to both shareholders and the FCA. Further details are set out on the Company’s website at blackrock.com/uk/beri, the Regulatory Disclosures section on pages 128 and 129 and in the notes to the financial statements on pages 106 to 117. The Company’s ordinary shares are eligible for inclusion in the stocks and shares component of an Individual Savings Account (ISA). Shareholder Rights Directive II The Shareholder Rights Directive II took effect from 10 June 2019 with some transitional provisions. It encourages long term shareholder engagement and transparency between companies and shareholders. In substantive terms the changes are small for investment companies and the majority of requirements apply to the Company’s remuneration policy and disclosure of processes, as well as related party transactions. There are also additional rules for Alternative Investment Fund Managers and proxy advisers. GDPR Data protection rights were harmonised across the European Union following the implementation of the General Data Protection Regulation (“GDPR”) on 25 May 2018. The Board has sought and received assurances from its third-party service providers that they have taken appropriate steps to ensure compliance with the new regulation. The Company’s ‘Data Privacy Policy’ can be found on the Company’s website at www.blackrock.com/uk/beri. Facilitating retail investments The Company currently conducts its affairs so that the shares issued by the Company can be recommended by independent financial advisers to ordinary retail investors in accordance with the FCA’s rules in relation to non- mainstream pooled investments and intends to continue to do so for the foreseeable future. The shares are excluded from the FCA’s restrictions which apply to non-mainstream pooled investments because they are shares in an investment trust. The Common Reporting Standard Tax legislation under the OECD (Organisation for Economic Co-operation and Development) Common Reporting Standard for Automatic Exchange of Financial Account Information (The Common Reporting Standard) was introduced on 1 January 2016. The legislation requires investment trust companies to provide personal information to HMRC about investors who purchase shares in investment trusts. As an affected company, BlackRock Energy and Resources Income Trust plc will have to provide information annually to the local tax authority on the tax residencies of a number of non-UK based certificated shareholders and corporate entities. The local tax authority to which the information is initially passed may in turn exchange the information with the tax authorities of another country or countries in which the shareholder may be tax resident, where those countries (or tax authorities in those countries) have entered into agreements to exchange financial account information. All new shareholders, excluding those whose shares are held in CREST, entered onto the share register will be sent a certification form for the purposes of collecting this information. Dividends Details of dividends paid and payable in respect of the year are set out in the Chairman’s Statement on page 6 and in note 8 on pages 101 to 102. Investment Management and Administration BlackRock Fund Managers Limited (BFM) was appointed as the Company’s AIFM with effect from 2 July 2014. The management contract is terminable by either party on six months’ notice. 54 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600BlackRock Investment Management (UK) Limited (BIM (UK)) acts as the Company’s Investment Manager under a delegation agreement with BFM. BIM (UK) also acted as the Secretary of the Company throughout the year. Up to 16 March 2020 BFM received a management fee of 0.95% on the first £250 million of gross assets and 0.90% thereafter. With effect from this date the Company’s management fee was amended such that BFM now receives a fee of 0.80% on gross assets. In addition, and also with effect from 17 March 2020, BFM has agreed, if required, to rebate a portion of the Company’s Management fee each year to ensure that the Company’s Ongoing Charges, as set out and defined in its annual report (and for avoidance of doubt including the management fee) do not exceed 1.25% per annum of net assets. Further details in relation to the management fee are given in note 4 on page 99. The Board believes that the current fee structure is appropriate for an investment company in this sector. The Group contributes to a focused investment trust sales and marketing initiative operated by BIM (UK) on behalf of the investment trusts under its management. For the year ended 30 November 2020, the Group’s contribution to the consortium element of the initiative, which enables the trusts to achieve efficiencies by combining certain sales and marketing activities, represented 0.025% per annum of its net assets (£88.5 million) as at 31 December 2019, and this contribution is matched by BIM (UK). For the year ended 30 November 2020, £32,000 (excluding VAT) has been invoiced and paid in respect of this initiative. The purpose of the programme is to ensure effective communication with existing shareholders and to attract new shareholders to the Company. This has the benefit of improving liquidity in the Company’s shares and helps sustain the stock market rating of the Company. BFM and BIM (UK) are subsidiaries of BlackRock, Inc. which is a publicly traded corporation on the New York Stock Exchange operating as an independent firm. Appointment of the Manager The Board considers the arrangements for the provision of investment management and other services to the Company on an ongoing basis and a formal review is conducted annually. As part of the annual review the Board considers the quality and continuity of the personnel assigned to handle the Company’s affairs, the investment process and the results achieved to date. The Board believes that the continuing appointment of BFM (the Manager) as AIFM, and the delegation of investment management services to BIM (UK) (the Investment Manager) on the terms disclosed above, is in the interests of shareholders as a whole given the track record of BlackRock’s Natural Resources team in the commodities sector. In addition, as the decarbonisation of the energy supply chain becomes an increasingly important theme in the sector, the Board notes that the Manager has excellent credentials in this area. The BlackRock team has over 20 years of experience running the strategy for the BGF Sustainable Energy Fund (the largest and one of the longest running Sustainable Energy funds within the Morningstar peer group), which has outperformed its peers over the long run with lower volatility. The team is also able to leverage the broader fundamental equity platform at BlackRock of more than 200 investors globally, allowing them to gain on the ground insight into how the sustainable energy theme is emerging in different regions. The team also aim to provide the gold standard for ESG integration, ensuring that ESG risks are considered as a fundamental part of the investment process, whilst its unrivalled access to company management enables engagement with companies on specific issues and opportunities. As a result, the team’s sustainable energy strategy has received a 5 globe rating for sustainability by Morningstar, in addition to numerous sustainability awards. Depositary and Custodian The Company has appointed the Bank of New York Mellon (International) Limited (BNYM or the Depositary) to perform this role. The Depositary’s duties and responsibilities are outlined in the investment fund legislation (as set out in the FCA AIF Rulebook). The main role of the Depositary under the AIFM Directive is to act as a central custodian with additional duties to monitor the operations of the Company, including monitoring cash flows and ensuring that the Company’s assets are valued appropriately in accordance with the relevant regulations and guidance. The Depositary is also responsible for enquiring into the conduct of the AIFM in each annual accounting period. The Depositary receives a fee payable at a rate of 0.0095% per annum of net assets. The Company has appointed the Depositary in a tripartite agreement, to which the Manager as AIFM is also a signatory. The Depositary is also liable for the loss of financial instruments held in custody. Under the depositary agreement, custody services in respect of the Company’s assets have been delegated to The Bank of New York Mellon (International) Limited (BNYM). BNYM receives a custody fee payable by the Company at rates depending on the number of trades effected and the location of securities held. The depositary agreement is subject to 90 days’ notice of termination by any party. Registrar The Company has appointed Computershare Investor Services PLC as its Registrar (the Registrar). The principal duty of the Registrar is the maintenance of the register of shareholders (including registering transfers). It also provides services in relation to any corporate actions, dividend administration and shareholder documentation, the Common Reporting Standard and for the Foreign Account Tax Compliance Act. Section 3: Governance 55 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Directors’ report continued Computershare receive a fixed fee, plus disbursements and VAT for the maintenance of the share register. Fees in respect of corporate actions are negotiated on an arising basis. Foreign exchange At the financial year end, approximately 84.0% of the Company’s portfolio was invested in non-sterling assets, with 45.9% invested in US dollar denominated assets. The Investment Manager does not actively hedge currency exposure. Derivative transactions During the year the Group entered into a number of derivative option contracts generating option premium income of £1,241,000 (2019: £1,294,000). There are 2 put option contracts that remained open at 30 November 2020, details of which are given in the portfolio holdings listed on pages 28 to 30. Change of control There are no agreements which the Company is party to that might be affected by a change of control of the Company. Exercise of voting rights in investee companies The exercise of voting rights attached to the Company’s portfolio has been delegated to the Investment Manager, whose voting policy is set out below. BlackRock’s approach to voting at shareholder meetings, engagement with companies and corporate governance is framed within an investment context. BlackRock believes that sound corporate governance practices by companies contribute to their long- term financial performance and thus to better risk-adjusted returns. BlackRock’s proxy voting process is led by the BlackRock Investment Stewardship team, located in six offices around the world. In addition to its own professional staff, the BlackRock Investment Stewardship team draws upon the expertise of BlackRock’s portfolio managers, researchers and other internal and external resources globally. BlackRock’s global corporate governance and engagement principles are published on the website https://www.blackrock.com/ corporate/literature/fact-sheet/blkresponsible-investment- guidelines-emea.pdf. The principles set out BlackRock’s views on the overarching features of corporate governance that apply in all markets. For each region, BlackRock also publishes market-specific policies, which are updated every year to ensure that they remain relevant. The voting guidelines are principles-based and not prescriptive because BlackRock believes that each voting situation needs to be assessed on its merits. Voting decisions are taken to support the outcome that BlackRock believes (in its professional judgement) will best protect the economic interests of their clients. During the year under review, the Investment Manager voted on 657 proposals at 48 general meetings on behalf of the Company. At these meetings the Investment Manager voted in favour of most resolutions, as should be expected when investing in well run companies but voted against 31 (4.7%) resolutions and abstained from voting on 17 (2.6%) resolutions. Most of the votes against were in respect of resolutions relating to the election or re-election of directors, changes to board structure and governance and directors’ remuneration, which were deemed by the Investment Manager as not being in the best interests of shareholders. Principal risks The key risks faced by the Company are set out in the Strategic Report on pages 41 to 44. Going concern The financial statements of the Company have been prepared on a going concern basis. As described in the viability statement on pages 44 and 45 of the annual report, the Board is mindful of the uncertainty surrounding the potential duration of the COVID-19 pandemic and its impact on the global economy. Notwithstanding this significant degree of uncertainty, the Directors are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future and is financially sound, and 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. For this reason, they continue to adopt the going concern basis in preparing the financial statements. The Company’s ongoing charges represent a very small proportion of the Company’s assets (and have been capped at 1.25% by the Manager) and the Board is confident that the Company will be able to meet all of its liabilities and ongoing expenses from its assets and income generated from these assets. More information in respect of how the ongoing charges ratio (which is an Alternative Performance Measure) is calculated is set out in the Glossary on pages 133 to 134; more information on how the cap is applied is set out in note 4 on page 99. Directors The Directors of the Company and their biographies are set out on pages 35 to 37. Details of the Directors’ interests in the ordinary shares of the Company are set out in the Directors’ Remuneration Report on page 65. All of the Directors held office throughout the year under review, except Mr Brown who was appointed on 10 December 2019 and Mr Robson who was appointed after the year end on 8 December 2020. The Board may appoint additional Directors to the Board but any Director so appointed must stand for election by the shareholders at the next AGM. 56 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Board independence and tenure The Board’s policy on tenure is that length of service does not necessarily compromise the independence or contribution of directors of an investment trust company, where continuity and experience can add significantly to the strength of the Board. After due consideration and further to the annual evaluation process, the Board has concluded that Mr Merton who has served as a Director for over nine years, continues to be independent in both character and judgement and that there are no relationships or circumstances which are likely to affect the judgement of any Director. Mr Merton has indicated his intention to retire from the Board with effect from the conclusion of the next AGM on 16 March 2021. Director’s appointment, retirement and succession Although the Articles of Association require that one third of the Directors retire and submit themselves for re- election at each AGM the Board has resolved that all of the Directors should be subject to re-election on an annual basis. Accordingly, Dr Bell, Mr Brown and Mr Warner will offer themselves for re-election for a further year. Mr Merton has informed the Board of his intention to retire with effect from 16 March 2021 and he will not be seeking re-election. Mr Robson was appointed as a Director on 8 December 2020 and will be seeking election for the first time at the next AGM. Further details of the independence of the Board and Board tenure is provided in the Corporate Governance Statement on pages 68 and 69. The Board has considered the position of Mr Warner, Mr Brown and Dr Bell as part of the evaluation process and believes that it would be in the Company’s best interests for each of them to be proposed for re-election at the forthcoming AGM, given their material level of contribution and commitment to the role. Mr Robson joined the Board in December 2020 following a rigorous selection process. A number of candidates were considered and the Nomination Committee concluded that Mr Robson was the most appropriate candidate to complement the skills of the Board. The Board approved his appointment in December 2020 and believes that it is in the Company’s best interests that Mr Robson stands for election by shareholders at the forthcoming AGM. Having considered the Directors’ performance within the annual Board performance evaluation process (further details of which are provided on page 69) or in the case of Mr Robson, the abilities and skill set that he brings to the Board as identified through the recruitment process, the Board believes that it continues to operate effectively and that the Directors bring extensive knowledge and commercial experience and demonstrate a range of valuable business, financial and asset management skills. The Board therefore recommends that shareholders vote in favour of each Director’s proposed re-election. More details in respect of the skills and experience each Director brings to the Board are set out in more detail on pages 59 and 60. As a previous employee of the Company’s Investment Manager, Mr Ruck Keene (who was a member of the Board until 17 March 2020) was deemed to be interested in the Company’s management agreement. There were no other contracts subsisting during the year under review or up to the date of this report in which a Director of the Company is or was materially interested and which is or was significant in relation to the Company’s business. None of the Directors are entitled to compensation for loss of office on the takeover of the Company. None of the Directors has a service contract with the Company. Directors’ indemnity In addition to Directors’ and Officers’ liability insurance cover, the Company’s Articles of Association provide, subject to the provisions of applicable UK legislation, an indemnity for Directors in respect of costs incurred in the defence of any proceedings brought against them by third parties arising out of their positions as Directors, in which they are acquitted or judgement is given in their favour. The Company has entered into Deeds of Indemnity with each of the Directors individually which are available for inspection at the Company’s registered office and will be available at the AGM. Conflicts of interest The Board has put in place a framework for Directors to report conflicts of interest, or potential conflicts of interest. All Directors are required to notify the Company Secretary of any situations, or potential situations, where they consider that they have or may have a direct, or indirect interest or duty that conflicts, or possibly conflicts, with the interests of the Company. All such situations are reviewed by the Board and duly authorised. Directors are also made aware at each meeting that there remains a continuing obligation to notify the Company Secretary of any new situations that may arise, or any changes to situations previously notified. It is the Board’s intention to continue to review all notified situations on a regular basis. The Board considers that the framework has worked effectively throughout the year under review. Directors’ remuneration report and policy The Directors’ Remuneration Report is set out on pages 63 to 67. An advisory ordinary resolution to approve this report will be put to shareholders at the Company’s AGM. The Company is also required to put the Director’s Remuneration Policy to a binding shareholder vote every three years. The Company’s Remuneration Policy was last put to shareholders at the AGM in 2020, therefore, an ordinary resolution to approve the policy will next be put to shareholders at the AGM in 2023. Section 3: Governance 57 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Directors’ report continued Directors’ responsibilities The Directors’ responsibilities in preparing these financial statements are noted on page 79. The Directors are proposing that their authority to buy back up to 14.99% of the Company’s issued share capital be renewed at the forthcoming AGM. Although the Manager initiates any buy backs, the policy and parameters are set by the Board and reviewed at regular intervals. The Company raises the cash needed to finance any purchase of shares either by selling securities in the Company’s portfolio or by short term borrowing. Treasury shares The Board has determined that up to 10% of the issued shares of the Company may be held in treasury and, as described above, the Company is authorised to purchase its own ordinary shares to be held in treasury for re-issue at a premium, or cancellation at a future date. As at 30 November 2020, 5,945,651 ordinary shares were held in treasury, representing 4.6% of the Company’s issued share capital. Streamlined Energy and Carbon Reporting (SECR) Statement: Greenhouse Gas (GHG) emissions and energy consumption disclosure This is a SECR statement1 on the Group’s annual energy consumption and GHG emissions for the financial year 1 December 2019 to 30 November 2020 and the prior year, 2018/2019. The Group does not own, lease or operate any assets, and has no direct employees. Therefore, there are zero emissions associated or attributed to the entity (Table 1) and no underlying global energy consumption (Table 2). In addition, there are no energy efficiency action measures taken over the reporting year. This is the Group’s first SECR statement. The Group used the main requirements of the GHG Protocol Corporate Standard (revised edition) as a basis to report on any GHG emissions in tonnes of carbon dioxide equivalent (tCO2e), which expresses multiple greenhouse gases in terms of carbon dioxide based on their global warming potential (including methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride). Emissions considered relate to activities for which the Company is responsible and included as applicable: combustion of any fuel and operation of its facilities; and annual emissions from the purchase of electricity, heat, steam or cooling by the Group for its own use. Substantial share interests As at 30 November 2020, 1607 Capital Partners LLC had notified the Company that it held interest in 5.07% of the voting rights attached to the Company’s issued share capital (excluding shares in treasury). Subsequently and up to 3 February 2021, the Company received one additional notification from 1607 Capital Partners LLC that its interests in the voting rights attached to the Company’s issued share capital had fallen to 4.28%. Other than this, the Company had not received any other additional notifications in accordance with the FCA’s Disclosure and Transparency Rule 5.1.2R of interests in 3% or more of the voting rights attaching to the Company’s issued share capital or any changes to existing interests. Share capital Details of the Company’s issued share capital are given in note 14 on page 104. Details of the voting rights are given in note 17 to the Notice of Annual General Meeting on page 141. The ordinary shares carry the right to receive dividends and have one voting right per ordinary share. There are no restrictions on the voting rights of the ordinary shares. There are no shares which carry specific rights with regard to the control of the Company. Share issues The current authority to issue new ordinary shares or sell ordinary shares from treasury for cash was granted to the Directors on 17 March 2020 and will expire at the conclusion of the 2021 AGM. The Directors are proposing that their authority to issue new ordinary shares or sell shares from treasury for cash be renewed at the forthcoming AGM. The Company will be seeking the authority to allot new ordinary shares or sell from treasury ordinary shares representing up to 10% of the Company’s issued ordinary shares capital. Share repurchases The current authority to repurchase up to 14.99% of the Company’s issued share capital to be held in treasury or for cancellation was granted to the Directors on 17 March 2020 and will expire at the conclusion of the 2021 AGM. 700,000 ordinary shares were bought back in the year under review at an average price of 66.57 pence per share representing total consideration of £466,000 including costs. As at the date of this report, no additional shares have been bought back since 30 November 2020. 58 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Table 1. 2019/2020 BlackRock Energy and Resources Income Trust plc GHG Emissions GHG Emissions (tCO2e)2 Scope 13 — Combustion of fuels and fugitive emissions of refrigerant gases Scope 24— Electricity, heat, steam, and cooling purchased for landlord shared services and own use Scopes 1+2 — Mandatory carbon footprint disclosure Scope 1+2 – Mandatory intensity ratio: emissions per total revenue (tCO2e/$100m) 2019/2020 2018/2019 Market- based) (Location- based) Market- based) (Location- based) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 GHG emissions and energy consumption statement pursuant to the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 (the SECR Regulations). 2 Tonnes of carbon dioxide equivalent. 3 Scope 1 emissions are direct GHG emissions from activities owned or controlled by an organisation. 4 Scope 2 emissions are indirect emissions associated with an organisation’s consumption of purchased electricity, heat, steam and cooling. These emissions occur as a consequence of an organisation’s activities at sources which the organisation does not own or control. Table 2. 2019/2020 BlackRock Energy and Resources Income Trust plc Energy use Consumption Source Natural Gas Diesel Fuel Private Aviation (Jet Fuel) Refrigerants Electricity 2019/2020 2018/2019 Scope Consumption value Consumption value Unit Scope 1 Scope 1 Scope 1 Scope 1 Scope 2 0 0 0 0 0 KWh KWh KWh KWh lbs 0 0 0 0 0 Unit KWh KWh KWh lbs KWh BlackRock acts as Investment Manager to BlackRock Energy and Resources Income Trust plc. Therefore, for full transparency, BlackRock’s global Scope 1, 2 and 3 emissions for 1 January 2019 to 31 December 2019 can be found in its 2020 Carbon Disclosure Project (CDP) submission: https://www.cdp.net/en/responses/1875 Articles of association Any amendments to the Company’s Articles must be made by special resolution. Annual general meeting The following information to be discussed at the forthcoming AGM is important and requires your immediate attention. If you are in any doubt about the action you should take, you should seek advice from your stockbroker, bank manager, solicitor, accountant or other financial adviser authorised under the Financial Services and Markets Act 2000 (as amended). If you have sold or transferred all of your ordinary shares in the Company you should pass this document, together with any other accompanying documents including the form of proxy, at once to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for onward transmission to the purchaser or transferee. Resolutions for the election and re-election of Directors The biographies of the Directors are set out on pages 35 to 37 and are incorporated into this report by reference. The skills and experience each Director brings to the Board for the long-term sustainable success of the Company are set out on page 60. All the Directors apart from Mr Brown (who joined the Board on 10 December 2019) and Mr Robson (who joined the Board on 8 December 2020) held office throughout the year under review. All Directors apart from Mr Merton and Mr Robson will stand for re-election by shareholders at the meeting in accordance with the requirements of the UK Code. As Mr Robson joined the Board in December 2020 he will stand for election at the meeting for the first time. Mr Merton will retire from the Board at the conclusion of the AGM on 16 March 2021 and will not be seeking re-election. Section 3: Governance 59 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Directors’ report continued • Resolution 4 relates to the election of Mr Andrew Robson who was appointed on 8 December 2020 and has a wealth of experience in the financial sector, with over 15 years of corporate finance experience, gained at Robert Fleming & Co Limited and SG Hambros. He has considerable experience as a finance director and as chairman of audit committees, including for a number of investment companies, and has a business advisory practice. He is also a qualified chartered accountant. • Resolution 5 relates to the re-election of Dr Carol Bell who was appointed on 1 December 2014. Dr Bell has worked in, or been an advisor or financier to the sectors in which the Company invests throughout her working life. As well as an in depth knowledge of these sectors, her skills include strategic planning and the ability to identify structural trends, a significant asset given the degree of change faced by the Company’s investment universe as a consequence of the energy transition away from hydrocarbon fuels. Dr Bell became a director of Chapter Zero in June 2019, an organisation which aims to support non-executive directors in engaging with Climate Risk at board level. She also has considerable governance experience through serving on public company boards since 2005 as a non-executive director. • Resolution 6 relates to the re-election of Mr Adrian Brown who was appointed on 10 December 2019 and has a wealth of experience in the financial sector and in developing corporate strategy. He brings in-depth knowledge, expertise and experience in investment management and investment marketing having worked in the financial services sector as a senior portfolio manager and a client portfolio manager for a number of management houses and has a wealth of experience in the financial and commerce sectors. • Resolution 7 relates to the re-election of Mr Ed Warner who was appointed on 1 July 2013. He brings leadership skills and much in-depth knowledge, expertise and experience of the financial services sector to his role as Chairman, having spent much of his career in senior positions at a number of investment banks and financial institutions (including Old Mutual Financial Services, Bankers Trust, Dresdner Kleinwort Benson and, most recently, IFX Group, where he was CEO until 2006). Mr Warner has extensive PLC experience and has chaired the boards at a range of prominent organisations. Resolutions relating to the following items of special business will be proposed at the forthcoming AGM. Resolution 10 Authority to allot shares: The Directors may only allot shares for cash if authorised to do so by shareholders in a general meeting. This resolution seeks to renew the authority of the Directors to allot ordinary shares for cash up to an aggregate nominal amount of £113,470 which is equivalent to 11,347,034 ordinary shares and represents 10% of the Company’s issued ordinary share capital (excluding any treasury shares) as at the date of the Notice of the Annual General Meeting. The Directors will use this authority when it is in the best interests of the Company to issue ordinary shares for cash. This authority will expire at the conclusion of the AGM to be held in 2022 unless renewed prior to that date. Resolution 11 Authority to disapply pre- exemption rights: By law, Directors require specific authority from shareholders before allotting new shares or selling shares out of treasury for cash without first offering them to existing shareholders in proportion to their holdings. Resolution 11 empowers the Directors to allot new ordinary shares for cash or to sell shares held by the Company in treasury, otherwise than to existing shareholders on a pro rata basis, up to an aggregate nominal amount of £113,470 which is equivalent to 11,347,034 ordinary shares and represents 10% of the Company’s issued ordinary share capital as at the date of the Notice of Annual General Meeting. This authority will expire at the conclusion of the AGM to be held in 2022 unless renewed prior to that date. Resolution 12 Authority to buy back shares: The resolution to be proposed will seek to renew the authority granted to Directors enabling the Company to purchase its own shares. The Directors will only consider repurchasing shares in the market if they believe it to be in shareholders’ interests and as a means of correcting any imbalance between supply and demand for the Company’s shares. The Directors are seeking authority to purchase up to 17,009,205 ordinary shares, being approximately 14.99% of the issued share capital (excluding treasury shares) as at the date of the Notice of Annual General Meeting. This authority will expire at the conclusion of the AGM to be held in 2022 unless renewed prior to that date. Any ordinary shares purchased pursuant to resolution 12 shall be cancelled immediately upon completion of the purchase or held, sold, transferred or otherwise dealt with as treasury shares in accordance with the provisions of the Companies Act 2006. Resolution 13 Notice Period for General Meetings: The resolution empowers the Directors to hold general meetings (other than annual general meetings) on 14 days’ notice, which is the minimum notice period permitted by the Companies Act 2006. The EU Shareholder Rights Directive increases the minimum notice period to 21 days unless two conditions are met. The first condition is that the company offers facilities for shareholders to vote by electronic means. The second condition is that there is an annual resolution of shareholders approving the reduction in the minimum notice period from 21 days to 14 days, hence this resolution being proposed. It is not intended that this power will be used as a matter of course, rather that this flexibility will be utilised where the Board believes that the nature of the business to 60 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600be conducted requires that a general meeting be convened at 14 days’ notice. Resolution 14 Amendments to the Articles The Board is proposing to make amendments to the Articles to enable the Directors to determine the time and place of annual general meetings and general meetings and the manner in which they are conducted (including the ability to hold hybrid meetings). The amendments are being sought in response to challenges posed by the government restrictions on social interactions as a result of the COVID-19 pandemic, which have made it difficult or impossible for shareholders to attend physical meetings. The key changes proposed to be introduced in the Articles, and their effect are set out below. Further amendments are being proposed to be made to the Articles to reflect recent changes to law and regulation (including changes to the UK Corporate Governance Code as described below) and to permit the Company to request information from shareholders to satisfy due diligence and reporting requirements under the US Foreign Account Tax Compliance Act (“US FATCA”) or similar laws and thereby avoid adverse tax consequences which would otherwise arise under US FATCA or similar laws. In addition, the Company is seeking an amendment to the Articles of Association to permit the Company to require