September 28, 2017 - 5:30 AM EDT
Print Email Article Font Down Font Up
BlackRock Emerging Europe Plc - Half-year Report

BlackRock Emerging Europe plc

Half Yearly Financial Results Announcement for the Six Months ended 31 July 2017

FINANCIAL HIGHLIGHTS
 



Attributable to ordinary shareholders 
As at 
31 July 2017 
(unaudited) 
As at 
31 January 2017 
(audited) 

Change 
US dollar
Net assets (US$'000) 165,552  154,951  6.8 
Net asset value per ordinary share (US$ cents) 460.94c  431.28c  6.9 
– with income reinvested 8.6 
MSCI Emerging Europe 10-40 Index (net return)1 434.23  404.84  7.3 
Ordinary share price (mid-market)2 427.33c  378.06c  13.0 
– with income reinvested 15.0 
 --------   --------   -------- 
Sterling
Net assets (£’000)2 125,570  123,163  2.0 
Net asset value per ordinary share2 349.62p  342.80p  2.0 
– with income reinvested 3.7 
MSCI Emerging Europe 10-40 Index (net return)1 329.37  321.79  2.4 
Ordinary share price (mid-market)2 324.13p  300.50p  7.9 
– with income reinvested 9.8 
 --------   --------   -------- 
Discount to net asset value 7.3%  12.3% 
 --------   --------   -------- 
Gross market exposure3 99.2%  103.1% 
 =======   =======   ======= 

Sources: BlackRock and Datastream.

1    Net return indices calculate the reinvestment of dividends net of withholding taxes using the tax rates applicable to institutional investors who are not resident in the local market.
2    Based on a £:US$ exchange rate of 1.3184 (31 January 2017: 1.2581).
3    Long positions plus short positions as a percentage of net assets.

For the six 
months 
ended 
31 July 2017 
(unaudited) 
For the six 
months 
ended 
31 July 2016 
(unaudited) 



Change 
Revenue
Net revenue after taxation (US$’000) 4,854  2,341  107.3 
Revenue return per ordinary share 13.51c  6.47c  108.8 
 ========   ========   ======== 

Source: BlackRock.

CHAIRMAN’S STATEMENT
for the six months ended 31 July 2017

MARKET OVERVIEW
The Company has made good progress in the period under review. Greece in particular performed very strongly on the back of a successful resolution to discussions on its third bailout and its return as a borrower to the international bond markets. Turkey also performed well, as the referendum on constitutional change removed some of the political uncertainty, allowing investors to focus on the improving economic and earnings outlook. Despite an improving economy, returns in Russia lagged those of the wider region, principally due to the likelihood of a continuation of US sanctions, which some had hoped might be reduced under the new US administration. Elsewhere in the region Hungary, Poland and the Czech Republic also performed strongly on the back of expectations of an improving global growth outlook.

PERFORMANCE
The Company’s net asset value (“NAV”) returned 8.6% and the share price 15.0% in US dollar terms (3.7% and 9.8% respectively in sterling terms). The MSCI Emerging Europe 10-40 Index returned 7.3% and 2.4% in US dollar and sterling terms. Since the appointment of BlackRock as investment manager on 1 May 2009 the Company’s NAV has increased by 92.7% in US dollar terms and 116.5% in sterling terms, compared with the benchmark returns of 48.9% and 67.4% respectively (all percentages with income reinvested).

Details of the factors which have contributed to performance are set out in the Investment Manager’s Report.

Since the period end and up until the close of business on 26 September 2017 the Company’s NAV has increased by 5.5% in US dollar terms and increased by 3.6% in sterling terms compared with an increase in the benchmark of 4.5% in US dollar terms and an increase of 2.7% in sterling terms (all percentages with income reinvested).

EARNINGS
In the six months to 31 July 2017, revenue earnings per share were 13.51 cents (31 July 2016:6.47 cents) reflecting, inter alia, the portfolio’s increased exposure to higher yielding Russian companies. It is expected that the Company will pay a dividend based on the net revenue generated by the portfolio in respect of the year ended 31 January 2018.

PERIODIC OPPORTUNITIES FOR RETURN OF CAPTIAL
Shareholders should note that it was agreed in June 2013 that, prior to 21 June 2018, the Board would formulate and submit proposals (which may constitute a tender offer and/or other method of distribution) to provide shareholders with an opportunity to realise the value of their investment in the Company at NAV less applicable costs.

As we approach June 2018 your Board has been considering several different options for the future of the Company. Clearly we will be seeking the support of shareholders for any proposals that we make and an announcement will be made once the Board has completed its deliberations.

DISCOUNT TO NAV
The Board operates a discount control policy to manage the discount within a 10% target. Our ability to do this is driven by several factors including fund performance, the periodic opportunity to realise value at close to NAV, an interim performance based tender offer and intermittent share buybacks, where shares are seen as overhanging the market. I am pleased to report that the combination of these factors has seen our discount narrow substantially during the period, not least driven by the Company’s performance. We have demonstrated consistent outperformance of both our benchmark index and the Morningstar peer group over one year, three years and since BlackRock started managing the portfolio in 2009*. Our discount as at close of business on 26 September 2017 was 5.5% which compares favourably with the averages achieved in our sector.

SHARE BUYBACKS
During the period under review, the Company repurchased 11,800 ordinary shares at an average price of 311.13p and at an average discount to NAV of 10.6% and a total cost of £37,000 including stamp duty and commission. No further shares have been repurchased since the period end up to close of business on 26 September 2017.

OUTLOOK
Whilst many commentators are concerned that the major developed markets are now at – or approaching – their all-time peaks, Emerging European equity markets stand out as a rare value opportunity. Indeed, even after the strong gains of the last eighteen months, the index is still 40% below its pre-crisis peak and the portfolio managers refer to a ‘lost decade’ of performance. We believe that Emerging Europe will continue to benefit from economic recovery and that the attractive valuations provide compelling opportunities for investors in our region. Your Board therefore view the outlook for the region with considerable confidence.

Neil England
28 September 2017

*periods to 31 August 2017.

INTERIM MANAGEMENT REPORT AND RESPONSIBILITY STATEMENT

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

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

  • Counterparty risk;

  • Investment performance risk;

  • Legal & compliance risk;

  • Operational risk;

  • Market risk (including political risk);

  • Financial risk; and

  • Marketing risk.

