BLACKROCK FRONTIERS INVESTMENT TRUST PLC
LEI: 5493003K5E043LHLO706 - Article 5 Transparency Directive, DTR 4.2
Half Yearly Financial Report for the six months ended 31 March 2017
INVESTMENT OBJECTIVE
The Company’s investment objective is to achieve long-term capital growth from investment in companies operating in Frontier Markets or whose stocks are listed on the Stock Markets of such countries.
PERFORMANCE RECORD
FINANCIAL HIGHLIGHTS
|
31 March 2017 |
30 September 2016 |
| US Dollar |
|
|
| Net assets (US$’000) |
307,228 |
276,397 |
| Net asset value per share (cum income) |
180.32c |
168.19c |
| Share price1 |
183.82c |
167.58c |
|
-------- |
-------- |
| Sterling |
|
|
| Net assets (£’000)1 |
245,684 |
212,777 |
| Net asset value per share (cum income)1 |
144.20p |
129.48p |
| Share price |
147.00p |
129.00p |
|
-------- |
-------- |
| Premium/(discount) |
1.9% |
(0.4%) |
|
====== |
====== |
Performance – total return basis |
Six months ended
31 March 2017
% |
Year ended
30 September 2016
% |
Since
inception3
% |
| US Dollar |
|
|
|
| Net asset value per share (with income reinvested) |
+9.7 |
+9.3 |
+43.8 |
| MSCI Frontier Markets Index (NR2) |
+9.4 |
+0.9 |
+15.7 |
| MSCI Emerging Markets Index (NR2) |
+6.8 |
+16.8 |
+0.4 |
| Ordinary share price (with income reinvested) |
+12.1 |
+11.6 |
+44.4 |
|
|
|
|
| Sterling |
|
|
|
| Net asset value per share (with income reinvested) |
+14.0 |
+27.4 |
+79.0 |
| MSCI Frontier Markets Index (NR2) |
+13.7 |
+17.7 |
+44.3 |
| MSCI Emerging Markets Index (NR2) |
+11.0 |
+36.2 |
+25.2 |
| Ordinary share price (with income reinvested) |
+16.5 |
+30.0 |
+79.4 |
1. Based on an exchange rate of US$1.2505 to £1 at 31 March 2017 and US$1.2990 to £1 at 30 September 2016.
2. Net return indices calculate the reinvestment of dividends net of withholding taxes using the tax rates applicable to non-resident institutional investors.
3. The Company was incorporated on 15 October 2010 and its shares were admitted to trading on the London Stock Exchange on 17 December 2010.
CHAIRMAN’S STATEMENT
for the six months to 31 March 2017
Dear Shareholder
I am pleased to present the Company’s half-yearly financial report for the six months to 31 March 2017.
PERIOD HIGHLIGHTS
-
Interim dividend of 2.70 cents per share;
-
Yield of 3.5% (based on share price at 23 May 2017 and interim dividend for 2017 and final dividend for 2016);
-
NAV total return of 9.7% (in US Dollar terms);
-
Share price total return of 12.1% (in US Dollar terms); and
-
6,050,000 new Ordinary shares issued at a premium to NAV.
OVERVIEW
I am pleased to report that during the period to 31 March 2017 the Company returned 9.7%, marginally outperforming its benchmark, the MSCI Frontier Markets Index, by 0.3%. The Company’s share price rose by 12.1%. Over the same period, the Emerging Markets Index rose by 6.8%. Notwithstanding that the Company has generated a strong absolute return during the past six months, the Company’s investment objective aims to achieve long-term capital growth and therefore it is important to consider the Company’s performance over the longer term. Since launch in December 2010, the Company’s NAV has increased by 43.8%, comparing very favourably to the increase in the benchmark index of just 15.7% (all calculations are in US Dollar terms with income reinvested). For sterling based investors performance is further enhanced with a sterling equivalent NAV total return of 79.0% since launch, versus the benchmark return of 44.3%.
Frontier Markets performed strongly during the period, particularly during the first three months of 2017, predominantly driven by domestic, rather than global, economic and political forces. The Investment Manager increased portfolio gearing, through the use of contracts for difference, in anticipation of the market rally and this, coupled with effective regional allocation and stock selection, aided overall performance. The ability to increase or reduce gearing to take advantage of market conditions is a key advantage of the closed-end investment trust structure and was applied to good effect during the period.
Argentina and Kazakhstan were the stand out performers by country. Kuwait, Romania and Vietnam continued to benefit from the implementation of structural reform, infrastructure investment, improved corporate governance and business friendly initiatives designed to cultivate economic growth and encourage foreign investment. The portfolio’s underweight exposure to Nigeria also aided overall performance relative to the benchmark as the fall in the global oil price and the overvalued local currency continued to negatively impact the oil export dependent Nigerian economy.
As you will read in the Investment Manager’s report which follows, your investment managers believe that countries such as Vietnam, Kuwait, Egypt and Kenya present exciting opportunities and have increased portfolio exposure to them. The portfolio’s weighting in Pakistan, Bangladesh and Sri Lanka reduced somewhat. Further details of the changes to portfolio composition and the significant components of overall portfolio performance are set out in the Investment Manager’s report which follows.
REVENUE RETURN AND DIVIDENDS
The Company’s revenue return per share for the six months ended 31 March 2017 amounted to 2.74 cents (2016: 2.14 cents). Previously, the Company has paid out approximately a third of its revenues at the interim stage and the balance in the form of a final dividend. As I mentioned in my statement in the Annual Report, the Board has decided that, when deemed to be appropriate, the Company may distribute a greater proportion of its revenue at the interim dividend stage to better reflect the timing of the underlying income earned by the Company. The Board is pleased to declare an interim dividend of 2.70 cents per share (2016: 2.60 cents per share) payable on 30 June 2017 to shareholders on the Company’s register on 9 June 2017. The final dividend of 4.00 cents per share for the year ended 30 September 2016, declared on 22 November 2016, was paid to shareholders on 17 February 2017.
SHARE CAPITAL
The Directors recognise the importance to investors of ensuring that the Company’s share price remains as close to its underlying NAV as possible. Accordingly, the Directors monitor the share price closely and will consider the issue at a premium or repurchase at a discount of ordinary shares to balance demand and supply in the market. For the period under review the Company’s ordinary shares have traded at an average premium to NAV of 0.8%, and were trading at a premium of 2.5% on a cum-income basis at 23 May 2017.
The Directors have the authority to buy back up to 14.99% of the Company’s issued share capital and also to issue up to 10% of the Company’s issued share capital (excluding any shares held in treasury). Both authorities expire at the conclusion of the 2018 AGM, at which time it is anticipated that renewal resolutions will be put to shareholders.
In response to sustained demand for its shares during the period, the Company has issued 6,050,000 new ordinary shares during the period at an average price of 144.4 pence per share and for a total consideration of £8,739,200. The new shares were issued at a premium to the prevailing NAV and were therefore accretive. The Board believes that the issue of new shares by the Company – where demand cannot be met in the market – helps to regulate the share price premium/discount to NAV and the resultant economies of scale achieved through the enlargement of the Company are beneficial to shareholders. Since the period end and up to the date of this report, the Company has issued a further 4,310,000 new ordinary shares at an average price of 146.2 pence per share and for a total consideration of £6,300,000. No shares were bought back in the period under review or up to the date of this report.
OUTLOOK
Frontier Markets remain a dynamic place to invest, with new entrants to the market offering exciting investment opportunities at attractive valuations. Your Board is confident that the Company is well positioned to take full advantage and that your investment managers possess the skills and local market knowledge required to maximise the rewards of doing so effectively. In addition, the low correlation of Frontier Markets with Developed Markets can provide diversification benefits and may offer a degree of insulation from global volatility. In a world of subdued growth, shifting policies and where heightened political and macroeconomic uncertainty dominate market sentiment, the Board believe that the Company’s ability to generate strong relative returns, complemented by a sustainable income stream, is a particularly attractive proposition for investors with a medium to long-term investment horizon.
Audley Twiston-Davies
Chairman
25 May 2017
INTERIM MANAGEMENT REPORT AND RESPONSIBILITY STATEMENT
The Chairman’s Statement and the Investment Manager’s Report give details of the important events which have occurred during the period and their impact on the financial statements.
PRINCIPAL RISKS AND UNCERTAINTIES
A detailed explanation of the risks relating to the Company can be divided into various areas as follows:
The Board reported on the principal risks and uncertainties faced by the Company in the Annual Report and Financial Statements for the year ended 30 September 2016. A detailed explanation can be found in the Strategic Report on pages 16 to 22 and in note 18 on pages 62 to 72 of the Annual Report and Financial Statements which are available on the website maintained by BlackRock at www.blackrock.co.uk/brfi.
In the view of the Board, there have not been any material changes to the fundamental nature of these risks since the previous report and these principal risks and uncertainties, as summarised, are equally applicable to the remaining six months of the financial year as they were to the six months under review.
GOING CONCERN
The Directors, having considered the nature and liquidity of the portfolio, the Company’s investment objective and the Company’s projected income and expenditure, 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 any performance fees, interest costs and taxation) were approximately 1.4% of average net assets for the year ended 30 September 2016.