the transfer of shares where the shareholder in question fails to comply with such request or may cause the Company issues under US FATCA or any similar laws. (i) ElectronicparticipationinAnnualGeneralMeetings and General Meetings The Board will have the ability to determine whether an annual general meeting or general meeting shall be held as either a ‘physical meeting’ or as a ‘hybrid meeting’, with the latter involving both the physical attendance of members and participation by members via electronic means. It is the current expectation of the Directors that hybrid meetings would only be used where a solely physical meeting is impracticable or unworkable. (ii) Postponementofannualgeneralmeetingsandgeneral meetings and alternative arrangements for annual general meetings and general meetings The Board’s existing ability to postpone the time at which an annual general meeting or general meeting is to be held, or change the place of the annual general meeting or general meeting will be updated, including to allow changes to the electronic facility or facilities to be used, in the event that they decide it has become impracticable or undesirable to hold the meeting at the declared time and place or using the declared facility or facilities. (iii) Power to adjourn The chairman of an annual general meeting or a general meeting (with the consent of the meeting) will have the ability to adjourn the meeting from time to time and from place to place (or in the case of a meeting held at a principal meeting place and one or more satellite meeting places, such other places) and/or from such electronic facility or facilities for the attendance and participation to such electronic facility or facilities as determined by the chairman of the meeting (or, in default of the Board) in his or its absolute discretion. Further, the chairman of a general meeting will have the ability to interrupt or adjourn the meeting without the consent of the meeting if it appears to the chairman that the facilities at the principal meeting place or any satellite meeting place or an electronic facility or facilities or security at the annual general meeting or general meeting have become inadequate, or are otherwise not sufficient to allow the meeting to be conducted substantially in accordance with the provisions set out in the notice of meeting. (iv) Accommodationofmembersandsecurity arrangements The Board will have the ability to put in place security measures where considered appropriate in the circumstances, and to take such action, give such directions or put in place such arrangements as are considered appropriate to secure the safety of those attending the meeting and to promote the orderly conduct of the meeting in relation to both physical attendance and attendance by electronic facility. (v) Methodofvoting A resolution put to vote at an annual general meeting or general meeting held partly by means of electronic facility or facilities shall be decided on a poll, which poll votes may be cast by such electronic means as the Board deems appropriate. (vi) Informationrightsandforcedtransfers The Board will have the ability, at any time, to serve notice on any member requiring that member to promptly provide the Company with any information, representations, certificates, waivers or forms relating to such member to enable the Company to satisfy its diligence and reporting requirements in relation to the U.S. Foreign Account Tax Compliance Act of 2010 and the requirements of similar laws which the Company may be subject from time to time. (vii) Appointment and retirement of Directors This article requires that, in accordance with the UK Corporate Governance Code, all of the Directors shall retire from office at each annual general meeting of the Company except any Director appointed by the Board after the notice of that annual general meeting has been given and before the annual general meeting has been held. This summary is intended only to highlight the principal amendments which are likely to be of interest to shareholders, and there are additional consequential changes which will be required as a result of the principal amendments being made. It is not intended to be comprehensive and cannot be relied upon to identify amendments or issues which may be of interest to shareholders. The proposed new Articles (marked to show the proposed changes) will be available for inspection on the Company’s website, https://www.blackrock.com/ uk/beri, from the date of this Report until the conclusion of the annual general meeting, and will also be available Section 3: Governance 61 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Directors’ report continued for inspection at the venue of the annual general meeting from fifteen minutes before and during the annual general meeting. Recommendation Your Board considers that each of the resolutions to be proposed at the AGM is likely to promote the success of the Company for the benefit of its members as a whole and are in the best interests of the Company and its shareholders as a whole. The Directors unanimously recommend that shareholders vote in favour of the resolutions, as they intend to do in respect of their own beneficial holdings. Corporate governance Full details are given in the Corporate Governance Statement on pages 68 to 73. The Corporate Governance Statement forms part of this Directors’ Report. Audit information As required by Section 418 of the Companies Act 2006 each of the Directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are aware, there is no relevant audit information of which the Company’s Auditor is unaware and each Director has taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the Company’s Auditor is aware of that information. Auditor The Auditor, Ernst & Young LLP, is willing to continue in office. Resolutions proposing the reappointment of Ernst & Young LLP and authorising the Audit and Management Engagement Committee to determine the Auditor’s remuneration for the ensuing year will be proposed at the AGM. The Directors’ Report was approved by the Board at its meeting on 4 February 2021. By order of the Board SARAH BEYNSBERGER For and on behalf of BlackRock Investment Management (UK) Limited Company Secretary 4 February 2021 62 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Directors’ remuneration report The Board presents the Directors’ remuneration report for the year ended 30 November 2020 which has been prepared in accordance with sections 420-422 of the Companies Act 2006 and the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008. Remuneration/service contracts The maximum remuneration of the Directors is determined within the limits of the Company’s Articles and currently amounts in aggregate to £150,000. No element of the Directors’ remuneration is performance related. None of the Directors are entitled to receive from the Company: • performance related remuneration; • any benefits in kind except reasonable travel expenses in the course of travel to attend meetings and duties undertaken on behalf of the Company; • share options; • rewards through a long term incentive scheme; • a pension or other retirement benefit; and • compensation for loss of office. The Company has no employees and consequently no consideration is required to be given to employment conditions elsewhere in setting Directors’ fees. All of the Directors are non-executive. None of the Directors has a service contract with the Company and the terms of their appointment are detailed in a letter of appointment. New directors are appointed for an initial term of three years and it is expected that they will serve two further three year terms. The continuation of an appointment is contingent on satisfactory performance evaluation and re-election at each Annual General Meeting (AGM). A director may resign by notice in writing to the Board at any time, there is no notice period. The letters of appointment are available for inspection at the registered office of the Company. The law requires the Company’s Auditor to audit certain of the disclosures provided. Where disclosures have been audited, they are indicated as such. The Auditor’s opinion is included in their report on pages 82 to 89. Statement by the Chairman A key driver of the remuneration policy is that fees payable to Directors should be sufficient to attract and retain individuals with suitable knowledge and experience to promote the long term success of the Company whilst also reflecting the time commitment and responsibilities of the role. The basis for determining the level of any increase in the Directors’ remuneration is set out in the Directors’ Remuneration Policy on pages 66 to 67. The Board’s remuneration was reviewed in December 2020. Following this review it was agreed that no changes would be made to Directors’ remuneration at the present time. Prior to this, Directors’ fees were last increased on 1 December 2018. The Board’s remuneration is set out in the policy table on page 67. No discretionary fees have been paid to Directors during the year or since inception and the payment of such fees is expected to be a rare occurrence, only necessary in exceptional circumstances. Any discretionary fees paid to the Directors will be clearly disclosed in the Directors’ Remuneration Report accompanied by an explanation of the work undertaken and why it was deemed necessary to pay such additional remuneration. Remuneration Committee The Board as a whole fulfils the function of the Remuneration Committee and considers any change in the Directors’ remuneration policy. A separate Committee has therefore not been established. The Company’s Directors as at the date of this report are all non-executive and are independent of the Manager. No advice or services were provided by any external agencies or third parties in respect of remuneration levels. Implementation of the Remuneration Policy in the year 2021 The Directors intend that the Company’s Remuneration Policy (as approved that the AGM on 17 March 2020) will be implemented as set out on pages 63 to 66. The Directors’ remuneration policy on page 66 and the policy table on page 67 form part of this report. The Directors do not receive any performance related remuneration or incentives. Discretionary payments are permitted under the policy; however such discretionary payments would only be considered in exceptional circumstances. Section 3: Governance 63 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Directors’ remuneration report continued Remuneration implementation report A single figure for total remuneration of each Director is set out in the table below for the year ended 30 November 2020: Directors Ed Warner (Chairman) Dr Carol Bell Adrian Brown2 Michael Merton Jonathan Ruck Keene3 Total Year ended 30 November 2020 Year ended 30 November 2019 Fees £ 38,000 27,000 26,336 32,000 7,967 131,303 Taxable benefits1 £ – – – – – – Total £ 38,000 27,000 26,336 32,000 7,967 Fees £ 38,000 27,000 – 32,000 27,000 131,303 124,000 Taxable benefits1 £ – – – – – – Total £ 38,000 27,000 – 32,000 27,000 124,000 1 Taxable benefits relates to travel and subsistence costs. 2 Mr Brown joined the Board with effect from 10 December 2019. 3 Mr Ruck Keene retired from the Board with effect from 17 March 2020. No discretionary payments were made in the year to 30 November 2020 (2019: £nil). The information in the table above has been audited. The amounts paid by the Company to the Directors were for services as non-executive Directors. The Directors receive no variable remuneration. At 30 November 2020, fees of £10,000 (2019: £10,000) were outstanding to Directors in respect of their annual fees. Relative importance of spend on pay As the Company has no employees, the table above also comprises the total remuneration costs and benefits paid by the Company. To enable shareholders to assess the relative importance of spend on pay, this has been shown in the table below compared to the Company’s net profit on ordinary activities after taxation, total operating expenditure and dividend distributions. Directors’ total remuneration Total dividends paid and payable Buy back of ordinary shares Net revenue profit on ordinary activities after tax No payments were made in the period to any past Directors (2019: £nil). Five year change comparison Over the last five years, Directors’ pay has increased as set out in the table below: Chairman Audit and Management Engagement Committee Chairman Director 2020 £’000 131 4,540 462 4,900 2019 £’000 124 4,596 1,390 4,578 Change £’000 +7 -56 -928 +322 2020 £’000 2015 £’000 Change 38,000 33,000 +15.2% 32,000 27,000 27,000 22,000 +18.5% +22.7% As previously noted, the Company does not have any employees and hence no comparisons are given in respect of the comparison between Directors’ and employees’ pay increases. 64 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Shareholdings The interests of the Directors in the ordinary shares of the Company are set out in the table below. The Company does not have a share option scheme, therefore none of the Directors has an interest in any share options in the Company. There is no requirement for Directors to hold shares in the Company. 30 November 2020 Ordinary shares 30 November 2019 Ordinary shares Ed Warner (Chairman) 94,000 94,000 Dr Carol Bell Adrian Brown Michael Merton 44,000 33,500 14,603 17,000 – 17,000 Performance from 30 November 2010 to 30 November 2020 120 100 80 60 40 0 1 v o N 1 1 v o N 2 1 v o N 3 1 v o N 4 1 v o N 5 1 v o N 6 1 v o N 7 1 v o N 8 1 v o N 9 1 v o N 0 2 v o N The information in the table above has been audited. Share price performance NAV performance All the holdings of the Directors are beneficial. No other changes to these holdings have been notified up to the date of this report. Since 30 November 2020, Andrew Robson has been appointed to the Board, and has acquired 14,000 shares in the Company on 11 December 2020 for total consideration of £11,411. Retirement of Directors Further details are given in the Directors’ Report on page 57. Performance The following graph compares the Company’s net asset value and share price performance with the performance of an equivalent investment in a Composite Index; 50% EMIX Global Mining Index and 50% MSCI World Energy Index up to 31 May 2020. From 1 June 2020 to 30 November 2020, the Composite Index has been adjusted to represent a blend of 40% EMIX Global Mining (ex Gold) Index, 30% MSCI World Energy Index and 30% S&P Global Clean Energy Index. This Composite Index is deemed to be the most appropriate as the Company has global mining and energy investment objectives, with energy transition stocks forming an increasingly important part of both the mining and energy sectors. Sources: BlackRock and Datastream. Composite Index¹ 1. For the period from 1 December 2019 to 31 May 2020, the composite index in the chart above was comprised of 50% EMIX Global Mining Index and 50% MSCI World Energy Index. From 1 June 2020 the composite index is comprised of a blend of 40% EMIX Global Mining (ex Gold) Index, 30% MSCI World Energy Index and 30% S&P Global Clean Energy Index. Whilst the first two indices are a reasonable proxy for the types of investment that are held within the mining and traditional energy components of the Company’s portfolio, the S&P Global Clean Energy Index is not aligned to the energy transition portion of the Company’s portfolio, but has been included as the closest available proxy given the limited number of indices currently available that represent the transitional energy sector. The energy transition section of the Company’s portfolio invests in a wide range of stocks with exposure to the transitional energy theme which are not included within the S&P Global Clean Energy Index, including mining stocks that produce materials used in the renewable transport and energy sectors, as described in more detail in the Manager’s report on pages 11 to 20. Performance figures are calculated in sterling terms, with dividends reinvested. Rebased to 100 at 30 November 2010. By order of the Board ED WARNER Chairman 4 February 2021 Section 3: Governance 65 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Directors’ remuneration policy Consideration of shareholders’ views An ordinary resolution to approve the remuneration report is put to members at each AGM. The Company is committed to ongoing shareholder dialogue and takes an active interest in voting outcomes. Shareholders have the opportunity to express their views and ask questions in respect of the remuneration policy at the AGM. To date, no shareholders have commented in respect of the remuneration policy. In the event that there was a substantial vote against any resolution proposed at the Company’s AGM, the reasons for any such vote would be sought and appropriate action taken. Should the votes be against resolutions in relation to the directors’ remuneration, further details will be provided in future Directors’ Remuneration Reports. In accordance with the Companies Act 2006, the Company is required to seek shareholder approval of its remuneration policy on a triennial basis. An ordinary resolution for the approval of the remuneration policy was approved by shareholders at the AGM held on 17 March 2020, with 97.54% of votes cast (including votes cast at the Chairman’s discretion) in favour and 2.46% votes cast against. It is the intention of the Board that this policy on remuneration (set out on pages 66 and 67) will continue to apply for the current financial years to 30 November 2020 and the two financial years following this to 30 November 2022. The Directors’ Remuneration Report was also last approved by shareholders at the AGM held on 17 March 2020, with 98.05% of votes cast (including votes cast at the Chairman’s discretion) in favour and 1.95% of votes cast against. Any discretionary fees paid to the Directors will be clearly disclosed in the Directors’ Remuneration Report accompanied by an explanation of the work undertaken. In setting the appropriate level of Directors’ fees, a number of factors are considered, including the workload of the Directors, their responsibilities, any change in these responsibilities and additional legal duties (for example as a result of new legislation being implemented), the relationship with their suppliers and service providers and the size and complexity of the Company. The time commitment required, the level of skills and appropriate experience required and the need for Directors to maintain on an ongoing basis an appropriate level of knowledge of regulatory and compliance requirements in an industry environment of increasing complexity are also taken into account. The Board also considers the average rate of inflation during the period since the last fee increase and reviews the level of remuneration in comparison with other investment trusts of a similar size and/or mandate, as well as taking account of any data published by the Association of Investment Companies to ensure that fees are in line with industry practice. This comparison, together with consideration of any alteration in non-executive Directors’ responsibilities, is used to review whether any change in remuneration is necessary. The review is performed on an annual basis. The Board is cognisant of the need to avoid any potential conflicts of interest and has therefore agreed a mechanism by which no Director is present when his or her own pay is being considered. The Company has no employees and consequently no consideration is required to be given to employment conditions elsewhere in setting this policy and there has been no employee consultation. No element of the Directors’ remuneration is performance related or subject to recovery or withholding (except for tax). Directors cannot be awarded any share options or long- term performance incentives. None of the Directors has a service contract with the Company or receives any non-cash benefits (except as described in the policy table), pension entitlements or compensation for loss of office. The remuneration policy would be applied when agreeing the remuneration package of any new Director. The terms of Directors’ appointment are detailed in a letter sent to them when they join the Board. These letters are available for inspection at the registered office of the Company. Directors’ appointments do not have a fixed duration, but they can be terminated by the Company in writing at any time without obligation to pay compensation. On termination of the appointment, Directors shall only be entitled to accrued fees as at the date of termination together with reimbursement of any expenses properly incurred prior to that date. No payments for loss of office are made. Directors are subject to annual re-election. 66 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Future policy table Purpose and link to strategy Fees payable to Directors should be sufficient to attract and retain individuals of high calibre with suitable knowledge and experience. Those chairing the Board and key Committees should be paid higher fees than other Directors in recognition of their more demanding roles. Fees should reflect the time spent by Directors on the Company’s affairs and the responsibilities borne by the Directors. Description Current levels of fixed annual fee (with effect from 1 December 2018): Chairman – £38,000 Audit and Management Engagement Committee Chairman – £32,000 Directors – £27,000 All reasonable expenses to be reimbursed. Maximum and minimum levels Remuneration consists of a fixed fee each year, set in accordance with the stated policies and any increase granted must be in line with the stated policies. The Company’s Articles of Association provide that the Directors are paid fees for their services not exceeding in the aggregate an annual sum of £150,000 or such larger amount as the Company may by Ordinary Resolution decide divided between the Directors as they agree. In accordance with the provisions of the Company’s Articles of Association, the Directors are entitled to be repaid all reasonable travelling, hotel and other expenses incurred by them respectively in or about the performance of their duties as Directors. There is a limit of £10,000 in relation to the amount payable in respect of expenses reimbursed. These ceilings have been set at a level to provide flexibility in respect of the recruitment of additional Board members and inflation. Policy on share ownership Directors are not required to own shares in the Company, although all Directors are currently shareholders. Fixed fee element Discretionary payments Taxable benefits The Board reviews the quantum of Directors’ fees each year to ensure that they are in line with the level of Directors’ remuneration for other investment trusts of a similar size. When considering any changes in fees, the Board will take into account wider factors such as the average rate of inflation over the period since the previous review, and the level and any change in complexity of the Directors’ responsibilities (including additional time commitments as a result of increased regulatory or corporate governance requirements). Directors are not eligible to be compensated for loss of office, nor are they eligible for bonuses, pension benefits, share options or other incentives or benefits. Directors do not have service contracts, but are appointed under letters of appointment. The Company’s Articles authorise the payment of discretionary fees to Directors for any additional work undertaken on behalf of the Company which is outside of their normal duties. Any such extra work undertaken is subject to the prior approval of the Chairman or, in the case of the Chairman undertaking the extra work, subject to the prior approval of the Chairman of the Audit and Management Engagement Committee. The level of discretionary fees shall be determined by the Directors. Any discretionary fees paid will be disclosed in the Director’s remuneration implementation report within the Annual Report. The payment of such fees would only be considered in exceptional circumstances and any discretionary fees paid will be clearly disclosed. Some expenses incurred by Directors are required to be treated as taxable benefits. Taxable benefits include (but are not limited to) travel expenses incurred by the Directors in the course of travel to attend Board and Committee meetings which are held at the Company’s registered offices in London, and which are reimbursed by the Company and therefore treated as a benefit in kind and are subject to tax and national insurance. The Company’s policy in respect of this element of remuneration is that all reasonable costs of this nature will be reimbursed as they are incurred, including the tax and national insurance costs incurred by the Director on such expenses. Section 3: Governance 67 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Corporate governance statement Chairman’s introduction Corporate governance is the process by which the Board seeks to look after shareholders’ interests and protect and enhance shareholder value. Shareholders hold the Directors responsible for the stewardship of the Company, delegating authority and responsibility to the Directors to manage the Company on their behalf and holding them accountable for its performance. The Board is ultimately responsible for framing and executing the Company’s strategy and for closely monitoring risks. We aim to run our Company in a manner which is responsible and consistent with our belief in honesty, transparency and accountability. In our view, good governance means managing our business well and engaging effectively with investors. We consider the practice of good governance to be an integral part of the way we manage the Company and we are committed to maintaining high standards of financial reporting, transparency and business integrity. As a UK-listed investment trust company our principal reporting obligation is driven by the UK Corporate Governance Code (the UK Code) issued by the Financial Reporting Council in July 2018. However, as listed investment trust companies differ in many ways from other listed companies, the Association of Investment Companies has drawn up its own set of guidelines, the AIC Code of Corporate Governance (the AIC Code) issued in February 2019, which addresses the governance issues relevant to investment companies and meets the approval of the Financial Reporting Council. Both the UK Code and the AIC Code apply to accounting periods beginning on or after 1 January 2019. The Board has determined that it has complied with the recommendations of the AIC Code. This in most material respects is the same as the UK Code, save that there is greater flexibility regarding the tenure of the Chairman and membership of the audit committee. This report, which is part of the Directors’ Report, explains how the Board addresses its responsibility, authority and accountability. Compliance The Board has made the appropriate disclosures in this report to ensure that the Company meets its continuing obligations. It should be noted that, as an investment trust, most of the Company’s day-to-day responsibilities are delegated to third parties, the Company has no employees and the Directors are non-executive. Therefore, not all of the provisions of the UK Code are directly applicable to the Company. The Board considers that the Company has complied with the recommendations of the AIC Code and the provisions contained within the UK Code that are relevant to the Company throughout this accounting period, except the provisions relating to: • the role of the chief executive; • executive directors’ remuneration; • the need for an internal audit function as set out on page 71; and • nomination of a senior independent director. The Board considers that these provisions are not relevant to the position of the Company, being an externally managed investment company with no executive employees and, in relation to the internal audit function, in view of BlackRock having an internal audit function. Further explanation is provided below. The UK Code is available from the Financial Reporting Council’s website at frc.org.uk. The AIC Code is available from the Association of Investment Companies at theaic.co.uk. Information on how the Company has applied the principles of the AIC Code and UK Code is set out below. Board composition The Board currently consists of five non-executive Directors. This is a higher number than usual and reflects a period of transition. One of the Directors currently serving on the Board (Mr Merton) has been in office for more than nine years. The Board recognises the value of progressive renewing of, and succession planning for, company boards, and consequently undertook a search and selection process in 2020 to identify a new Director. The preferred candidate, Mr Andrew Robson, was appointed to the Board with effect from 8 December 2020. Mr Robson will stand for election at the forthcoming Annual General Meeting and further details of his background and the biographies of all the Directors can be found on pages 35 to 37. Mr Merton has indicated his intention to retire from the Board and will not be seeking re-election at the AGM in 2021; Mr Robson will take over the role of Chairman of the Audit and Management Engagement Committee from Mr Merton with effect from this date. The refreshment of the Board will remain as an ongoing process to ensure that the Board is well balanced through the appointment of new Directors with the skills and experience necessary. Directors must be able to demonstrate commitment to the Company, including in terms of time. All Directors are considered to be independent of the Company’s Manager. The provision of the UK Code which relates to the combination of the roles of the chairman and chief executive does not apply as the Company has no executive directors. The UK Code recommends that the Board should appoint one of the independent non- executive directors to be the senior independent director. However, as the Board’s structure is relatively simple, with no executive directors and just five non-executive directors, the Board does not consider it necessary to nominate a senior independent director. The Directors’ biographies, on pages 35 to 37 demonstrate a breadth of investment knowledge, business and financial 68 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600skills which enable them to provide effective strategic leadership and proper governance of the Company. Details of the Chairman’s other significant time commitments can also be found on page 35. Diversity The Board’s policy on diversity, including gender, is to take this into account during the recruitment and appointment process. However, the Board is committed to appointing the most appropriate candidate, regardless of gender or other forms of diversity and therefore no targets have been set against which to report. Board independence and tenure Details of the Board’s policy on tenure and independence are set out on page 57. Directors’ appointment, retirement and rotation The rules concerning the appointment, retirement and rotation of Directors are discussed in the Directors’ Report on page 57. None of the Directors has a service contract with the Company. The terms of their appointment are detailed in a letter sent to them when they join the Board. These letters are available for inspection at the registered office of the Company and will be available at the AGM. Directors’ training and induction When a new Director is appointed to the Board, he or she is provided with all relevant information regarding the Company and his or her duties and responsibilities as a Director. In addition, a new Director will also spend some time with representatives of the Manager, including the Portfolio Managers and the Company Secretary, whereby he or she will become familiar with the various processes which are considered necessary for the performance of their duties and responsibilities. The Company’s policy is to encourage Directors to keep up to date and attend training courses on matters which are directly relevant to their involvement with the Company. The Directors also receive regular briefings from, amongst others, the Auditor and the Company Secretary regarding any proposed developments or changes in law or regulations that could affect them or the Company. Directors’ liability insurance The Company has maintained appropriate Directors’ liability insurance cover throughout the year. dividend policy, public documents such as the Annual Report and Financial Statements, the terms of the discount control mechanism, buy back policy and corporate governance matters. In order to enable them to discharge their responsibilities effectively the Board has full and timely access to relevant information. The Board currently meets at least six times a year to review investment performance, financial reports and other reports of a strategic nature. Board or Board committee meetings are also held on an ad hoc basis to consider particular issues as they arise. Key representatives of the Manager and/or Investment Manager attend each meeting and between these meetings there is regular contact with the Manager and Investment Manager. The Board has direct access to company secretarial advice and the services of the Manager which, through its nominated representative, is responsible for ensuring that Board and Committee procedures are followed and that applicable regulations are complied with. The appointment and removal of the Company Secretary is a matter for the whole Board. The Board has established a procedure whereby Directors wishing to do so in the furtherance of their duties, may take independent professional advice at the Company’s expense. Performance evaluation A formal appraisal system has been agreed for the evaluation of the Board, its Committees and the individual Directors, including the Chairman. The annual evaluation for the year ended 30 November 2020 has been carried out. This took the form of questionnaires followed by discussions to identify how the effectiveness of the Board’s activities, including its Committees, policies or processes might be enhanced. The Chairman also reviewed with each Director their individual performance, contribution and commitment. The appraisal of the Chairman followed the same format and was led by Mr Merton. The results of the evaluation process were presented to and considered by the Board. There were no significant actions arising from the evaluation process and it was agreed that the current composition of the Board and its Committees reflected a suitable mix of skills and experience, and that the Board as a whole, the individual Directors and its Committees were functioning effectively. Delegation of responsibilities The Board has delegated the following areas of responsibility: The Board’s responsibilities The Board is responsible to shareholders for the effective stewardship of the Company and a formal schedule of matters reserved for the decision of the Board has been adopted. Investment policy and strategy are determined by the Board. It is also responsible