The Board reported on the principal risks and uncertainties faced by the Company in the Annual Report and Financial Statements for the year ended 31 January 2017. A detailed explanation can be found on pages 9 to 11 and in note 18 on pages 56 to 66 of the Annual Report and Financial Statements which are available on the website maintained by BlackRock, at www.blackrock.co.uk/beep.

In the view of the Board, there have not been any changes to the fundamental nature of these risks since the previous report and these principal risks and uncertainties are equally applicable to the remaining six months of the financial year as they were to the six months under review.

GOING CONCERN
The Board will submit proposals at a General Meeting immediately following the Company’s Annual General Meeting in June 2018 whereby shareholders will have the opportunity to realise the value of their investment in the Company at NAV less applicable costs. As at the date of this report, the voting intentions of the majority of shareholders are not known and will be further influenced by events leading up to the proposals being presented.

Given that the outcome of the proposals to be put to shareholders is uncertain, the Directors are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future and is financially sound. For this reason they continue to adopt the going concern basis in preparing the financial statements. The Company has a portfolio of investments which are considered to be readily realisable and is able to meet all of its liabilities from its assets and income generated from these assets. Ongoing charges (excluding finance costs and taxation) for the year ended 31 January 2017 were approximately 1.2% of net assets.

RELATED PARTY DISCLOSURE AND TRANSACTIONS WITH THE INVESTMENT MANAGER
BlackRock Fund Managers Limited (BFM) was appointed as the Company’s AIFM with effect from 2 July 2014. BFM has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services, to BlackRock Investment Management (UK) Limited (BIM (UK)). Both BFM and BIM (UK) are regarded as related parties under the Listing Rules. Details of the management fees payable are set out in note 4 and note 12.

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

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

The Directors confirm to the best of their knowledge that:

  • the condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with the Financial Reporting Council’s Standard, FRS 104 ‘Interim Financial Reporting’; and

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

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

The half yearly financial report was approved by the Board on 28 September 2017 and the above responsibility statement was signed on its behalf by the Chairman.

Neil England
For and on behalf of the Board
28 September 2017

INVESTMENT MANAGER’S REPORT

MARKET REVIEW
In the six months to 31 July 2017, the MSCI Emerging Europe 10-40 Index gained 7.3% in US dollar terms and 2.4% in sterling terms (all percentages with income reinvested).

Greece and Turkey were the main drivers of performance, while Russia was the largest detractor in the region over the period.

Greece experienced a strong rally of +41.9% in US dollar terms over the 6 months as progress was made on the second review of the country’s third bailout. Greece agreed a deal with its creditors and enacted the necessary reforms enabling it to receive the next €8.5bn tranche of its bailout. Moreover, the successful conclusion allowed Greece to return to the bond markets for the first time since 2014. The 5 year Euro bonds were priced to yield 4.625%, below the initial guidance of 4.875% on the back of high demand. Moody’s upgraded Greece’s credit rating to Caa2 with a positive outlook and S&P raised Greece’s sovereign credit-rating outlook to positive from stable.

Turkey returned +36.1% in US dollar terms over the period. The constitutional referendum in April alleviated investor concerns regarding political uncertainty. The ‘Yes’ vote won the referendum with 51.4% of the vote to change Turkey from a parliamentary democracy into a presidential republic, cementing Erdogan’s leadership position. With political clarity restored, the markets focused on the improving economy and significant growth in earnings, lifting the market higher.

In the Central and Eastern European region, Hungary (+22.9%), Poland (+29.5%) and the Czech Republic (+21.7%) (all in US dollar terms) also joined in the rally in the period, reacting positively to rising global reflation expectations. These economies performed well with accelerating wage growth, unemployment at multi-decade lows, and a pickup in investment spending. The mix of rising consumer confidence coupled with higher inflation should allow the regional banks to recover from the damaging effects of years of low interest rates.

Russia was the regional laggard, falling by 9.9% in US dollar terms over the period. The market’s initial excitement that the incoming Trump administration might lift sanctions against Russia was met with disappointment, culminating in the US Congress passing a bill to impose incremental sanctions and to codify the existing sanctions, thus ensuring that President Trump wouldn’t be able to remove sanctions without the approval of Congress. Despite this disappointment, the Russian economy continued to recover with expanded industrial production numbers, solid wage growth and credit impulse (change in net new credit issued as % of GDP over last four quarters) turning positive. The period also witnessed inflation falling rapidly and reaching the Central Bank of Russia’s target of 4% faster than expected, allowing the bank to reduce interest rates and bring down the cost of borrowing.

PERFORMANCE REVIEW
The Company delivered +8.6% in US dollar terms (3.7% in sterling terms) for the six month period ending 31 July 2017, which outperformed the MSCI Emerging Europe 10-40 Index by +1.3% in US dollar terms (1.3% in sterling terms) over the same time period.

Once again, our off-benchmark stocks provided the largest contribution to performance. In Russia, our off-benchmark position in Mail.Ru (+51.6% in US dollar terms), Russia’s leading social network, contributed positively. Mail.Ru reported strong results as investors gained confidence in management’s ability to put adjacent businesses (Youla, Delivery Club) onto the social networking platform. Also off-benchmark in Russia, Globaltrans (+33.2% in US dollar terms), the leading private freight rail transportation company, continued to benefit from rising transportation tariffs in Russia.

In Turkey, Turk Hava Yollari performed strongly on the back of improving passenger numbers and higher margins, driving positive EPS revisions. We also made profits in our overweight in Turkish oil refiner, Tupras, supported by improving refining margins.

In Greece, our overweight positions in banks, National Bank of Greece and Alpha Bank, benefited from the successful completion of the Second Review and the fall in Greek bond yields. Greek gaming company, OPAP (Greek Organisation of Football Prognostics), also performed well and we took profits as the company reached our target price.

The main detractors from performance were in Poland and Russia. In Poland, an underweight in the refining sector, hurt relative returns. In addition, our off-benchmark positioning in Griffin Real Estate detracted as the stock continued to underperform post its IPO, though we maintain conviction in the company given attractive valuations. In Russia, the sanctions news hurt our holdings in Rosneft Oil Company and Novatek.

OUTLOOK
Emerging Europe is just beginning to leave behind a lost decade of performance. The strong gains of 2016 and the first six months of 2017 still leave the index more than 40% below its pre-crisis peak. Compared to the US S&P which is more than 55% above its pre-crisis peak, we believe that Emerging Europe continues to provide a fertile ground to deliver further returns. Emerging Europe valuations are still below historical trends, investor positioning remains light and the region has the potential to benefit from several positive developments. The equities trade on less than half the multiple of its developed peers, despite having higher dividend yields, growing earnings and strong free cash flows.