RELATED PARTY DISCLOSURE AND TRANSACTIONS WITH THE AIFM AND INVESTMENT MANAGER
BlackRock Fund Managers Limited (‘BFM’) is the Company’s AIFM. 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 and performance fees payable are set out in note 5 and note 14 of this report. The related party transactions with the Directors are set out in note 15.
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 International Accounting Standard 34 – Interim Financial Reporting; and
-
the interim management report, together with the Chairman’s Statement and Investment Manager’s Report, includes a fair review of the information required by 4.2.7R and 4.2.8R of the Financial Conduct Authority (‘FCA’) Disclosure and Transparency Rules.
The half yearly financial report has been reviewed by the Company’s Auditors.
The half yearly financial report was approved by the Board on 25 May 2017 and the above responsibility statement was signed on its behalf by the Chairman.
Audley Twiston-Davies
For and on behalf of the Board
25 May 2017
INVESTMENT MANAGER’S REPORT
PORTFOLIO AND MARKET COMMENTARY
In the six months to 31 March 2017, the Company outperformed the benchmark by 0.3% returning 9.7%, compared with the benchmark return of 9.4%. By comparison, over the same time period the MSCI Emerging Markets Index rose by 6.8%. Since inception the Company has returned 43.8%, compared with the return of 15.7% from the benchmark (all calculations are in US Dollar terms with income reinvested).
Frontier Markets performed well over the period thanks to a great start to 2017, which marked the best start to the calendar year since 2013. The past six months have once again demonstrated the benefits of investing in such a diverse and widely spread asset class. In most countries domestic, rather than global, economic and political developments have driven market returns. The Company was geared throughout the period with net long exposure increasing to 115.8% at the end of February 2017, which contributed to performance. Following a period of robust performance, we have reduced the gearing level of the Company to 108.9% as at 30 April 2017.
The Kazakh market was the strongest performer during the period, rising by 27%. The Company benefited from its significant above benchmark exposure, with 8% of the portfolio invested in this market as at the end of March 2017. Kazmunaigas was the strongest performing stock, rising by 31% as the company returned to positive free cash flow generation following a change in economics on domestic production. The Company also benefited from the holding in Halyk Savings Bank, which rose by 13% following the announcement that they were considering a merger with Kazkommertsbank (‘KKB’) if the government were to recapitalise KKB in some format.
The Company benefitted from favourable stock selection in Argentina, which continued to perform strongly over the period, rising by 18%. Recently published GDP data showed that the Argentine economy grew at 0.5% quarter-on-quarter in the fourth quarter of 2016, exiting recession. Economists forecast activity to continue to improve through 2017 and this, together with global appetite for high carry assets, has led to compression of Argentine yields in 2017 and driven the equity market to new highs. In particular, Argentine utility, Pampa Energia (+55%), contributed after announcing increases in tariffs across almost all their gas and electricity businesses as well as growth in their Exploration & Production business.
Romania, another market where we have a large overweight position, rallied 9% over the period. The Romanian economy is the fastest growing economy in Europe, with GDP up 5.7% year-on-year in Q1 2017, while retail sales grew 8% in the same period. Our positions there benefitted from the positive macroeconomic environment.
The underweight to Nigeria continued to benefit the Company on a relative basis. Although we have a positive view on the long term potential of the country, the decline in oil prices and the reluctance of monetary authorities to allow the currency to adjust has placed pressure on the economy. The country’s foreign exchange issues continue to persist and the central bank’s decision not to devalue the Naira any further has resulted in a scarcity of US Dollars available at the official rate, and the dispersion between the official and black market exchange rates remains.
The Kuwaiti market had an unusually strong period of performance, rising by 23%. The rally was driven by positive local sentiment around the implementation of the long-awaited Kuwait National Development Plan and oil price stability. Whilst we had increased our exposure to Kuwait, our overall underweight to the country detracted on a relative basis.
A number of individual stocks contributed to overall performance, such as off-benchmark positioning in Egyptian gold miner, Centamin, which rallied with the strong gold price and the company reporting better than expected year end results. Conversely, Eurasian bottler, Coca-Cola Icecek, underperformed as results disappointed investors, despite improved volume performance from Pakistan.
Details of the performance of the constituents of the MSCI Frontier Markets Index are set out in the table below:
FOR THE 6 MONTH PERIOD ENDED 31 MARCH 2017
| Country |
% |
| Kazakhstan |
26.8 |
| Saudi Arabia |
24.7 |
| Kuwait |
21.9 |
| Argentina |
18.3 |
| Pakistan |
13.7 |
| Romania |
9.1 |
| Bangladesh |
8.3 |
| Morocco |
6.5 |
| Vietnam |
-1.3 |
| Nigeria |
-4.0 |
| Mauritius |
-4.6 |
| Oman |
-5.3 |
| Kenya |
-6.5 |
| Sri Lanka |
-10.1 |
All performance figures calcuated on a US dollar basis.
Source: BlackRock
PORTFOLIO ACTIVITY
We have increased our overall Kuwaiti exposure, initiating two new positions in Burgan Bank and Kipco on the belief that both companies have reached attractive valuation levels. Furthermore, the acceleration of government led reform initiatives to increase infrastructure spending and reduce inefficiencies in the economy make Kuwait a more attractive opportunity than it has been for a number of years.
In Egypt, we initiated a position in the medical diagnostic services company, Integrated Diagnostics Holdings, on market weakness following the devaluation of the Egyptian Pound. The company later reported satisfactory year-end results despite the macro challenges, highlighting the strength of the company’s business model, overall quality and its ability to maintain pricing power over the longer term. We believe that the company has the potential to grow significantly in an under-penetrated space given its notable scale advantages versus its peers.
We have also slightly reduced our overall exposure to Pakistan. The market has done well, rising by nearly 100% over the last 5 years and we have taken some profits in companies where we see limited upside.
OUTLOOK
We retain our preference for Frontier Markets that are experiencing improving macroeconomic conditions, better political governance, cash flow growth and cheap valuations. Our preferred countries are Argentina, Kuwait, Romania and Vietnam and we have recently been increasing our weighting in Egypt. Given the recent exceptional performance of the Argentine stock market and our belief that stocks remain under-priced given the encouraging outlook, we expect that the fund weight in Argentina could increase to circa. 20% if the right political and economic conditions persist.
We highlight Vietnam as one of the more exciting countries in our universe. The economy is expanding driven by ongoing Foreign Direct Investment. The government is also pushing a stock market reform agenda which we expect will result in companies increasing their free float, lifting foreign ownership restrictions and the launch of a number of IPOs. With valuations that are some of the cheapest in Asia, we have identified a number of attractive opportunities.
Frontier Markets continue to exhibit the characteristics that we believe represent a compelling opportunity for long-term investors. The combination of the countries with the fastest growing GDP, the best demographic profiles, the lowest government debt and a substantial commodity endowment, where it is possible to invest in companies on some of the lowest valuations in the world, provides an unrivalled investment opportunity. The low correlation between Frontier Markets and all developed and emerging markets means that the inclusion of a Frontier Markets fund within a portfolio can bring significant diversification benefits.
Sam Vecht and Emily Fletcher
BlackRock Investment Management (UK) Limited
25 May 2017
TEN LARGEST INVESTMENTS1
31 March 2017
MCB Bank (Pakistan, Financials, 4.4% (2016: 4.8%)) is one of the leading private banks in Pakistan. The Bank has a customer base of approximately 4 million and a nationwide distribution network of over 1,100 branches.
Halyk Savings Bank2 (Kazakhstan, Financials, 3.9% (2016: 3.4%)) is one of Kazakhstan’s leading financial services groups and a leading retail bank with the largest customer base and distribution network in Kazakhstan. It has the largest branch network consisting of 544 outlets across the country, 2,034 ATMs and 11,172 POS terminals.
Pampa Energia (Argentina, Utilities, 3.9% (2016: 2.4%)) is the largest utility company in Argentina, which through its subsidiaries participates in the generation, transmission and distribution of electricity. The company also has significant oil and gas exploration and production assets, some of which were acquired through the acquisition of Petrobras Argentina.
Mobile Telecommunications (Kuwait, Telecommunication Services, 3.8% (2016: 2.0%)) is a leading mobile and data services operator with a commercial footprint in eight Middle Eastern and African countries providing a comprehensive range of mobile voice and data services to over 47 million active individual and business customers.
Equity Group2 (Kenya, Financials, 3.7% (2016: 2.7%)) is a large East African financial services company headquartered in Nairobi. The bank differentiates itself from its peers through its large retail customer base with nearly half of all bank accounts in Kenya.
Square Pharmaceuticals2 (Bangladesh, Health Care, 3.3% (2016: 3.3%)) is the largest pharmaceutical company in Bangladesh, with a domestic market share of 16%.
Banco Macro (Argentina, Financials, 3.3% (2016: 4.0%)) is the sixth largest bank in Argentina with around 6% share of total assets in the banking system. Around 80% of the bank’s branches are located outside of the City of Buenos Aires and Province of Buenos Aires. Macro is the leading bank in personal lending with around 14% market share.
S.N.G.N. Romgaz2 (Romania, Energy, 3.1% (2016: 2.9%)) is the largest natural gas producer in Romania, supplying c. 5.6bcm of gas per year. The company’s main production comes from the Transylvanian basin; the company also engages in exploration projects in the Black Sea.
