BlackRock Frontiers Investment Trust Plc - Half-year Report
(LEI: 5493003K5E043LHLO706)
HALF YEARLY FINANCIAL REPORT FOR THE SIX MONTHS ENDED
Performance record
The Company’s financial statements are presented in US Dollars. The Company’s shares are listed on the
As at As at 31 March 30 September 2024 2023 US Dollar Net assets (US$’000)1 397,362 363,598 Net asset value per ordinary share (cents) 209.88 192.05 Ordinary share price (mid-market)2 (cents) 192.96 175.76 --------------- --------------- British Pound Sterling Net assets (£’000)1,2 314,555 297,897 Net asset value per ordinary share2 (pence) 166.14 157.35 Ordinary share price (mid-market) (pence) 152.75 144.00 Discount3 8.1% 8.5% ========= =========
For the six For the months ended year ended 31 March 30 September Since 2024 2023 inception4 Performance % % % US Dollar Net asset value per share (with +12.0 +25.1 +123.9 dividends reinvested)3 Benchmark Index5,6 +8.6 +5.0 +54.3 MSCI Frontier Markets Index6 +9.4 +6.5 +45.3 MSCI Emerging Markets Index6 +10.4 +11.7 +29.6 Ordinary share price (with +12.7 +28.8 +104.2 dividends reinvested)3 --------------- --------------- --------------- British Pound Sterling Net asset value per share (with +8.2 +14.3 +175.4 dividends reinvested)3 Benchmark Index5,6 +4.9 -3.9 +89.0 MSCI Frontier Markets Index6 +5.7 -2.6 +79.3 MSCI Emerging Markets Index6 +6.7 +2.2 +59.9 Ordinary share price (with +8.9 +17.7 +150.8 dividends reinvested)3 ========= ========= =========
1 The change in net assets reflects dividends paid and portfolio movements during the period.
² Based on an exchange rate of
³ Alternative Performance Measures, see Glossary in the half yearly report and financial statements.
⁴ The Company was incorporated on
⁵ With effect from
⁶ Total return indices calculate the reinvestment of dividends net of withholding taxes.
Sources: BlackRock and Datastream.
Chair’s Statement
Dear Shareholder,
I am pleased to present the Company’s Half Yearly Financial Report for the six months to
Period highlights
-- NAV total return of +12.0%, well ahead of the Benchmark Index of +8.6% (in US Dollar terms with dividends reinvested); -- Share price total return of +12.7% (in US Dollar terms with dividends reinvested); -- Share price total return of +8.9% (in British Pound Sterling terms with dividends reinvested); -- Declared interim dividend of3.50 cents per share; and -- Yield of 4.4% (based on the share price at31 March 2024 , interim dividend for 2024 and final dividend for 2023).
Performance and overview
The portfolio managers’ unique strategy and investment process have again enabled the Company to perform strongly during the period, comfortably beating our Benchmark Index. In fact, the Company has outperformed its Benchmark in five of the past six 6-month periods. The portfolio managers’ ability to identify and expose the portfolio to exciting and uncorrelated themes is, we believe, a key competitive advantage.
During the six months to
As you will read in the Investment Manager’s Report which follows, our portfolio managers describe an improving macroeconomic backdrop for many countries across the Frontier Markets, often arising from the implementation of more orthodox fiscal policy, relatively low interest rates and greater political stability, together providing a fertile environment for growth. The portfolio is exposed to a broad range of fast-growing companies across
Our portfolio managers provide a detailed description of the key contributors to and detractors from performance during the period, portfolio activity and their views on the outlook for the second half of the financial year in their report which follows.
Revenue return and dividends
The Company’s revenue return per share for the six months ended
This higher interim dividend is reflective of an increase in the amount of revenue generated, which the portfolio managers believe is sustainable given that it is broadly representative of the underlying earnings growth in the companies held within the portfolio. There can, of course, be no guarantee of the level of future revenue derived from the portfolio and nor, therefore, the amount of dividends that may be paid.
Gearing
One of the advantages of the investment trust structure is that the Company can use gearing with the objective of increasing portfolio returns over the longer term. The Company generated leverage in the portfolio through its contracts for difference (CFD) exposure during the period. As at
Fees and charges
As a result of the outperformance of the Benchmark Index during the period, a performance fee of
As a Board, we regularly review our fees and charges. We conducted a detailed, formal, fee review towards the end of last year, which was supplemented by an analysis of our fee structure by a third party. The Board concluded that the fees charged represented good value and that the Company’s fee structure and quantum remained appropriate. Further details of the Company’s costs and charges can be found in note 4 below and in the Glossary in the half yearly report and financial statements.
Board composition
On
As announced on
Share capital
For the period under review, the Company’s ordinary shares traded at an average discount to NAV of 8.5%, and this had narrowed to 8.1% on a cum-income basis at
As at
The Directors currently have the authority to buy back shares in the market equivalent to 14.99% of the Company’s issued share capital and also to issue new shares equivalent to 10% of the Company’s issued share capital (excluding any shares held in treasury). The Board will seek a renewal of these authorities from shareholders at the AGM.