In the Central European economies of Poland, Czech Republic and Hungary, inflationary pressures continue to build, giving the potential for the region’s banking sector to break away from the destructive low rate environment. After several years of inflation rates being around zero and in some cases negative, we are seeing inflation returning to these countries on the back of accelerated wage growth, lower levels of unemployment and increased investment spending in the region. In particular, banks present an investment opportunity in our view given their sensitivity to a rise in interest rates.

In Greece, we have seen successful progress made on the second review of the country’s third bailout. Greece has just been able to access the financial markets for the first time in several years, which we feel will unlock significant pent-up investment demand into the country. The Greek financial sector is still much cheaper than its peers, reflecting its recent difficulties and provides room for substantial improvement if the situation normalises. Furthermore, the recent successful conclusion of the Second Bailout Review may eventually lead to the subsequent admission of Greek bonds into the ECB quantitative easing program, providing the government with a lower cost of debt and reassuring investors. This coupled with an acceleration of GDP growth should prove to be just what the banks need to leave behind any questions on solvency.

In Russia, the sanctions noise has proved a headwind, however the positive monetary and fiscal policies are continuing. With the economy in good shape, improving consumer sentiment and record low inflation, there is room for interest rates to be cut, further aiding the economic recovery. Valuations are low, dividend yields are high and the potential remains for the market to re-rate on lower interest rates.

Finally, Turkey remains a trading market prone to fits of exuberance and excessive pessimism. The economy has been normalizing and we expect further improvement in tourism trends. The expectations of falling interest rates coupled with the government’s Credit Guarantee Fund are supporting the market, specifically the financial sector. However, the challenging political backdrop coupled with the spectre of tighter global liquidity constrains the upside in our view.

Taken together, we believe that the economic recovery of the region, the uncorrelated equity returns of the different regional markets, the attractive valuations supported by high dividend yields, and the lost decade of performance yet to be recovered, continue to make the Emerging European equities an attractive opportunity for investors.

Sam Vecht and Christopher Colunga
BlackRock Investment Management (UK) Limited

28 September 2017

PORTFOLIO ANALYSIS
as at 31 July 2017






Russia 





Turkey 





Poland 





Greece 





Ukraine 





Other 
 

Net 
current 
assets/
(liabilities) 



Net 
assets 
31.07.17 



Net 
assets 
31.01.17 

MSCI EM 
Europe 
10-40 
Index 
31.07.17 
Consumer Discretionary  –   –   –  –   –   –   –   –  2.3  4.6 
 --------   --------   --------   --------   --------   --------   --------   --------   --------   -------- 
Consumer Staples 4.2  2.1   –   –  2.6   –   –  8.9  4.8  6.1 
 --------   --------   --------   --------   --------   --------   --------   --------   --------   -------- 
Energy 26.7  2.5  (1.9)  –  –   –   –  27.3  25.3  30.0 
 --------   --------   --------   --------   --------   --------   --------   --------   --------   -------- 
Financials 9.7  3.3  7.6  7.2  –  –   –  27.8  41.9  36.8 
 --------   --------   --------   --------   --------   --------   --------   --------   --------   -------- 
Health Care 2.5   –   –   –  –   –   –  2.5  3.2  1.1 
 --------   --------   --------   --------   --------   --------   --------   --------   --------   -------- 
Industrials 3.6  4.2   –   –  –   –   –  7.8  6.9  2.6 
 --------   --------   --------   --------   --------   --------   --------   --------   --------   -------- 
Information Technology 2.6   –  –   –  2.5  –   –  5.1  5.4   – 
 --------   --------   --------   --------   --------   --------   --------   --------   --------   -------- 
Materials 2.7  2.3  –   –  –   –   –  5.0  7.4  10.3 
 --------   --------   --------   --------   --------   --------   --------   --------   --------   -------- 
Telecommunication Services 5.3  2.9   –   –  –   –   –  8.2  3.0  4.8 
 --------   --------   --------   --------   --------   --------   --------   --------   --------   -------- 
Real Estate –  –  2.9   –  –   –   –  2.9  –  0.5 
 --------   --------   --------   --------   --------   --------   --------   --------   --------   -------- 
Utilities –   –   –   –  –   –   –  –  2.9  3.2 
 --------   --------   --------   --------   --------   --------   --------   --------   --------   -------- 
Other  –   –   –   –  –  –  4.5  4.5  (3.1) – 
 --------   --------   --------   --------   --------   --------   --------   --------   --------   -------- 
% net assets 31.07.17 57.3  17.3  8.6  7.2  5.1   –  4.5  100.0   –   – 
 --------   --------   --------   --------   --------   --------   --------   --------   --------   -------- 
% net assets 31.01.17 48.1  23.5  9.0  7.2  8.8  6.5  (3.1)  –   100.0   – 
 --------   --------   --------   --------   --------   --------   --------   --------   --------   -------- 
% MSCI EM Europe
10-40 Index 31.07.17
47.7  18.4  20.2  5.8  –  7.9   –   –   –   100.0 
 ========   ========   ========   ========   ========   ========   ========   ========   ========   ======== 

The table above shows the analysis of the net assets as at 31 July 2017 by sector and region, compared with the net assets as at 31 January 2017 and the MSCI EM Europe 10-40 Index breakdown as at 31 July 2017.

FIFTEEN LARGEST INVESTMENTS
as at 31 July 2017

Gazprom – 10.4% (2017: 9.0%) is Russia’s largest gas producer and transporter, with a pipeline export monopoly. Despite its status as one of the most profitable companies in the region, the Russian energy giant has been out of favour with investors. We believe that the risks to Gazprom are more than priced into the valuation and the company pays an attractive dividend yield.

Sberbank – 9.7% (2017: 10.4%) is Russia’s largest bank, state-owned. It has branches throughout the country and a 46% share in the retail deposit market. The bank continues to build on its restructuring strategy which has driven much of its success over the past few years, improving its services and the efficiency with which they are delivered.

Novatek – 6.7% (2017: 6.4%) is Russia’s largest independent natural gas producer. The company is set to enter a new phase of growth through its Yamal LNG project, whilst the capital expenditure burden for the company is set to become much lighter, allowing the company to generate increasing amounts of free cash flow.