MHP (Ukraine, Consumer Staples, 3.1% (2016: 3.1%)) is an agricultural company, specialising in poultry production. The company is involved across the production process, from hatching to finished poultry products. MHP also has a large land bank allowing it to be vertically integrated in feed production.
Maroc Telecom3 (Morocco, Telecommunication Services, 3.0% (2016: 3.0%)) is the largest telecommunication company in Morocco with 33 million customers and a network covering 97% of the Moroccan population. The company also has substantial African operations with a presence in nine other countries.
1. Gross market exposure as a % of net assets. Percentages in brackets represent the portfolio holding at 30 September 2016.
2. Includes exposure gained via both contracts for difference and equity holdings.
3. Denotes exposure gained via contract for difference.
COUNTRY AND SECTOR ALLOCATION
31 March 2017
COUNTRY ALLOCATION (%)*
| Relative to MSCI Frontier Markets Index |
Absolute weights |
| Kazakhstan |
6.4 |
Argentina |
16.2 |
| Ukraine |
6.0 |
Kuwait |
10.7 |
| Romania |
5.9 |
Romania |
9.6 |
| Bangladesh |
5.6 |
Pakistan |
9.2 |
| Vietnam |
4.9 |
Vietnam |
8.6 |
| Egypt |
4.4 |
Kazakhstan |
8.1 |
| Sri Lanka |
4.4 |
Bangladesh |
8.0 |
| Saudi Arabia |
3.0 |
Sri Lanka |
6.1 |
| Philippines |
2.3 |
Ukraine |
6.0 |
| Argentina |
1.8 |
Kenya |
5.7 |
| Colombia |
1.7 |
Egypt |
4.4 |
| Eurasia |
1.6 |
Morocco |
4.2 |
| Estonia |
1.3 |
Nigeria |
3.2 |
| Pakistan |
0.6 |
Saudi Arabia |
3.0 |
| Kenya |
0.0 |
Philippines |
2.3 |
| Bulgaria |
-0.1 |
Estonia |
1.9 |
| Serbia |
-0.2 |
Colombia |
1.7 |
| Lithuania |
-0.2 |
Slovenia |
1.6 |
| Slovenia |
-0.7 |
Eurasia |
1.6 |
| Jordan |
-0.7 |
|
|
| Tunisia |
-0.8 |
|
|
| Croatia |
-1.5 |
|
|
| Mauritius |
-1.8 |
|
|
| Bahrain |
-1.9 |
|
|
| Morocco |
-3.4 |
|
|
| Lebanon |
-3.8 |
|
|
| Oman |
-4.5 |
|
|
| Nigeria |
-8.6 |
|
|
| Kuwait |
-9.6 |
|
|
Source: BlackRock and Datastream.
* Based on portfolio gross market exposure as a % of net assets (excluding the investment in BlackRock’s Institutional
Cash Series plc – US Dollar Liquidity Fund), compared to the MSCI Frontier Markets Index.
SECTOR ALLOCATION (%)*
| Relative to MSCI Frontier Markets Index |
Absolute weights |
| Consumer Staples |
9.9 |
Financial |
36.0 |
| Information Technology |
5.5 |
Consumer Staples |
17.7 |
| Utilities |
5.3 |
Telecommunication Services |
12.2 |
| Health Care |
4.6 |
Materials |
9.3 |
| Materials |
2.5 |
Energy |
8.5 |
| Industrials |
0.9 |
Health Care |
8.0 |
| Consumer Discretionary |
0.3 |
Utilities |
6.6 |
| Energy |
-1.3 |
Information Technology |
5.9 |
| Telecommunication Services |
-1.5 |
Industrials |
4.2 |
| Real Estate |
-3.3 |
Real Estate |
2.3 |
| Financials |
-10.8 |
Consumer Discretionary |
1.4 |
Source: BlackRock and Datastream.
* Based on portfolio gross market exposure as a % of net assets (excluding the investment in BlackRock’s Institutional
Cash Series plc – US Dollar Liquidity Fund), compared to the MSCI Frontier Markets Index.
INVESTMENTS
as at 31 March 2017
Company |
Principal
country of
operation |
Sector |
Fair value and
market exposure1
US$’000 |
Gross market
exposure
as a % of
net assets3 |
| Equity portfolio |
|
|
|
|
| Pampa Energia |
Argentina |
Utilities |
11,927 |
3.9 |
| Banco Macro |
Argentina |
Financials |
10,192 |
3.3 |
| Grupo Financiero Galicia |
Argentina |
Financials |
8,714 |
2.8 |
| Irsa Inversiones GDR |
Argentina |
Real Estate |
7,211 |
2.3 |
| Transportadora De Gas Del Sur |
Argentina |
Energy |
6,060 |
2.0 |
| Globant |
Argentina |
Information Technology |
5,792 |
1.9 |
|
|
|
-------- |
-------- |
|
|
|
49,896 |
16.2 |
|
|
|
-------- |
-------- |
| Mobile Telecommunications |
Kuwait |
Telecommunication Services |
11,661 |
3.8 |
| Mezzan Holdings |
Kuwait |
Consumer Staples |
8,070 |
2.6 |
| Burgan Bank |
Kuwait |
Financials |
6,767 |
2.2 |
| Kuwait Projects Company |
Kuwait |
Financials |
6,109 |
2.0 |
| National Gulf Holding |
Kuwait |
Consumer Discretionary |
208 |
0.1 |
|
|
|
-------- |
-------- |
|
|
|
32,815 |
10.7 |
|
|
|
-------- |
-------- |
| S.N.G.N. Romgaz |
Romania |
Energy |
9,300 |
3.0 |
| Societatea Energetica Electrica |
Romania |
Utilities |
7,672 |
2.5 |
| Banca Transilvania |
Romania |
Financials |
5,778 |
1.9 |
| BRD Groupe Societe Generale |
Romania |
Financials |
5,669 |
1.9 |
|
|
|
-------- |
-------- |
|
|
|
28,419 |
9.3 |
|
|
|
-------- |
-------- |
| MCB Bank |
Pakistan |
Financials |
13,417 |
4.4 |
| United Bank |
Pakistan |
Financials |
5,525 |
1.8 |
| Engro Corporation |
Pakistan |
Materials |
4,729 |
1.5 |
| D.G. Khan Cement |
Pakistan |
Materials |
4,625 |
1.5 |
|
|
|
--------- |
------- |
|
|
|
28,296 |
9.2 |
|
|
|
-------- |
-------- |
| Halyk Savings Bank |
Kazakhstan |
Financials |
11,821 |
3.8 |
| Kcell Joint Stock Company |
Kazakhstan |
Telecommunication Services |
7,721 |
2.5 |
| KazMunaiGas Exploration Production |
Kazakhstan |
Energy |
5,172 |
1.7 |
|
|
|
-------- |
-------- |
|
|
|
24,714 |
8.0 |
|
|
|
-------- |
-------- |
| MHP |
Ukraine |
Consumer Staples |
9,558 |
3.1 |
| Luxoft |
Ukraine |
Information Technology |
9,048 |
2.9 |
|
|
|
-------- |
-------- |
|
|
|
18,606 |
6.0 |
|
|
|
-------- |
-------- |
| Equity Group |
Kenya |
Financials |
10,924 |
3.6 |
| Safaricom |
Kenya |
Telecommunication Services |
3,872 |
1.3 |
| East African Breweries |
Kenya |
Consumer Staples |
2,139 |
0.7 |
|
|
|
-------- |
-------- |
|
|
|
16,935 |
5.6 |
|
|
|
-------- |
-------- |
| Chevron Lubricants |
Sri Lanka |
Materials |
4,966 |
1.6 |
| Melstacorp |
Sri Lanka |
Consumer Staples |
4,902 |
1.6 |
| Hatton National Bank |
Sri Lanka |
Financials |
3,244 |
1.1 |
|
|
|
-------- |
-------- |
|
|
|
13,112 |
4.3 |
|
|
|
-------- |
-------- |
| Integrated Diagnostics |
Egypt |
Health Care |
7,458 |
2.4 |
| Centamin |
Egypt |
Materials |
4,122 |
1.3 |
| Cleopatra Hospital |
Egypt |
Health Care |
1 |
– |
|
|
|
-------- |
-------- |
|
|
|
11,581 |
3.7 |
|
|
|
-------- |
-------- |
| Grameenphone |
Bangladesh |
Telecommunication Services |
4,912 |
1.6 |
| Olympic Industries |
Bangladesh |
Consumer Staples |
3,825 |
1.2 |
| Square Pharmaceuticals |
Bangladesh |
Health Care |
2,532 |
0.8 |
|
|
|
-------- |
-------- |
|
|
|
11,269 |
3.6 |
|
|
|
-------- |
-------- |
| Zenith Bank |
Nigeria |
Financials |
3,986 |
1.3 |
| United Bank for Africa |
Nigeria |
Financials |
3,663 |
1.3 |
| Guaranty Trust Bank |
Nigeria |
Financials |
1,867 |
0.6 |
|
|
|
-------- |
-------- |
|
|
|
9,516 |
3.2 |
|
|
|
-------- |
-------- |
| LT Group |
Philippines |
Industrials |
7,147 |
2.3 |
|
|
|
-------- |
-------- |
|
|
|
7,147 |
2.3 |
|
|
|
-------- |
-------- |
| Tallink |
Estonia |
Industrials |
5,528 |
1.8 |
|
|
|
-------- |
-------- |
|
|
|
5,528 |
1.8 |
|
|
|
-------- |
-------- |
| Ecopetrol ADR |
Colombia |
Energy |
5,162 |
1.7 |
|
|
|
-------- |
-------- |
|
|
|
5,162 |
1.7 |
|
|
|
-------- |
-------- |
| KRKA |
Slovenia |
Health Care |
4,528 |
1.5 |
|
|
|
-------- |
-------- |
|
|
|
4,528 |
1.5 |
|
|
|
-------- |
-------- |
| Attijariwafa Bank |
Morocco |
Financials |
3,504 |
1.1 |
|
|
|
-------- |
-------- |
|
|
|
3,504 |