Shareholder communication
I was delighted to offer my first meetings as Chair to several of our shareholders during the period. As always, it is invaluable to share views on the Company as well as the wider sector and I look forward to staying in regular dialogue going forward.
We appreciate how important access to regular and high quality information is to our shareholders. To supplement the Company’s website, we offer shareholders the ability to sign up to the BlackRock Trust Matters newsletter which includes information on the Company as well as news, views and insights. Further information on how to sign up is included on the inside cover of this report.
Outlook
Since the period end and up to
As investors, they are emboldened by the opportunity set, noting the improving fundamentals of several countries to which we have previously had a material exposure, such as
Chair
Investment Manager’s Report
Market review
A common theme in our communication with clients over the past one and a half years has been the world splitting along geopolitical alliances; Eastern aligned, US/Western aligned, and the rest – with the latter group standing to benefit greatly over the medium-term as trade channels strengthen and they increase their share of global foreign direct investment (FDI). The emergence of this new world order has become ever more prevalent over the past six months, as our insights from on-the-ground research have reinforced.
In 2024, approximately 75 countries, representing over half of the world’s population, are heading to the polls. The outcomes of these elections could potentially alter both domestic and foreign policies. The sheer number of elections globally signifies a period of potential political volatility, but also presents unique opportunities. This could lead to shifts in power dynamics, policy changes, and economic adjustments, creating both risks and opportunities. A few of these elections, including those in
Over this period, we have also seen market reforms unfold and liquidity improve in some of the smaller emerging markets. In
In terms of performance, a variety of different markets within our universe have done well. In
In
From the road
Over the last six months, our trips have taken us across five different continents, and we have spent a considerable amount of time in many of the smaller markets within our universe, hunting for alpha. Some of the markets we have visited have been absent from the portfolio for an extended period of time, but a select few of these markets have now started to flag positively through our macro process and we expect their economies to see an upswing in activity post extended downturns, external rebalancing, under-valued currency, and relatively stable politics. Examples include
We had a packed agenda for our trip to
Some of the other countries we have travelled to include
In
Portfolio review
In the six months to
Several stock picks across a variety of different markets did well.
PKO Bank Polski
(+69.9%) was the strongest performer over the period. The Polish market rallied following the elections that took place in mid-October. Turkish gold operator
Eldorado Gold
(+57.2%) was another strong contributor. The stock price has been supported by the latest surge in gold prices.
On the other hand,
Astra International
(-16.9%), the Indonesian conglomerate, weighed on returns. Performance lagged due to concerns the company has been slow to ramp into electric vehicles in the Indonesian market and risks losing out to Chinese competition.
LPP
(-6.9%), a Polish clothing manufacturer was another detractor over the period following a short seller report released by
We added to
Outlook
As higher global interest rates continue to feed through into the real economy, we expect some moderation of demand in developed markets. We note slowing credit growth in particular in the US. In contrast, we continue to see improving activity levels in frontier and smaller emerging markets. With inflation falling across many countries, rate cuts have started to materialize in some areas of our universe. This is a good set up for domestically oriented economies to see a cyclical pick up.
Over the period, we have increased our exposure to
We have initiated small positions in a number of countries where we have not been invested for some time, including
Given this backdrop, we remain positive on the outlook for small emerging and frontier markets versus developed markets. We find significant value in currencies and equity markets across our investment opportunity set, and we are particularly excited about the opportunities we see in many of the smaller markets. Our investment universe, in absolute and relative terms, also remains under-researched. We believe this to be the perfect hunting ground and should continue to enable compelling investment opportunities.
Ten largest investments
1
as at
The Company’s ten largest investments represented 33.7% of the Company’s portfolio as at
1 ▲
Financials (
Portfolio value:
Percentage of net assets: 4.8% (2023: 4.2%)
2
▼
Bank Central Asia
(2023: 1st)
Financials (
Portfolio value:
Percentage of net assets: 4.7% (2023: 4.6%)
Bank Central Asia is an Indonesian commercial bank headquartered in
3
►
JSC Kaspi
(2023: 3rd)
Financials (
Portfolio value:
Percentage of net assets: 3.8% (2023: 3.2%)
JSC Kaspi is the largest payments, marketplace and fintech ecosystem in
4
▲
Emaar Properties
(2023: 6th)
Real Estate (
Portfolio value:
Percentage of net assets: 3.4% (2023: 2.9%)
Emaar Properties is an
5
▲
FPT
2
(2023: 7th)
Information Technology (
Portfolio value:
Percentage of net assets: 3.2% (2023: 2.8%)
FPT is Vietnam’s largest information technology services company. The core business focuses on consulting, providing and deploying technology and telecommunications services and solutions.