Lukoil – 5.2% (2017: 6.0%) was formed in 1991 following the merger of three state-run companies in western Siberia. The three companies were called Langepasneftegaz, Urayneftegaz, and Kogalymneftegaz and this heritage is preserved in the company’s current name. Today, the company is the largest privately-owned company by proved oil reserves. Lukoil is a highly competitive oil producer even at current low oil prices and generates significant free cash flow.

PKO Bank Polski – 4.6% (2017: 3.8%) is Poland’s largest bank. PKO has one of the strongest deposit franchises in the country, meaning it has a structurally lower cost of funding than its peers. The bank trades at attractive valuations relative to other Polish banks.

Rosneft Oil Company – 4.4% (2017: nil) is the leader of Russia’s petroleum industry include exploration, production, and refining. The company has been undergoing a restructuring phase, increasing efficiency, acquiring new assets within Russia and abroad, whilst disposing of stakes in mature fields. The production growth profile coupled with improving cash flow make the company attractive.

Lenta – 4.2% (2017: nil) is one of the largest retail chains in Russia and the country’s largest hypermarket chain founded in 1993 in St. Petersburg. Lenta operates 195 hypermarkets in 78 cities across Russia and 59 supermarkets in the Moscow, St. Petersburg, Novosibirsk and the Central region with a total of approximately 1,173,416 sq.m. of selling space. The company continues to grow its business, should benefit from improved consumer spending on the back of macro recovery with its stock trading at attractive valuations.

National Bank of Greece – 4.2% (2017: 2.5%) is a leading banking and financial services company in Greece. It has one of the strongest capital bases in the country and has been showing steady improvement in the quality of its loan book.

Turk Hava Yollari – 4.2% (2017: 2.7%) is the national carrier of Turkey with its headquarters in Istanbul. Leveraging its geographic location as a transit hub between Europe, Asia and Africa, the company has managed to grow its fleet of aircraft to over 300 and is one of the largest airlines in the world as measured by destinations served – reaching over 100 countries globally. We hold the stock on the expectation of improving margins and increasing passenger volumes.

Globaltrans – 3.6% (2017: 4.2%) is a leading freight rail transportation group with operations in Russia, the CIS and the Baltic countries. The company provides services to more than 500 customers and its key customers include companies in, or suppliers to, a number of large Russian industrial groups in the metals and mining and the oil products and oil sectors.

Mobile Telesystems (MTS) – 3.5% (2017: nil) is the largest mobile operator in Russia and CIS. The company provides mobile and fixed line voice and data telecommunications services, including data transfer, broadband, pay-television and various value-added services, as well as selling equipment and accessories. The industry has improving competitive dynamics and the stock pays an attractive dividend yield.

TSKB – 3.3% (2017: 2.3%) is a Turkish development bank which focuses on lending to infrastructure projects. The bank’s high-margin, stable revenue projects combined with their long funding maturities mean that TSKB has one of the most sustainable earnings streams in the Turkish banking sector.

PZU – 3.0% (2017: 3.8%) is Poland’s largest insurance company, active in both the life and non-life segments for over 16m customers. Its scale and unparalleled distribution network – both through direct sales and 12 thousand agents – provide a strong competitive advantage that enables the company to generate attractive returns.

Alpha Bank – 3.0% (2017: 2.5%) is the fourth largest Greek bank by total assets, and the largest by market capitalization. The bank offers a wide range of high-quality financial products and services, including retail banking, SMEs and corporate banking, asset management and private banking, the distribution of insurance products, investment banking, brokerage and real estate management.

Turkcell – 2.9% (2017: 3.0%) is the leading mobile phone operator in Turkey with a dominant market share position. Improved industry dynamics coupled with recent regulatory changes led us to believe that earnings had troughed.

All percentages reflect the value of the holding as a percentage of net assets. Percentage in brackets represents the value of the holding at 31 January 2017. Together, the fifteen largest investments represents 72.9% of net assets (31 January 2017: 72.9%).

INVESTMENTS
as at 31 July 2017


Country of 
operation 
Market value/
exposure 
US$’000 

% of 
net assets 
Financials
Sberbank Russia  16,018  9.7% 
PKO Bank Polski Poland  7,651  4.6% 
National Bank of Greece Greece  7,026  4.2% 
TSKB Turkey  5,479  3.3% 
PZU Poland  5,046  3.0% 
Alpha Bank Greece  4,886  3.0% 
Aviva Emeklilik ve Hayat Turkey  –  0.0% 
 --------   -------- 
46,106  27.8% 
 --------   -------- 
Energy
Gazprom Russia  17,159  10.4% 
Novatek Russia  11,090  6.7% 
Lukoil Russia  8,621  5.2% 
Rosneft Oil Company Russia  7,310  4.4% 
Tupras Turkey  4,242  2.5% 
Short CFD Position Poland  (3,145) (1.9%)
 --------   -------- 
45,277  27.3% 
 --------   -------- 
Consumer Staples
Lenta Russia  7,050  4.2% 
MHP Ukraine  4,260  2.6% 
Coca Cola Icecek Turkey  3,486  2.1% 
--------  --------
14,796  8.9% 
 --------   -------- 
Telecommunication Services
Mobile Telesystems (MTS) Russia  5,824  3.5% 
Turkcell Turkey  4,790  2.9% 
Sistema Russia  2,901  1.8% 
 --------   -------- 
13,515  8.2% 
 --------   -------- 
Industrials
Turk Hava Yollari Turkey  6,847  4.2% 
Globaltrans Russia  5,989  3.6% 
 --------   -------- 
12,836  7.8% 
 --------   -------- 
Information Technology
Mail.Ru Russia  4,219  2.6% 
Luxoft Ukraine  4,170  2.5% 
 --------   -------- 
8,389  5.1% 
 --------   -------- 
Materials
Norilsk Nickel Russia  4,408  2.7% 
Eldorado Gold Turkey  3,848  2.3% 
 --------   -------- 
8,256  5.0% 
 --------   -------- 
Real Estate
Long CFD Position – Griffin Premium Poland  4,766  2.9% 
 --------   -------- 
4,766  2.9% 
 --------   -------- 
Health Care
MD Medical Group Russia  4,070  2.5% 
 --------   -------- 
4,070  2.5% 
 --------   -------- 
Total investments – gross exposure 158,011  95.5% 
 --------   -------- 
Less: net exposure on CFDs (1,621) (1.0%)
 --------   -------- 
Equity investments held at fair value 156,390  94.5% 
Net current assets 9,181  5.5% 
Preference shares (19) 0.0% 
 --------   -------- 
Net assets 165,552  100.0% 
 --------   -------- 
Long positions 161,156  97.3% 
Short positions 3,145  1.9% 
 --------   -------- 
Gross positions 164,301  99.2% 
 ========   ======== 

The total number of investments (excluding CFD positions) held at 31 July 2017 was 25 (31 January 2017: 29). All investments are in equity shares unless otherwise stated.