1.1 |
|
|
|
-------- |
-------- |
| Equity Investments |
|
|
271,028 |
88.2 |
|
|
|
-------- |
-------- |
| BlackRock’s Institutional Cash Series plc – US Dollar Liquidity Fund |
|
|
21,370 |
7.0 |
|
|
|
-------- |
-------- |
Total equity investments (including BlackRock’s Institutional Cash
Series plc – US Dollar Liquidity Fund) |
|
|
292,398 |
95.2 |
|
|
|
-------- |
-------- |
| P-Notes |
|
|
|
|
| Abdullah Al Othaim |
Saudi Arabia |
Consumer Staples |
5,577 |
1.8 |
| Saudi International Petrochemical |
Saudi Arabia |
Materials |
3,615 |
1.2 |
|
|
|
-------- |
-------- |
| Total P-Notes |
|
|
9,192 |
3.0 |
|
|
|
-------- |
-------- |
| Total investments excluding CFDs |
|
|
301,590 |
98.2 |
|
|
|
======== |
======== |
Company |
Principal
country of
operation |
Sector |
Fair value1
US$’000 |
Gross market
exposure2
US$’000 |
Gross market
exposure as a % of
net assets3 |
| CFD portfolio |
|
|
|
|
|
| Long positions |
|
|
|
|
|
| Masan |
Vietnam |
Consumer Staples |
|
6,997 |
2.3 |
| Petrovietnam Fertilizer & Chemicals |
Vietnam |
Materials |
|
6,416 |
2.1 |
| Saigon Securities |
Vietnam |
Financials |
|
4,399 |
1.4 |
| Mobile World |
Vietnam |
Consumer Discretionary |
|
4,041 |
1.3 |
| FPT |
Vietnam |
Information Technology |
|
3,227 |
1.1 |
| Quang Ngai Sugar |
Vietnam |
Consumer Staples |
|
1,343 |
0.4 |
|
|
|
|
-------- |
-------- |
|
|
|
|
26,423 |
8.6 |
|
|
|
|
-------- |
-------- |
| Square Pharmaceuticals |
Bangladesh |
Health Care |
|
7,666 |
2.5 |
| British American Tobacco |
Bangladesh |
Consumer Staples |
|
5,567 |
1.8 |
| Olympic Industries |
Bangladesh |
Consumer Staples |
|
377 |
0.1 |
|
|
|
|
-------- |
-------- |
|
|
|
|
13,610 |
4.4 |
|
|
|
|
-------- |
-------- |
| Maroc Telecom |
Morocco |
Telecommunication Services |
|
9,146 |
3.0 |
| Attijariwafa Bank |
Morocco |
Financials |
|
409 |
0.1 |
|
|
|
|
-------- |
-------- |
|
|
|
|
9,555 |
3.1 |
|
|
|
|
-------- |
-------- |
| Hatton National Bank |
Sri Lanka |
Financials |
|
3,651 |
1.2 |
| Melstacorp |
Sri Lanka |
Consumer Staples |
|
1,580 |
0.5 |
| Chevron Lubricants |
Sri Lanka |
Materials |
|
205 |
0.1 |
|
|
|
|
-------- |
-------- |
|
|
|
|
5,436 |
1.8 |
|
|
|
|
-------- |
-------- |
| Coca Cola Icecek |
Eurasia |
Consumer Staples |
|
5,032 |
1.6 |
|
|
|
|
-------- |
-------- |
|
|
|
|
5,032 |
1.6 |
|
|
|
|
-------- |
-------- |
| Cleopatra Hospital |
Egypt |
Health Care |
|
2,133 |
0.7 |
|
|
|
|
-------- |
-------- |
|
|
|
|
2,133 |
0.7 |
|
|
|
|
-------- |
-------- |
| Societatea Energetica Electrica |
Romania |
Utilities |
|
714 |
0.2 |
| S.N.G.N. Romgaz |
Romania |
Energy |
|
284 |
0.1 |
|
|
|
|
-------- |
-------- |
|
|
|
|
998 |
0.3 |
|
|
|
|
-------- |
-------- |
| Halyk Savings Bank |
Kazakhstan |
Financials |
|
432 |
0.1 |
|
|
|
|
-------- |
-------- |
|
|
|
|
432 |
0.1 |
|
|
|
|
-------- |
-------- |
| Equity Group |
Kenya |
Financials |
|
267 |
0.1 |
|
|
|
|
-------- |
-------- |
|
|
|
|
267 |
0.1 |
|
|
|
|
-------- |
-------- |
| Tallink |
Estonia |
Industrials |
|
242 |
0.1 |
|
|
|
|
-------- |
-------- |
|
|
|
|
242 |
0.1 |
|
|
|
|
-------- |
-------- |
| KRKA |
Slovenia |
Health Care |
|
189 |
0.1 |
|
|
|
|
-------- |
-------- |
|
|
|
|
189 |
0.1 |
|
|
|
|
-------- |
-------- |
| National Gulf Holding |
Kuwait |
Consumer Discretionary |
|
2 |
– |
|
|
|
|
-------- |
-------- |
|
|
|
|
2 |
– |
|
|
|
|
-------- |
-------- |
| D.G. Khan Cement |
Pakistan |
Materials |
|
– |
– |
|
|
|
|
-------- |
-------- |
|
|
|
|
– |
– |
|
|
|
|
-------- |
-------- |
| Total long CFD positions |
|
|
306 |
64,319 |
20.9 |
|
|
|
-------- |
-------- |
-------- |
Equity investments (excluding BlackRock’s
Institutional Cash Series plc – US Dollar
Liquidity Fund) and P-Notes |
|
|
280,220 |
280,220 |
91.2 |
|
|
|
-------- |
-------- |
-------- |
BlackRock’s Institutional Cash Series plc – US
Dollar Liquidity Fund4 (Liquidity Fund) |
|
|
21,370 |
21,370 |
7.0 |
|
|
|
-------- |
-------- |
-------- |
| Total Investments |
|
|
301,896 |
365,909 |
119.1 |
|
|
|
-------- |
-------- |
-------- |
| Cash and cash equivalents4 |
|
|
9,609 |
(54,404) |
(17.7) |
|
|
|
-------- |
-------- |
-------- |
| Net current liabilities |
|
|
(4,277) |
(4,277) |
(1.4) |
|
|
|
-------- |
-------- |
-------- |
| Net assets |
|
|
307,228 |
307,228 |
100.0 |
|
|
|
======== |
======== |
======== |
1. Fair value is determined as follows:
– Listed and AIM quoted investments are valued at bid prices where available, otherwise at latest market traded quoted prices.
– The sum of the fair value column for the CFD contracts totalling US$306,000 represents the fair valuation of all the CFD contracts, which is determined based on the difference between the purchase price and value of the underlying shares in the contract (in effect the unrealised gains/losses on the exposed positions). The cost of purchasing the securities held through long CFD positions directly in the market would have amounted to US$64,013,000 at the time of purchase, and subsequent market rises in prices have resulted in unrealised gains on the CFD contracts of US$306,000, resulting in the value of the total market exposure to the underlying securities rising to US$64,319,000 as at 31 March 2017.
– P-Notes are valued based on the quoted bid price of the underlying security to which they relate.
2. Market exposure in the case of equity and P-Note investments is the same as fair value. In the case of CFDs it is the market value of the underlying shares to which the portfolio is exposed via the contract.
3. % based on the total market exposure.
4. The gross market exposure column for cash and cash equivalents has been adjusted to assume the Company purchased direct holdings rather than exposure being gained through CFDs.
INDEPENDENT REVIEW REPORT
to BlackRock Frontiers Investment Trust plc
INTRODUCTION
We have been engaged by the Company to review the condensed set of financial statements in the half yearly financial report for the six months ended 31 March 2017 which comprises the Statement of Comprehensive Income, Statement of Changes in Equity, Statement of Financial Position, Cash Flow Statement, Reconciliation of Net Profit/(Loss) before Taxation to Net Cash Flow from Operating Activities and the related notes. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.
DIRECTORS’ RESPONSIBILITIES
The half yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom’s Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the Company are prepared in accordance with IFRS’s as adopted by the European Union. The condensed set of financial statements included in this half yearly financial report has been prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting”, as adopted by the European Union.
OUR RESPONSIBILITY
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half yearly financial report based on our review.
SCOPE OF REVIEW
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
CONCLUSION
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half yearly financial report for the six months ended 31 March 2017 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom’s Financial Conduct Authority.