for the gearing policy, Management and administration The management of the investment portfolio and the administration of the Company have been contractually delegated to BFM as the Company’s AIFM, and BFM (with the permission of the Company) has delegated certain investment management and other ancillary services Section 3: Governance 69 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Corporate governance statement continued to BIM (UK) (the Investment Manager). The contractual arrangements with the Manager are summarised on pages 54 and 55. The Manager, operating under guidelines determined by the Board, has direct responsibility for the decisions relating to the day-to-day running of the Company and is accountable to the Board for the investment, financial and operating performance of the Company. The review of the Manager’s performance is an ongoing duty and responsibility of the Board which is carried out at every Board meeting. In addition, a formal review is undertaken annually, details of which are set out above. The assets of the Company have been entrusted to the Depositary for safekeeping. The Depositary is The Bank of New York Mellon (International) Limited. The address at which the business is conducted is given on page 127. The Board has delegated the exercise of voting rights attaching to the securities held in the portfolio to the Investment Manager. Details of the Investment Manager’s voting policy are set out on page 56. Committees of the Board The Board has appointed a number of committees as set out below and on page 34. Copies of the terms of reference of each committee are available on request from the Company’s registered office, on the BlackRock website at www.blackrock. com/uk/beri and at each Annual General Meeting. Audit and Management Engagement Committee The Audit and Management Engagement Committee consists of Michael Merton who acts as Chairman, Dr Carol Bell and Adrian Brown. Mr Warner is not a member of the Committee but may attend by invitation. Further details are provided in the Report of the Audit and Management Engagement Committee on pages 74 to 78. Nomination Committee The Nomination Committee comprises all the Directors and is chaired by the Chairman of the Board. The role of the Committee is to review Board structure, size and composition, the balance of knowledge, experience and skills range and to consider succession planning and tenure policy. Appointments of new Directors will be made on a formalised basis, with the Committee agreeing the selection criteria and the method of selection, recruitment and appointment. Board diversity, including gender, will be taken into account in establishing the criteria. The services of an external search consultant may be used to identify potential candidates. On the recommendation of the Nomination Committee, the Board engaged an independent third-party recruitment firm, Cornforth Consulting Limited, to assist in the search for a new Director during the year. The Committee meets at least once a year and more regularly if required. Remuneration Committee The Company’s policy on Directors’ remuneration, together with details of the remuneration of each Director, is detailed in the Directors’ Remuneration Report on pages 66 to 67. As stated in the Directors’ Remuneration Report, the full Board determines the level of Directors’ fees and accordingly there is no separate Remuneration Committee. Internal Controls The Board is responsible for the internal controls of the Company and for reviewing their effectiveness, for ensuring that financial information published or used within the business is reliable, and for regularly monitoring compliance with regulations governing the operation of investment trusts. The Board reviews the effectiveness of the internal control systems to identify, evaluate and manage the Company’s significant risks. As part of that process, there are procedures designed to capture and evaluate any failings or weaknesses. Should a matter be categorised by the Board as significant, procedures exist to ensure that necessary action is taken to remedy the failings. The Board is not aware of any significant failings or weaknesses arising in the year under review. Control of the risks identified, covering financial, operational, compliance and risk management, is embedded in the operations of the Company. There is a monitoring and reporting process to review these controls, which has been in place throughout the year under review and up to the date of this report carried out by the Manager’s corporate audit department. This accords with the Financial Reporting Council’s ‘Internal Control: Revised Guidance for Directors on the UK Corporate Governance Code’. The Company’s risk register sets out the risks relevant to the Company and describes, where relevant, the internal controls that are in place at the AIFM, the Investment Manager and other third party service providers to mitigate these risks. The Audit and Management Engagement Committee (the Committee) formally reviews this register on a semi-annual basis and BFM as the Company’s AIFM reports on any significant issues that have been identified in the period. In addition, BlackRock’s internal audit department provides an annual presentation to the Audit and Management Engagement Committee Chairman on the results of testing performed in relation to BlackRock’s internal control processes. The Depositary also reviews the control processes in place at the custodian, the fund accountant and the AIFM and reports formally to the Committee twice yearly. Both the AIFM and the Depositary will escalate issues and report to the Committee outside of these meetings on an ad hoc basis to the extent this is required. The Committee also receives annual and quarterly Service Organisation Control (SOC 1) reports respectively from BlackRock and The Bank of New 70 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600York Mellon (International) Limited on the internal controls of their respective operations, together with the opinion of their reporting accountants. The Board recognises that these control systems can only be designed to manage rather than to eliminate the risk of failure to achieve business objectives, and to provide reasonable, but not absolute, assurance against material misstatement or loss, and relies on the operating controls established by the Manager and the Custodian. The Investment Manager prepares revenue forecasts and management accounts which allow the Board to assess the Company’s activities and review its performance. The Board and the Investment Manager have agreed clearly defined investment criteria, specified levels of authority and exposure limits. Reports on these issues, including performance statistics and investment valuations, are submitted to the Board at each meeting. Internal audit function The Company does not have its own internal audit function, as all the administration is delegated to the Manager. The Board monitors the controls in place through the Manager’s internal audit department and considers that there is currently no need for the Company to have its own internal audit function, although this matter is kept under review. Financial reporting The Statement of Directors’ Responsibilities in respect of the Annual Report and Financial Statements is set out on page 79, the Report of the Independent Auditor on pages 82 to 89 and the Statement of Going Concern on page 56. Socially responsible investment Generally, investment trusts do not employ staff and accordingly have no direct impact on social matters but can be significant investors in the economies of the regions in which they invest. The Company invests primarily in the securities of companies operating in the mining and energy sectors around the world in a range of countries which have varying degrees of political and corporate governance standards. The Investment Manager’s evaluation procedures and financial analysis of the companies within the portfolio includes research and appraisal, and also takes into account environmental policies, social, ethical and other business issues. In this regard, the Natural Resources team works closely with BlackRock’s Investment Stewardship team. The Company’s investment process is ESG integrated. The Investment Manager defines ESG integration as the practice of explicitly incorporating ESG information into investment decisions to help enhance risk-adjusted returns. The Investment Manager believes integrating ESG information, or sustainability considerations, is an appropriate component of their robust investment process, and have adapted their research to account for additional sources of risk and return that are explained by ESG-related information. As part of the Investment Manager’s structured investment process, ESG risks and opportunities are considered within their fundamental analysis of companies and industries. In their aim to protect capital for clients and generate them wealth in the long term the Investment Manager looks to invest in businesses which have superior return characteristics over a multi-year period. The Investment Manager recognises that a business’ return can be improved or eroded over the long run by a number of factors, particularly those related to ESG, and look to understand the potential for change or resilience within a business in this respect. They, therefore, aim to assess financial materiality in relation to ESG in all of their investments. To follow this process systematically, the Investment Manager looks at data insights integrated into the team’s standard research templates shown in the BlackRock ESG Risk Window. The Risk Window, using MSCI data, flags any stock-specific concerns allowing investors to investigate them further. It screens for Governance, Environment and Social metrics through over 400 single data points and orders potentials risks from High to Managed. Investors also have access to other data sources such as RepRisk or Sustainalytics to complement the Risk Window. The Investment Manager’s unparalleled access to company management allows them to engage on these issues through questioning management teams and conducting site visits. They look to understand how management approaches ESG risks and opportunities and the potential impact this may have on company financials. Further engagement is carried out by the BlackRock Investment Stewardship team (BIS), who meet with boards of companies frequently to evaluate how companies are strategically managing their longer term issues, including those surrounding ESG. Through this combination of quantitative and qualitative assessment, the Investment Manager ensures that an understanding of our investments is thorough, reliable and up-to-date. The Investment Manager’s understanding of ESG issues is further supported by BlackRock’s Sustainable Investment Team (BSI). BSI look to advance ESG research and integration, active engagement and the development of sustainable investment solutions across the firm. BlackRock believes ESG issues have real financial impacts over the long-term. The sustainable investing effort is embedded into the Investment Manager’s culture from the top down as they believe that a company’s ability to manage ESG matters demonstrates the leadership and good governance that is essential to sustainable growth, which is why the Investment Manager is integrating these issues into their investment process. The understanding of ESG risk and opportunities goes beyond initial templating of an investment idea. This is a continual process where ESG insights are embedded in the ongoing assessment of risk-reward on each company the Investment Manager invests in or monitors. Their awareness of the development of ESG risks is further aided by weekly automated emails highlighting changes to MSCI ESG controversies and scores on a single stock basis. This Section 3: Governance 71 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Corporate governance statement continued is reviewed by analysts and any relevant changes will be discussed in the team’s morning meeting. From a portfolio management perspective, our Portfolio Managers are able to see, in Aladdin, the ESG scores of the funds they manage in comparison to its benchmark both in total, and also decomposed into the three categories, namely Environmental, Social and Governance. This specifically includes Carbon Metrics and further ESG Metrics, which are linked from numerous third-party data providers, including MSCI and Sustainalytics. Further details on ESG and Sustainable Investing can be found in the Strategic Report on pages 51 to 53. The Manager is a Tier 1 signatory to the UK Stewardship Code, which, among other things, sets out the responsibilities of institutional shareholders in respect of investee companies. The Manager’s compliance with the UK Stewardship Code is publicly available on the BlackRock website https://www.blackrock.com/corporate/aboutus/ investment-stewardship. The Manager’s approach to sustainable investing is detailed on the website at https:// www.blackrock.com/us/individual/investment-ideas/ sustainable-investing. Bribery prevention policy The provision of bribes of any nature to third parties in order to gain a commercial advantage is prohibited and is a criminal offence. The Board has a zero tolerance policy towards bribery and a commitment to carry out business fairly, honestly and openly. The Board takes its responsibility to prevent bribery very seriously. The Manager has anti- bribery policies and procedures in place which are high level, proportionate and risk-based, which are periodically reviewed by the Board. The Company’s other service providers have been contacted in respect of their anti-bribery policies and, where necessary, contractual changes are made to existing agreements in respect of anti-bribery provisions. Criminal Finances Act 2017 The Company has a commitment to zero tolerance towards the criminal facilitation of tax evasion. Communication with shareholders Under normal operating circumstances, all shareholders have the opportunity to attend and vote at the AGM. Although physical attendance at the Company’s 2021 AGM in March may not be possible due to social distancing restrictions in place, the Board encourage shareholders to send any questions that they would like to address to the AGM by post or email to the Secretary at the address shown on page 127. Shareholders are also encouraged to submit their votes by proxy. A written response will be provided to all queries. The Notice of Annual General Meeting sets out the business of the Meeting; any items not of a routine nature are explained in the Directors’ Report on pages 59 to 61. Separate resolutions are proposed for substantive issues. In addition, regular updates on performance are available to shareholders and the Portfolio Managers will review the Company’s portfolio and performance at the AGM. This year, to the extent that social distancing regulations make physical attendance at the AGM impossible, a recorded video of the portfolio managers’ presentation will be made available on the Company’s website at www.blackrock.com/uk/beri shortly after the AGM has concluded. Proxy voting figures will be announced to the shareholders at the AGM and will be made available on BlackRock’s website shortly after the Meeting. The Company’s willingness to enter into discussions with shareholders is demonstrated by a programme of presentations made by the Investment Manager. The Board discusses with the Investment Manager at each Board meeting any feedback from meetings with shareholders, and it also receives reports from its corporate broker. There is a section within this report entitled ‘Additional Information – Shareholder Information’ on pages 121 to 124, which provides an overview of useful information available to shareholders. The Company’s financial statements, regular factsheets and other information are also published on the BlackRock website at blackrock.com/uk/beri. The work undertaken by the Auditor does not involve consideration of the maintenance and integrity of the website and, accordingly, the Auditor accepts no responsibility for any changes that have occurred to the financial statements since they were initially presented on the website. Visitors to the website need to be aware that legislation in the United Kingdom governing the preparation and dissemination of the accounts may differ from legislation in their jurisdiction. Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation (‘The Regulation’) With effect from 1 January 2018, the European Union’s PRIIPs regulation came into force and requires that anyone manufacturing, advising on, or selling a PRIIP to a retail investor in the EEA must comply with the regulation. Shares issued by Investment Trusts fall into scope of the regulation. Investors should be aware that the PRIIPs regulation requires the AIFM, as PRIIPs manufacturer, to prepare a key information document (‘KID’) in respect of the Company. This KID must be made available, free of charge, to EEA retail investors prior to them making any investment decision and have been published on BlackRock’s website. The Company is not responsible for the information contained in the KID and investors should note that the procedures for calculating the risks, costs and potential returns are prescribed by law. The figures in the KID may not reflect the expected returns for the Company and anticipated performance returns cannot be guaranteed. 72 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600The PRIIPs KID in respect of the Company can be found at: www.blackrock.com/uk/beri. Disclosure and Transparency Rules Other information required to be disclosed pursuant to the Disclosure Guidance and Transparency Rules has been placed in the Directors’ Report on pages 54 to 58 because it is information which refers to events that have taken place during the course of the year. By order of the Board ED WARNER Chairman 4 February 2021 Section 3: Governance 73 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Report of the audit and management engagement committee As Chairman of the Audit and Management Engagement Committee (the Committee) I am pleased to present the Committee’s report to shareholders for the year ended 30 November 2020. Composition All of the Directors at the date of this report, except the Chairman, are members of the Committee. The Chairman may attend the Committee meetings by invitation. Mr Andrew Robson became a member of the Committee from the date of his appointment on 8 December 2020, and the Committee is therefore currently composed of Mr Merton (who acts as Chair), Dr Bell and Mr Brown and Mr Robson. Having served on the Board since July 2010, Mr Merton’s tenure now exceeds the recommended limit under the UK Code and he has informed the Board of his intention to retire at the Company’s 2021 AGM. Mr Robson will replace Mr Merton as the Chairman of the Audit and Management Engagement Committee with effect from this date. The Directors’ biographies are given on pages 35 to 37 and the Board considers that at least two members of the Committee have sufficient recent and relevant financial experience for the Committee to discharge its function effectively. The Board is also satisfied that the Audit and Management Engagement Committee as a whole has competence relevant to the sector in which the Company operates. Role and responsibilities During the year under review the Committee met three times. Two of the three planned meetings were held prior to the Board meetings to approve the half yearly and annual results in July and January respectively. The third meeting is held in December to start the report and accounts preparation process. The Committee operates within written terms of reference detailing its scope and duties and these are available on the Company’s website at blackrock.com/uk/beri. The Committee’s principal duties, as set out in the terms of reference, fall into seven main categories, as set out below. In accordance with these duties the principal activities of the Committee during the year included: Internal Controls, Financial Reporting and Risk Management Systems • reviewing the adequacy and effectiveness of the Company’s internal financial controls and the internal control and risk management systems; • reasonably satisfying itself that such systems meet relevant legal and regulatory requirements; • monitoring the integrity of the financial statements including the half yearly and annual report and financial statements; • reviewing the consistency of, and any changes to, accounting policies; • reviewing the half yearly and annual report and financial statements to ensure that the Company’s results and financial position are represented accurately and fairly to shareholders; • reviewing semi-annual reports from the Manager on its activities as AIFM; and • reviewing half yearly reports from the Depositary on its activities. Narrative reporting • reviewing the content of the annual report and financial statements and advising the Board on whether, taken as a whole, it is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position, performance, business model and strategy. External Audit • making recommendations to the Board, to be put to shareholders for approval at the Annual General Meeting (AGM) in relation to the appointment, re-appointment and removal of the Company’s external auditor; • overseeing the relationship with the external auditor; • meeting with the auditor and at least once without management being present; • reviewing and approving the annual audit plan; • reviewing the findings of the audit with the external auditor, including any major issues which arose during the audit, any accounting and audit judgements and the level of errors identified during the audit; and • reviewing any representation letters requested by the external auditor before signature by the Board. The fees paid to the external auditor are set out in note 5 on page 99. An explanation on how auditor objectivity and independence are safeguarded is reported under ‘Assessment of the effectiveness of the external audit process’ on page 77. Management engagement • reviewing the management contract to ensure that the terms remain competitive; • satisfying itself that the continuing appointment of the Manager is in the interests of shareholders as a whole; • to consider the appointment or re-appointment of the Manager and the level of management fees; • considering the appointment of third party service providers; and 74 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600• ensuring that third party service providers comply with the terms of their agreements and that the provisions of such agreements remain competitive. Reporting responsibilities • reporting to the Board on its proceedings and how it has discharged its responsibilities making whatever recommendations it deems appropriate on any area within its remit; and • compiling a report on its activities to be included in the annual report and financial statements. Whistleblowing and fraud • reviewing the adequacy and security of the Manager’s arrangements for its employees and contractors to raise concerns, in confidence about possible wrongdoing in financial reporting or other matters insofar as they affect the Company. Internal audit • considering the need for an internal audit function, as set out in the Corporate Governance Statement on page 71. Whistleblowing policy The Committee has reviewed and accepted the whistleblowing policy that has been put in place by the Manager under which its staff, in confidence, can raise concerns about possible improprieties in matters of financial reporting or other matters, insofar as they affect the Company. Internal audit The Company does not have its own internal audit function, as all the administration is delegated to the Manager. The Board considers that it is sufficient to rely on the internal audit department of BlackRock. The requirement for an internal audit function is kept under review. Significant issues considered regarding the Annual Report and Financial Statements During the year, the Committee considered a number of significant issues and areas of key audit risk in respect of the Annual Report and Financial Statements. The Committee reviewed the external audit plan at an early stage and concluded that the appropriate areas of audit risk relevant to the Company had been identified by the auditor and discussed the audit procedures and plan with the auditors. The table on pages 76 and 77 sets out the key areas of risk identified and also explains how these were addressed by the Committee. As the provision of portfolio valuation, fund accounting and administration services is delegated to the Company’s Investment Manager, which sub-delegates fund accounting to The Bank of New York Mellon (International) Limited, and the provision of depositary services is contracted to BNYM, the Committee has also reviewed the SOC 1 reports prepared by BlackRock, the Custodian and Fund Accountant. This enables the Committee to ensure that the control procedures in place over the areas of risk identified in the following table are adequate and appropriate and have been designated as operating effectively by their reporting auditor. Auditor and audit tenure The appointment of the Auditor is reviewed each year and the audit partner changes at least every five years. Accordingly, following a formal tender process, Ernst & Young LLP (EY), who had acted as external Auditor since the Company’s launch in 2005, was re-appointed in 2015 and Ms Susan Dawe became audit partner. Having reached the five year limit of her permitted tender under EU Audit Reform rules, Ms Susan Dawe was replaced by Mr Matthew Price as the Company’s audit partner in September 2020. There are no contractual obligations that restrict the Company’s choice of auditor. There were no fees paid to the Auditor in respect of non-audit services during the year (2019: £nil). The Auditor has indicated its willingness to continue in office. Resolutions proposing its reappointment and authorising the Audit and Management Engagement Committee to determine its remuneration for the ensuing year will be proposed at the AGM. Section 3: Governance 75 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Report of the audit and management engagement committee continued Significant issue How the issue was addressed The accuracy of the valuation of the investment portfolio. The risk of misappropriation of assets and unsecured ownership of investments. The risk that income is overstated, incomplete or inaccurate through failure to recognise proper income entitlements or to apply the appropriate accounting treatment for recognition of income. Listed investments are valued using stock exchange prices provided by third party pricing vendors. Unquoted or illiquid investments, if any, are valued by the Directors based on recommendations from BlackRock’s Pricing Committee. The Board reviews detailed portfolio valuations at each of its Board meetings and receives confirmation from the Manager that the pricing basis is appropriate, in line with relevant accounting standards as adopted by the Company and that the carrying values are materially correct. The Board also relies on the Manager’s and Fund Accountant’s controls which are documented in a semi- annual internal controls report which is reviewed by the Audit Committee. The Depositary is responsible for financial restitution for the loss of financial investments held in custody. The Depositary reports to the Committee twice a year. The Committee reviews reports from its service providers on key controls over the assets of the Company and will take action to address any significant issues that are identified in these reports, which may include direct discussions with representatives of the relevant service providers to obtain more detailed information surrounding any matters of concern and gaining assurance that appropriate remediation action has been taken. Any significant issues are reported by the Manager to the Committee. The Manager has put in place procedures to ensure that investments can only be made to the extent that the appropriate contractual and legal arrangements are in place to protect the Company’s assets. The Committee reviews income forecasts, including special dividends and option income and receives explanations from the Investment Manager for any variations or significant movements from previous forecasts and prior year figures. The Committee also reviews the facts and circumstances of all special dividends to determine the revenue/capital treatment. The Board reviews the option transactions at each board meeting to confirm revenue treatment. The Directors also review a detailed schedule of dividends received from portfolio holdings at each meeting which sets out current and historic dividend rates, and the amounts accrued. Any significant movements or unusual items are discussed with the Manager. The Committee also reviews SOC 1 Reports from its service providers, including the Company’s fund accountant and custodian, The Bank of New York Mellon (International) Limited. These reports include information on the control processes in place to ensure the accurate recording of income, and any exceptions are highlighted to the Committee and will be investigated further to ensure that appropriate remediation action has been taken where relevant. 76 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Significant issue How the issue was addressed The risk that the global economic disruption caused by COVID-19 will affect the Company’s ability to continue in operation due to the impact on the market valuations of portfolio companies or the ability of key service providers (including the Manager, the Depositary, the Custodian, the Fund Accountant, the Brokers and the printers) to maintain business continuity and continue to provide appropriate service levels. Assessment of the effectiveness of the external audit process To assess the effectiveness of the external audit, members of the Committee work closely with the Manager to obtain a good understanding of the quality and efficiency of the audit. The Committee has adopted a formal framework to review the effectiveness of the external audit process and audit quality. This includes a review of the following areas: • the quality of the audit engagement partner and the audit team; • the expertise of the audit firm and the resources available to it; • identification of areas of audit risk; • planning, scope and execution of the audit; • consideration of the appropriateness of the level of audit materiality adopted; • the role of the Committee, the Manager and other third party service providers in an effective audit process; • communication, by the Auditor, with the Committee; • how the Auditor supports the work of the Committee; • a review of independence and objectivity of the audit firm; and • the quality of the formal audit report to shareholders. The Audit and Management Engagement Committee has reviewed the impact of recent market volatility related to the COVID-19 pandemic on the Company’s portfolio and have received regular updates on portfolio performance from the portfolio manager. The Committee has also reviewed portfolio liquidity as at 13 January 2021 and updated revenue and expense forecasts in light of the COVID-19 pandemic and its anticipated impact on portfolio liquidity, dividend income and market valuations and considers that the Company’s business model remains viable and that the Company has sufficient resources to continue in operation and to meet all liabilities as they fall due. The Committee has reviewed the Company’s bank overdraft facility and considers that despite recent market volatility the Company continues to meet its financial covenants in respect of this facility and has a wide margin before any relevant thresholds are reached. The Committee keeps the Company’s principal risks and uncertainties as set out above under review, and are confident that the Company has appropriate controls and processes in place to manage these and to maintain its operating model, even given the global economic challenges posed by COVID-19. The Committee has received presentations and updates from key service providers in respect of their business continuity plans to address the issues posed by COVID-19 and are confident that they will be able to continue to provide a good level of service for the foreseeable future. Feedback in relation to the audit process and also of the effectiveness of the Manager in performing its role is also sought from relevant involved parties, including the audit partner and team. The external auditor is invited to attend the Committee meetings at which the half yearly and annual report and financial statements are considered and at which they have the opportunity to meet with the Committee without representatives of the Manager or Investment Manager being present. The effectiveness of the external audit process is assessed principally in relation to the timely identification and resolution of any process errors or control breaches that might impact the Company’s net asset value and accounting records. It is also assessed by reference to how successfully any issues in respect of areas of accounting judgement are identified and resolved, the quality and timeliness of papers analysing these judgements, the views of the independent auditors and the booking of any audit adjustments arising, and the timely provision of draft public documents for review by the Auditor and the Committee. To form a conclusion with regard to the independence of the external Auditor, the following factors are considered. The Committee considers whether the skills and experience of the auditor make them a suitable supplier of the non-audit services and whether there are safeguards in place to ensure that there is no threat to its objectivity and independence in the conduct of the audit resulting from the provision of such services. On an ongoing basis, EY reviews the independence of its relationship with the Group and reports to the Committee, providing details of any other relationships with the Manager. As part of this review, the Auditor will Section 3: Governance 77 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Report of the audit and management engagement committee continued provide the Committee with information about policies and processes for maintaining independence and monitoring compliance with relevant requirements. This will include information on the rotation of audit partners and staff, the level of fees that the Group pays, details of any relationships between the audit firm and its staff and the Group as well as an overall confirmation from the auditor of its independence and objectivity. As a result of their review, the Committee has concluded that the external audit has been conducted effectively and also that EY is independent of the Company. Conclusions in respect of the Annual Report and Financial Statements The production and the audit of the Group’s annual report and financial statements is a comprehensive process requiring input from a number of different contributors. In order to reach a conclusion that the annual report and financial statements are fair, balanced and understandable, the Board has requested that the Committee advise on whether these criteria are satisfied. In doing so the Committee has given consideration to the following: • the comprehensive control framework over the production of the annual report and financial statements including the verification process in place to deal with the factual content; • the extensive levels of review that are undertaken in the production process by the Manager, the Depositary and the Committee; • the Manager and other third party service provider controls to ensure the completeness and accuracy of the Group’s financial records and the security of the Group’s assets; and • the existence of satisfactory SOC 1 reports to verify the effectiveness of the internal controls of the Manager, Custodian and Fund Accountants. The Committee has reviewed the Annual Report and Financial Statements and is satisfied that, taken as a whole, they are fair, balanced and understandable. In reaching this conclusion, the Committee has assumed that the reader of the Annual Report and Financial Statements would have a reasonable level of knowledge of the investment trust industry in general and of investment trusts in particular. The Committee has reported on these findings to the Board who affirm the Committee’s conclusions in the Statement of Directors’ Responsibilities in respect of the Annual Report and Financial Statements on page 79. MICHAEL MERTON Chairman Audit and Management Engagement Committee 4 February 2021 78 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Statement of Directors’ responsibilities in respect of the annual report and financial statements The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable United Kingdom law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have elected to prepare the Group and Parent Company financial statements in accordance with International Accounting Standards in conformity with the Companies Act. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company as at the end of each financial year and of the profit or loss of the Group for that year. Under the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules, Group financial statements are required to be prepared in accordance with International Financial Reporting Standards (‘IFRSs’) adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. In preparing these financial statements, the Directors are required to: • present fairly the financial position, financial performance and cash flows of the Group and the Company; • select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently; • present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; • make judgements and estimates that are reasonable and prudent; • in respect of the Group financial statements, state whether International Accounting Standards in conformity with the Companies Act 2006 and IFRSs adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union have been followed, subject to any material departures disclosed and explained in the financial statements; • in respect of the Parent Company financial statements, state whether International Accounting Standards in conformity with the Companies Act 2006 have been followed, subject to any material departures disclosed and explained in the financial statements; • provide additional disclosures when compliance with the specific requirements in IFRS as adopted by the European Union is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group’s financial position and financial performance; and accuracy at any time the financial position of the Group and the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are also responsible for preparing the Strategic Report, the Directors’ Report, the Directors’ Remuneration Report, the Corporate Governance Statement and the Report of the Audit and Management Engagement Committee in accordance with the Companies Act 2006 and applicable regulations, including the requirements of the Listing Rules and the Disclosure Guidance and Transparency Rules. The Directors have delegated responsibility to the Manager for the maintenance and integrity of the Group’s corporate and financial information included on the BlackRock website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Each of the Directors, whose names are listed on pages 35 to 37, confirm to the best of their knowledge that: • the consolidated financial statements, prepared in accordance with International Accounting Standards in conformity with the Companies Act 2006 and IFRSs adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Company and undertakings included in the consolidation taken as a whole; and • the annual report and financial statements include a fair review of the development and performance of the business and the position of the Company and undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that it faces. The 2018 UK Corporate Governance Code also requires Directors to ensure that the Annual Report and Financial Statements are fair, balanced and understandable. In order to reach a conclusion on this matter, the Board has requested that the Audit and Management Engagement Committee advise on whether it considers that the Annual Report and Financial Statements fulfils these requirements. The process by which the Committee has reached these conclusions is set out in the Audit and Management Engagement Committee’s Report on pages 74 to 78. As a result, the Board has concluded that the Annual Report for the year ended 30 November 2020, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s and the Company’s position, performance, business model and strategy. For and on behalf of the Board • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and/or the Company will continue in business. ED WARNER Chairman 4 February 2021 The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and the Company’s transactions and disclose with reasonable Section 3: Governance 79 Job No: 43774Proof Event: 20Black Line Level: 3Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 80 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Financial statements It is estimated that an electric vehicle has approximately four times the copper content per vehicle when compared to an internal combustion engine car. Currently copper miners (and companies that produce other metals that are indispensable in the energy transition) trade in the equity market at a substantially lower valuation multiple than companies such as wind turbine manufacturers or renewable energy utilities. Mining companies that are able to operate with respect for their host communities and articulate a credible climate strategy will be set to appeal to investors in the next few years. ID.3 1ST EDITION AND BATTERY SCHEMATIC PHOTO COURTESY OF VOLKSWAGEN. Section 4: Financial statements 81 Job No: 43774 Customer: BlackRock Proof Event:7 Project Title: BERI Annual Rpt 2020 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA T: 0207 055 6500 F: 020 7055 6600 Independent auditor’s report to the members of BlackRock Energy and Resources Income Trust plc Opinion In our opinion: • BlackRock Energy and Resources Income Trust plc’s Group financial statements and Parent Company financial statements (the “financial statements”) give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 30 November 2020 and of the Group’s profit for the year then ended; • the Group financial statements have been properly prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union; • the Parent Company financial statements have been properly prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 as applied in accordance with the provisions of the Companies Act 2006; and • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements of BlackRock Energy and Resources Income Trust plc which comprise: Group Parent company Consolidated Statement of Financial Position as at 30 November 2020; Statement of Financial Position as at 30 November 2020; Consolidated Statement of Comprehensive Income for the year then ended; Statement of Changes in Equity for the year then ended; Consolidated Statement of Changes in Equity for the year then ended; Consolidated Cash Flow Statement for the year then ended; and Related notes 1 to 19 to the financial statements including a summary of significant accounting policies. Cash Flow Statement for the year then ended; and Related notes 1 to 19 to the financial statements including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Accounting Standards in conformity with the requirements of the Companies Act 2006 and, as regards the Group financial statements, International Financial Reporting Standards adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union, and, as regards the Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report below. We are independent of the Group and Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Conclusions relating to principal risks, going concern and viability statement We have nothing to report in respect of the following information in the Annual Report, in relation to which the ISAs (UK) require us to report to you whether we have anything material to add or draw attention to: • the disclosures in the Annual Report set out on pages 40 to 44 that describe the principal risks and explain how they are being managed or mitigated; • the Directors’ confirmation set out on page 40 in the Annual Report that they have carried out a robust assessment of the emerging and principal risks facing the entity, including those that would threaten its business model, future performance, solvency or liquidity; • the Directors’ statement set out on pages 56 and 95 in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification of any material uncertainties to the entity’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements. • whether the Directors’ statement in relation to going concern required under the Listing Rules in accordance with Listing Rule 9.8.6R(3) is materially inconsistent with our knowledge obtained in the audit; or • the Directors’ explanation set out on pages 44 to 45 in the Annual Report as to how they have assessed the prospects of the entity, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the entity will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions. 82 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Overview of our audit approach Key audit matters Audit scope • • • • Materiality • Incomplete or inaccurate revenue recognition, including the calculation and classification of special dividends and option premium income as revenue or capital in the Consolidated Statement of Comprehensive Income. Incorrect valuation or ownership of the investment portfolio and derivatives. Impact of COVID-19. We performed an audit of the complete financial information of BlackRock Energy and Resources Income Trust plc’s components. Overall Group materiality of £0.92m (2019: £0.86m) which represents 1% (2019: 1% of net assets). Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters. Key observations communicated to the Audit and Management Engagement Committee What we reported to the Audit and Management Engagement Committee: The results of our procedures identified no material misstatement in relation to incomplete or inaccurate revenue recognition, including the calculation and classification of special dividends and option premium income as revenue or capital in the Consolidated Statement of Comprehensive Income. Based on the work performed we had no matters to report to the Audit and Management Engagement Committee. Risk Our response to the risk Incomplete or inaccurate revenue recognition, including the calculation and classification of special dividends and option premium income as revenue or capital in the Consolidated Statement of Comprehensive Income (as described on page 76 in the Report of the Audit and Management Engagement Committee and as per the accounting policy set out on pages 96 and 97 and note 3 to the financial statements). The total income from investments received for the year to 30 November 2020 was £3.62m (2019: £4.34m), consisting primarily of dividend income from listed investments. The option premium income for the year was £1.24m (2019: £1.29m). There is a risk of incomplete or inaccurate recognition of revenue through the failure to recognise proper income entitlements or to apply an appropriate accounting treatment. We performed the following procedures: We obtained an understanding of The Bank of New York Mellon (International) Limited (BNYM) and BlackRock Fund Managers Limited’s (the Manager) processes and controls around revenue recognition, including the classification of special dividends and option premium income, by reviewing their internal controls reports and performing our walkthrough procedures. For the classification of special dividends and option premium income, we also evaluated the design and implementation of controls. For a sample of dividends and fixed interest payments, we recalculated the investment income by multiplying the investment holdings at the ex-dividend date, traced from the accounting records, by the dividend per share/coupon rate, as agreed to an independent data vendor. We agreed this sample to bank statements and, where applicable, we also agreed the exchange rates to an external source. Section 4: Financial statements 83 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Independent auditor’s report continued Risk Our response to the risk Key observations communicated to the Audit and Management Engagement Committee Special dividends The Directors are required to exercise judgement in determining whether income receivable in the form of special dividends should be classified as ‘revenue’ or ‘capital’ in the Consolidated Statement of Comprehensive Income. During the year, the Group received no special dividends (2019: £0.23m classified as revenue, £0.66m classified as capital). Option premium income Options may be purchased or written over securities held in the portfolio for generating or protecting capital returns, or for generating or maintaining revenue returns. As such, there is a manual and judgemental element in allocating option premium income between revenue and capital, based on the underlying intention for writing the option. Based on the above, there is a risk that the option premium income is incorrectly allocated to revenue or capital. In the year ended 30 November 2020, all option premium income received was allocated to revenue. To test the completeness of ordinary and special dividends, we agreed all dividends received on investments held from an independent data vendor to the income recorded by the Group. For all dividends and fixed interest income accrued at the year end, we agreed the income entitlement to an independent data vendor and agreed the amount receivable to post year- end bank statements, if paid post year end. We obtained the income report and the acquisition and disposal report produced by BNYM to identify special dividends received or accrued during the year, above our testing threshold. For all dividends above our testing threshold, we agreed the dividend type to an independent data vendor. We identified no special dividends, above our testing threshold. For a sample of option premia received, we agreed the key transaction details (i.e. contract size, number of contracts and contract price) to trade tickets, recalculated the option premium income and confirmed the income was correctly amortised over the life of the options. We agreed this sample to bank statements and, where applicable, we also agreed the exchange rates to an external source. We obtained the Manager’s summary for writing the options and challenged that the option premia have been correctly allocated to revenue based on the underlying intention for writing the option, and in accordance with the Group’s accounting policy. 84 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Key observations communicated to the Audit and Management Engagement Committee What we reported to the Audit and Management Engagement Committee: The results of our procedures identified no material misstatement in relation to incorrect valuation or ownership of the investment portfolio and derivatives. Based on the work performed we had no matters to report to the Audit and Management Engagement Committee. Risk Our response to the risk Incorrect valuation or ownership of the investment portfolio and derivatives (as described on page 76 in the Report of the Audit and Management Engagement Committee and as per the accounting policy set out on page 97 and note 10 to the financial statements). We performed the following procedures: We obtained an understanding of BNYM’s process surrounding investment and derivative pricing by reviewing their internal control reports and performing our walkthrough procedures. The valuation of the listed investment portfolio is £97.58m (2019: £98.55m). The written option contracts amount to a net liability of £0.01m (2019: net liability of £0.03m). The valuation of the instruments held in the investment portfolio is the key driver of the Group’s net asset value and total return. Incorrect asset pricing or a failure to maintain proper legal title of the instruments held by the Group could have a significant impact on the portfolio valuation and, therefore, the return generated for shareholders. The fair value of listed investments is determined using quoted market bid prices at close of business on the reporting date. The value of option contracts is marked-to-market to reflect the fair value of the option based on traded prices. For all listed investments and derivatives in the portfolio, we compared the market prices and exchange rates applied to an independent pricing vendor and recalculated the investment and derivative valuations as at the year- end. We inspected the stale pricing reports produced by BNYM to identify prices that have not changed and verified whether the listed price is a valid fair value. We compared the Group’s investment holdings at 30 November 2020 to independent confirmations received directly from the Group’s Custodian and Depositary, testing any reconciling items to supporting documentation. We agreed all year-end open derivative positions to confirmations received independently from the Group’s Broker. Section 4: Financial statements 85 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Independent auditor’s report continued Key observations communicated to the Audit and Management Engagement Committee What we reported to the Audit and Management Engagement Committee: As a result of our procedures, we have determined that the Directors’ conclusion that there is no material uncertainty relating to going concern is appropriate. We have reviewed the disclosures relating to going concern and COVID-19 and determined that they are appropriate. Risk Impact of COVID-19 (as described on pages 40 to 44 in the Strategic Report, page 77 in the Report of the Audit and Management Engagement Committee and as per the accounting policy set out on page 95). The COVID-19 pandemic has adversely impacted global commercial activity and contributed to significant volatility in global equity and debt markets. As of the date of our audit report, the longer-term impact remains uncertain. This uncertainty had an impact on our risk assessment and, as a result, on our audit of the financial statements. The COVID-19 pandemic had the most significant impact on our audit of the financial statements in the following areas: Going concern There is increased uncertainty in certain of the assumptions underlying the Directors’ assessment of future prospects, which includes the ability of the Group to meet debt covenants and the ability to fund ongoing costs. Financial statements disclosures There is a risk that the impact of COVID-19 is not adequately disclosed in the financial statements. Our response to the risk We performed the following procedures: Going Concern We inspected the Directors’ assessment of going concern, which includes consideration of the impact of COVID-19 and challenged the assumptions made in the preparation of the revenue and expense forecast. We have agreed the inputs and assumptions used in the assessment to historically observed results of the Group. We inspected the Directors’ assessment of the risk of breaching the debt covenants as a result of a reduction in the value of the Group’s portfolio. We recalculated the Group’s compliance with debt covenants in the scenarios assessed by the Directors. Financial statements disclosures We reviewed the adequacy of the going concern and COVID-19 disclosures by evaluating whether they were consistent with the Directors’ assessment. We reviewed the disclosures for compliance with the reporting requirements. In the prior year, our auditor’s report included two key audit matters in relation to ‘Incomplete or inaccurate revenue recognition, including classification of special dividends as revenue or capital items in the Consolidated Statement of Comprehensive Income’ and ‘Incorrect calculation and classification of option premium income’. In the current year, we combined the prior year key audit matters into one key audit matter, ‘Incomplete or inaccurate revenue recognition, including the calculation and classification of special dividends and option premium income as revenue or capital in the Consolidated Statement of Comprehensive Income.’ Additionally, we re-assessed the risks determined in the prior year and, due to the uncertainty in global markets caused by the COVID-19 pandemic, we revised our risk assessment to include the key audit matter ‘Impact of COVID-19’. An overview of the scope of our audit Tailoring the scope Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for each entity within the Group. Taken together, this enables us to form an opinion on the consolidated financial statements. We take into account size, risk profile, the organisation of the Group and effectiveness of group- wide controls and changes in the business environment when assessing the level of work to be performed at each entity. We performed an audit of the complete financial information of both the Parent Company and its subsidiary, BlackRock Energy and Resources Securities Income Company Limited (“full scope components”). 86 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600All audit work performed for the purposes of the audit was undertaken by the Group audit team. Reporting threshold An amount below which identified misstatements are considered as being clearly trivial. Our application of materiality We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion. Materiality The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures. We determined materiality for the Group and Parent Company to be £0.92m (2019: £0.86m), which is 1% (2019: 1%) of net assets. We believe net assets to be the most important financial metric on which shareholders would judge the performance of the Group and Parent Company. During the course of our audit, we reassessed initial materiality and found no reason to alter the basis of calculation used at year end. Performance materiality The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality. On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was that performance materiality was 75% (2019: 75%) of our planning materiality, namely £0.69m (2019: £0.64m). We have set performance materiality at this percentage due to our past experience of the audit that indicates a lower risk of misstatements, both corrected and uncorrected. Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement accounts is undertaken based on a percentage of total performance materiality. The performance materiality set for each component is based on the relative scale and risk of the component to the Group as a whole and our assessment of the risk of misstatement at that component. In the current year, performance materiality allocated to BlackRock Energy and Resources Securities Income Company Limited was £0.05m (2019: £0.05m). Given the importance of the distinction between revenue and capital for the Group we have also applied a separate testing threshold of £0.22m (2019: £0.25m) for the revenue column of the Consolidated Statement of Comprehensive Income, being 5% (2019: 5%) of the net profit on ordinary activities before taxation. We agreed with the Audit and Management Engagement Committee that we would report to them all uncorrected audit differences in excess of £0.05m (2019: £0.04m), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative considerations in forming our opinion. Other information The other information comprises the information included in the Annual Report set out on pages 1 to 79 and 119 to 142, other than the financial statements and our auditor’s report thereon. The Directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard. In this context, we also have nothing to report in regard to our responsibility to specifically address the following items in the other information and to report as uncorrected material misstatements of the other information where we conclude that those items meet the following conditions: • Fair, balanced and understandable set out on pages 78 and 79 – the statement given by the Directors that they consider the Annual Report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s performance, business model and strategy, is materially inconsistent with our knowledge obtained in the audit; or Section 4: Financial statements 87 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Independent auditor’s report continued • Audit and Management Engagement Committee reporting set out on pages 74 to 78 – the section describing the work of the Audit and Management Engagement Committee does not appropriately address matters communicated by us to the Audit and Management Engagement Committee; or • Directors’ statement of compliance with the UK Corporate Governance Code set out on pages 68 to 73 – the parts of the Directors’ statement required under the Listing Rules relating to the Parent Company’s compliance with the UK Corporate Governance Code containing provisions specified for review by the auditor in accordance with Listing Rule 9.8.10R(2) do not properly disclose a departure from a relevant provision of the UK Corporate Governance Code. Opinions on other matters prescribed by the Companies Act 2006 In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006. In our opinion, based on the work undertaken in the course of the audit: • the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and • the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements. Matters on which we are required to report by exception In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: • adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or • the Parent Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or • certain disclosures of Directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit. Responsibilities of Directors As explained more fully in the Statement of Directors’ Responsibilities in Respect of the Annual Report and Financial Statements set out on page 79, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the Group and Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud The objectives of our audit, in respect to fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses; and to respond appropriately to fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management. Our approach was as follows: • We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that the most significant are International Accounting Standards in conformity with the requirements of the Companies Act 2006, the Companies Act 2006, the Listing Rules, the UK Corporate Governance Code, the AIC Code and section 1158 of the Corporation Tax Act 2010. 88 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Use of our report This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. MATTHEW PRICE (Senior statutory auditor) for and on behalf of Ernst & Young LLP, Statutory Auditor London 4 February 2021 Notes: 1. The maintenance and integrity of the BlackRock Energy and Resources Income Trust plc web site is the responsibility of BlackRock; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the web site. 2. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. • We understood how BlackRock Energy and Resources Income Trust plc is complying with those frameworks through discussions with the Audit and Management Engagement Committee and the Company Secretary and a review of the Group’s documented policies and procedures. • We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur by considering the key risks impacting the financial statements. We identified a fraud risk with respect to incomplete or inaccurate revenue recognition, including the calculation and classification of special dividends and option premium income as revenue or capital in the Consolidated Statement of Comprehensive Income. Further discussion of our approach is set out in the section on key audit matters above. • Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures involved review of the reporting to the Directors with respect to the application of the documented policies and procedures and review of the financial statements to ensure compliance with the reporting requirements of the Group. • We have reviewed that the Group’s control environment is adequate for the size and operating model of such a listed investment company. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at https://www.frc.org.uk/ auditorsresponsibilities. This description forms part of our auditor’s report. Other matters we are required to address • We were appointed by the Group to audit the financial statements for the year ended 30 November 2006 and subsequent financial periods. The period of total uninterrupted engagement including previous renewals and reappointments is 15 years, covering periods from our appointment through to the period ended 30 November 2020. • The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the Parent Company and we remain independent of the Group and the Parent Company in conducting the audit. • The audit opinion is consistent with the additional report to the Audit and Management Engagement Committee. Section 4: Financial statements 89 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Consolidated statement of comprehensive income for the year ended 30 November 2020 Income from investments held at fair value through profit or loss Other income Total revenue Notes Revenue 2020 Revenue 2019 Capital 2020 Capital 2019 Total 2020 Total 2019 £’000 £’000 £’000 £’000 £’000 £’000 3 3 3,618 1,325 4,336 1,308 4,943 5,644 – – – 658 – 3,618 1,325 4,994 1,308 658 4,943 6,302 Net profit/(loss) on investments and options held at fair value through profit or loss 10 Net (loss)/profit on foreign exchange – – – – 6,307 (585) 6,307 (585) 4,943 5,644 6,258 (49) 25 98 (49) 25 11,201 5,742 Total Expenses Investment management fee Other operating expenses Total operating expenses Net profit/(loss) on ordinary activities before finance costs and taxation Finance costs Net profit/(loss) on ordinary activities before taxation Taxation Net profit/(loss) on ordinary activities after taxation Earnings/(loss) per ordinary share (pence) 4 5 6 7 9 (133) (388) (521) (237) (404) (641) (469) (711) (6) (5) (602) (394) (948) (409) (475) (716) (996) (1,357) 4,422 5,003 5,783 (618) 10,205 4,385 (9) (49) (26) (148) (35) (197) 4,413 4,954 5,757 (766) 10,170 4,188 487 (376) 50 42 537 (334) 4,900 4,578 5,807 (724) 10,707 3,854 4.31 3.97 5.12 (0.63) 9.43 3.34 The total column of this statement represents the Group’s Statement of Comprehensive Income, prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union. 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 year. 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 year disclosed above represents the Group’s total comprehensive income/(loss). The notes on pages 95 to 118 form part of these financial statements. 90 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Consolidated statement of changes in equity for the year ended 30 November 2020 Called up share capital Share premium account Notes Special reserve Capital reserve Revenue reserve £’000 £’000 £’000 £’000 £’000 Total £’000 Group For the year ended 30 November 2020 At 30 November 2019 Total comprehensive income: Net profit for the year Transactions with owners, recorded directly to equity: Ordinary shares purchased into treasury 14, 15 Share purchase costs Dividends paid1 At 30 November 2020 For the year ended 30 November 2019 At 30 November 2018 Total comprehensive income: Net (loss)/profit for the year Transactions with owners, recorded directly to equity: Ordinary shares purchased into treasury Share purchase costs Dividends paid2 At 30 November 2019 15 8 8 1,190 46,977 67,241 (33,604) 4,141 85,945 – – – – – – – – – 5,807 4,900 10,707 (462) (4) – – – – – – (462) (4) (4,544) (4,544) 1,190 46,977 66,775 (27,797) 4,497 91,642 1,190 46,977 68,873 (32,880) 3,949 88,109 – – – – – – – – - (724) 4,578 3,854 (1,390) (10) (232) – – – – – (1,390) (10) (4,386) (4,618) 1,190 46,977 67,241 (33,604) 4,141 85,945 1 2 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; 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; 2nd interim dividend of 1.00p per share for the year ended 30 November 2020, declared on 9 June 2020 and paid on 17 July 2020 and 3rd interim dividend of 1.00p per share for the year ended 30 November 2020, declared on 15 September 2020 and paid on 20 October 2020. 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 ended 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 notes on pages 95 to 118 form part of these financial statements. Section 4: Financial statements 91 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Parent company statement of changes in equity for the year ended 30 November 2020 Called up share capital Share premium account Notes Special reserve Capital reserve Revenue reserve £’000 £’000 £’000 £’000 £’000 Total £’000 Company For the year ended 30 November 2020 At 30 November 2019 Total comprehensive income: Net profit for the year Transactions with owners, recorded directly to equity: Ordinary shares purchased into treasury 14, 15 Share purchase costs Dividends paid1 At 30 November 2020 For the year ended 30 November 2019 At 30 November 2018 Total comprehensive income: Net profit for the year Transactions with owners, recorded directly to equity: Ordinary shares purchased into treasury Share purchase costs Dividends paid2 At 30 November 2019 15 8 8 1,190 46,977 67,241 (30,988) 1,525 85,945 – – – – – – – – – 6,166 4,541 10,707 (462) (4) – – – – – – (462) (4) (4,544) (4,544) 1,190 46,977 66,775 (24,822) 1,522 91,642 1,190 46,977 68,873 (31,444) 2,513 88,109 – – – – – – – – – 456 3,398 3,854 (1,390) (10) (232) – – – – – (1,390) (10) (4,386) (4,618) 1,190 46,977 67,241 (30,988) 1,525 85,945 1 2 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; 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; 2nd interim dividend of 1.00p per share for the year ended 30 November 2020, declared on 9 June 2020 and paid on 17 July 2020 and 3rd interim dividend of 1.00p per share for the year ended 30 November 2020, declared on 15 September 2020 and paid on 20 October 2020. 