During the period, the Company entered into CFDs to gain long and short exposure on individual securities. At the period end, one short CFD was outstanding (31 January 2017: nil) with a fair value profit of US$56,000 (31 January 2017: US$nil) and an underlying market value of US$3,145,000 (31 January 2017: US$nil). In addition, one long CFD position was held (31 January 2017: one) with a net fair value profit of US$24,000 (31 January 2017: US$71,000) and an underlying market value of US$4,766,000 (31 January 2017: US$2,680,000).

INCOME STATEMENT
for the six months ended 31 July 2017

Revenue US$’000 Capital US$’000 Total US$’000




Notes
Six
months
ended
31.07.17 
(unaudited) 
Six
months
ended 31.07.16 
(unaudited) 

Year 
ended 
31.01.17 
(audited) 
Six
months
ended
31.07.17 
(unaudited) 
Six
months
ended 31.07.16 
(unaudited) 

Year 
ended 
31.01.17 
(audited) 
Six
months
ended
31.07.17 
(unaudited) 
Six
months
ended 31.07.16 
(unaudited) 

Year 
ended 
31.01.17 
(audited) 
Gains on investments held at fair value through profit or loss –  –  –  9,364  17,682  40,597  9,364  17,682  40,597 
Gains on foreign exchange –  –  –  38  171  38  171 
Income from investments held at fair value through profit or loss 5,987  2,998  3,921  –  –  –  5,987  2,998  3,921 
(Losses)/gains on contracts for difference (93) 56  47  (347) 32  302  (440) 88  349 
Other income 20  –  –  –  20 
    --------   --------   --------   --------   --------   --------   --------   --------   -------- 
Total income 5,897  3,055  3,988  9,023  17,752  41,070  14,920  20,807  45,058 
    --------   --------   --------   --------   --------   --------   --------   --------   -------- 
Expenses
Investment management fees (204) (167) (337) (475) (391) (785) (679) (558) (1,122)
Other operating expenses (168) (201) (502) (40) (60) (76) (208) (261) (578)
    --------   --------   --------   --------   --------   --------   --------   --------   -------- 
Total operating expenses (372) (368) (839) (515) (451) (861) (887) (819) (1,700)
    --------   --------   --------   --------   --------   --------   --------   --------   -------- 
Net profit on ordinary activities before finance costs and taxation 5,525  2,687  3,149  8,508  17,301  40,209  14,033  19,988  43,358 
Finance costs (9) (13) (16) (21) (31) (37) (30) (44) (53)
    --------   --------   --------   --------   --------   --------   --------   --------   -------- 
Net profit on ordinary activities before taxation 5,516  2,674  3,133  8,487  17,270  40,172  14,003  19,944  43,305 
Taxation (662) (333) (428) –  –  –  (662) (333) (428)
    --------   --------   --------   --------   --------   --------   --------   --------   -------- 
Net profit on ordinary activities after taxation 4,854  2,341  2,705  8,487  17,270  40,172  13,341  19,611  42,877 
    --------   --------   --------   --------   --------   --------   --------   --------   -------- 
Earnings per ordinary share (US$ cents) 13.51  6.47  7.50  23.63  47.74  111.31  37.14  54.21  118.81 
    ========   ========   ========   ========   ========   ========   ========   ========   ======== 

The total column of this statement represents the Company’s profit and loss Account. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies (AIC). All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period.

The net profit for the period disclosed above represents the Company’s total comprehensive income.

STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 July 2017

Called up 
share 
capital 
US$’000 
Share 
premium 
account 
US$’000 
Capital 
redemption 
reserve 
US$’000 

Capital 
reserves 
US$’000 

Revenue 
reserve 
US$’000 


Total 
US$’000 
For the six months ended 31 July 2017 (unaudited)
At 31 January 2017 4,133  41,684  5,889  114,768  (11,523) 154,951 
Total comprehensive income:
Profit for the period –  –  –  8,487  4,854  13,341 
Transactions with owners, recorded directly to equity:
Ordinary shares purchased for cancellation (1) –  (46) –  (46)
Treasury shares cancelled (40) –  40  –  –  – 
Dividend paid1 –  –  –  –  (2,694) (2,694)
 --------   --------   --------   --------   --------   -------- 
At 31 July 2017 4,092  41,684  5,930  123,209  (9,363) 165,552 
 --------   --------   --------   --------   --------   -------- 
For the six months ended 31 July 2016 (unaudited)
At 31 January 2016 4,162  41,684  5,860  75,565  (14,228) 113,043 
Total comprehensive income:
Profit for the period –  –  –  17,270  2,341  19,611 
Transactions with owners, recorded directly to equity:
Ordinary shares purchased for cancellation (9) –  (293) –  (293)
 --------   --------   --------   --------   --------   -------- 
At 31 July 2016 4,153  41,684  5,869  92,542  (11,887) 132,361 
 --------   --------   --------   --------   --------   -------- 
For the year ended 31 January 2017 (audited)
At 31 January 2016 4,162  41,684  5,860  75,565  (14,228) 113,043 
Total comprehensive income:
Profit for the year –  –  –  40,172  2,705  42,877 
Transactions with owners, recorded directly to equity:
Ordinary shares purchased for cancellation (29) –  29  (969) –  (969)
 --------   --------   --------   --------   --------   -------- 
At 31 January 2017 4,133  41,684  5,889  114,768  (11,523) 154,951 
 ========   ========   ========   ========   ========   ======== 

1  In respect of the year ended 31 January 2017 a final dividend of 7.50 cents per share was declared on 28 March 2017 and paid on 28 June 2017.

The transaction costs incurred on the acquisition and disposal of investments are included within the capital reserves and amounted to US$204,000 for the six months ended 31 July 2017 (six months ended 31 July 2016: US$68,000; year ended 31 January 2017: US$248,000).