Ernst & Young LLP
London
25 May 2017
STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31 March 2017
|
|
Revenue US$’000 |
Capital US$’000 |
Total US$’000 |
|
Notes |
Six
months
ended
31.03.17
(unaudited) |
Six
months
31.03.16
(Restated)1
(unaudited) |
Year
ended
30.09.16
(audited) |
Six
months
ended
31.03.17
(unaudited) |
Six
months
31.03.16
(Restated)1
(unaudited) |
Year
ended
30.09.16
(audited) |
Six
months
ended
31.03.17
(unaudited) |
Six
months
31.03.16
(Restated)1
(unaudited) |
Year
ended
30.09.16
(audited) |
| Income from investments held at fair value through profit or loss |
4 |
4,770 |
3,479 |
11,041 |
– |
– |
– |
4,770 |
3,479 |
11,041 |
| Net income from contracts for difference |
4 |
1,054 |
1,197 |
1,954 |
– |
– |
– |
1,054 |
1,197 |
1,954 |
| Other income |
4 |
5 |
33 |
4 |
– |
– |
– |
5 |
33 |
4 |
|
|
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
| Total revenue |
|
5,829 |
4,709 |
12,999 |
– |
– |
– |
5,829 |
4,709 |
12,999 |
|
|
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
| Profit on investments held at fair value through profit or loss |
|
– |
– |
– |
29,412 |
259 |
15,625 |
29,412 |
259 |
15,625 |
| (Loss)/profit on foreign exchange |
|
– |
– |
– |
(212) |
240 |
1,973 |
(212) |
240 |
1,973 |
| Net (loss)/profit from contracts for difference |
|
– |
– |
– |
(434) |
(1,921) |
915 |
(434) |
(1,921) |
915 |
|
|
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
| Total |
|
5,829 |
4,709 |
12,999 |
28,766 |
(1,422) |
18,513 |
34,595 |
3,287 |
31,512 |
|
|
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
| Expenses |
|
|
|
|
|
|
|
|
|
|
| Investment management and performance fees |
5 |
(308) |
(201) |
(494) |
(2,244) |
(1,445) |
(4,557) |
(2,552) |
(1,646) |
(5,051) |
| Other operating expenses |
6 |
(481) |
(526) |
(1,005) |
(59) |
(50) |
(70) |
(540) |
(576) |
(1,075) |
|
|
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
| Total operating expenses |
|
(789) |
(727) |
(1,499) |
(2,303) |
(1,495) |
(4,627) |
(3,092) |
(2,222) |
(6,126) |
|
|
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
| Net profit/(loss) before finance costs and taxation |
|
5,040 |
3,982 |
11,500 |
26,463 |
(2,917) |
13,886 |
31,503 |
1,065 |
25,386 |
| Finance costs |
7 |
– |
(276) |
(277) |
– |
(1,104) |
(1,106) |
– |
(1,380) |
(1,383) |
|
|
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
| Net profit/(loss) on ordinary activities before taxation |
|
5,040 |
3,706 |
11,223 |
26,463 |
(4,021) |
12,780 |
31,503 |
(315) |
24,003 |
| Taxation (charge)/credit |
8 |
(504) |
(448) |
(1,110) |
(4,316) |
111 |
275 |
(4,820) |
(337) |
(835) |
|
|
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
| Profit/(loss) for the period |
|
4,536 |
3,258 |
10,113 |
22,147 |
(3,910) |
13,055 |
26,683 |
(652) |
23,168 |
|
|
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
| Earnings/(loss) per ordinary share (cents) |
10 |
2.74 |
2.14 |
6.40 |
13.40 |
(2.58) |
8.26 |
16.14 |
(0.44) |
14.66 |
|
|
======== |
======== |
======== |
======== |
======== |
======== |
======== |
======== |
======== |
1 see note 3.
The total column of this statement represents the Company’s Statement of Comprehensive Income, prepared in accordance with International Financial Reporting Standards (‘IFRS’) as adopted by the European Union (‘EU’). The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies (‘AIC’). All items in the above statement derive from continuing operations. No operations were acquired or disposed of during the period.
The Company does not have any other comprehensive income. The net profit/(loss) for the period disclosed above represents the Company’s total comprehensive income/(loss).
STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 March 2017
|
Notes |
Called up
share
capital
US$’000 |
Share
premium
account
US$’000 |
Capital
redemption
reserve
US$’000 |
Special
reserve
US$’000 |
Capital
reserves
US$’000 |
Revenue
reserve
US$’000 |
Total
US$’000 |
| For the six months ended 31 March 2017 (unaudited) |
|
|
|
|
|
|
|
|
| At 30 September 2016 |
|
1,643 |
21,456 |
5,798 |
230,794 |
8,804 |
7,902 |
276,397 |
| Total comprehensive income: |
|
|
|
|
|
|
|
|
| Net profit for the period |
|
– |
– |
– |
– |
22,147 |
4,536 |
26,683 |
| Transactions with owners, recorded directly to equity: |
|
|
|
|
|
|
|
|
| Share issues |
11 |
61 |
10,757 |
– |
– |
– |
– |
10,818 |
| Share issue costs |
|
– |
– |
– |
– |
(54) |
– |
(54) |
| Cash exit tender offer costs |
|
– |
– |
– |
(43) |
– |
– |
(43) |
| Dividend paid (a) |
9 |
– |
– |
– |
– |
– |
(6,573) |
(6,573) |
|
|
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
| At 31 March 2017 |
|
1,704 |
32,213 |
5,798 |
230,751 |
30,897 |
5,865 |
307,228 |
|
|
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
| For the six months ended 31 March 2016 (unaudited) (Restated) |
|
|
|
|
|
|
|
|
| At 30 September 2015 |
|
1,506 |
– |
5,798 |
231,030 |
(4,251) |
8,312 |
242,395 |
| Total comprehensive income: |
|
|
|
|
|
|
|
|
| Net (loss)/profit for the period |
|
– |
– |
– |
– |
(3,910) |
3,258 |
(652) |
| Transactions with owners, recorded directly to equity: |
|
|
|
|
|
|
|
|
| Share issues – conversion of C shares |
12 |
137 |
21,456 |
– |
– |
– |
– |
21,593 |
| Cash exit tender offer costs |
|
– |
– |
– |
(250) |
– |
– |
(250) |
| Dividend paid (b) |
9 |
– |
– |
– |
– |
– |
(6,251) |
(6,251) |
|
|
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
| At 31 March 2016 |
|
1,643 |
21,456 |
5,798 |
230,780 |
(8,161) |
5,319 |
256,835 |
|
|
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
| For the year ended 30 September 2016 (audited) |
|
|
|
|
|
|
|
|
| At 30 September 2015 |
|
1,506 |
– |
5,798 |
231,030 |
(4,251) |
8,312 |
242,395 |
| Total comprehensive income: |
|
|
|
|
|
|
|
|
| Net profit for the year |
|
– |
– |
– |
– |
13,055 |
10,113 |
23,168 |
| Transactions with owners, recorded directly to equity: |
|
|
|
|
|
|
|
|
| Share issues – conversion of C shares |
12 |
137 |
21,456 |
– |
– |
– |
– |
21,593 |
| Cash exit tender offer costs |
|
– |
– |
– |
(236) |
– |
– |
(236) |
| Dividend paid (c) |
9 |
– |
– |
– |
– |
– |
(10,523) |
(10,523) |
|
|
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
| At 30 September 2016 |
|
1,643 |
21,456 |
5,798 |
230,794 |
8,804 |
7,902 |
276,397 |
|
|
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
(a) Final dividend of 4.00 cents per share for the year ended 30 September 2016, declared on 22 November 2016 and paid on 17 February 2017.
(b) Final dividend of 4.15 cents per share for the year ended 30 September 2015, declared on 17 December 2015 and paid on 19 February 2016.
(c) Final dividend of 4.15 cents per share for the year ended 30 September 2015, declared on 17 December 2015 and paid on 19 February 2016 and interim dividend paid in respect of the year ended 30 September 2016 of 2.60 cents per share, declared on 16 May 2016 and paid on 1 July 2016
The transaction costs incurred on the acquisition and disposal of investments are included within the capital reserves. Purchase and sale costs amounted to US$262,000 and US$205,000 respectively for the period ended 31 March 2017 (six months ended 31 March 2016: US$309,000 and US$289,000; year ended 30 September 2016: US$637,000 and US$445,000).