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 ended 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. For information on the Company’s distributable reserves please refer to note 15 on page 105. The notes on pages 95 to 118 form part of these financial statements. 92 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Consolidated and parent company statements of financial position as at 30 November 2020 30 November 2020 30 November 2019 Notes Group £’000 Company £’000 Group £’000 Company £’000 10 12 13 10 14 15 15 Non current assets Investments held at fair value through profit or loss Current assets Other receivables Cash collateral held with brokers Cash and cash equivalents Total current assets Total assets Current liabilities Other payables Derivative financial liabilities held at fair value through profit or loss Bank overdraft Total current liabilities Net assets Equity attributable to equity holders Called up share capital Share premium account Special reserve Capital reserves At 1 December Net profit/(loss) for the year At 30 November Revenue reserve At 1 December Net profit for the year Dividends paid At 30 November Total equity Net asset value per ordinary share (pence) 9 97,580 101,375 98,554 101,990 355 163 8 526 2,874 – 8 2,882 519 218 – 737 3,008 – – 3,008 98,106 104,257 99,291 104,998 (708) (11) (5,745) (6,464) 91,642 1,190 46,977 66,775 (33,604) 5,807 (27,797) 4,141 4,900 (4,544) 4,497 91,642 80.76 (487) (11) (12,117) (12,615) 91,642 1,190 46,977 66,775 (30,988) 6,166 (24,822) 1,525 4,541 (4,544) 1,522 91,642 80.76 (727) (30) (12,589) (13,346) 85,945 1,190 46,977 67,241 (32,880) (724) (33,604) 3,949 4,578 (4,386) 4,141 85,945 75.28 (654) (30) (18,369) (19,053) 85,945 1,190 46,977 67,241 (31,444) 456 (30,988) 2,513 3,398 (4,386) 1,525 85,945 75.28 The financial statements on pages 90 to 118 were approved and authorised for issue by the Board of Directors on 4 February 2021 and signed on its behalf by Ed Warner, Chairman. BlackRock Energy and Resources Income Trust plc Registered in England, No. 5612963 The notes on pages 95 to 118 form part of these financial statements. Section 4: Financial statements 93 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Consolidated and parent company cash flow statements for the year ended 30 November 2020 Operating activities Net profit on ordinary activities before taxation Add back finance costs Net (profit)/loss on investments and options held at fair value through profit or loss (including transaction costs) Net loss/(profit) on foreign exchange Sales of investments held at fair value through profit or loss Purchases of investments held at fair value through profit or loss Decrease/(increase) in other receivables (Decrease)/increase in other payables Net movement in cash collateral held with brokers Net cash inflow/(outflow) from operating activities before taxation Taxation paid Refund of UK corporation tax Taxation on investment income included within gross income Net cash inflow/(outflow) from operating activities Financing activities Interest paid Payments for share purchases Share purchase costs paid Dividends paid Net cash outflow from financing activities Increase/(decrease) in cash and cash equivalents Effect of foreign exchange rate changes Change in cash and cash equivalents Cash and cash equivalents at start of year Cash and cash equivalents at end of year Comprised of: Cash at bank Bank overdraft 30 November 2020 30 November 2019 Group £’000 Company £’000 Group £’000 Company £’000 10,170 35 (6,307) 49 9,949 30 (6,666) 86 4,188 197 585 (25) 4,061 197 (595) (24) 94,723 94,723 34,855 34,855 (87,461) (87,461) (39,831) 171 (167) 55 141 (167) – 11,268 10,635 (73) 946 (195) 11,946 (35) (462) (4) (4,544) (5,045) 6,901 (49) 6,852 (12,589) (5,737) 8 (5,745) (5,737) – 946 (195) 11,386 (30) (462) (4) (4,544) (5,040) 6,346 (86) 6,260 (18,369) (12,109) 8 (12,117) (12,109) (43) 23 1,795 1,744 (245) – (209) 1,290 (197) (1,390) (10) (4,618) (6,215) (4,925) 25 (4,900) (7,689) (12,589) – (12,589) (12,589) (39,831) (150) 23 – (1,464) – – (209) (1,673) (197) (1,390) (10) (4,618) (6,215) (7,888) 24 (7,864) (10,505) (18,369) – (18,369) (18,369) The notes on pages 95 to 118 form part of these financial statements. 94 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Notes to the financial statements for the year ended 30 November 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 Company was incorporated on 4 November 2005 and this is the fifteenth Annual Report. the Manager, have in place to maintain operational resilience on the going concern of the Company. The Directors have reviewed compliance with the covenants associated with the bank overdraft facility, income and expense projections and the liquidity of the investment portfolio in making their assessment. 2. Accounting policies The principal accounting policies adopted by the Group and Company are set out below. (a) Basis of preparation The Group and Company financial statements have been prepared under the historic cost convention modified by the revaluation of financial assets and financial liabilities held at fair value through profit or loss in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 and, as regards the Group financial statements, International Financial Reporting Standards adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union, and, as regards the Company financial statements, as applied in accordance with the provisions of the Companies Act 2006. The Company has taken advantage of the exemption provided under Section 408 of the Companies Act 2006 not to publish its individual Statement of Comprehensive Income and related notes. All of the Group’s operations are of a continuing nature. Insofar as the Statement of Recommended Practice (SORP) for investment trust companies and venture capital trusts issued by the Association of Investment Companies (AIC) in October 2019, 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. As a result, for the Group, the loss on disposal of investments of £5,542,000 (2019: gain of £359,000) and gain on revaluation of investments of £11,849,000 (2019: loss of £944,000) have now been combined in note 10. For the Company, the loss on disposal of investments of £5,542,000 (2019: gain of £359,000) and gain on revaluation of investments of £12,208,000 (2019: gain of £236,000) have now been combined in note 10. The result of this change in presentation has no impact on the net asset value or total return for both the current year and prior year. No other accounting policies or disclosures have changed as a result of the revised SORP. Substantially, all of the assets of the Group consist of securities that are readily realisable and, accordingly, the Directors believe that the Group has adequate resources to continue in operational existence for the foreseeable future. Consequently, the Directors have determined that it is appropriate for the financial statements to be prepared on a going concern basis. The Directors have considered any potential impact of the COVID-19 pandemic and the mitigation measures which key service providers, including The Group’s financial statements are presented in sterling, which is the functional currency of the Group and the currency of the primary economic environment in which the Group operates. All values are rounded to the nearest thousand pounds (£’000) except when otherwise indicated. IFRS standards that have recently been adopted: IFRS 16 – Leases The Group adopted IFRS 16 as of the date of initial application of 1 December 2019. IFRS specifies accounting for leases and removes the distinction between operating and finance leases. The 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. Section 4: Financial statements 95 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Notes to the financial statements continued 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. (b) Basis of consolidation The Group’s financial statements are made up to 30 November each year and consolidate the financial statements of the Company and its wholly owned subsidiary, which is registered and operates in England and Wales, BlackRock Energy and Resources Securities Income Company Limited (together ‘the Group’). Subsidiaries are consolidated from the date of their acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of subsidiaries used in the preparation of the consolidated financial statements are based on consistent accounting policies. All intra-group balances and transactions, including unrealised profits arising therefrom, are eliminated. The subsidiary is not considered to be an investment entity. (c) Presentation of the Consolidated Statement of Comprehensive Income In order to reflect better the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Consolidated Statement of Comprehensive Income between items of a revenue and a capital nature has been presented alongside the Consolidated Statement of Comprehensive Income. (d) Segmental reporting The Directors are of the opinion that the Group is engaged in a single segment of business being investment business. (e) Income Dividends receivable on equity shares are recognised as revenue for the year on an ex-dividend basis. Where no ex- dividend date is available, dividends receivable on or before the year end are treated as revenue for the year. Provision is made for any dividends not expected to be received. Special dividends, if any, are treated as a capital or a revenue receipt depending on the facts or circumstances of each dividend. The return on a debt security is recognised on a time apportionment basis so as to reflect the effective yield on the debt security. Interest income and deposit interest is accounted for on an accruals basis. Options may be purchased or written over securities held in the portfolio for generating or protecting capital returns, or for generating or maintaining revenue returns. Where the purpose of the option is the generation of income, the premium is treated as a revenue item. Where the purpose of the option is the maintenance of capital, the premium is treated as a capital item. Option premium income is recognised as revenue evenly over the life of the option contract and included in the revenue column of the Consolidated Statement of Comprehensive Income unless the option has been written for the maintenance and enhancement of the Group’s investment portfolio and represents an incidental part of a larger capital transaction, in which case any premia arising are allocated to the capital column of the Consolidated Statement of Comprehensive Income. Where the Group has elected to receive its dividends in the form of additional shares rather than in cash, the cash equivalent of the dividend is recognised as revenue. Any excess in the value of the shares received over the amount of the cash dividend is recognised in capital. (f) Expenses All expenses, including finance costs, are accounted for on an accruals basis. Expenses have been charged wholly to the revenue column of the Consolidated Statement of Comprehensive Income, except as follows: • expenses which are incidental to the acquisition or sale of an investment are charged to the capital column of the Consolidated Statement of Comprehensive Income. Details of transaction costs on the purchases and sales of investments are disclosed within note 10 to the financial statements on page 103; • expenses are treated as capital where a connection with the maintenance or enhancement of the value of the investments can be demonstrated; • the investment management fee and finance costs have been allocated 75% to the capital column and 25% to the revenue column of the Consolidated Statement of Comprehensive Income in line with the Board’s expectations of the long term split of returns, in the form of capital gains and income, respectively, from the investment portfolio. The investment management fee rebate accrued as a result of the application of the cap on Ongoing Charges of 1.25% per annum of average daily net assets is offset against management fees and is allocated between revenue and capital in the ratio of total Ongoing Charges allocated between revenue and capital during the year. Finance costs incurred by the Subsidiary are charged 100% to revenue. (g) Taxation The Group accounts do not reflect any adjustment for group relief between the Company and the Subsidiary. 96 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the Consolidated Statement of Comprehensive Income because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that were applicable at the balance sheet date. For all financial instruments not traded in an active market, the fair value is determined by using various valuation techniques. Valuation techniques include market approach (i.e., using recent arm’s length market transactions adjusted as necessary and reference to the current market value of another instrument that is substantially the same) and the income approach (e.g., discounted cash flow analysis and option pricing models making use of available and supportable market data as possible). Where expenses are allocated between capital and revenue, any tax relief in respect of expenses is allocated between capital and revenue returns on the marginal basis using the Company’s effective rate of corporation tax for the accounting period. Deferred taxation is recognised in respect of all temporary differences that have originated but not reversed at the financial reporting date, where transactions or events that result in an obligation to pay more taxation in the future or right to pay less tax in the future have occurred at the financial reporting date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the temporary differences can be deducted. Deferred tax assets and liabilities are measured at the rates applicable to the legal jurisdictions in which they arise. (h) Investments held at fair value through profit or loss In accordance with IFRS 9, the Group classifies its investments at initial recognition as held at fair value through profit or loss and are managed and evaluated on a fair value basis in accordance with its investment strategy and business model. All investments are measured initially and subsequently at fair value through profit or loss. Purchases of investments are recognised on a trade date basis. Sales of investments are recognised at the trade date of the disposal. The fair value of the financial investments is based on their quoted bid price at the financial reporting date, without deduction for the estimated selling costs. This policy applies to all current and non current asset investments held by the Group. The fair value of the investment in the subsidiary is calculated based on the net asset value of the underlying balances within the subsidiary. Changes in the value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Consolidated Statement of Comprehensive Income as ‘Net profits or losses on investments held at fair value through profit of loss’. Also included within the heading are transaction costs in relation to the purchase or sale of investments. (i) Options Options are held at fair value through profit or loss based on the bid/offer prices of the options written to which the Group is exposed. The value of the option is subsequently marked- to-market to reflect the fair value through profit or loss of the option based on traded prices. Where the premium is taken to revenue, an appropriate amount is shown as capital return such that the total return reflects the overall change in the fair value of the option. When an option is exercised, the gain or loss is accounted for as a capital gain or loss. Any cost on closing out an option is transferred to revenue along with any remaining unamortised premium. (j) Other receivables and other payables Other receivables and other payables do not carry any interest and are short term in nature and are accordingly stated on an amortised cost basis. (k) Dividends payable Under IFRS, final dividends should not be accrued in the financial statements unless they have been approved by shareholders before the financial reporting date. Interim dividends should not be accrued in the financial statements unless they have been paid. Dividends payable to equity shareholders are recognised in the Consolidated Statement of Changes in Equity. (l) Foreign currency translation Transactions involving foreign currencies are converted at the rate ruling at the date of the transaction. Foreign currency monetary assets and liabilities and non monetary assets held at fair value are translated into sterling at the rate ruling on the financial reporting date. Foreign exchange differences arising on translation are recognised in the Consolidated Statement of Comprehensive Income as a revenue or capital item depending on the income or expense to which they relate. For investment transactions and investments held at the year end, denominated in a foreign currency, the resulting gains or losses are included in the profit/(loss) on investments held at fair value through profit or loss in the Consolidated Statement of Comprehensive Income. (m) Cash and cash equivalents Cash comprises cash in hand and on demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value. Section 4: Financial statements 97 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Notes to the financial statements continued (n) Bank borrowings Bank overdrafts are recorded as the proceeds received. Finance charges are accounted for on an accruals basis in the Consolidated Statement of Comprehensive Income using the effective interest rate method and are added to the carrying amount of the instruments to the extent that they are not settled in the period in which they arise. (o) Share repurchases Shares repurchased and subsequently cancelled – share capital is reduced by the nominal value of the shares repurchased, and the capital redemption reserve is correspondingly increased in accordance with section 733 of the Companies Act 2006. The full cost of the repurchase is charged to the special reserve. Shares repurchased and held in treasury – the full cost of the repurchase is charged to the special reserve. Where treasury shares are subsequently reissued: • amounts received to the extent of the repurchase price are credited to the special reserve; and • any surplus received in excess of the repurchase price is taken to the share premium account. (p) Critical accounting estimates and judgements The Group makes estimates and assumptions concerning the future. The resulting accounting estimates and assumptions will, by definition, seldom equal the related actual results. Estimates and judgements are regularly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Directors do not believe that any accounting judgements or estimates have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year. 3. Income Investment income: UK dividends UK special dividends Overseas dividends Overseas special dividends Overseas scrip dividends Fixed Income Less provision for doubtful debts Other income: Deposit interest Option premium income Interest on corporation tax refund Total income 2020 £’000 1,034 – 1,848 – 17 722 (3) 2019 £’000 1,485 57 1,707 178 – 909 – 3,618 4,336 – 1,241 84 1,325 4,943 14 1,294 – 1,308 5,644 During the year, the Group received option premium income in cash totalling £1,238,000 (2019: £1,156,000) for writing covered call and put 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 £1,241,000 (2019: £1,294,000) were amortised to revenue. At 30 November 2020, there were 2 (2019: 2) open positions with an associated liability of £11,000 (2019: £30,000). Dividends and interest received in cash during the year amounted to £2,867,000 and £680,000 (2019: £3,167,000 and £836,000). No special dividends have been recognised in capital during the year (2019: £658,000). 98 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 66004. Investment management fee Investment management fee Expense rebate due from Manager Total 2020 2019 Revenue Capital Total Revenue Capital £’000 £’000 £’000 £’000 £’000 167 (34) 133 501 (32) 469 668 (66) 602 237 – 237 711 – 711 Total £’000 948 – 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. There is no additional fee for company secretarial and administration services. 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 exceed the cap of 1.25% per annum of average daily net assets. The amount of rebate accrued as at 30 November 2020 amounted to £66,000 and has been adjusted in the investment management fee charged by the Manager. The rebate is offset against management fees and is allocated between revenue and capital in the ratio of total Ongoing Charges (as defined on pages 133 and 134) allocated between revenue and capital during the year. 5. Other operating expenses 2020 £’000 2019 £’000 Allocated to revenue: Custody fee Auditors’ remuneration: – audit services1 Registrar’s fee Directors’ emoluments2 Broker fees Depositary fees Marketing fees Printing and postage fees Legal and professional fees Directors search fees Bank charges Stock exchange listings fees Other administrative costs Allocated to capital: Custody transaction charges 4 37 30 131 23 7 32 29 16 20 7 7 45 388 6 394 4 27 30 124 23 9 29 31 21 26 15 7 58 404 5 409 The Company’s ongoing charges3, calculated as a percentage of average daily net assets and using the management fee and all other operating expenses excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain non- recurring items were: 1.25% 1.48% 1 No non-audit services are provided by the Company’s auditors. 2 Further information on Directors’ emoluments can be found in the Directors’ Remuneration Report on page 64. The Company has no employees. 3 Alternative Performance Measure, see Glossary on pages 132 to 134. For the year ended 30 November 2020, expenses of £6,000 (2019: £5,000) were charged to the capital column of the Statement of Comprehensive Income. These relate to transaction costs charged by the custodian on sale and purchase trades. Section 4: Financial statements 99 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Notes to the financial statements continued 5. Other operating expenses continued Effective 17 March 2020, the Company’s Ongoing Charges, as defined on page 133 (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 exceed 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 fee charged up to 30 November every year. See note 4 on page 99. 6. Finance costs Interest payable – bank overdraft Revenue £’000 9 9 2020 Capital £’000 26 26 Total £’000 Revenue £’000 35 35 49 49 2019 Capital £’000 148 148 Total £’000 197 197 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. 7. Taxation (a) Analysis of (credit)/charge for the year Corporation taxation Double taxation relief Reallocation of part of subsidiary’s tax charge Prior years UK corporation tax adjustment (note 7(c)) Overseas tax suffered Total taxation (credit)/charge (note 7(b)) Revenue £’000 2020 Capital £’000 298 (20) (7) (946) 188 (487) (77) 20 7 – – (50) Revenue £’000 2019 Capital £’000 169 (42) – – – 207 376 – – – – (42) Total £’000 221 – – (946) 188 (537) Total £’000 127 – – – 207 334 The AIC SORP states that any tax relief obtained on expenses should be allocated between capital and revenue on the assumption that expenses charged to revenue are matched first against taxable revenue items. Tax relief is only reflected in capital to the extent that ‘additional’ expenses are utilised from capital to reduce or eliminate the Investment Company’s tax liability. The amount of tax relief on such expenses should be the amount of corporation tax, or additional corporation tax, that would have been payable were it not for the existence of these ‘additional’ expenses. In accordance with the HMRC taxation structure for the Group, the Company surrenders its excess management expenses to the subsidiary in order to reduce the taxation calculated on a standalone basis for the subsidiary. As Group relief is not charged between the Company and subsidiary, the Group accounts do not include any allocation of tax relief between capital and revenue as the substance of any such transfer within the group accounts would be a payment for group relief which is an inter-group transaction that is eliminated on consolidation. Consequently the consolidated financial statements do not reflect the marginal basis of taxation allocation as recommended by the SORP. The Board consider that including this adjustment would result in a misleading consolidated earnings per share figure. Had the recommended approach within the SORP been adopted, the Company’s consolidated tax charge to the revenue column of the Consolidated Statement of Comprehensive Income would have been increased by £21,000 (2019: £121,000) and this would have been offset by a credit to the tax charge in the capital column of the same primary statement for the same amount, resulting in a nil impact on the tax charge in the total column of the Consolidated Statement of Comprehensive Income. There would have been no impact on either the parent company or the subsidiary company accounts. Management expenses of £110,000 accounted for through the capital column of the income statement have been surrendered to the subsidiary for the year ended 30 November 2020 (2019: £639,000). In accordance with the Company’s accounting policy the transfer has been made for group tax relief between the Company and its subsidiary. 100 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600(b) Factors affecting total tax charge for the year The taxation assessed for the year is lower (2019: lower) than the standard rate of corporation taxation in the UK of 19.00% (2019: 19.00%). The differences are explained below: Net profit/(loss) on ordinary activities before taxation 4,413 5,757 10,170 4,954 (766) Revenue £’000 2020 Capital £’000 Total £’000 Revenue £’000 2019 Capital £’000 Total £’000 4,188 Net profit/(loss) on ordinary activities multiplied by standard rate of corporation tax at 19.00% (2019: 19.00%) Effects of: Non taxable UK dividend income Non taxable overseas dividend income Non taxable overseas scrip dividends Overseas tax suffered Relief for overseas tax Net profit on investments and options held at fair value through profit or loss Net loss/(profit) on foreign exchange Taxation effect of allowable expenses in capital Disallowed expenses Prior years UK corporation tax adjustment 838 1,094 1,932 941 (145) 796 (197) (326) (3) 188 (20) – – (21) – (946) – – – – 16 (197) (326) (3) 188 (4) (1,198) (1,198) 16 21 1 – 16 – 1 (946) (1,325) (1,144) (2,469) (293) (358) – 207 – – – (121) – – (565) 376 – – – – – (14) (5) 121 1 – 103 (42) (293) (358) – 207 – (14) (5) – 1 – (462) 334 Total taxation (credit)/charge (note 7(a)) (487) (50) (537) The Company is exempt from corporation tax on capital gains provided it maintains its status as an investment trust under Chapter 4 of Part 24 of the Corporation Tax Act 2010. Due to the Company’s intention to meet the conditions required to maintain its investment trust status, it has not provided for deferred tax on any capital gains or losses. (c) UK Corporation Tax refund The Company received a corporation tax repayment of £0.9 million from Her Majesty Revenue & Customs (HMRC) in the period. The refund related to corporation tax paid with respect to the years ended 2007, 2008 and 2009 and was issued as HMRC agreed that the Company was entitled to claim credit relief for the underlying tax associated with overseas dividends received in those periods. 8. Dividends Divi dends paid on equity shares Record date Payment date 4th interim dividend of 1.00p per share for the year ended 30 November 2019 (2018: 1.00p) 1st interim dividend of 1.00p per share for the year ended 30 November 2020 (2019: 1.00p) 2nd interim dividend of 1.00p per share for the year ended 30 November 2020 (2019: 1.00p) 3rd interim dividend of 1.00p per share for the year ended 30 November 2020 (2019: 1.00p) Accounted for in the financial statements 20 December 2019 20 January 2020 27 March 2020 23 April 2020 19 June 2020 17 July 2020 25 September 2020 20 October 2020 2020 £’000 1,139 1,135 1,135 1,135 4,544 2019 £’000 1,161 1,161 1,151 1,145 4,618 The total dividends payable in respect of the year ended 30 November 2020 which form the basis of Section 1158 of the Corporation Tax act 2010 and Section 833 of the Companies Act 2006, and the amounts proposed, meet the relevant requirements as set out in this legislation. Section 4: Financial statements 101 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Notes to the financial statements continued 8. Dividends continued Divi dends paid on equity shares 1st interim dividend of 1.00p per share for the year ended 30 November 2020 (2019: 1.00p) 2nd interim dividend of 1.00p per share for the year ended 30 November 2020 (2019: 1.00p) 3rd interim dividend of 1.00p per share for the year ended 30 November 2020 (2019: 1.00p) 4th interim dividend of 1.00p per share for the year ended 30 November 20201 (2019: 1.00p) 2020 £’000 1,135 1,135 1,135 1,135 4,540 2019 £’000 1,161 1,151 1,145 1,139 4,596 1 Based on 113,470,349 ordinary shares in issue on 18 December 2020. 9. Earnings and net asset value per ordinary share Total revenue, capital return and net asset value per share are shown below and have been calculated using the following: Net revenue profit attributable to ordinary shareholders (£’000) Net capital profit/(loss) attributable to ordinary shareholders (£’000) Total profit attributable to ordinary shareholders (£’000) Total shareholders’ funds (£’000) 2020 4,900 5,807 10,707 91,642 2019 4,578 (724) 3,854 85,945 The weighted average number of ordinary shares in issue during the year, on which the earnings per ordinary share was calculated was: 113,562,426 115,379,743 The actual number of ordinary shares in issue at the year end, on which the net asset value per ordinary share was calculated was: 113,470,349 114,170,349 Earnings per share Revenue earnings per share (pence) Capital earnings/(loss) per share (pence) Total earnings per share (pence) Net asset value per ordinary share (pence) Ordinary share price (pence) There were no dilutive securities at the year end. 4.31 5.12 9.43 3.97 (0.63) 3.34 As at 30 November 2020 As at 30 November 2019 80.76 71.40 75.28 66.00 102 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 660010. Investments held at fair value through profit or loss UK listed equity investments held at fair value through profit or loss Overseas listed equity investments held at fair value through profit or loss Fixed income investments held at fair value through profit or loss Investment in subsidiary held at fair value through profit or loss1 Group 2020 £’000 Company 2020 £’000 Group 2019 £’000 Company 2019 £’000 8,790 8,790 26,301 26,301 85,427 85,427 62,922 62,922 3,363 – 3,363 3,795 9,331 – 9,331 3,436 Total value of financial asset investments 97,580 101,375 98,554 101,990 Derivative financial instruments - written option contracts Total value of financial asset investments and derivatives at 30 November Opening book cost of investments Investment holding gains Opening fair value Analysis of transactions made during the year: Purchases at cost Sales proceeds received Gains/(losses) on investments Closing fair value Closing book cost of investments Closing investment holding gains Closing fair value Comprising of: – Equity investments – Derivative financial instruments - written option contracts Total (11) (11) (30) (30) 97,569 96,611 1,913 98,524 87,461 (94,723) 6,307 97,569 83,807 13,762 97,569 101,364 96,611 5,349 101,960 87,461 (94,723) 6,666 101,364 83,807 17,557 101,364 98,524 91,276 2,857 94,133 39,831 (34,855) (585) 98,524 96,611 1,913 98,524 101,960 91,276 5,113 96,389 39,831 (34,855) 595 101,960 96,611 5,349 101,960 97,580 101,375 98,554 101,990 (11) (11) (30) (30) 97,569 101,364 98,524 101,960 1 Relates to wholly owned subsidiary, BlackRock Energy and Resources Securities Income Company Limited. The Group and Company received £94,723,000 (2019: £34,855,000) from investments sold in the year. The book cost of these investments when they were purchased was £100,265,000 (2019: £34,496,000). These investments have been revalued over time and until they were sold and any unrealised gains/losses were included in the fair value of the investments. The revised SORP issued in October 2019 is applicable for accounting periods beginning on or after 1 January 2019. As a result, for the Group, the loss on disposal of investments of £5,542,000 (2019: gain of £359,000) and gain on revaluation of investments of £11,849,000 (2019: loss of £944,000) have now been combined in the note above. For the Company, the loss on disposal of investments of £5,542,000 (2019: gain of £359,000) and gain on revaluation of investments of £12,208,000 (2019: gain of £236,000) have now been combined in the note above. The result of this change in presentation has no impact on the net asset value or total return for both the current year and prior year. No other accounting policies or disclosures have changed as a result of the revised SORP. During the year, transaction costs of £140,000 (2019: £67,000) were incurred on the acquisition of investments. Costs relating to the disposal of investments during the year amounted to £31,000 (2019: £9,000). All transaction costs have been included within the capital reserve. Section 4: Financial statements 103 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Notes to the financial statements continued 11. Investment in subsidiary At 30 November 2020, the Company had one wholly owned subsidiary which is registered and operating in England and Wales and has been included in the consolidated financial statements. BlackRock Energy and Resources Securities Income Company Limited was incorporated on 9 November 2005. There are no non-controlling interests in the subsidiary. The principal activity of the subsidiary, BlackRock Energy and Resources Securities Income Company Limited, is investment dealing and options writing. The registered office address for the subsidiary company is 12 Throgmorton Avenue, London EC2N 2DL. During the year, the subsidiary paid a dividend of £692,000 (2019: £nil) to the Company. Description of ordinary shares Authorised and issued share capital BlackRock Energy and Resources Securities Income Company Limited Ordinary shares of £1 12. Other receivables Withholding tax recoverable Prepayments and accrued income Amounts receivable from subsidiary 13. Other payables Accruals for expenses and interest payable Taxation payable 14. Called up share capital Allotted, called up and fully paid share capital comprised: Ordinary shares of 1 pence each At 30 November 2019 Group 2020 £’000 17 338 – 355 Group 2020 £’000 487 221 708 Company 2020 £’000 17 338 2,519 2,874 Company 2020 £’000 487 – 487 Number of ordinary shares Treasury shares Total shares 114,170,349 4,795,651 118,966,000 2020 £1 Group 2019 £’000 10 509 – 519 Group 2019 £’000 654 73 727 2019 £1 Company 2019 £’000 10 509 2,489 3,008 Company 2019 £’000 654 – 654 Nominal value £’000 1,190 – 1,190 Ordinary shares bought back into treasury (700,000) 700,000 – At 30 November 2020 113,470,349 5,495,651 118,966,000 During the year ended 30 November 2020, 700,000 (2019: 1,956,166) shares were bought back and transferred to treasury for a total consideration including costs of £466,000 (2019: £1,400,000). Since the year end, no ordinary shares have been bought back. 104 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 660015. Reserves Group At 30 November 2019 Movement during the year: Total comprehensive income: Net capital (loss)/profit for the year Net revenue profit for the year Transactions with owners recorded directly to equity: Ordinary shares purchased into treasury Share purchase costs Dividends paid At 30 November 2020 Company At 30 November 2019 Movement during the year: Total comprehensive income: Net capital (loss)/profit for the year Net revenue profit for the year Transactions with owners recorded directly to equity: Ordinary shares purchased into treasury Share purchase costs Dividends paid At 30 November 2020 Share premium account £’000 Capital reserve arising on investments sold £’000 Special reserve £’000 46,977 67,241 (35,517) Capital reserve arising on revaluation of investments held £’000 1,913 – – – – – – – (462) (4) – (5,929) 11,736 - – – – – – – – Revenue reserve £’000 4,141 – 4,900 – – (4,544) 46,977 66,775 (41,446) 13,649 4,497 Distributable reserves Share premium account £’000 Capital reserve arising on investments sold £’000 Special reserve £’000 46,977 67,241 (36,335) Capital reserve arising on revaluation of investments held £’000 5,347 – – – – – – – (462) (4) – (5,929) 12,095 – – – – – – – – Revenue reserve £’000 1,525 – 4,541 – – (4,544) 46,977 66,775 (42,264) 17,442 1,522 The share premium account is not a distributable reserve under the Companies Act 2006. The special reserve and capital reserve of the Company 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 and its status as an investment company under the provisions of Section 1158 of the Corporation Tax Act 2010, net capital returns may be distributed by way of dividend. The reserves of the subsidiary company are not distributable until distributed as a dividend to the Company. Section 4: Financial statements 105 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Notes to the financial statements continued 16. Risk management policies and procedures The Group’s investment activities expose it to various types of risks which are associated with the financial instruments and markets in which it invests. The following information is not intended to be a comprehensive summary of all risks and shareholders should refer to the Alternative Investment Fund Managers’ Directive FUND 3.2.2R Disclosures which can be found at blackrock.com/uk/beri for a more detailed discussion of the risks inherent in investing in the Group. Risk management framework The following information refers to the risk management framework of the Alternative Investment Fund Manager (AIFM). However, as disclosed in the Corporate Governance Statement on pages 68 to 73 and in the Statement of Directors’ Responsibilities on page 79, it is the ultimate responsibility of the Board to ensure that the Group’s risks are appropriately monitored, and to the extent that elements of this are delegated to third party service providers, the Board is responsible for ensuring that the relevant parties are discharging their duties in accordance with the terms of the relevant agreements and taking appropriate action to the extent issues are identified. The Directors of the AIFM review quarterly investment performance reports and receive semi-annual presentations in person from the Investment Manager covering the Group’s performance and risk profile during the year. The AIFM has delegated the day-to-day administration of the investment programme to the Investment Manager. The Investment Manager is also responsible for ensuring that the Group is managed within the terms of its investment guidelines and limits set out in the Alternative Investment Fund Managers’ Directive FUND 3.2.2R Disclosures which can be found at blackrock.com/uk/beri. The AIFM is responsible for monitoring investment performance, product risk monitoring and oversight and has the responsibility for the monitoring and oversight of regulatory and operational risk for the Group. The Directors of the AIFM have appointed a Risk Manager who has responsibility for the daily risk management process with assistance from key risk management personnel of the Investment Manager, including members of the Risk and Quantitative Analysis Group (RQA) which is a centralised group which performs an independent risk management function. RQA independently identifies, measures and monitors investment risk and tracks the actual risk management practices being deployed across the Group. By breaking down the components of the process, RQA has the ability to determine if the appropriate risk management processes are in place. This captures the risk management tools employed, how the levels of risk are controlled, ensuring risk/return is considered in portfolio construction and reviewing outcomes. The AIFM reports to the Audit and Management Engagement Committee twice yearly on key risk metrics and risk management processes; in addition, the Depositary monitors the performance of the AIFM and reports to the Audit Committee. Any significant issues are reported to the Board as they arise. Risk Exposures The risk exposures of the Group and Company are set out as follows: (a) Market risk Market risk arises mainly from uncertainty about future values of financial instruments influenced by other price, currency and interest rate movements. It represents the potential loss the Group may suffer through holding market positions in financial instruments in the face of market movements. A key metric the RQA Group uses to measure market risk is Value-at-Risk (VaR) which encompasses price, currency and interest rate risk. VaR is a statistical risk measure that estimates the potential portfolio loss from adverse market moves in an ordinary market environment. VaR analysis reflects the interdependencies between risk variables, unlike a traditional sensitivity analysis. The VaR calculations are based on a confidence level of 99% with a holding period of not greater than one day and a historical observation period of not less than one year (250 days). A VaR number is defined at a specified probability and a specified time horizon. A 99% one day VaR means that the expectation is that 99% of the time over a one day period the Company will lose less than this number in percentage terms. Therefore, higher VaR numbers indicate higher risk. It is noted that the use of VaR methodology has limitations, namely assumptions that risk factor returns are normally distributed and that the use of historical market data as a basis for estimating future events does not encompass all possible scenarios, particularly those that are of an extreme nature and that the use of a specified confidence level (e.g. 99%) does not take into account losses that occur beyond this level. There is some probability that the loss could be greater than the VaR amounts. These limitations, and the nature of the VaR measure, mean that the Company can neither guarantee that losses will not exceed the VaR amounts indicated, nor that losses in excess of the VaR amounts will not occur more frequently. The one-day VaR for the Group and Company as of 30 November 2020 and 30 November 2019 (based on a 99% confidence level) was 6.28% and 2.66%, respectively. 106 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600(i) Market risk arising from other price risk Exposure to other price risk Other 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. An outbreak of an infectious respiratory illness caused by a novel coronavirus known as COVID-19 was first reported in China in December 2019 and has now developed into a global pandemic. This coronavirus 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 economies of many nations across the entire global economy, individual issuers and capital markets, and could continue to extents that cannot necessarily be foreseen. 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. The duration of the COVID-19 outbreak and its effects cannot be determined with certainty. The Group is exposed to market price risk arising from its equity investments and written options. The movements in the prices of these investments result in movements in the performance of the Group. Other price risk sensitivity has been covered by the VaR analysis under the market risk section above. Use of derivatives The Group may utilise both exchange traded and over-the-counter derivatives, including, but not limited to, options, as part of its investment policy. Options written by the Group provide the purchaser with the opportunity to purchase from or sell to the Group the underlying asset at an agreed-upon value either on or before the expiration of the option. Options are generally settled on a net basis. Management of other price risk By diversifying the portfolio, where this is appropriate and consistent with the Group’s objectives, the risk that a price change of a particular investment will have a material impact on the NAV of the Group is minimised which is in line with the investment objectives of the Group. The Group’s exposure to other changes in market prices at 30 November 2020 on its equity and fixed income investments was £97,580,000 (2019: £98,554,000). In addition, the Group’s gross market exposure to these price changes through its option portfolio was £1,459,000 (2019: £1,764,000). Section 4: Financial statements 107 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Notes to the financial statements continued 16. Risk management policies and procedures continued (ii) Market risk arising from foreign currency risk Exposure to foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Foreign currency sensitivity risk has been covered by the VaR analysis under the market risk section. The fair values of the Group’s and Company’s monetary items which have foreign currency exposure at 30 November 2020 and 30 November 2019 are shown below. Where equity investments which are not monetary items are denominated in a foreign currency, they have been included separately in the analysis so as to show the overall level of exposure. 2020 Receivables (due from brokers, dividends and other income receivable) Cash and cash equivalents Derivative financial liabilities at fair value through profit or loss Total foreign currency exposure on net monetary items Investments at fair value through profit or loss Total net foreign currency exposure 2019 Receivables (due from brokers, dividends and other income receivable) Derivative financial liabilities at fair value through profit or loss Total foreign currency exposure on net monetary items Investments at fair value through profit or loss Total net foreign currency exposure US Dollar £’000 227 8 (11) 224 44,766 44,990 US Dollar £’000 391 (2) 389 47,263 47,652 Euro £’000 16 – – 16 Canadian Dollar £’000 – (10) – (10) Other £’000 4 – – 4 16,669 16,685 10,094 10,084 10,436 10,440 Canadian Dollar £’000 10 – 10 14,421 14,431 Euro £’000 5 – 5 6,549 6,554 Other £’000 – – – 4,021 4,021 Management of foreign currency risk The Investment Manager monitors the Group’s exposure to foreign currencies on a daily basis and reports to the Board of the Group on a regular basis. The Investment Manager measures the risk to the Group of the foreign currency exposure by considering the effect on the Group’s net asset value and income of a movement in the exchange rate to which the Group’s assets, liabilities, income and expenses are exposed. The Group does not use financial instruments to mitigate the currency exposure in the period between the time that income is included in the financial statements and its receipt. Derivative contracts are not used to hedge against exposure to foreign currency risk. Consequently, the Group is exposed to risks that the exchange rate of its reporting currencies relative to other currencies may change in a manner which has an adverse effect on the value of the portion of the Group’s assets which are denominated in currencies other than their own currencies. 108 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600(iii) Market risk arising from interest rate risk Exposure to interest rate risk Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group is exposed to interest rate risk specifically through its fixed income investments, cash holdings and its borrowing facility for investment purposes. Interest rate movements may affect the level of income receivable from any cash at bank and on deposits. The effect of interest rate changes on the earnings of the companies held within the portfolio may have a significant impact on the valuation of the Group’s investments. Interest rate sensitivity risk has been covered by the VaR analysis under the market risk section. Interest rate exposure The exposure for the Group and Company at 30 November 2020 and 30 November 2019 of financial assets and liabilities to interest rate risk is shown by reference to: • floating interest rates – when the interest rate is due to be re-set; and • fixed interest rates – when the financial instrument is due for repayment. Group Exposure to floating interest rates: Cash and cash equivalents Bank overdraft Exposure to fixed interest rates: Fixed income investments Total exposure to interest rates Company Exposure to floating interest rates: Cash and cash equivalents Bank overdraft Exposure to fixed interest rates: Fixed income investments Total exposure to interest rates 2020 Within one year More than one year £’000 £’000 2019 Within one year More than one year £’000 £’000 Total £’000 Total £’000 8 (5,745) – – 8 – (5,745) (12,589) – – – (12,589) – 3,363 3,363 – 9,331 9,331 (5,737) 3,363 (2,374) (12,589) 9,331 (3,258) 2020 Within one year More than one year £’000 £’000 2019 Within one year More than one year £’000 £’000 Total £’000 Total £’000 8 (12,117) – – 8 – (12,117) (18,369) – – – (18,369) – 3,363 3,363 – 9,331 9,331 (12,109) 3,363 (8,746) (18,369) 9,331 (9,038) Interest rates received on cash balances or paid on bank overdrafts in sterling, respectively, is approximately 0.11% and 1.15% per annum (2019: 0.40% and 1.69% per annum). Management of interest rate risk The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment decisions and borrowings under the overdraft facility. The Group finances part of its activities through borrowings at levels approved and monitored by the Board of the Company. The Group, generally, does not hold significant balances, with short term borrowings being used when required. Derivative contracts are not used to hedge against the exposure to interest rate risk. Section 4: Financial statements 109 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Notes to the financial statements continued 16. Risk management policies and procedures continued (b) Counterparty credit risk Credit risk is the risk that the issuer of a financial instrument will fail to fulfil an obligation or commitment that it has entered into with the Group. The Group is exposed to counterparty credit risk from the parties with which it trades and will bear the risk of settlement default. Counterparty credit risk to the Group arises from transactions to purchase or sell investments and through option writing transactions on equity investments held within the portfolio. Other receivables as at 30 November 2020 include fixed interest income of £3,000 that has been fully provided for (see Note 3). There were no other past due assets as at 30 November 2020 (2019: nil). The major counterparties engaged with the Group are all widely recognised and regulated entities. Depositary The Group’s Depositary is The Bank of New York Mellon (International) Limited (BNYM or the Depositary) (S&P long-term credit rating as at 30 November 2020: AA- (2019: AA-)). All of the equity assets and cash of the Group are held within the custodial network of the global custodian appointed by the Depositary. Bankruptcy or insolvency of the Depositary may cause the Group’s rights with respect to its investments held by the Depositary to be delayed or limited. The maximum exposure to this risk at 30 November 2020 is the total value of equity investments held with the Depositary and cash and cash equivalents in the Consolidated Statement of Financial Position. In accordance with the requirements of the depositary agreement, the Depositary will ensure that any agents it appoints to assist in safekeeping the equity and fixed income investments of the Group will segregate the equity and fixed income assets of the Group. Thus, in the event of insolvency or bankruptcy of the Depositary, the Group’s non-cash assets are segregated and this reduces counterparty credit risk. The Group will, however, be exposed to the counterparty credit risk of the Depositary in relation to the Group’s cash held by the Depositary. In the event of the insolvency or bankruptcy of the Depositary, the Group will be treated as a general creditor of the Depositary in relation to cash holdings of the Group. The Group’s listed investments are held on its behalf by The Bank of New York (International) Limited as the Group’s custodian (as sub-delegated by the Depositary). Bankruptcy or insolvency of the custodian may cause the Group’s rights with respect to securities held by the custodian to be delayed. The Board monitors the Group’s risk by reviewing the custodian’s internal control reports. Counterparties⁄brokers The Group only invests directly in markets that operate on a ‘delivery versus payment’ basis, and consequently most investment transactions in listed securities involve simultaneous delivery of securities against cash payment using an approved broker. The risk of default is considered minimal, and the trade will fail if either party fails to meet its obligation. For a few markets that the Group invests in from time to time, although they operate on a ‘delivery versus payment’ basis, there may be a very short time gap between stock delivery and payment, giving potential rise to counterparty credit risk with the broker in relation to transactions awaiting settlement. Risk relating to unsettled transactions is considered small due to the short settlement period involved and the high credit quality of the brokers used for those markets. Cash held as security by the counterparty to financial derivative contracts is subject to the credit risk of the counterparty. The following table details the total number of counterparties to which the Group is exposed, the maximum exposure to any one counterparty, the collateral held by the Group against this exposure, the total exposure to all other counterparties and the lowest long term credit rating of any one counterparty (or its ultimate parent if unrated). Total number of counterparties Maximum exposure to any one counterparty1 Collateral held1 Total exposure to all other counterparties1 Lowest credit rating of any one counterparty2 2 2 £’000 163 218 £’000 £’000 – – 8 – A+ A+ Year 2020 2019 1 Calculated on a net basis. 2 S&P Ratings. 110 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600The Group may also be exposed to counterparty risk should there be any rehypothecation of pledged collateral. Collateral is received/paid where the client service agreement states that there should be collateral movements agreed with the counterparty, where there is a requirement for a mark-to-market process or collateralisation to ensure that the Group is protected against any counterparty default. Over-the-counter (“OTC”) financial derivative instruments During the year ended 30 November 2020 and 30 November 2019, the Group wrote covered call and put option contracts to generate revenue income for the Group. As the call and put options are covered by dedicated cash or stock resources and no call or put option contracts were written to manage price risk, there is no impact on the Group’s exposure to gearing or leverage as a result of writing covered call and put options. The notional amount of call/put options written that were open at 30 November 2020 was £1,459,000 (2019: £1,764,000). Management of OTC financial derivative instruments Economic exposure through option writing transactions is restricted such that no more than 30% of the Group’s assets shall be under options at any given time. Exposures are monitored daily by the Investment Manager, BlackRock, and its independent risk management team. The Group’s Board also reviews the exposures regularly. The option positions are diversified across sectors and geographies comprising 2 positions as at 30 November 2020 (2019: 2). The economic exposures to options can be closed out at any time by the Group with immediate effect. Details of securities and exposures to market risk and credit risk implicit within the options portfolio are given elsewhere in this note. Collateral The Group engages in activities which may require collateral to be provided to a counterparty (Pledged Collateral). Cash collateral pledged by the Group is separately identified as an asset in the Consolidated Statement of Financial Position and is not included as a component of cash and cash equivalents. The fair value of cash collateral pledged is reflected in the table below: Cash collateral – Bank of America Merrill Lynch Pledged collateral As at 30 November 2020 As at 30 November 2019 £’000 163 £’000 218 Section 4: Financial statements 111 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Notes to the financial statements continued 16. Risk management policies and procedures continued Receivables Amounts due from debtors are disclosed in the Consolidated and Parent Company Statements of Financial Position as receivables. The counterparties included in receivables are the same counterparties discussed previously under counterparty credit risk and subject to the same scrutiny by the BlackRock RQA Counterparty & Concentration Risk team (RQA CCR). The Group monitors the ageing of receivables to mitigate the risk of debtor balances becoming overdue. In summary, the exposure to credit risk at 30 November 2020 and 2019 was as follows: Group Fixed income investments Cash collateral held with brokers Cash and cash equivalents Other receivables (amounts due from brokers, dividends and interest receivable) Company Fixed income investments Other receivables (amounts due from brokers, dividends and interest receivable and receivable from subsidiary company) 2020 £’000 3,363 163 8 355 2019 £’000 9,331 218 – 519 3,889 10,068 2020 £’000 3,363 2,874 6,237 2019 £’000 9,331 3,008 12,339 Management of counterparty credit risk RQA CCR are responsible for the risk management of the Group, with duties comprising of identifying, monitoring and managing risk, including counterparty credit risk. RQA CCR are supported in this role by the Investment Manager. The counterparty/credit risk is managed as follows: • transactions are only entered into with those counterparties approved by RQA CCR, with a formal review carried out for each new counterparty and with counterparties selected by RQA CCR on the basis of a number of risk migration criteria designed to reduce the risk to the Group of default; • the creditworthiness of financial institutions with whom cash is held is reviewed regularly by the Investment Manager; and • RQA CCR reviews the credit standard of the Group’s brokers on a periodic basis and set limits on the amount that may be due from any one broker. The Board monitors the Group’s counterparty risk by reviewing: • the semi-annual report from the Depositary, which includes the results of periodic site visits to the Company’s custodian where controls are reviewed and tested; • the custodian’s Service Organisation Control (SOC 1) reports which include a report by the Custodian’s auditor. This report sets out any exceptions or issues noted as a result of the auditor’s review of the custodian’s processes; • the Manager’s internal control reports which include a report by the Manager’s auditor. This report sets out any exceptions or issues noted as a result of the auditor’s review of the Manager’s control processes; and • in addition, the Depositary and the Manager report any significant breaches or issues arising to the Board as soon as these are identified. 112 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Offsetting disclosures In order to better define its contractual rights and to secure rights that will help the Group mitigate its counterparty risk, the Group may enter into an ISDA Master Agreement or similar agreement with its OTC derivative contract counterparties. An ISDA Master Agreement is an agreement between the Group and the counterparty that governs OTC derivative contracts and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, the Group has a contractual right to offset with the counterparty certain derivative financial instruments payables and/or receivables with collateral held and/or posted and create one single net payment in the event of default including the bankruptcy or insolvency of the counterparty. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy, insolvency or other events. For financial reporting purposes, the Group does not offset derivative assets and derivative liabilities that are subject to netting arrangements in the Consolidated and Parent Company Statements of Financial Position. The disclosures set out in the following tables include financial assets and financial liabilities that are subject to an enforceable master netting arrangement or similar agreement. At 30 November 2020 and 2019, the Group’s and Company’s derivative assets and liabilities (by type) are as follows: Derivatives Written option contracts Total derivative assets and liabilities in the Consolidated and Parent Company Statements of Financial Position Total assets and liabilities subject to a master netting agreement At 30 November 2020 At 30 November 2019 Assets £’000 Liabilities £’000 Assets £’000 Liabilities £’000 – – – (11) (11) (11) – – – (30) (30) (30) The following table presents the Group’s and Company’s derivative liabilities by counterparty, net of amounts available for offset, under a master netting agreement and net of any related collateral paid by the Group at 30 November 2020 and 30 November 2019: Derivative liabilities subject to a master netting agreement by a counterparty £’000 Derivatives available for offset £’000 Net amount as per statement of financial position £’000 Non-cash collateral given £’000 Pledged Cash collateral £’000 Net amount of derivative liabilities £’000 (11) (30) – – (11) (30) – – 11 30 – – Counterparty At 30 November 2020 Bank of America Merrill Lynch At 30 November 2019 Bank of America Merrill Lynch Section 4: Financial statements 113 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Notes to the financial statements continued 16. Risk management policies and procedures continued (c) Liquidity risk Liquidity risk is the risk that the Group will encounter difficulties in meeting obligations associated with financial liabilities. The Group is also exposed to the liquidity risk for margin calls on derivative instruments. At the year end, the Group had an overdraft facility of the lower of £17.5 million or 20% of the Group’s net assets (2019: £17.5 million or 20% of the Group’s net assets). Liquidity risk exposure The remaining undiscounted gross cash outflows of the financial liabilities as at 30 November 2020 and 30 November 2019, based on the earliest date on which payment can be required, were as follows: Group 2020 Amounts due to brokers, accruals and provisions Derivative financial liabilities held at fair value through profit or loss Bank overdraft Company 2020 Amounts due to brokers, accruals and provisions Derivative financial liabilities held at fair value through profit or loss Bank overdraft Group 2019 Amounts due to brokers, accruals and provisions Derivative financial liabilities held at fair value through profit or loss Bank overdraft Company 2019 Amounts due to brokers, accruals and provisions Derivative financial liabilities held at fair value through profit or loss Bank overdraft 3 months or less £’000 Not more than one year £’000 487 11 5,745 6,243 221 – – 221 3 months or less £’000 Not more than one year £’000 487 11 12,117 12,615 – – – – 3 months or less £’000 Not more than one year £’000 654 30 12,589 13,273 73 – – 73 3 months or less £’000 Not more than one year £’000 654 30 18,369 19,053 – – – – Total £’000 708 11 5,745 6,464 Total £’000 487 11 12,117 12,615 Total £’000 727 30 12,589 13,346 Total £’000 654 30 18,369 19,053 Management of liquidity risk Liquidity risk is minimised by holding sufficient liquid investments which can be readily realised to meet liquidity demands. Asset disposals may also be required to meet liquidity needs. However, the timely sale of trading positions can be impaired by many factors including decreased trading volume and increased price volatility. As a result, the Group may experience difficulties in disposing of assets to satisfy liquidity demands. Liquidity risk is not significant as the Group’s assets are investments in listed securities that are readily realisable. 114 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600The Group’s liquidity risk is managed on a daily basis by the Investment Manager in accordance with established policies and procedures in place. The Portfolio Managers’ review daily forward-looking cash reports which project cash obligations. These reports allow them to manage their obligations. For the avoidance of doubt, none of the assets of the Group are subject to special liquidity arrangements. (d) Valuation of financial instruments Financial assets and financial liabilities are either carried in the Consolidated and Parent Company Statements 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) to the Financial Statements on page 97. 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. The fair value hierarchy has the following levels: Level 1 – Quoted market price for identical instruments in active markets A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The 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 observable market data and these inputs could have a significant impact on the instrument’s valuation. This category 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. 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 investment in the subsidiary is classified within Level 3 since the subsidiary is not a listed entity. The fair value of the investment in the subsidiary is calculated based on the net asset value of the underlying balances within the subsidiary. Therefore, no sensitivity analysis has been presented. Section 4: Financial statements 115 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Notes to the financial statements continued 16. Risk management policies and procedures continued Fair values of financial assets and financial liabilities The table below sets out fair value measurements using the IFRS 13 fair value hierarchy. Financial assets/(liabilities) at fair value through profit or loss at 30 November 2020 – Group Assets: Equity investments Fixed income investments Liabilities: Derivative financial instruments – written options Financial assets/(liabilities) at fair value through profit or loss at 30 November 2020 - Company Assets: Equity investments Fixed income investments Liabilities: Derivative financial instruments – written options Financial assets/(liabilities) at fair value through profit or loss at 30 November 2019 – Group Assets: Equity investments Fixed income investments Liabilities: Derivative financial instruments – written options Financial assets/(liabilities) at fair value through profit or loss at 30 November 2019 – Company Assets: Equity investments Fixed income investments Liabilities: Derivative financial instruments – written options Level 1 £’000 94,217 3,216 – 97,433 Level 1 £’000 94,217 3,216 – 97,433 Level 1 £’000 89,223 9,331 – 98,554 Level 1 £’000 89,223 9,331 – 98,554 Level 2 £’000 Level 3 £’000 – 147 (11) 136 Level 2 £’000 – 147 (11) 136 – – (30) (30) Level 2 £’000 – – (30) (30) – – – – Level 3 £’000 3,795 – – – – – – Level 3 £’000 3,436 – – Total £’000 94,217 3,363 (11) 97,569 Total £’000 98,012 3,363 (11) Total £’000 89,223 9,331 (30) 98,524 Total £’000 92,659 9,331 (30) 3,795 101,364 Level 2 £’000 Level 3 £’000 3,436 101,960 116 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600A reconciliation of fair value measurement in Level 3 is set out below: Level 3 Financial assets fair value through profit or loss at 30 November – Company Opening fair value Total gains or losses included in profit/(loss) on investments in the Consolidated Statement of Comprehensive Income: – assets held at the end of the year Closing balance (e) Capital management policies and procedures The Group’s capital management objectives are: • to ensure it will be able to continue as a going concern; and 2020 £’000 3,436 359 3,795 2019 £’000 2,256 1,180 3,436 • 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. This is to be achieved through an appropriate balance of equity capital and gearing. The Group operates a flexible gearing policy which depends on prevailing conditions. The Group’s total capital at 30 November 2020 was £97,387,000 (2019: £98,534,000), comprising a bank overdraft of £5,745,000 (2019: £12,589,000) and equity shares, capital and reserves of £91,642,000 (2019: £85,945,000). Under the terms of the overdraft facility agreement, the Group’s total indebtedness shall at no time exceed £17.5m or 20% of the Group’s net asset value (whichever is the lowest) (2019: £17.5 million or 20% of the Group’s net asset value (whichever is the lowest)). The Board with the assistance of the Investment Manager monitors and reviews the broad structure of the Group’s capital on an ongoing basis. This review includes: • the planned level of gearing, which takes into account the Investment Manager’s view on the market; and • the need to buy back equity shares, either for cancellation or to be held in treasury, which takes account of the difference between the NAV per share and the share price (i.e. the level of share price discount or premium). The Group is subject to externally imposed capital requirements: • as a public company, the Company has a minimum share capital of £50,000; and • in order to be able to pay dividends out of profits available for distribution, the Company has to be able to meet one of the two capital restrictions tests imposed on investment companies by law. During the year, the Company complied with the externally imposed capital requirements to which it was subject including those imposed in respect of overdraft covenants. (f) Investments held through Stock Connect The Company may invest no more than 10% of its net asset value in investments held through Stock Connect. Any China A shares invested in via Stock Connect will be held by the Depositary/sub-custodian in accounts in the Hong Kong Central Clearing and Settlement System (“CCASS”) maintained by the Hong Kong Securities Clearing Company Limited (“HKSCC”) as central securities depositary in Hong Kong. HKSCC in turn will hold any such China A Shares, as the nominee holder, through an omnibus securities account in its name registered with ChinaClear for the Company. Section 4: Financial statements 117 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Notes to the financial statements continued 17. Related party disclosure Directors’ Emoluments At the date of this report, the Board consists of five non-executive Directors, all of whom are considered to be independent of the Manager by the Board. Disclosures of the Directors’ interests in the ordinary shares of the Company and fees and expenses payable to the Directors are set out in the Directors’ Remuneration Report on pages 64 and 65. At 30 November 2020, £10,000 (2019: £10,000) was outstanding in respect of Directors’ fees. Significant Holdings As at 30 November 2020 and 2019, there were no investors which were: a. funds managed by the BlackRock Group or are affiliates of BlackRock Inc. (“Related BlackRock Funds”) or b. investors (other than those listed in (a) above) who held more than 20% of the voting shares in issue in the Company and are as a result, considered to be related parties to the Company (“Significant Investors”). 