BALANCE SHEET
as at 31 July 2017



Notes 
31  July 2017 
US$’000 
(unaudited) 
31  July 2016 
US$’000 
(unaudited) 
31  January 2017 
US$’000 
(audited) 
Fixed assets
Investments held at fair value through profit or loss 156,390  137,362  157,134 
    --------   --------   -------- 
Current assets
Debtors 5,136  1,472  387 
Cash and cash equivalents 5,084  – 
Collateral pledged in respect of contracts for difference 557  –  – 
Derivative financial assets 80  56  71 
    --------   --------   -------- 
10,857  1,528  459 
    --------   --------   -------- 
Creditors – amounts falling due within one year
Bank overdraft –  (5,215) (1,496)
Amounts payable in respect of contracts for difference (433) –  – 
Other creditors (1,243) (1,295) (1,127)
    --------   --------   -------- 
(1,676) (6,510) (2,623)
    --------   --------   -------- 
Net current assets/(liabilities) 9,181  (4,982) (2,164)
    --------   --------   -------- 
Total assets less current liabilities 165,571  132,380  154,970 
    --------   --------   -------- 
Creditors – amounts falling due after more than one year
Preference shares of £1.00 each (one quarter paid) (19) (19) (19)
    --------   --------   -------- 
Net assets 165,552  132,361  154,951 
    --------   --------   -------- 
Capital and reserves
Called up share capital 4,092  4,153  4,133 
Share premium account 41,684  41,684  41,684 
Capital redemption reserve 5,930  5,869  5,889 
Capital reserves 123,209  92,542  114,768 
Revenue reserve (9,363) (11,887) (11,523)
    --------   --------   -------- 
Total shareholders’ funds 165,552  132,361  154,951 
    --------   --------   -------- 
Net asset value per ordinary share (US$ cents) 460.94  366.41  431.28 
    ========   ========   ======== 

STATEMENT OF CASH FLOWS
for the six months ended 31 July 2017

Six months 
ended 
31 July 2017 
US$’000 
(unaudited) 
Six months 
ended 
31 July 2016 
US$’000 
(unaudited) 

Year ended 
31 January 2017 
US$’000 
(audited) 
Operating activities
Net profit before taxation 14,003  19,944  43,305 
Add back finance costs 30  44  53 
Gains on investments and derivatives (9,033) (17,736) (40,945)
Net gains on foreign exchange (6) (38) (171)
Sales of investments 65,641  24,426  77,638 
Purchases of investments (58,742) (27,257) (76,329)
Realised (losses)/gains on contracts for difference (340) (90) 189 
(Increase)/decrease in debtors (1,827) (552) 21 
Increase/(decrease) in other creditors 611  (223) (848)
Net movement in collateral pledged with brokers (124) 204  204 
Tax on investment income (870) (329) (414)
 --------   --------   -------- 
Net cash generated from/(used in) operating activities 9,343  (1,607) 2,703 
 --------   --------   -------- 
Financing activities
Purchase of ordinary shares (46) (325) (1,039)
Interest paid (30) (44) (53)
Dividend paid (2,694) –  – 
 --------   --------   -------- 
Net cash used in financing activities (2,770) (369) (1,092)
 --------   --------   -------- 
Increase/(decrease) in cash and cash equivalents 6,573  (1,976) 1,611 
 --------   --------   -------- 
Cash and cash equivalents at the start of the period (1,495) (3,277) (3,277)
Effect of foreign exchange rate changes 38  171 
 --------   --------   -------- 
Cash and cash equivalents at end of period 5,084  (5,215) (1,495)
 --------   --------   -------- 
Comprised of:
Cash at bank 5,084  – 
Bank overdraft –  (5,215) (1,496)
 --------   --------   -------- 
5,084  (5,215) (1,495)
 ========   ========   ======== 

NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 31 July 2017

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

2. BASIS OF PREPARATION
The Company presents its results and positions under FRS 102, ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ (FRS 102), which forms part of revised Generally Accepted Accounting Practice (New UK GAAP) issued by the Financial Reporting Council (FRC) in 2013.

The condensed set of financial statements has been prepared on a going concern basis in accordance with FRS 102 and FRS 104, ‘Interim Financial Reporting’ issued by the FRC in March 2015 and the revised Statement of Recommended Practice – ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ (SORP) issued by the Association of Investment Companies (AIC) in November 2014.

The Company’s cash flow statement reflects the presentation requirements of FRS 102, which are different to that prepared under FRS 1. In addition, the Statement of Cash Flows reconciles to cash and cash equivalents whereas under previous UK GAAP the cash flow statement reconciled to cash. Cash and cash equivalents are defined in FRS 102 as ‘cash in hand and demand deposits, 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 and bank overdraft which forms an integral part of the Company’s cash management policy’ whereas cash is defined in FRS 1 as ‘cash in hand and deposits repayable on demand with any qualifying institution, less overdrafts from any qualifying institution repayable on demand’.

The accounting policies applied for the condensed set of financial statements are as set out in the Company’s Annual Report and Financial Statements for the year ended 31 January 2017. This reflects the Company’s application of FRS 102.

3. INCOME
 

Six months 
ended 
31 July 2017 
US$’000 
(unaudited) 
Six months 
ended 
31 July 2016 
US$’000 
(unaudited) 

Year ended 
31 January 2017 
US$’000 
(audited) 
Investment income:
UK dividends –  – 
Overseas dividends 5,964  2,998  3,620 
Overseas special dividends –  –  301 
UK special dividends 21  –  – 
 --------   --------   -------- 
5,987  2,998  3,921 
 --------   --------   -------- 
Net (loss)/income from contracts for difference (93) 56  47 
 --------   --------   -------- 
5,894  3,054  3,968 
 --------   --------   -------- 
Other income:
Deposit interest
Other income –  –  19 
 --------   --------   -------- 
Total income 5,897  3,055  3,988 
 ========   ========   ======== 

Dividends and interest received during the period amounted to US$4,023,000 and US$3,000 (six months ended 31 July 2016: US$2,543,000 and US$1,000; year ended 31 January 2017: US$3,881,000 and US$1,000) respectively.