STATEMENT OF FINANCIAL POSITION
as at 31 March 2017
|
Notes |
31 March 2017
US$’000
(unaudited) |
31 March 2016
(Restated)1
US$’000
(unaudited) |
30 September 2016
US$’000
(audited) |
| Non current assets |
|
|
|
|
| Investments held at fair value through profit or loss |
|
301,590 |
258,436 |
267,684 |
|
|
-------- |
-------- |
-------- |
| Current assets |
|
|
|
|
| Other receivables |
|
3,617 |
3,554 |
5,118 |
| Derivative financial assets held at fair value through profit or loss |
|
1,153 |
2,505 |
884 |
| Cash held on margin deposit with brokers |
|
– |
1,500 |
450 |
| Cash and cash equivalents |
|
10,799 |
4,362 |
8,729 |
|
|
-------- |
-------- |
-------- |
|
|
15,569 |
11,921 |
15,181 |
| Total assets |
|
317,159 |
270,357 |
282,865 |
| Current liabilities |
|
|
|
|
| Other payables |
|
(3,475) |
(10,962) |
(5,705) |
| Collateral held in respect of contracts for difference |
|
(1,190) |
(710) |
(167) |
| Derivative financial liabilities held at fair value through profit or loss |
|
(847) |
(1,831) |
(577) |
|
|
-------- |
-------- |
-------- |
|
|
(5,512) |
(13,503) |
(6,449) |
|
|
-------- |
-------- |
-------- |
| Net current assets/(liabilities) |
|
10,057 |
(1,582) |
8,732 |
|
|
-------- |
-------- |
-------- |
| Total assets less current liabilities |
|
311,647 |
256,854 |
276,416 |
|
|
======== |
======== |
======== |
| Non current liabilities |
|
|
|
|
| Non current tax liabilities |
8 |
(1,734) |
– |
– |
| Deferred taxation |
8 |
(2,666) |
– |
– |
| Management shares of £1.00 each (one quarter paid) |
|
(19) |
(19) |
(19) |
|
|
-------- |
-------- |
-------- |
| Net assets |
|
307,228 |
256,835 |
276,397 |
|
|
======== |
======== |
======== |
| Equity attributable to equity holders |
|
|
|
|
| Called up share capital |
11 |
1,704 |
1,643 |
1,643 |
| Share premium account |
|
32,213 |
21,456 |
21,456 |
| Capital redemption reserve |
|
5,798 |
5,798 |
5,798 |
| Special reserve |
|
230,751 |
230,780 |
230,794 |
| Capital reserves |
|
30,897 |
(8,161) |
8,804 |
| Revenue reserve |
|
5,865 |
5,319 |
7,902 |
|
|
-------- |
-------- |
-------- |
| Total equity |
|
307,228 |
256,835 |
276,397 |
|
|
======== |
======== |
======== |
| Net asset value per ordinary share (US cents) |
10 |
180.32 |
156.29 |
168.19 |
|
|
======== |
======== |
======== |
1 see note 3.
CASH FLOW STATEMENT
for the six months ended 31 March 2017
|
Six months
ended
31 March 2017
US$’000
(unaudited) |
Six months
ended
31 March 2016
US$’000
(unaudited) |
Year ended
30 September 2016
US$’000
(audited) |
| Net cash outflow from operating activities |
(1,866) |
(15,225) |
(8,330) |
|
-------- |
-------- |
-------- |
| Financing activities |
|
|
|
| Interest paid |
– |
– |
(3) |
|
-------- |
-------- |
-------- |
| Tender costs paid |
(43) |
(250) |
(236) |
|
-------- |
-------- |
-------- |
| Share issue costs paid |
– |
(691) |
(691) |
|
-------- |
-------- |
-------- |
| Proceeds from issue of C shares |
– |
20,904 |
20,904 |
|
-------- |
-------- |
-------- |
| Net proceeds from issue of ordinary shares |
10,764 |
– |
– |
| Dividends paid |
(6,573) |
(6,251) |
(10,523) |
|
-------- |
-------- |
-------- |
| Net cash inflow from financing activities |
4,148 |
13,712 |
9,451 |
|
-------- |
-------- |
-------- |
| Increase/(decrease) in cash and cash equivalents |
2,282 |
(1,513) |
1,121 |
| Effect of foreign exchange rate changes |
(212) |
240 |
1,973 |
|
-------- |
-------- |
-------- |
| Change in cash and cash equivalents |
2,070 |
(1,273) |
3,094 |
| Cash and cash equivalents at start of period |
8,729 |
5,635 |
5,635 |
|
-------- |
-------- |
-------- |
| Cash and cash equivalents at end of period |
10,799 |
4,362 |
8,729 |
|
-------- |
-------- |
-------- |
| Comprised of: |
|
|
|
| Cash at bank |
10,799 |
4,362 |
8,729 |
|
-------- |
-------- |
-------- |
|
10,799 |
4,362 |
8,729 |
|
======== |
======== |
======== |
RECONCILIATION OF NET PROFIT/(LOSS) BEFORE TAXATION TO NET CASH FLOW FROM OPERATING ACTIVITIES
for the six months ended 31 March 2017
|
Six months
ended
31 March 2017
US$’000
(unaudited) |
Six months
ended
31 March 2016
US$’000
(unaudited) |
Year ended
30 September 2016
US$’000
(audited) |
| Operating activities |
|
|
|
| Net profit/(loss) before taxation |
31,503 |
(315) |
24,003 |
| Add back finance costs |
– |
1,380 |
1,383 |
| (Profit)/loss on investments and CFDs held at fair value through profit or loss (including transaction costs) |
(29,348) |
1,420 |
(17,094) |
| Net losses/(profit) on foreign exchange |
212 |
(240) |
(1,973) |
| Sale of investments held at fair value through profit or loss |
66,441 |
70,642 |
134,040 |
| Purchase of investments held at fair value through profit or loss |
(92,191) |
(99,445) |
(156,952) |
| Purchase of Liquidity Fund |
(18,556) |
(35,736) |
(102,881) |
| Sale of Liquidity Fund |
39,812 |
45,809 |
113,180 |
| Realised losses on closure of CFD contracts |
(13,223) |
(12,262) |
(19,917) |
| Realised gains on closure of CFD contracts |
13,159 |
10,889 |
22,060 |
| Increase in other receivables |
(1,393) |
(2,203) |
(47) |
| (Decrease)/increase in other payables |
(1,111) |
744 |
1,653 |
| Decrease in amounts due from brokers |
2,894 |
4,019 |
300 |
| Net movement in cash held on margin deposit with brokers |
450 |
(355) |
695 |
| (Decrease)/increase in amounts due to brokers |
(1,118) |
315 |
(5,852) |
| Collateral returned/(paid) in respect of contracts for difference |
1,023 |
450 |
(93) |
|
-------- |
-------- |
-------- |
| Taxation paid |
(420) |
(337) |
(835) |
|
-------- |
-------- |
-------- |
| Net cash outflow from operating activities |
(1,866) |
(15,225) |
(8,330) |
|
======== |
======== |
======== |
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 31 March 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 half yearly financial statements have been prepared using the same accounting policies as set out in the Company’s Annual Report and Financial Statements for the year ended 30 September 2016 which were prepared in accordance with International Financial Reporting Standards (‘IFRS’) as adopted by the European Union and applied in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’. Insofar as the Statement of Recommended Practice (‘SORP’) for investment trust companies and venture capital trusts issued by the Association of Investment Companies (‘AIC’), revised in November 2014 is compatible with IFRS, the Financial Statements have been prepared in accordance with guidance set out in the SORP.
3. Restatement of 2016 interim accounts
C shares were initially treated as equity in the interim financial statements for the six months ended 31 March 2016. This accounting treatment was amended in the audited financial statements for the year ended 30 September 2016 to reflect the C shares as a liability. Comparative numbers for the six months ended 31 March 2016 have been restated to reflect the change. The restatement resulted in the issue costs and the return on the C shares being treated as finance costs in the Company’s Statement of Comprehensive Income with the return on the C shares representing an increase in the liability attributable to the C shares over and above the net proceeds raised from the issue of C shares.
The accounting policy adopted for the treatment of C shares is set out in note 2(m) on page 55 of the Annual Report and Financial Statements for the year ended 30 September 2016.
4. Income
|
Six months
ended
31 March 2017
US$’000
(unaudited) |
Six months
ended
31 March 2016
US$’000
(unaudited) |
Year
ended
30 September 2016
US$’000
(audited) |
| Investment income: |
|
|
|
| Overseas listed dividends |
4,770 |
3,479 |
11,041 |
|
-------- |
-------- |
-------- |
| Income from contracts for difference |
1,054 |
1,197 |
1,954 |
|
-------- |
-------- |
-------- |
|
5,824 |
4,676 |
12,995 |
| Interest receivable and other income: |
|
|
|
| Deposit interest |
5 |
33 |
4 |
|
-------- |
-------- |
-------- |
| Total income |
5,829 |
4,709 |
12,999 |
|
===== |
===== |
===== |
Dividends and interest received during the period amounted to US$5,008,000 and US$5,000 (six months ended 31 March 2016: US$2,429,000 and US$33,000; year ended 30 September 2016: US$13,165,000 and US$4,000) respectively.
5. Investment management and performance fees
|
Six months ended
31 March 2017
(unaudited) |
Six months ended
31 March 2016
(unaudited) |
Year ended
30 September 2016
(audited) |
|
Revenue
US$’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 |
308 |
1,232 |
1,540 |
201 |
804 |
1,005 |
494 |
1,976 |
2,470 |
| Performance fee |
- |
1,012 |
1,012 |
– |
641 |
641 |
– |
2,581 |
2,581 |
|
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
| Total |
308 |
2,244 |
2,552 |
201 |
1,445 |
1,646 |
494 |
4,557 |
5,051 |
|
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
An investment management fee equivalent to 1.10% per annum of the Company’s gross assets (defined as the aggregate value of the total assets of the Company) is payable to the Manager. In addition, the Manager is also entitled to receive a performance fee at a rate of 10% of any increase in the NAV at the end of a performance period over and above what would have been achieved had the cumulative NAV since launch increased in line with the MSCI Frontiers Markets Index (‘the Reference Index’). The performance fee payable in any year is capped at an amount equal to 2.5% or 1% of the gross assets if there is any increase or decrease in the NAV per share at the end of the relevant performance period, respectively. Any capped excess outperformance for a period may be carried forward to the next two performance periods, subject to the then applicable annual cap. The performance fee is also subject to a high watermark such that any performance fee is only payable to the extent that the cumulative relative outperformance of the NAV is greater than what would have been achieved had the NAV increased in line with the Reference Index since the last date in relation to which a performance fee had been paid. The management and performance fees are payable to BFM.