18. Transactions with the Investment Manager and AIFM BlackRock Fund Managers Limited (BFM) provides management and administrative services to the Group under a contract which is terminable on six months’ notice. BFM has (with the Company’s consent) delegated certain portfolio and risk 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 on pages 54 and 55. The investment management fee due for the year ended 30 November 2020 amounted to £602,000 (2019: £948,000). At the year end, £296,000 was outstanding in respect of the management fee (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 30 November 2020 amounted to £66,000 and has been adjusted in the investment management fee charged by the Manager. Further details in respect of the management fee and rebate are given in note 4 on page 99. In addition to the above services, BlackRock has provided the Group with marketing services. The total fees paid or payable for these services for the year ended 30 November 2020 amounted to £32,000 excluding VAT (2019: £29,000). Marketing fees of £20,000 excluding VAT (2019: £19,000) were outstanding as at the year end. 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). 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 the 11 May 2020, when PNC announced its intent to sell its investment in BlackRock, Inc. through a registered offering and related buyback by BlackRock, Inc. 19. Contingent liabilities There were no contingent liabilities at 30 November 2020 (2019: nil). 118 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Section 4: Financial statements 119 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 120 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Additional information Iron ore prices increases have dominated revenue streams for many mining companies. Iron ore supply in 2020 fell short of expectations, primarily as Vale struggled to hit targets with frequent operational disruptions. With iron ore demand being strong in China, prices increased by 50% during the year and have surged higher into 2021 with producers are now earning record margins and generating record cashflow from these businesses. AREA 4 MINE, CORUMBÁ, BRAZIL PHOTO COURTESY OF LEANDRO GRANDI/VALE. Section 5: Additional information 121 Job No: 43774 Customer: BlackRock Proof Event: 3 Black Line Level: 1 Park Communications Ltd Alpine Way London E6 6LA Project Title: Greater Europe Annual Rpt 2020 T: 0207 055 6500 F: 020 7055 6600 Shareholder information Financial calendar The timing of the announcement and publication of the Company’s results may normally be expected in the months shown below: Investor Services PLC on 0370 707 1476 or through their secure website, investorcentre.co.uk. Shareholders who have already opted to have their dividends reinvested do not need to reapply. January/February March July Annual results for the year ended 30 November announced and the annual report and financial statements published. Annual General Meeting. Half yearly figures to 31 May announced and half yearly financial report published. Share price The Company’s mid-market ordinary share price is quoted daily in The Financial Times and The Times under ‘Investment Companies’ and in The Daily Telegraph under ‘Investment Trusts’. The share price is also available on the BlackRock website at blackrock.com/uk/beri. Quarterly Dividends Dividends are paid quarterly as follows: ISIN/SEDOL numbers The ISIN/SEDOL numbers and mnemonic codes for the Company’s shares are: Period ending 28 February 31 May 31 August 30 November Ex-date March June Payment date April July ISIN SEDOL September October December January Reuters Code Bloomberg Code Ordinary shares GB00B0N8MF98 BON8MF9 BERI:L BERI:LN Payment of dividends Cash dividends will be sent by cheque to the first-named shareholder at their registered address. Dividends may also be paid directly into a shareholder’s bank account. This may be arranged by contacting the Company’s registrar, Computershare Investor Services PLC (Computershare), on 0370 707 1476, through their secure website investorcentre. co.uk, or by completing the Mandate Instructions section on the reverse of your dividend counterfoil and sending it to Computershare. Dividend confirmations will be sent to shareholders at their registered address, unless other instructions have been given, to arrive on the payment date. Dividend tax allowance The annual tax-free allowance on dividend income across an individual’s entire share portfolio is £2,000. Above this amount, individuals will pay tax on their dividend income at a rate dependent on their income tax bracket and personal circumstances. The Company will continue to provide registered shareholders with confirmation of the dividends paid and this should be included with any other dividend income received when calculating and reporting total dividend income received. It is a shareholder’s responsibility to include all dividend income when calculating any tax liability. If you have any tax queries, please contact a financial advisor. Dividend reinvestment scheme (DRIP) Shareholders may request that their dividends be used to purchase further shares in the Company. Dividend reinvestment forms may be obtained from Computershare Share dealing Investors wishing to purchase more shares in the Company or sell all or part of their existing holding may do so through a stockbroker. Most banks also offer this service. Alternatively, they can do so by creating a Trading Account at www.computershare.com/dealing/uk. To purchase this investment, you must have read the Key Information Document before the trade can be executed. Computershare can email or post this to you. For existing shareholders not looking to purchase shares, the Company’s registrar, Computershare, has an internet and telephone share dealing service. The telephone share dealing service is available on 0370 703 0084. To access the internet share dealing service, you will need to access www. computershare.com/dealing/uk using your shareholder reference number, which can be found on paper or electronic communications that you have previously received from Computershare. Internet dealing – The fee for this service is 1% of the value of the transaction (subject to a minimum of £30). Telephone dealing – The fee for this service will be 1% of the value of the transaction (plus £50). CREST The Company’s shares may be held in CREST, an electronic system for uncertificated securities trading. Private investors can continue to retain their share certificates and remain outside the CREST system. Private investors are able to buy and sell their holdings in the same way as they did prior to the introduction of CREST, although there may be differences in dealing charges. 122 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Electronic communications Computershare provides a service to enable shareholders to receive correspondence electronically (including annual and half yearly financial reports) if they wish. If a shareholder opts to receive documents in this way, paper documents will only be available on request (unless electronic submission fails, in which case a letter will be mailed to the investor’s registered address giving details of the website address where information can be found online). Shareholders who opt for this service will receive a Notice of Availability via e-mail from Computershare with a link to the relevant section of the BlackRock website where the documents can be viewed and printed. For more information, to view the terms and conditions and to register for this service, please visit Computershare’s internet site at investorcentre.co.uk/ ecomms (you will need your shareholder reference number). Electronic proxy voting Shareholders are able to submit their proxy votes electronically via Computershare’s internet site at eproxyappointment.com using a unique identification PIN which will be provided with voting instructions and the Notice of Annual General Meeting. CREST members who wish to appoint one or more proxies or give an instruction through the CREST electronic proxy appointment service may do so by using the procedures described in the CREST manual. Further details are set out in the notes on the Form of Proxy and the Notice of Annual General Meeting. Online access Other details about the Company are also available on the BlackRock website at blackrock.com/uk/beri. The financial statements and other literature are published on the website. Visitors to the website need to be aware that legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in their jurisdiction. Shareholders can also manage their shareholding online by using Investor Centre, Computershare’s secure website, at investorcentre.co.uk. To register on Computershare’s website you will need your shareholder reference number. Listed below are the most frequently used features of the website. • Holding enquiry – view balances, values, history, payments and reinvestments. • Payments enquiry – view your dividends and other payment types. • Address change – change your registered address. • Bank details update – choose to receive your dividend payment directly into your bank account instead of by cheque. Nominee code Where shares are held in a nominee company name, the Company undertakes: • e-Comms sign-up – choose to receive email notification when your shareholder communications become available instead of paper communications. • to provide the nominee company with multiple copies of shareholder communications, so long as an indication of quantities has been provided in advance; • to allow investors holding shares through a nominee company to attend general meetings, provided the correct authority from the nominee company is available; and Nominee companies are encouraged to provide the necessary authority to underlying shareholders to attend the Company’s general meetings. Publication of NAV/portfolio analysis The NAV per share of the Company is calculated and published daily. Details of the Company’s investments and performance are published monthly. The daily NAV per share and monthly information are released through the London Stock Exchange’s Regulatory News Service and are available on the BlackRock website at www.blackrock.com/uk/beri and through the Reuters News Service under the code ‘BLRKINDEX’, on page 8800 on Topic 3 (ICV terminals) and under ‘BLRK’ on Bloomberg (monthly information only). • Outstanding payments – reissue payments using the online replacement service. • Downloadable forms – including dividend mandates, stock transfer, dividend reinvestment and change of address forms. Individual Savings Accounts (ISAs) ISAs are a tax-efficient method of investment and the Company’s shares are eligible investments for inclusion in an ISA. In the 2020/2021 tax year, investors will be able to invest up to £20,000 in Individual Savings Accounts (ISAs) either as cash or shares. Shareholder enquiries The Company’s registrar is Computershare Investor Services PLC. Certain details relating to your holding can be checked through the Computershare Investor Centre website. As a security check, specific information will need to be input accurately to gain access to your account including your shareholder reference number, available from your share certificate, dividend confirmation or other electronic communications received from Computershare. The address of the Computershare website is investorcentre.co.uk. Alternatively, please contact the registrar on 0370 707 1476. Section 5: Additional information 123 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Shareholder information continued Changes of name or address must be notified in writing either through Computershare’s website, or to the registrar at: Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZZ General enquiries Enquiries about the Company should be directed to: The Company Secretary BlackRock Energy and Resources Income Trust plc 12 Throgmorton Avenue London EC2N 2DL Telephone: 020 7743 3000 Email: Cosec@blackrock.com 124 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Analysis of ordinary shareholders as at 30 November 2020 By type of holder Direct private investors Banks and nominee companies Others Shares held in treasury By size of holding 1-10,000 10,001-100,000 100,001-1,000,000 1,000,001-5,000,000 5,000,001-9,999,999 Shares held in treasury Number of shares % of total 2020 % of total 2019 Number of holders % of total 2020 % of total 2019 1,825,321 109,105,620 2,539,408 5,495,651 1.5 91.7 2.2 4.6 1.6 92.9 1.3 4.2 118,966,000 100.0 100.0 191 504 16 1 712 26.8 70.8 2.3 0.1 24.2 73.8 1.9 0.1 100.0 100.0 Number of shares % of total 2020 % of total 2019 Number of holders % of total 2020 % of total 2019 1,813,937 6,010,842 25,138,924 57,220,643 23,286,003 5,495,651 1.5 5.1 21.1 48.1 19.6 4.6 1.9 5.6 30.7 47.4 10.2 4.2 409 195 79 25 3 1 57.4 27.4 11.1 3.6 0.4 0.1 57.1 28.5 11.5 2.7 0.1 0.1 118,966,000 100.0 100.0 712 100.0 100.0 Section 5: Additional information 125 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Historical analysis Year ended 31 August At launch, 13 December 2005 Period ended 30 November 2006 Year ended 30 November 2007 Year ended 30 November 2008 Year ended 30 November 2009 Year ended 30 November 2010 Year ended 30 November 2011 Year ended 30 November 2012 Year ended 30 November 2013 Year ended 30 November 2014 Year ended 30 November 2015 Year ended 30 November 2016 Year ended 30 November 2017 Year ended 30 November 2018 Year ended 30 November 2019 Year ended 30 November 2020 Net assets attributable to ordinary shareholders Net asset value per ordinary share Ordinary share price (mid-market) Revenue return per ordinary share Dividend per ordinary share Ongoing Charges ratio1 £’000 73,500 79,784 110,018 57,625 90,260 125,848 118,642 111,663 101,830 96,696 69,430 98,933 91,357 88,109 85,945 91,642 p 98.00 105.53 158.05 80.25 120.63 139.05 131.08 118.47 105.79 91.95 60.08 83.57 76.92 75.87 75.28 80.76 p 100.00 101.25 149.75 72.50 119.75 143.00 127.75 122.75 109.50 99.00 59.75 82.75 75.00 70.60 66.00 71.40 p – 5.28 6.31 6.96 5.74 5.85 5.88 6.10 5.87 6.20 6.32 4.43 4.84 4.37 3.97 4.31 p – 4.50 5.25 5.40 5.50 5.602 5.75 5.90 5.95 6.00 6.00 5.00 4.00 4.00 4.00 4.00 – 1.50 1.30 1.40 1.50 1.40 1.30 1.30 1.40 1.50 1.40 1.39 1.36 1.39 1.48 1.25 1 2 Revised for years prior to 30 November 2014 to conform to AIC best practice guidance. The Ongoing Charges Ratio is an Alternative Performance Measure. See the Glossary on pages 133 to 134 for more details in respect of the calculation. In addition, two special dividends were also paid during the year, totalling 1.52 pence per share. 126 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Management & other service providers Registered Office (Registered in England, No. 5612963) 12 Throgmorton Avenue London EC2N 2DL Auditor Ernst & Young LLP 25 Churchill Place London E14 5EY Alternative Investment Fund Manager1 BlackRock Fund Managers Limited2 12 Throgmorton Avenue London EC2N 2DL Telephone: 020 7743 3000 Stockbroker Winterflood Securities Limited2 The Atrium Building 25 Dowgate Hill London EC4R 2GA Solicitor Gowling WLG (UK) LLP 4 More London Riverside London SE1 2AU Investment Manager and Company Secretary BlackRock Investment Management (UK) Limited2 12 Throgmorton Avenue London EC2N 2DL Email: cosec@blackrock.com Banker, Custodian and Depositary The Bank of New York Mellon (International) Limited2 One Canada Square London E14 5AL Registrar Computershare Investor Services PLC2 The Pavilions Bridgwater Road Bristol BS99 6ZZ Telephone: 0370 707 1476 1 BlackRock Fund Managers Limited (BFM) was appointed as the Alternative Investment Fund Manager on 2 July 2014. BlackRock Investment Management (UK) Limited continues to act as the Investment Manager under a delegation agreement with BFM. 2 Authorised and regulated by the Financial Conduct Authority. Section 5: Additional information 127 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 AIFMD disclosures Report on remuneration The Alternative Investment Fund Managers’ Directive (the AIFMD) requires certain disclosures to be made with regard to the remuneration policy of the Company’s AIFM. Details of the BlackRock AIFM Remuneration Policy are disclosed on the Company’s website at www.blackrock.com/ uk/beri and have applied to the Manager since 1 January 2015, being the beginning of the first financial year of BlackRock following the Manager’s authorisation as an AIFM. Quantitative remuneration disclosure Appropriate disclosures will be made in due course in accordance with FUND 3.3.5, Article 22(2)(e) and 22(2)(f) of the AIFMD and Article 107 of the Delegated Regulation. Leverage The Company may employ leverage and borrow cash in accordance with its stated investment policy or investment strategy. The Company may also employ leverage in its investment programme through foreign exchange forward contracts and may also utilise a variety of exchange traded and over-the-counter (OTC) derivative instruments such as covered put/call options as part of its investment policy. The use of derivatives may expose the Company to a higher degree of risk. In particular, derivative contracts can be highly volatile and the amount of initial margin is generally small relative to the size of the contract so that transactions may be leveraged in terms of market exposure. A relatively small market movement may have a potentially larger impact on derivatives than on standard underlying bonds or equities. Leveraged derivative positions can therefore increase the Company’s volatility. The use of borrowings and leverage has attendant risks and can, in certain circumstances, substantially increase the adverse impact to which the Company’s investment portfolio may be subject. No foreign exchange forward contracts or derivatives were used for leverage purposes during the year. For the purposes of this disclosure, leverage is any method by which the Company’s exposure is increased, whether through borrowing of cash or securities, or leverage embedded in foreign exchange forward contracts or by any other means. The AIFMD requires that each leverage ratio be expressed as the ratio between a Company’s exposure and its NAV, and prescribes two required methodologies, the gross methodology and the commitment methodology (as set out in AIFMD Level 2 Implementation Guidance), for calculating such exposure. Using the methodologies prescribed under the AIFMD, the leverage of the Group and Company is disclosed in the table below: Commitment leverage as at 30 November 2020 Gross leverage as at 30 November 2020 Leverage ratio 1.11 1.11 Further information on the calculation of leverage ratios is provided in the Glossary on page 132. Other risk disclosures The financial risk disclosures relating to risk framework and liquidity risk are set out in note 16 to the notes to the financial statements on pages 106 to 117. Pre investment disclosures The AIFMD requires certain information to be made available to investors in AIFs before they invest and requires that material changes to this information be disclosed in the annual report of each AIF. An Investor Disclosure Document, which sets out information on the Company’s investment strategy and policies, leverage, risk, liquidity, administration, management, fees, conflicts of interest and other shareholder information is available on the website at www.blackrock.com/uk/beri. There have been no material changes (other than those reflected in these financial statements or previously disclosed to the London Stock Exchange through a primary information provider) to this information requiring disclosure. Any information requiring immediate disclosure pursuant to the AIFMD will be disclosed to the London Stock Exchange through a primary information provider. SARAH BEYNSBERGER For and on behalf of BlackRock Investment Management (UK) Limited Company Secretary 4 February 2021 128 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Information to be disclosed in accordance with Listing Rule 9.8.4 The disclosures below are made in compliance with the requirements of Listing Rule 9.8.4. 9.8.4 (1) The Company has not capitalised any interest in the period under review. 9.8.4 (2) The Company has not published any unaudited financial information in a class 1 circular or prospectus or any profit forecast or profit estimate. 9.8.4 (3) This provision has been deleted. 9.8.4 (4) The Company does not have any long term incentive schemes in operation. 9.8.4 (5) and (6) Mr Ruck Keene had waived his Directors’ fees for the period from 1 December 2016 to 7 April 2017 when he served as an employee of BlackRock. With effect from his retirement from BlackRock on 7 April 2017 through to his retirement from the Company’s Board on 17 March 2020, he was paid as a Director of the Company and did not waive his fees. 9.8.4 (7) The Company has not allotted any equity securities for cash in the period under review. 9.8.4 (8) and 9.8.4 (9) are not applicable. 9.8.4 (10) As a managing director of BlackRock, up to his retirement from BlackRock on 7 April 2017, Mr Ruck Keene was deemed to have had an interest in the Company’s management agreement. Mr Ruck Keene retired from the Board of the Company on 17 March 2020. There were no other contracts of significance subsisting during the period under review to which the Company is a party and in which a Director of the Company is or was materially interested; or between the Company and a controlling shareholder. 9.8.4 (11) This provision is not applicable to the Company. 9.8.4 (12) and (13) There were no arrangements under which a shareholder has waived or agreed to waive any dividends or future dividends. 9.8.4 (14) This provision is not applicable to the Company. By order of the Board SARAH BEYNSBERGER For and on behalf of BlackRock Investment Management (UK) Limited Company Secretary 4 February 2021 Section 5: Additional information 129 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Information to be disclosed in respect of investment in the People’s Republic of China (PRC) via the Stock Connect The Stock Connect links markets in mainland China and Hong Kong, allowing foreign (non-Chinese) investors to invest in China A-Shares listed on the relevant mainland markets more easily than was possible prior to establishment of the Stock Connect. The disclosures below are given to provide shareholders and investors in the Company with more information in respect of how the Stock Connect works, and more detail on the risks associated with the scheme. Additional disclosures are set out in the notes to the financial statements on page 117. The Stock Connect is a securities trading and clearing linked program developed by the Hong Kong Exchanges and Clearing Market (HKEX), Shanghai Stock Exchange (SSE) and China Clear with an aim to achieve mutual stock market access between the People’s Republic of China (PRC) and Hong Kong. The Stock Connect comprises a Northbound Trading Link and a Southbound Trading Link. Under the Northbound Trading Link, Hong Kong and overseas investors (including the Company), through their Hong Kong brokers and a securities trading service company established by the Hong Kong Stock Exchange (SEHK), may be able to trade eligible China A Shares listed on the SSE by routing orders to SSE. Under the Southbound Trading Link investors in the PRC will be able to trade certain stocks listed on the SEHK. Under a joint announcement issued by the SFC and CSRC on 10 November 2014 the Stock Connect commenced trading on 17 November 2014. Companies and funds investing in the PRC may invest in China A Shares trading on the Shanghai Stock Exchange via Stock Connect. The Stock Connect is a programme that links the Shanghai Stock Exchange and the SEHK. Under the programme, investors can access the Shanghai Stock Exchange via the Hong Kong Central Clearing and Settlement System (CCASS) maintained by the Hong Kong Securities Clearing Company Ltd (HKSCC) as central securities depositary in Hong Kong. Investing in China A Shares via Stock Connect bypasses the requirement to obtain Renminbi Qualified Foreign Institutional Investor (RQFII) status which is required for direct access to the Shanghai Stock Exchange. Quota limitations Investing in the PRC via Stock Connect is subject to quota limitations which apply to the Investment Manager. In particular, once the remaining balance of the relevant quota drops to zero or the daily quota is exceeded, buy orders will be rejected (although investors will be permitted to sell their cross-boundary securities regardless of the quota balance). Investment thresholds for stock connect funds The Company may invest no more than 10% of its net asset value in the Stock Connect. Legal/beneficial ownership The China A Shares invested in via the Stock Connect will be held by the Trustee in accounts in the Hong Kong Central Clearing and Settlement System the China Securities Repository and Clearing Company Limited (CCASS) maintained by the HKSCC as central securities depositary in Hong Kong. HKSCC in turn holds the China A Shares, as the nominee holder, through an omnibus securities account in its name registered with the China Securities Depository and Clearing Company Limited (CSDCC). The precise nature and rights of the Stock Connect Funds as the beneficial owners of the China A Shares through HKSCC as nominee is not well defined under PRC law. There is lack of a clear definition of, and distinction between, “Legal Ownership” and “Beneficial Ownership” under PRC law and there have been few cases involving a nominee account structure in the PRC courts. Therefore the exact nature and methods of enforcement of the rights and interests of the Stock Connect Funds under PRC law is uncertain. Because of this uncertainty, in the unlikely event that HKSCC becomes subject to winding up proceedings in Hong Kong it is not clear if the China A Shares will be regarded as held for the beneficial ownership of the Company or as part of the general assets of HKSCC available for general distribution to its creditors. Clearing and settlement risk HKSCC and CSDCC will establish the clearing links and each will become a participant of each other to facilitate clearing and settlement of cross-boundary trades. For cross- boundary trades initiated in a market, the clearing house of that market will on one hand clear and settle with its own clearing participants, and on the other hand undertake to fulfil the clearing and settlement obligations of its clearing participants with the counterparty clearing house. As the national central counterparty of the PRC’s securities market, CSDCC operates a comprehensive network of clearing, settlement and stock holding infrastructure. CSDCC has established a risk management framework and measures that are approved and supervised by the CSRC. The chances of CSDCC default are considered to be remote. In the remote event of a CSDCC default, HKSCC’s liabilities in respect of China A Shares invested in via the Stock Connect will be limited under its market contracts with clearing participants to assisting clearing participants in pursuing their claims against CSDCC. HKSCC should in good faith, seek recovery of the outstanding stocks and monies from CSDCC through available legal channels or through CSDCC’s liquidation. In that event, the Company may suffer a delay in the recovery process or may not fully recover its losses from CSDCC. 130 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Suspension risk It is contemplated that both the SEHK and the Shanghai Stock Exchange would reserve the right to suspend trading if necessary for ensuring an orderly and fair market and that risks are managed prudently. Consent from the relevant regulator will be sought before a suspension is triggered. Where a suspension is effected, the Company’s ability to access the PRC market will be adversely affected. Differences in trading day The Stock Connect will only operate on days when both the PRC and Hong Kong markets are open for trading and when banks in both markets are open on the corresponding settlement days. So it is possible that there are occasions when it is a normal trading day for the PRC market but the Company cannot carry out any China A Shares trading via the Stock Connect. The Company may be subject to a risk of price fluctuations in China A Shares during the time when the Stock Connect is not trading as a result. Restrictions on selling imposed by front-end monitoring PRC regulations require that before an investor sells any share, there should be sufficient shares in the account; otherwise the Shanghai Stock Exchange will reject the sell order concerned. SEHK will carry out pre-trade checking on China A Share sell orders of its participants (i.e. the stock brokers) to ensure there is no over-selling. If the Company intends to sell certain China A Shares it holds, it must transfer those China A Shares to the respective accounts of its broker(s) before the market opens on the day of selling (“trading day”). If it fails to meet this deadline, it will not be able to sell those shares on the trading day. Because of this requirement, the Company may not be able to dispose of its holdings of China A Shares in a timely manner. Operational risk The Stock Connect is premised on the functioning of the operational systems of the relevant market participants. Market participants are permitted to participate in this program subject to meeting certain information technology capability, risk management and other requirements as may be specified by the relevant exchange and/or clearing house. The securities regimes and legal systems of the SEHK and the Shanghai Stock Exchange differ significantly and market participants may need to address issues arising from the differences on an on-going basis. There is no assurance that the systems of the SEHK and market participants will function properly or will continue to be adapted to changes and developments in both markets. In the event that the relevant systems fail to function properly, trading in both markets through the program could be disrupted. The Company’s ability to access the China A Share market (and hence to pursue its investment strategy) may be adversely affected. Regulatory risk The Stock Connect is a novel concept. The current regulations are untested and there is no certainty as to how they will be applied. In addition, the current regulations are subject to change and there can be no assurance that the Stock Connect will not be abolished. New regulations may be issued from time to time by the regulators/stock exchanges in the PRC and Hong Kong in connection with operations, legal enforcement and cross-border trades under the Stock Connect. The Company may be adversely affected as a result of such changes. Recalling of eligible stocks When a stock is recalled from the scope of eligible stocks for trading via the Stock Connect, the stock can only be sold but restricted from being bought. This may restrict the ability of the Company to acquire shares. No protection by investor compensation fund Investment in China A Shares via the Stock Connect is conducted through brokers, and is subject to the risk of default by such brokers in their obligations. Investments of the Company are not covered by the Hong Kong’s investor compensation fund, which has been established to pay compensation to investors of any nationality who suffer pecuniary losses as a result of default of a licensed intermediary or authorised financial institution in relation to exchange-traded products in Hong Kong. Since default matters in respect of China A Shares invested in via the Stock Connect do not involve products listed or traded on the SEHK, they will not be covered by the investor compensation fund. Therefore the Company is exposed to the risks of default of the broker(s) it engages in its trading in China A Shares through the Stock Connect. Taxation risks The PRC tax authorities have also made announcements that gains derived from China A-Shares investments via the Stock Connects would be temporarily exempted from PRC taxation effective from 17 November 2014. This temporary exemption applies to China A-Shares generally, including shares in PRC ‘land-rich’ companies. The duration of the period of temporary exemption has not been stated and may be subject to termination by the PRC tax authorities with or without notice and, in the worst case, retrospectively. If the temporary exemption is withdrawn the relevant Stock Connect Funds would be subject to PRC taxation in respect of gains on China-A Shares and the resultant tax liability would eventually be borne by investors. However, this liability may be mitigated under the terms of an applicable tax treaty, and if so, such benefits will also be passed to investors. Section 5: Additional information 131 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Glossary Alternative performance measures (APM) An APM is a measure of performance or financial position that is not defined in applicable accounting standards and cannot be directly derived from the financial statements. The Group’s APMs are set out below and are cross-referenced where relevant to the financial inputs used to derive them as contained in other sections of the Annual Financial report. Closed-end company An investment trust works along the same lines as a unit trust, in that it pools money from investors which is then managed on a collective basis. The main difference is that an investment trust is a company listed on the Stock Exchange and, in most cases, trading