4. INVESTMENT MANAGEMENT FEE
 

Six months ended
31 July 2017
(unaudited)
Six months ended
31 July 2016
(unaudited)
Year ended
31 January 2017
(audited)
Revenue 
US$’000 
Capital 
US$’000 
Total 
US$’000 
Revenue 
US$’000 
Capital 
US$’000 
Total 
US$’000 
Revenue 
US$’000 
Capital 
US$’000 
Total 
US$’000 
Investment management fee 204  475  679  167  391  558  337  785  1,122 
 --------   --------   --------   --------   --------   --------   --------   --------   -------- 
Total 204  475  679  167  391  558  337  785  1,122 
 ========   ========   ========   ========   ========   ========   ========   ========   ======== 

BFM was appointed as the Company’s AIFM with effect from 2 July 2014, having been authorised as an AIFM by the FCA on 1 May 2014. The management contract is terminable by either party on six months’ notice. Prior to this, BIM (UK) was appointed as Investment Manager and Company Secretary on 1 May 2009. BIM (UK) continues to act 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.

With effect from 1 April 2017 the management fee has been reduced from 1.0% per annum of the Company’s average daily market capitalisation to 0.80% per annum of the Company’s average daily net asset value.

The management fee is allocated 70% to capital reserves and 30% to the revenue reserve.

5. OTHER OPERATING EXPENSES
 

Six months 
ended 
31 July 2017 
US$’000 
(unaudited) 
Six months 
ended 
31 July 2016 
US$’000 
(unaudited) 

Year ended 
31 January 2017 
US$’000 
(audited) 
Custody fee1, 2 33  67 
Depositary fees 15 
Audit fee2 20  20  39 
Registrar’s fees 14  19  29 
Directors’ fees2 64  84  171 
Marketing fees 23  14  27 
Marketing fees written back (7) (39) (60)
Other administration costs 37  63  214 
 --------   --------   -------- 
168  201  502 
 --------   --------   -------- 
Transaction costs taken to capital 40  60  76 
 --------   --------   -------- 
208  261  578 
 ========   ========   ======== 

1  The custody fees at 31 July 2017 include expenses of US$33,000 in respect of the current period and a write-back of US$25,000 in respect of prior periods.
2  The custody fee, Audit fee and Directors’ fees are paid in sterling and are therefore subject to exchange rate fluctuations. Directors’ fees paid to 31 July 2017 also include a write-back of US$22,000 in respect of fees from prior periods.

6. DIVIDENDS
In accordance with FRS 102, Section 32 ‘Events After the End of the Reporting Period’, dividends payable on the ordinary shares are not included as a liability in the financial statements, as dividends are only recognised when they have been paid.

The Board has not declared an interim dividend (six months ended 31 July 2016: nil; year ended 31 January 2017: 7.50 cents).

7. EARNINGS AND NET ASSET VALUE PER ORDINARY SHARE
 

Six months 
ended 
31 July 
2017 
(unaudited) 
Six months 
ended 
31 July 
2016 
(unaudited) 

Year ended 
31 January 
2017 
(audited) 
Net revenue profit attributable to ordinary shareholders 4,854  2,341  2,705 
Net capital profit attributable to ordinary shareholders 8,487  17,270  40,172 
 --------   --------   -------- 
Total profit (US$’000) 13,341  19,611  42,877 
 --------   --------   -------- 
Equity shareholders’ funds (US$’000) 165,552  132,361  154,951 
 --------   --------   -------- 
Earnings per share
The weighted average number of ordinary shares in issue during each period on which the basic return per ordinary share was calculated was: 35,916,680  36,179,196  36,087,772 
 --------   --------   -------- 
The actual number of ordinary shares in issue at the end of each period on which the undiluted net asset value was calculated was: 35,916,028  36,124,128  35,927,828 
 --------   --------   -------- 
Calculated on weighted average number of ordinary shares
Revenue profit (cents) 13.51  6.47  7.50 
Capital profit (cents) 23.63  47.74  111.31 
 --------   --------   -------- 
Total (cents) 37.14  54.21  118.81 
 ========   ========   ======== 
As at 
31 July 
2017 
(unaudited) 
As at 
31 July 
2016 
(unaudited) 
As at 
31 January 
2017 
(audited) 
 --------   --------   -------- 
Net asset value per share (cents) 460.94  366.41  431.28 
 --------   --------   -------- 
Ordinary share price* (cents) 427.33  323.29  378.06 
 ========   ========   ======== 

*     The Company’s share price is quoted in sterling and the above represents the US dollar equivalent

8. CREDITORS – AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
 

Six months 
ended 
31 July 2017 
US$’000 
(unaudited) 
Six months 
ended 
31 July 2016 
US$’000 
(unaudited) 

Year ended 
31 January 2017 
US$’000 
(audited) 
Allotted, issued and one quarter paid: 19  19  19 
 --------   --------   -------- 
Shares in issue at 31 July 2017, 50,000 preference shares of £1.00 each 19  19  19 
 ========   ========   ======== 

The preference shares confer no right to receive notice of or attend or vote at any general meeting of the Company except upon any resolution to vary the rights attached to the preference shares. They carry the right to receive a fixed dividend of USD0.01 per preference share per annum, payable on demand. On a winding up or return of capital, the preference shares confer the right to be paid, out of the assets of the Company available for distribution, the capital paid up on such shares pari passu with and in proportion to any amounts of capital paid to ordinary shareholders, but do not confer any right to participate in the surplus assets of the Company. In the period to 31 July 2017 and the previous year, the preference shareholders waived their rights to any preference dividend.

9. SHARE CAPITAL AND SHARES HELD IN TREASURY
 

Ordinary 
shares 
number 
Treasury 
shares 
number 
Total 
shares 
number 
Nominal 
value 
US$’000 
Allotted, called up and fully paid share capital comprised:
Ordinary shares of 10 cents each
 --------   --------   --------   -------- 
At 1 February 2017 35,927,828  5,400,000  41,327,828  4,133 
 --------   --------   --------   -------- 
Shares repurchased/cancelled (11,800) (400,000) (411,800) (41)
 --------   --------   --------   -------- 
At 31 July 2017 35,916,028  5,000,000  40,916,028  4,092 
 ========   ========   ========   ======== 

During the period, 11,800 ordinary shares were repurchased and cancelled (31 July 2016: 92,800; 31 January 2017: 289,100) for a total consideration of US$46,000 (31 July 2016: US$293,000; year ended 31 January 2017: US$969,000) and 400,000 shares were cancelled from treasury (31 July 2016: nil; 31 January 2017: nil).