For the six months ended 31 March 2017, the Company’s NAV had outperformed the MSCI Frontiers Markets Index on a US dollar basis and a performance fee of US$1,012,000 has been accrued (six months ended 31 March 2016: US$641,000; year ended 30 September 2016: US$2,581,000).
Under the terms of the C share issue in February 2016, BlackRock had agreed to waive the management fees payable by the Company up to the value of issue expenses that exceeded the capped amount of 1.75% of the gross proceeds from the issue of C shares. As the issue expenses exceeded the capped amount, the excess issue expenses of US$325,000 have been offset against the investment management fee payable by the Company during the six months period ended 31 March 2016 and year ended 30 September 2016.
6. Other operating expenses
|
Six months ended
31 March 2017
US$’000
(unaudited) |
Six months ended
31 March 2016
US$’000
(unaudited) |
Year ended
30 September 2016
US$’000
(audited) |
| Allocated to revenue: |
|
|
|
| Custody fee1 |
187 |
170 |
342 |
| Auditor’s remuneration1: |
|
|
|
| – audit services |
12 |
18 |
41 |
| – other non audit services |
7 |
19 |
23 |
| Registrar’s fee1 |
12 |
19 |
32 |
| Directors’ emoluments1 |
89 |
84 |
171 |
| Broker fees1 |
18 |
21 |
40 |
| Depositary fees |
16 |
14 |
29 |
| Marketing fees1 |
28 |
51 |
58 |
| Other administrative costs |
112 |
130 |
269 |
|
-------- |
-------- |
-------- |
|
481 |
526 |
1,005 |
|
-------- |
-------- |
-------- |
| Allocated to capital: |
|
|
|
| Transaction charges |
59 |
50 |
70 |
|
-------- |
-------- |
-------- |
|
540 |
576 |
1,075 |
|
-------- |
-------- |
-------- |
1 Custody fees, audit fees, registrar’s fees, directors’ fees, broker fees and marketing fees are paid in sterling and therefore subject to exchange rate fluctuations.
7. Finance costs
|
Six months ended
31 March 2017
(unaudited) |
Six months ended
31 March 2016
(unaudited) (Restated) |
Year ended
30 September 2016
(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$’000 |
| Interest payable - bank overdraft |
– |
– |
– |
– |
– |
– |
1 |
2 |
3 |
| Amortisation of C share issue costs |
– |
– |
– |
138 |
553 |
691 |
138 |
553 |
691 |
| Return on C shares |
– |
– |
– |
138 |
551 |
689 |
138 |
551 |
689 |
|
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
| Total |
– |
– |
– |
276 |
1,104 |
1,380 |
277 |
1,106 |
1,383 |
|
===== |
===== |
===== |
===== |
==== |
==== |
==== |
==== |
==== |
8. Taxation
|
Six months ended
31 March 2017
(unaudited) |
Six months ended
31 March 2016
(unaudited) |
Year ended
30 September 2016
(audited) |
|
Revenue
US$’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 |
| Analysis of tax charge/ (credit) for the period: |
|
|
|
|
|
|
|
|
|
| Current tax: |
|
|
|
|
|
|
|
|
|
| Corporation tax |
84 |
(84) |
– |
111 |
(111) |
– |
275 |
(275) |
– |
| Overseas tax |
420 |
– |
420 |
337 |
– |
337 |
835 |
– |
835 |
| Capital gains tax |
– |
1,734 |
1,734 |
– |
– |
– |
– |
– |
– |
|
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
| Total current tax charge |
504 |
1,650 |
2,154 |
448 |
(111) |
337 |
1,110 |
(275) |
835 |
| Deferred tax |
– |
2,666 |
2,666 |
– |
– |
– |
– |
– |
– |
|
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
| Total |
504 |
4,316 |
4,820 |
448 |
(111) |
337 |
1,110 |
(275) |
835 |
|
===== |
===== |
===== |
===== |
===== |
===== |
===== |
===== |
===== |
During the six months ended 31 March 2017, the Company has accounted for a provision for capital gains tax potentially payable in Argentina. At 31 March 2017, capital gains tax provided for in the financial statements for the six months ended 31 March 2017 amounted to US$1,734,000 on realised gains and US$2,666,000 on unrealised gains from Argentinian securities since 23 September 2013, the date when the Argentine tax reform bill became effective. There is still uncertainty as to whether the capital gains tax will become payable and there is currently no established mechanism for paying it. In the event that no tax becomes payable the provision will be reversed.
9. Dividend
The Board has declared an interim dividend of 2.70 cents per share payable on 30 June 2017 to shareholders on the register at 9 June 2017 (six months ended 31 March 2016, interim dividend of 2.60 cents per share paid on 1 July 2016 to shareholders on the register at 3 June 2016). This dividend has not been accrued in the financial statements for the six months ended 31 March 2017, as under IFRS, interim dividends are not recognised until paid. Dividends are debited directly to reserves.
10. Earnings and net asset value per ordinary share
Total revenue and capital returns per share are shown below and have been calculated using the following:
|
Six months ended
31 March 2017
(unaudited) |
Six months ended
31 March 2016
(unaudited) |
Year ended
30 September 2016
(audited) |
| Net revenue profit attributable to ordinary shareholders (US$’000) |
4,536 |
3,258 |
10,113 |
| Net capital profit/(loss) attributable to ordinary shareholders (US$’000) |
22,147 |
(3,910) |
13,055 |
|
-------- |
-------- |
-------- |
| Total profit/(loss) attributable to ordinary shareholders (US$’000) |
26,683 |
(652) |
23,168 |
|
-------- |
-------- |
-------- |
| Total equity attributable to shareholders (US$’000) |
307,228 |
256,835 |
276,397 |
| The weighted average number of ordinary shares in issue during the period on which the return per ordinary share was calculated was: |
165,363,328 |
151,820,440 |
158,076,774 |
|
-------- |
-------- |
-------- |
| The actual number of ordinary shares in issue at the end of each period on which the net asset value per ordinary share was calculated was: |
170,383,108 |
164,333,108 |
164,333,108 |
|
======== |
======== |
======== |
| Revenue earnings per ordinary share – (US cents) |
2.74 |
2.14 |
6.40 |
|
======== |
======== |
======== |
| Capital earnings/(loss) per ordinary share – (US cents) |
13.40 |
(2.58) |
8.26 |
|
======== |
======== |
======== |
| Total earnings/(loss) per ordinary share – (US cents) |
16.14 |
(0.44) |
14.66 |
|
======== |
======== |
======== |
| Net asset value per ordinary share – (US cents) |
180.32 |
156.29 |
168.19 |
|
======== |
======== |
======== |
| Share price* (US cents) |
183.82 |
152.72 |
167.58 |
| Share price (pence) |
147.00 |
106.25 |
129.00 |
|
======== |
======== |
======== |
* The Company’s share price is quoted in sterling and the above represents the US dollar equivalent based on exchange rates of 1.2505 at 31 March 2017, 1.4374 at 31 March 2016 and 1.2990 at 30 September 2016.
11. Called up share capital
|
Number of ordinary
shares in issue |
Total shares
in issue |
Nominal value
US$’000 |
| Allotted, called up and fully paid share capital comprised: |
|
|
|
| Ordinary shares of 1 cent each: |
|
|
|
| At 30 September 2016 |
164,333,108 |
164,333,108 |
1,643 |
| Ordinary shares issued |
6,050,000 |
6,050,000 |
61 |
|
--------------- |
---------------- |
-------- |
| At 31 March 2017 |
170,383,108 |
170,383,108 |
1,704 |
|
========== |
========= |
===== |
During the period 6,050,000 ordinary shares were issued for a total consideration of US$10,818,000 before the deduction of issue costs. Since the period end, a further 4,310,000 ordinary shares were issued for a total consideration of US$8,036,000 before the deduction of issue costs.
12. C Shares financial liability
|
At 31 March 2017
US$’000
(unaudited) |
At 31 March 2016
US$’000
(unaudited) |
At 30 September 2016
US$’000
(audited) |
| Proceeds from issue of C shares |
– |
20,213 |
20,213 |
| Amortisation of C share issue costs |
– |
691 |
691 |
| Return on C share liability |
– |
689 |
689 |
| Extinguishment of C share liability upon conversion to ordinary shares |
– |
(21,593) |
(21,593) |
|
-------- |
-------- |
-------- |
|
– |
– |
– |
|
===== |
===== |
===== |
On 29 February 2016 the Company issued 15,000,001 C shares with a nominal value of 10 cents each. On 15 March 2016 the C shares were converted into ordinary shares. The conversion ratio, which has been calculated by reference to the net assets of the Company attributable to the ordinary shares and the net assets of the Company attributable to the C shares as at the close of business on 7 March 2016 was 0.9141 for every C share held.