takes place in shares which have already been issued, rather than through the creation or redemption of units. As the number of shares which can be issued or cancelled at any one time is limited, and requires the approval of existing shareholders, investment trusts are known as closed end funds or companies. This means that investment trusts are not subject to the same liquidity constraints as open ended funds and can therefore invest in less liquid investments. Discount and premium* Investment trust shares can frequently trade at a discount to NAV. This occurs when the share price (based on the mid- market share price) is less than the NAV and investors may therefore buy shares at less than the value attributable to them by reference to the underlying assets. The discount is the difference between the share price and the NAV, expressed as a percentage of the NAV. As at 30 November 2020, the share price was 71.40p (2019: 66.00p) and the audited NAV per share was 80.76p (2019: 75.28p), giving a discount of 11.6% (2019: 12.3%) (please see note 9 of the financial statements for the audited inputs to these calculations). A premium occurs when the share price (based on the mid- market share price) is more than the NAV and investors would therefore be paying more than the value attributable to the shares by reference to the underlying assets. For example, if the share price was 370p and the NAV 365p, the premium would be 1.4%. Discounts and premiums are mainly the consequence of supply and demand for the shares on the stock market. Gearing and borrowings* Investment companies can borrow to purchase additional investments. This is called ‘gearing’. It allows investment companies to take advantage of a long term view on a sector or to take advantage of a favourable situation or a particularly attractive stock without having to sell existing investments. Gearing works by magnifying a company’s performance. If a company ‘gears up’ and then markets rise and returns on the investments outstrip the costs of borrowing, the overall * Alternative performance measures. returns to investors will be even greater. But if markets fall and the performance of the assets in the portfolio is poor, then losses suffered by the investor will also be magnified. The Group may achieve gearing through borrowings or the effect of gearing through an appropriate balance of equity capital, investment in derivatives and structured financial instruments, and borrowings. Gearing through the use of derivatives is limited to a maximum of 30% of the Group’s assets for the purposes of efficient portfolio management and to enhance portfolio returns. Gearing through borrowings is limited to 40% of the Group’s gross assets; however borrowings are not envisaged to exceed 20% of the Group’s gross assets at the date or drawdown. Net gearing calculation Net assets Borrowings 30 November 2020 £’000 30 November 2019 £’000 91,642 85,945 5,745 12,589 Page 93 93 Total assets (a+b) 97,387 98,534 Current assets1 93 526 737 (a) (b) (c) (d) Current liabilities (excluding borrowings) Net current liabilities (d+e) Net gearing figure ((b - f)/a) 1 Includes cash at bank. 93 (719) (757) (e) (193) (20) (f) 6.5% 14.7% (g) Gross assets Gross assets is defined as the total of the Group’s net assets and borrowings. Leverage Leverage is defined in the AIFM Directive as “any method by which the AIFM increases the exposure of an AIF it manages whether through borrowing of cash or securities, or leverage embedded in derivative positions or by any other means”. Leverage is measured in terms of ‘exposure’ and is expressed as a ratio of net asset value: Leverage ratio = Exposure Net assets The Directive sets out two methodologies for calculating exposure. These are the Gross Method and the Commitment Method. The treatment of cash and cash equivalent balances in terms of calculating what constitutes an “exposure” under AIFMD differs for these two methods. The definitions for calculating the Gross Method exposures require that “the value of any cash and cash equivalents which are highly liquid investments held in the base currency of the AIF, 132 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 that are readily convertible to a known amount of cash, are subject to an insignificant risk of change in value and provide a return no greater than the rate of a three-month high quality government bond” should be excluded from exposure calculations. NAV and share price return (with dividends reinvested)* Performance statistics enable the investor to make performance comparisons between investment trusts with different dividend policies. The performance measures the combined effect of any dividends paid, together with the rise or fall in the share price or NAV. This is calculated by the movement in the share price or NAV plus the dividends paid by the Group assuming these are reinvested in the Group at the prevailing NAV/Share price (please see note 9 of the financial statements for the audited inputs to the calculations). NAV total return Page 30 November 2020 30 November 2019 Closing NAV per share (pence) Add back interim and final dividends (pence) Effect of dividend reinvestment (pence) Adjusted closing NAV (pence) Opening NAV per share (pence) NAV total return (c = ((a - b)/b)) (%) 102 80.76 75.28 102 4.00 4.00 1.00 (0.08) 85.76 79.20 (a) 102 75.28 75.87 (b) 13.9 4.4 (c) Share price total return 30 November 2020 30 November 2019 Page shareholders’ funds’ by the total number of ordinary shares in issue (excluding treasury shares). For example, as at 30 November 2020, equity shareholders’ funds were worth £91,642,000 and there were 113,470,349 ordinary shares in issue (excluding treasury shares); the undiluted NAV was therefore 80.76 pence per ordinary share (please see note 9 of the financial statements for the audited inputs to the calculations). Equity shareholders’ funds are calculated by deducting from the Group’s total assets, its current and long-term liabilities and any provision for liabilities and charges. Net asset value per share (Capital only NAV)* The capital only NAV is a popular point of reference when comparing a range of investment trusts. This NAV focuses on the value of the Group’s assets disregarding the current period revenue income, on the basis that most trusts will distribute substantially all of their income in any financial period. It is also the measure adopted by the Association of Investment Companies for preparation of statistical data. It is calculated by dividing ‘equity shareholders’ funds’ (excluding current period revenue) by the total number of ordinary shares in issue. As at 30 November 2020, equity shareholders’ funds less the current year net revenue return (after interim dividends) amounted to £90,147,000 and there were 113,470,349 ordinary shares in issue (excluding treasury shares); therefore the capital only NAV was 79.45 pence. Equity shareholders’ funds (excluding current period revenue) of £90,147,000 are calculated by deducting from the Group’s net assets (£91,642,000) its current period revenue (£4,900,000) and adding back the interim dividends paid from revenue (£3,405,000). 102 71.40 66.00 102 4.00 4.00 Ongoing charges ratio* Ongoing charges (%) = Annualised ongoing charges Average undiluted net asset value in the period 1.17 (0.29) 76.57 69.71 102 66.00 70.60 Ongoing charges are those expenses of a type which are likely to recur in the foreseeable future, whether charged to capital or revenue, and which relate to the operation of the investment company as a collective fund. Ongoing charges are based on costs incurred in the year as being the best estimate of future costs and include the annual management charge. (a) (b) 16.0 (1.3) (c) Net asset value per share (Cum income NAV) This is the value of the Group’s assets attributable to one ordinary share. It is calculated by dividing ‘equity * Alternative performance measures. As recommended by the AIC in its guidance, ongoing charges are calculated using the Group’s annualised recurring revenue and capital expenses (excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain non-recurring items) expressed as a percentage of the average daily net assets of the Group during the year. Section 5: Additional information 133 Closing share price (pence) Add back interim and final dividends (pence) Effect of dividend reinvestment (pence) Adjusted closing share price (pence) Opening share price (pence) Share price total return (c = ((a - b)/b)) (%) Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Revenue profit and revenue reserves Revenue profit is the net revenue income earned after deduction of fees and expenses allocated to the revenue account and taxation suffered by the Group. Revenue reserves is the undistributed income that the Group keeps as reserves. Investment trusts do not have to distribute all the income they generate, after expenses. They may retain up to 15% of revenue generated which will be held in a revenue reserve. This reserve can be used at a later date to supplement dividend payments to shareholders. Treasury shares Treasury shares are shares that a company keeps in its own treasury which are not currently issued to the public. These shares do not pay dividends, have no voting rights and are not included in a company’s total issued share capital amount for calculating percentage ownership. Treasury stock may have come from a repurchase or buy back from shareholders, or it may never have been issued to the public in the first place. Treasury shares may be reissued from treasury to the public to meet demand for a company’s shares in certain circumstances. Yield* The yield is the amount of cash (in percentage terms) that is returned to the owners of the security, in the form of interest or dividends received from it. Normally, it does not include the price variations, distinguishing it from the total return. 30 November 2020 30 November 2019 Page Interim dividends paid/payable (pence)1 Ordinary share price (pence) Yield (c = a/b) (%) 102 102 4.00 4.00 (a) 71.40 5.6% 66.00 6.1% (b) (c) 1 Comprising dividends declared/paid for the twelve months to 30 November. Glossary continued The inputs that have been used to calculate the ongoing charges percentage are set out in the following table. Ongoing charges calculation Page Management fee Other operating expenses 99 99 30 November 2020 £’000 30 November 2019 £’000 602 388 948 394 Total management fee and other operating expenses Average daily net assets in the year Ongoing charges (c = a/b) 990 1,342 (a) 79,170 90,703 (b) 1.25% 1.48% (c) Effective 17 March 2020 the Company’s Ongoing Charges (including the investment management fee), will be capped at 1.25% per annum of average daily net assets. No cap was in place for Ongoing Charges incurred up to 16 March 2020. Options and options overwriting strategy An option is a contract that offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price (the strike price) during a certain period of time or on a specific date (exercise date) for a fee (the premium). The sale of call or put options on stocks that are believed to be overpriced or underpriced, based on the assumption that the options will not be exercised, is referred to as an ‘options overwriting’ strategy. The seller of the option collects a premium but, if the option subsequently expires without being exercised, there will be no down side for the seller. However, if the stock rises above the exercise price the holder of the option is likely to exercise the option and this strategy can reduce returns in a rising market. The Group employs an options overwriting strategy but seeks to mitigate risk by utilising predominantly covered call options (meaning that call options are only written in respect of stocks already owned within the Group’s portfolio such that, if the options are exercised, the Group does not need to purchase stock externally at fluctuating market prices to meet its obligations under the options contract). Any use of derivatives for efficient portfolio management and options for investment purposes will be made on the basis of the same principles of risk spreading and diversification that apply to the Group’s direct investments. Quoted securities and unquoted securities Securities that trade on an exchange for which there is a publicly quoted price. Unquoted securities are financial securities that do not trade on an exchange and for which there is not a publicly quoted price. * Alternative performance measures. 134 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Job No: 43268 Customer: BlackRock Proof Event: 5 Black Line Level: 0 Park Communications Ltd Alpine Way London E6 6LA Project Title: Greater Europe Annual Rpt 2020 T: 0207 055 6500 F: 020 7055 6600 136 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600Annual general meeting Enel is an electric utility and network operator and a leading owner of renewable energy assets. The group operates in more than 30 countries, bringing energy to people through the adoption of new sustainability-oriented technologies. The image on the left is of Enel’s Chañares photovoltaic plant in Chile. The Chañares plant has an installed capacity of 40 MW and can generate up to 94 GWh per year. Construction work on the plant, which is located in Chañaral, began in 2014. PHOTO COURTESY OF ENEL Section 6: Notice of annual general meeting 137 Notice of annual general meeting Given the risks posed by the spread of COVID-19 and in accordance with Government guidance, special arrangements have been made with respect to the Company’s Annual General Meeting for 2021. More details may be found in note 1 on page 140 and pages 7 and 8 of the Chairman’s Statement. Details are also available on the Company’s website at www.blackrock.com/uk/beri. Notice is hereby given that the next Annual General Meeting of BlackRock Energy and Resources Income Trust plc will be held at the offices of BlackRock at 12 Throgmorton Avenue, London EC2N 2DL on Tuesday, 16 March 2021 at 10.00 a.m. for the purpose of considering and, if thought fit, passing the following resolutions (which will be proposed in the case of resolutions 1 to 10, as ordinary resolutions and, in the case of resolutions 11 to 14, as special resolutions). More information in respect of the contribution of each Director to support their re-election is given in the Directors’ Report on pages 59 and 60. Ordinary business 1. To receive the report of the Directors of the Company and the financial statements for the year ended 30 November 2020, together with the report of the Auditor thereon. before the expiry of this authority which would or might require relevant securities to be allotted after such expiry and the Directors may allot such securities pursuant to any such offer or agreement as if the power conferred hereby had not expired. Special resolutions 11. That, in substitution for all existing authorities and subject to the passing of the resolution numbered 10 above, the Directors of the Company be and are hereby empowered pursuant to sections 570 and 573 of the Companies Act 2006 (the Act) to allot equity securities (as defined in section 560 of the Act) and to sell equity securities held by the Company as treasury shares (as defined in section 724 of the Act) for cash pursuant to the authority granted by resolution 10 above, as if section 561(1) of the Act did not apply to any such allotment and or sales of equity securities, provided that this authority: 2. To approve the Directors’ Remuneration Report for the year ended 30 November 2020. (a) 3. That the shareholders approve the Company’s dividend policy to continue to pay four quarterly interim dividends, which in the year under review totalled 4.00p per share. 4. To elect Mr Robson as a Director. 5. To re-elect Dr Bell as a Director. 6. To re- elect Mr Brown as a Director. 7. To re-elect Mr Warner as a Director. 8. To reappoint Ernst & Young LLP as Auditor of the Company to hold office until the conclusion of the next Annual General Meeting of the Company. 9. To authorise the Audit and Management Engagement Committee to determine the Auditor’s remuneration. Special business Ordinary resolution 10. That, in substitution for all existing authorities, the Directors of the Company be and they are hereby generally and unconditionally authorised pursuant to section 551 of the Companies Act 2006 (the Act), to exercise all the powers of the Company to allot shares and relevant securities in the Company (as described in that section) up to an aggregate nominal amount of £113,470 (being 10% of the aggregate nominal amount of the issued ordinary share capital, excluding any treasury shares, of the Company at the date of this notice) provided this authority shall (unless previously revoked) expire at the conclusion of the Company’s Annual General Meeting to be held in 2022, but the Company shall be entitled to make offers or agreements shall expire at the conclusion of the next Annual General Meeting to be held in 2022, except that the Company may before such expiry make offers or agreements which would or might require equity securities to be allotted or sold after such expiry and notwithstanding such expiry the Directors may allot or sell equity securities in pursuance of such offers or agreements; (b) (c) shall be limited to the allotment of equity securities and/or sale of equity securities held in treasury for cash up to an aggregate nominal amount of £113,470, (representing 10% of the aggregate nominal amount of the issued share capital of the Company at the date of this notice); and shall be limited to the allotment of equity securities and/or the sale of equity securities held in treasury at a price not less than the net asset value per ordinary share as close as practicable to the allotment or sale. 12. That, in substitution for the Company’s existing authority to make market purchases of ordinary shares of 1p each in the Company (Ordinary Shares), the Company be and is hereby generally and, subject as hereinafter appears, unconditionally authorised in accordance with section 701 of the Companies Act 2006 (the Act) to make market purchases of ordinary shares (within the meaning of section 693 of the Act) provided that: (a) the maximum number of Ordinary Shares hereby authorised to be purchased shall be 17,009,205 or, if less, that number of Ordinary Shares which is equal to 14.99% of the Company’s issued ordinary share capital (excluding any treasury shares) at the date of the Annual General Meeting; 138 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 (b) (c) (d) the minimum price (exclusive of expenses) which may be paid for any such Ordinary Share shall be 1p being the nominal value per share; 13. That, the period of notice required for general meetings of the Company (other than Annual General Meetings) shall be not less than 14 clear days’ notice. the maximum price (exclusive of expenses) which may be paid for any such Ordinary Share shall be the higher of (i) 105% of the average of the middle market quotations (as derived from the Official List) of the Ordinary Shares for the five dealing days prior to the date on which the market purchase is made and (ii) the higher of the price quoted for (a) the last independent trade of and (b) the highest current independent bid for, any number of Ordinary Shares on the trading venue where the purchase is carried out; and unless renewed, the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company in 2022 save that the Company may, prior to such expiry, enter into a contract to purchase Ordinary Shares under the authority hereby conferred and may make a purchase of Ordinary Shares pursuant to any such contract notwithstanding such expiry. 14. That the amended Articles as set out in the printed document produced to the meeting and marked ‘A’ (and for the purposes of identification initialled by the Chairman of the meeting) be hereby approved and adopted as the Articles of Association of the Company in substitution for, and to the exclusion of, all existing Articles of Association. By order of the Board SARAH BEYNSBERGER For and on behalf of BlackRock Investment Management (UK) Limited Company Secretary 4 February 2021 Registered Office: 12 Throgmorton Avenue London EC2N 2DL All Shares purchased pursuant to the above authority shall be either: (a) cancelled immediately on completion of the purchase; or (b) held, sold, transferred or otherwise dealt with as treasury shares in accordance with the provisions of the Act. Section 6: Notice of annual general meeting 139 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Notice of annual general meeting continued Notes: 1. 2. 3. 4. 5. 6. Given the risks posed by the spread of COVID-19 and in accordance with the provisions of the Articles of Association and Government guidance, attendance at the Annual General Meeting (‘AGM’) is unlikely to be possible for shareholders. At the date of posting of this AGM Notice, given the ongoing uncertainty about the course of COVID-19 and due to ongoing public health concerns, the Board intends to limit physical attendance at the AGM only to Directors or their proxies and representatives from BlackRock. The Board will ensure that the minimum quorum is present to allow the formal business to proceed. If law or Government guidance so requires at the time of the Meeting, the Chairman of the Meeting will limit, in his sole discretion, the number of individuals in attendance at the Meeting. Should the Government guidance change and the current restrictions on group gatherings be relaxed by the time of the meeting, the Company may still impose entry restrictions on certain persons wishing to attend the AGM in order to secure the orderly and proper conduct of the Meeting. A member entitled to attend and vote at the meeting convened by the above Notice is also entitled to appoint one or more proxies to exercise all or any of the rights of the member to attend, speak and vote in his place. A proxy need not be a member of the Company. If a member appoints more than one proxy to attend the meeting, each proxy must be appointed to exercise the rights attached to a different share or shares held by the member. To appoint a proxy you may use the Form of Proxy enclosed with this Notice of Annual General Meeting. To be valid, the Form of Proxy, together with the power of attorney or other authority (if any) under which it is signed or a notarially certified or office copy of the same, must be completed and returned to the office of the Company’s registrar in accordance with the instructions thereon as soon as possible and in any event by not later than 10.00 a.m. on 12 March 2021 (Saturdays, Sundays and public holidays excepted). Amended instructions must also be received by the Company’s registrar by the deadline for receipt of forms of proxy. Alternatively you can vote or appoint a proxy electronically by visiting eproxyappointment.com. You will be asked to enter the Control Number, the Shareholder Reference Number and PIN which are printed on the Form of Proxy. The latest time for the submission of proxy votes electronically is 10.00 a.m. on 12 March 2021 (Saturdays, Sundays and public holidays excepted). Proxymity Voting – if you are an institutional investor you may also be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to www.proxymity.io. Your proxy must be lodged by 10.00 a.m. on 12 March 2021 in order to be considered valid. Before you can appoint a proxy via this process you will need to have agreed to Proxymity’s associated terms and conditions. It is important that you read these carefully as you will be bound by them and they will govern the electronic appointment of your proxy. Completion and return of the Form of Proxy will not prevent a member from attending the meeting and voting in person. Any person receiving a copy of this Notice as a person nominated by a member to enjoy information rights under section 146 of the Companies Act 2006 (a Nominated Person) should note that the provisions in Notes 1 and 2 above concerning the appointment of a proxy or proxies to attend the meeting in place of a member, do not apply to a Nominated Person as only ordinary shareholders have the right to appoint a proxy. However, a Nominated Person may have a right under an agreement between the Nominated Person and the member by whom he or she was nominated to be appointed, or to have someone else appointed, as proxy 7. 8. for the meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may have a right under such agreement to give instructions to the member as to the exercise of voting rights at the meeting. Nominated Persons should also remember that their main point of contact in terms of their investment in the Company remains the member who nominated the Nominated Person to enjoy the information rights (or perhaps the custodian or broker who administers the investment on their behalf). Nominated Persons should continue to contact that member, custodian or broker (and not the Company) regarding any changes or queries relating to the Nominated Person’s personal details and interest in the Company (including any administrative matter). The only exception to this is where the Company expressly requests a response from the Nominated Person. Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, only ordinary shareholders registered in the register of members of the Company by not later than 6.00 p.m. two days prior to the time fixed for the meeting shall be entitled to attend and vote at the meeting in respect of the number of ordinary shares registered in their name at such time. If the meeting is adjourned, the time by which a person must be entered on the register of members of the Company in order to have the right to attend and vote at the adjourned meeting is 6.00 p.m. two days prior to the time of adjournment. Changes to the register of members after the relevant times shall be disregarded in determining the rights of any person to attend and vote at the meeting. 9. In the case of joint holders, the vote of the senior holder who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders and, for this purpose, seniority will be determined by the order in which the names stand in the register of members of the Company in respect of the relevant joint holding. 10. Shareholders who hold their ordinary shares electronically may submit their votes through CREST, by submitting the appropriate and authenticated CREST message so as to be received by the Company’s registrar not later than 48 hours before the start of the meeting (excluding non-working days). Instructions on how to vote through CREST can be found by accessing the following website: euroclear.com/CREST. Shareholders are advised that CREST and the internet are the only methods by which completed proxies can be submitted electronically. 11. If you are a CREST system user (including a CREST personal member) you can appoint one or more proxies or give an instruction to a proxy by having an appropriate CREST message transmitted. To appoint one or more proxies or to give an instruction to a proxy (whether previously appointed or otherwise) via the CREST system, CREST messages must be received by Computershare (ID number 3RA50) not later than 48 hours before the time appointed for holding the meeting (excluding non-working days). For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp generated by the CREST system) from which Computershare is able to retrieve the message. CREST personal members or other CREST sponsored members should contact their CREST sponsor for assistance with appointing proxies via CREST. For further information on CREST procedures, limitations and system timings please refer to the CREST manual. The Company may treat as invalid a proxy appointment sent by CREST in the circumstances set out in Regulation 35(5)(a) of The Uncertificated Securities Regulations 2001. 12. If the Chairman, as a result of any proxy appointments, is given discretion as to how the votes subject of those proxies are cast and the voting rights in respect of those discretionary proxies, when added to the interest in the Company’s securities already held by the Chairman, result 140 BlackRock Energy and Resources Income Trust plc l Annual Report and Financial Statements 30 November 2020 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600(a) (in the case of a resolution only) it would, if passed, be ineffective (whether by reason of inconsistency with any enactment or the Company’s constitution or otherwise); (b) it is defamatory of any person; or (c) it is frivolous or vexatious. Such a request may be in hard copy form or in electronic form, and must identify the resolution of which notice is to be given or the matter to be included in the business, must be authorised by the person or persons making it, must be received by the Company not later than on 2 February 2021, being the date six clear weeks before the meeting, and (in the case of a matter to be included in the business only) must be accompanied by a statement setting out the grounds for the request. 17. As at 4 February 2021 (being the last practicable date prior to the publication of this Notice of Annual General Meeting), the Company’s issued share capital (excluding 5,495,651 treasury shares) consisted of 113,470,349 ordinary shares of 1p each. Each ordinary share carries the right to one vote and therefore the total voting rights in the Company as at the date of this report are 113,470,349. 18. Further information regarding the meeting which the Company is required by section 311A of the Companies Act 2006 to publish on a website in advance of the meeting (including this Notice), can be accessed at blackrock.com/uk/beri. 19. No service contracts exist between the Company and any of the Directors, who hold office in accordance with letters of appointment and the Articles of Association. in the Chairman holding such number of voting rights that he has a notifiable obligation under the Disclosure Guidance and Transparency Rules, the Chairman will make the necessary notifications to the Company and the Financial Conduct Authority. As a result, any member holding 3% or more of the voting rights in the Company, who grants the Chairman a discretionary proxy in respect of some or all of those voting rights and so would otherwise have a notification obligation under the Disclosure Guidance and Transparency Rules, need not make a separate notification to the Company and the Financial Conduct Authority. 13. Any questions relevant to the business of the meeting may be asked at the meeting by anyone permitted to speak at the meeting. A shareholder may alternatively submit a question in advance by a letter addressed to the Company Secretary at the Company’s registered office. Under section 319A of the Companies Act 2006, the Company must answer any question a shareholder asks relating to the business being dealt with at the meeting, unless (i) answering the question would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information; (ii) the answer had already been given on a website in the form of an answer to a question; or (iii) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered. 14. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided that, if it is appointing more than one corporate representative, it does not do so in relation to the same shares. It is therefore no longer necessary to nominate a designated corporate representative. 15. Under section 527 of the Companies Act 2006, members meeting the threshold requirements set out in that section have the right to require the Company to publish on a website a statement setting out any matter relating to: (i) the audit of the Company’s accounts (including the Auditor’s report and the conduct of the audit) that are laid before the meeting; or (ii) any circumstance connected with an auditor of the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in accordance with section 437 of the Companies Act 2006. The Company may not require the members requesting such website publication to pay its expenses in complying with sections 527 or 528 of the Companies Act 2006. Where the Company is required to place a statement on a website under section 527 of the Companies Act 2006, it must forward the statement to the Company’s Auditor not later than the time when it makes the statement available on the website. The business which may be dealt with at the meeting includes any statement that the Company has been required under section 527 of the Companies Act 2006 to publish on a website. 16. Under sections 338 and 338A of the Companies Act 2006, members meeting the threshold requirements in those sections have the right to require the Company: (i) to give, to members of the Company entitled to receive notice of the meeting, notice of a resolution which may properly be moved and is intended to be moved at the meeting; and/or (ii) to include in the business to be dealt with at the meeting any matter (other than a proposed resolution) which may be properly included in the business. A resolution may properly be moved or a matter may properly be included in the business unless: Section 6: Notice of annual general meeting 141 Job No: 43774Proof Event: 18Black Line Level: 2Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 Share fraud warning Be ScamSmart Investment scams are designed to look like genuine investments Spot the warning signs Have you been: • contacted out of the blue • promised tempting returns and told the investment is safe • called repeatedly, or • told the offer is only available for a limited time? If so, you might have been contacted by fraudsters. Avoid investment fraud Report a scam 1 2 3 Reject cold calls If you’ve received unsolicited contact about an investment opportunity, chances are it’s a high risk investment or a scam. You should treat the call with extreme caution. The safest thing to do is to hang up. Check the FCA Warning List The FCA Warning List is a list of firms and individuals we know are operating without our authorisation. Get impartial advice you hand over any money. Seek advice from someone If you suspect that you have been approached by fraudsters please tell the FCA using the reporting form at www.fca.org.uk/consumers. You can also call the FCA Consumer Helpline on 0800 111 6768 If you have lost money to investment fraud, you should report it to Action Fraud on 0300 123 2040 or online at www.actionfraud.police.uk Find out more at www.fca.org.uk/scamsmart Remember: if it sounds too good to be true, it probably is! SGN001 Job No: 43268 Customer: BlackRock Proof Event: 9 Black Line Level: 0 Park Communications Ltd Alpine Way London E6 6LA Project Title: Greater Europe Annual Rpt 2020 T: 0207 055 6500 F: 020 7055 6600 B l a c k R o c k E n e r g y a n d R e s o u r c e s I n c o m e T r u s t p l c A n n u a l R e p o r t a n d F n a n c i a i l S t a t e m e n t s 3 0 N o v e m b e r 2 0 2 0 blackrock.com/uk/beri Job No: 43774Proof Event: 11Black Line Level: 0Park Communications Ltd Alpine Way London E6 6LACustomer: BlackRockProject Title: BERI Annual Rpt 2020T: 0207 055 6500 F: 020 7055 6600 

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