10. VALUATION OF FINANCIAL INSTRUMENTS
For the six months ended 31 July 2017 and 31 July 2016 and the year ended 31 January 2017, the Company had early adopted the amendments to FRS 102 ‘Fair value hierarchy disclosure’ effective for annual periods beginning on or after 1 January 2017. These amendments improve the consistency of fair value disclosure for financial instruments with these required by EU adopted IFRS.

Financial assets and financial liabilities are either carried in the Balance Sheet at their fair value (investments) or at an amount which is a reasonable approximation of fair value (due from brokers, dividends and interest receivable, due to brokers, accruals, cash and cash equivalents and overdrafts). Section 11 of FRS 102 requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The valuation techniques used by the Company are explained in the accounting policies note on page 49 of the Annual Report and Financial Statements for the year ended 31 January 2017.

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 prices 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 Company does not adjust the quoted price for these instruments.

Level 2 – Valuation techniques using observable inputs
This category includes instruments valued using quoted prices for similar instruments in markets that are considered less than active, or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

Level 3 – Valuation techniques using significant unobservable inputs
This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs could have a significant impact on the instrument’s valuation.
 

This category also includes instruments that are valued based on quoted prices for similar instruments where significant entity determined adjustments or assumptions are required to reflect differences between the instruments and instruments for which there is no active market. The Investment Manager considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

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

Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.

The table below gives an analysis of the Company’s financial instruments measured at fair value at the balance sheet date.

Financial assets/(liabilities) at fair value through profit or 
loss at 31 July 2017 
Level 1 
US$’000 
Level 2 
US$’000 
Level 3 
US$’000 
Total 
US$’000 
Assets:
Equity investments 156,390 156,390
Derivative instruments – CFD’s (gross exposure) 4,766 4,766
Liabilities:
Derivative instruments - CFD's (gross exposure) - (3,145) - (3,145)
 --------   --------   --------   -------- 
Total 156,390 1,621 158,011
 ========   ========   ========   ======== 

   

Financial assets at fair value through profit or 
loss at 31 July 2016 
Level 1 
US$’000 
Level 2 
US$’000 
Level 3 
US$’000 
Total 
US$’000 
Assets:
Equity investments 137,362 137,362
Derivative instruments – CFD’s (gross exposure) 2,386 2,386
 --------   --------   --------   -------- 
Total 137,362 2,386 139,748
 ========   ========   ========   ======== 

   

Financial assets at fair value through profit or 
loss at 31 January 2017 
Level 1 
US$’000 
Level 2 
US$’000 
Level  3
US$’000 
Total 
US$’000 
Assets:
Equity investments 157,134 157,134
Derivative instruments – CFD’s (gross exposure) 2,680 2,680
 --------   --------   --------   -------- 
Total 157,134 2,680 159,814
 ========   ========   ========   ======== 

CFDs 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 Company.

There were no transfers between levels for financial assets and financial liabilities during the period/year recorded at fair value as at 31 July 2017, 31 July 2016 and 31 January 2017. The Company did not hold any other Level 3 securities throughout the six month period ended 31 July 2017 (six month period ended 31 July 2016: none; year ended 31 January 2017: none).

11. RELATED PARTY DISCLOSURE
The Board consists of five non-executive Directors, all of whom are considered to be independent by the Board. None of the Directors has a service contract with the Company. With effect from 1 February 2017, the Chairman receives an annual fee of £38,500 (2016: £38,000), the Chairman of the Audit Committee/Senior Independent Director receives an annual fee of £28,500 (2016: £28,250) and each of the other Directors receives an annual fee of £24,250 (2016: £24,000).

At the period end and as at the date of this report members of the Board held ordinary shares in the Company as set out below:

28 September 
2017 
Ordinary 
shares 
31 July 
2017 
Ordinary 
shares 
Rachel Beagles 20,209  20,209 
Mark Bridgeman 8,650  8,650 
Philippe Delpal 12,000  12,000 
Neil England (Chairman) 156,633  156,633 
Robert Sheppard 10,000  10,000 
 ========   ======== 

12. TRANSACTIONS WITH THE AIFM AND THE INVESTMENT MANAGER
BlackRock Fund Managers Limited (BFM) provides management and administration services to the Company under a contract which is terminable on six months’ notice. BFM has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services, to BlackRock Investment Management (UK) Limited (BIM (UK)). Further details of the investment management contract are disclosed in note 4 on page 51 in the Annual Report and Financial Statements 31 January 2017.

The investment management fee due for the six months ended 31 July 2017 amounted to US$679,000 (six months ended 31 July 2016: US$558,000; year ended 31 January 2017: US$1,122,000).

At 31 July 2017, US$937,000 was outstanding in respect of the investment management fees (six months ended 31 July 2016: US$558,000; year ended 31 January 2017: US$258,000).

In addition to the above services, BlackRock provided the Company with marketing services. The total fees paid or payable for the period ended 31 July 2017 amounted to US$23,000 excluding VAT (six months ended 31 July 2016: US$14,000; year ended 31 January 2017: US$27,000). In addition there was a write-back of US$7,000 in respect of previous periods (six month ended 31 July 2016: US$39,000; year ended 31 January 2017: US$60,000). Marketing fees of US$23,000 were outstanding at 31 July 2017 (31 July 2016: US$16,000; 31 January 2017: US$29,000).

13. CONTINGENT LIABILITIES
There were no contingent liabilities at 31 July 2017, 31 July 2016 or 31 January 2017.

14. PUBLICATION OF NON STATUTORY ACCOUNTS
The financial information contained in this half yearly report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the six months ended 31 July 2017 and 31 July 2016 has not been audited.

The information for the year ended 31 January 2017 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies. The report of the Auditor on those accounts contained no qualification or statement under sections 498(2) or (3) of the Companies Act 2006.

15. ANNUAL RESULTS
The Board expects to announce the annual results for the year ending 31 January 2018 as prepared under new UK GAAP in March 2018. Copies of the results announcement can be obtained from the Secretary on 020 7743 3000. The annual report should be available by early April 2018, with the Annual General Meeting being held in June 2018.

For further information, please contact:

Simon White, Managing Director, Investment Trusts, BlackRock Investment Management (UK) Limited
Tel: 020 7743 5284

Press enquiries:

Lucy Horne, Lansons Communications – Tel:  020 7294 3689
E-mail:  lucyh@lansons.com

28 September 2017

12 Throgmorton Avenue
London EC2N 2DL

END

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


Source: PR Newswire (September 28, 2017 - 5:30 AM EDT)

News by QuoteMedia
www.quotemedia.com

Legal Notice