The C shares (when in issue) were listed on the London Stock Exchange. After the conversion of the C shares into ordinary shares, the shares were delisted on 21 March 2016.
Whilst the C shares were in issue, the results, assets and liabilities attributable to the C shares were accounted for in a separate pool to the results, assets and liabilities of the ordinary shares. A share of management fee and other expenses for the period the C shares had been in issue was allocated to the C share pool.
The tables below give a summary of the results of the C share pool up to the date of conversion.
| For the period from issue to conversion on 15 March 2016 |
US$’000 |
|
|
| Proceeds from issue of C shares |
20,904 |
| C share issue costs |
(691) |
| Net revenue income |
63 |
| Fair value gains on investments and contracts for difference |
626 |
| Finance costs – amortisation of C share issue costs |
691 |
|
-------- |
| Value of C shares on conversion |
21,593 |
|
====== |
13. Valuation of financial instruments
Financial assets and financial liabilities are either carried in the Statement of Financial Position at their fair value (investments and derivatives) or at an amount which is a reasonable approximation of fair value (due from brokers, dividends and interest receivable, due to brokers, accruals, cash at bank and bank overdrafts). IFRS 13 requires the Company to classify fair value measurements using a 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 2(g) as set out in the Company’s Annual Report and Financial Statements for the year ended 30 September 2016.
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 in an active market for an identical instrument. 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.
Level 2 - Valuation techniques used to price securities based on observable inputs. Valuation techniques used for non-standard 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.
As at the period end the P-Notes and CFDs are valued using the underlying equity bid price and the inputs to the valuation were the exchange rates used to convert the P-Notes and CFD valuation from the relevant local currency to US Dollars at the accounting period end date.
Level 3 – Valuation techniques using significant unobservable inputs other than quoted prices within Level 1. This category includes all instruments where the valuation technique includes inputs not based on observable market data and unobservable 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 unobservable adjustments or assumptions are required to reflect differences between the instruments and instruments for which there is no active market. The level in the fair value hierarchy where 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 in its entirety.
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 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.
There has been no change to the valuation techniques during the period under review or as at the date of this report.
CFDs and P-Notes have all been classified as Level 2 investments as their valuation has been based on market observable inputs represented by the market prices of the underlying quoted securities to which these contracts expose the Company and relevant foreign currency exchange rates.
The table below sets out fair value measurements using IFRS 13 fair value hierarchy.
Financial assets/(liabilities)
at fair value through profit or loss
at 31 March 2017 (unaudited) |
Level 1
US$’000 |
Level 2
US$’000 |
Level 3
US$’000 |
Total
US$’000 |
| Assets: |
|
|
|
|
| Equity investments |
261,304 |
9,516 |
208 |
271,028 |
| P-Notes |
– |
9,192 |
– |
9,192 |
| BlackRock’s Institutional Cash Series plc – US Dollar Liquidity Fund |
21,370 |
– |
– |
21,370 |
| Contracts for difference – long (gross exposure) |
– |
64,317 |
2 |
64,319 |
|
-------- |
-------- |
-------- |
-------- |
|
282,674 |
83,025 |
210 |
365,909 |
|
======== |
======== |
======== |
======== |
Financial assets/(liabilities)
at fair value through profit or loss
at 31 March 2016 (unaudited) |
Level 1
US$’000 |
Level 2
US$’000 |
Level 3
US$’000 |
Total
US$’000 |
| Assets: |
|
|
|
|
| Equity investments |
209,101 |
– |
– |
209,101 |
| P-Notes |
– |
6,484 |
– |
6,484 |
| BlackRock’s Institutional Cash Series plc – US Dollar Liquidity Fund |
42,851 |
– |
– |
42,851 |
| Contracts for difference – long (gross exposure) |
– |
61,345 |
– |
61,345 |
| Liabilities: |
|
|
|
|
| Contracts for difference – short (gross exposure) |
– |
(3,110) |
– |
(3,110) |
|
-------- |
-------- |
-------- |
-------- |
|
251,952 |
64,719 |
– |
316,671 |
|
======== |
======== |
======== |
======== |
Financial assets/(liabilities)
at fair value through profit or loss
at 30 September 2016 (audited) |
Level 1
US$’000 |
Level 2
US$’000 |
Level 3
US$’000 |
Total
US$’000 |
| Assets: |
|
|
|
|
| Equity investments |
215,612 |
8,792 |
211 |
224,615 |
| P-Notes |
– |
444 |
– |
444 |
| BlackRock’s Institutional Cash Series plc – US Dollar Liquidity Fund |
42,625 |
– |
– |
42,625 |
| Contracts for difference – long (gross exposure) |
– |
62,359 |
2 |
62,361 |
|
-------- |
-------- |
-------- |
-------- |
|
258,237 |
71,595 |
213 |
330,045 |
|
======== |
======== |
======== |
======== |
There were no transfers between levels for financial assets and financial liabilities during the period recorded at fair value as at 31 March 2017 or 31 March 2016. For the year ended 30 September 2016, transfers of financial assets from fair value hierarchy Level 1 to Level 2 amounted to US$8,792,000. These arose primarily in relation to the Nigerian equity securities held in the investment portfolio where the 3 month non deliverable US$-Nigerian Naira forward exchange rate was used in place of the spot exchange rates following the devaluation of the Nigerian Naira. At 31 March 2017, these equity securities were valued at US$9,516,000. Since the period end and effective from 28 April 2017, the Company has applied the spot exchange rates quoted on the FMDQ OTC Securities Exchange for valuing the Nigerian Securities following the introduction of a special window for investors by the Central Bank of Nigeria. The Company held one Level 3 security throughout the financial period under review and as at 30 September 2016. No Level 3 securities were held as at 31 March 2016.
Level 3 Financial assets at fair value through profit or loss |
31 March 2017
(unaudited)
US$’000 |
31 March 2016
(unaudited)
US$’000 |
30 September 2016
(audited)
US$’000 |
| Opening fair value |
213 |
– |
– |
| Investment acquired – corporate action spin off received |
– |
– |
213 |
| Total gains or losses included in gains/(losses) on investments in the Statement of Comprehensive Income |
(3) |
– |
– |
|
-------- |
-------- |
-------- |
| Closing balance |
210 |
– |
213 |
|
======== |
======== |
======== |
14. Transactions with the AIFM and investment manager
BlackRock Fund Managers Limited (‘BFM’) was appointed as the Company’s Alternative Investment Fund Manager (‘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)").
The investment management fee due to BFM for the six months ended 31 March 2017 amounted to US$1,540,000 (six months ended 31 March 2016: US$1,005,000; year ended 30 September 2016: US$2,470,000). In addition a performance fee of US$1,012,000 (six months ended 31 March 2016: US$641,000; year ended 30 September 2016: US$2,581,000) was accrued for the six months ended 31 March 2017.
At the period end US$1,855,000 was outstanding in respect of the investment management fee (31 March 2016: US$1,724,000; 30 September 2016: US$1,151,000). Any final performance fee for the full year to 30 September 2017 will not crystallise and fall due until the calculation date of 30 September 2017.
In addition to the above services, BlackRock provides the Company with marketing services. The total fees paid or payable for these services to 31 March 2017 amounted to US$28,000 excluding VAT (six months ended 31 March 2016: US$51,000; year ended 30 September 2016: US$58,000). Marketing fees of US$68,000 excluding VAT (31 March 2016: US$90,000; 30 September 2016: US$40,000) were outstanding at 31 March 2017.
The Company has an investment in BlackRock’s Institutional Cash Series plc – US Dollar Liquidity Fund of US$21,370,000 at 31 March 2017 (31 March 2016: US$42,851,000; 30 September 2016: US$42,625,000).
15. Related party disclosure
The Board consists of five non-executive Directors, all of whom are considered to be wholly independent by the Board. None of the Directors has a service contract with the Company. The Chairman receives an annual fee of £36,000, the Chairman of the Audit and Management Engagement Committee receives an annual fee of £30,000 and each other Director receives an annual fee of £26,000.
As at 31 March 2017 an amount of £12,000 (31 March 2016: £11,000; 30 September 2016: £13,000) was outstanding in respect of Directors' fees.
At the period end, the interests of the Directors in the ordinary shares of the Company were as set out below:
|
Ordinary
shares |
|
|
| Audley Twiston-Davies |
128,935 |
| John Murray |
121,967 |
| Nicholas Pitts-Tucker |
110,148 |
| Sarmad Zok |
38,787 |
| Stephen White |
30,000 |
16. Contingent liabilities
There were no contingent liabilities at 31 March 2017 (31 March 2016 and 30 September 2016: nil).
17. Publication of non statutory accounts
The financial information contained in this half yearly financial report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the six months ended 31 March 2017 has not been audited.
The information for the year ended 30 September 2016 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 qualifications or statement under section 498(2) or 498(3) of the Companies Act 2006.
18. Annual results
The Board expects to announce the annual results for the year ended 30 September 2017 in early December 2017. Copies of the annual results announcement can be obtained from the Secretary on 020 7743 3000. The Annual Report and Financial Statements should be available by late December with the Annual General Meeting being held in February 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
25 May 2017
12 Throgmorton Avenue
London EC2N 2DL
END