6
▲
Abdullah Al Othaim Markets
2
(2023: 16th)
Consumer Staples (
Portfolio value:
Percentage of net assets: 3.0% (2023: 2.4%)
Abdullah Al Othaim Markets is a large retailer in
7
▲
Ayala Land
(2023: 34th)
Real Estate (
Portfolio value:
Percentage of net assets: 2.9% (2023: 1.8%)
Ayala Land is a
8
▲
Etihad Etisalat
2
(2023: n/a)
Communication Services (
Portfolio value:
Percentage of net assets: 2.7% (2023: nil%)
Also known as Mobily, this is a
9
▲
Wizz Air Holdings
(2023: 15th
)
Industrials (
Portfolio value:
Percentage of net assets: 2.6% (2023: 2.5%)
Wizz Air Holdings, legally incorporated as
10
▲
Bank of Georgia
(2023: 24
th
)
Financials (
Portfolio value:
Percentage of net assets: 2.6% (2023: 2.5%)
Bank of Georgia is a
1 Gross market exposure as a % of net assets.
2 Exposure gained via contracts for difference (CFDs) only.
Percentages shown are the share of net assets.
The market value shown is the gross exposure to the shares through equity investments and long derivative positions. For equity investments, the market value is the fair value of the shares. For long derivative positions, it is the market value of the underlying shares to which the portfolio is exposed via the contract.
Percentages in brackets represent the portfolio holding as at
Arrows indicate the change in the relative ranking of the position in the portfolio compared to its ranking as at
Portfolio analysis as at
Country allocation: Absolute weights (Gross market exposure as a % of net assets) 1
_________________________ | |% | |____________________|____| |Saudi Arabia |18.8| |____________________|____| |Indonesia |14.2| |____________________|____| |Philippines |10.1| |____________________|____| |Kazakhstan |8.0 | |____________________|____| |United Arab Emirates|7.0 | |____________________|____| |Hungary |6.7 | |____________________|____| |Greece |6.1 | |____________________|____| |Vietnam |5.2 | |____________________|____| |Czech Republic |4.9 | |____________________|____| |Poland |4.8 | |____________________|____| |Chile |4.7 | |____________________|____| |Thailand |4.6 | |____________________|____| |Qatar |4.0 | |____________________|____| |Argentina |3.1 | |____________________|____| |Georgia |2.6 | |____________________|____| |Multi-International |2.5 | |____________________|____| |Kenya |2.5 | |____________________|____| |Colombia |2.3 | |____________________|____| |Malaysia |2.1 | |____________________|____| |Turkey |2.1 | |____________________|____| |Pakistan |1.8 | |____________________|____| |Romania |1.6 | |____________________|____| |Nigeria |1.3 | |____________________|____| |Cambodia |0.9 | |____________________|____| |Bangladesh |0.8 | |____________________|____| |Egypt |0.4 | |____________________|____|
Country allocation relative to the Benchmark Index (%) 1
_________________________ | |% | |____________________|____| |Kazakhstan |7.1 | |____________________|____| |Philippines |6.5 | |____________________|____| |Hungary |5.3 | |____________________|____| |Czech Republic |4.2 | |____________________|____| |Indonesia |3.7 | |____________________|____| |Greece |3.2 | |____________________|____| |Argentina |3.1 | |____________________|____| |Georgia |2.6 | |____________________|____| |Vietnam |2.5 | |____________________|____| |Multi-International |2.5 | |____________________|____| |Kenya |2.3 | |____________________|____| |Chile |2.0 | |____________________|____| |Colombia |1.6 | |____________________|____| |Pakistan |1.5 | |____________________|____| |Nigeria |1.3 | |____________________|____| |Cambodia |0.9 | |____________________|____| |Bangladesh |0.6 | |____________________|____| |Romania |0.5 | |____________________|____| |United Arab Emirates|0.2 | |____________________|____| |Egypt |0.0 | |____________________|____| |Lithuania |-0.1| |____________________|____| |Luxembourg |-0.1| |____________________|____| |Sri Lanka |-0.1| |____________________|____| |Estonia |-0.1| |____________________|____| |Tunisia |-0.1| |____________________|____| |Mauritius |-0.2| |____________________|____| |Jordan |-0.2| |____________________|____| |Bahrain |-0.3| |____________________|____| |Croatia |-0.3| |____________________|____| |Oman |-0.3| |____________________|____| |Slovenia |-0.5| |____________________|____| |Qatar |-0.7| |____________________|____| |Poland |-0.7| |____________________|____| |Other |-0.8| |____________________|____| |Morocco |-0.9| |____________________|____| |Turkey |-1.8| |____________________|____| |Peru |-1.9| |____________________|____| |Thailand |-4.0| |____________________|____| |Kuwait |-4.6| |____________________|____| |Saudi Arabia |-5.2| |____________________|____| |Malaysia |-5.6| |____________________|____|
Sector allocation: Absolute weights (Gross market exposure as a % of net assets)
1
___________________________ | |% | |______________________|____| |Financials |45.2| |______________________|____| |Industrials |14.9| |______________________|____| |Energy |12.0| |______________________|____| |Materials |10.0| |______________________|____| |Consumer Staples |9.3 | |______________________|____| |Consumer Discretionary|8.3 | |______________________|____| |Real Estate |8.2 | |______________________|____| |Communication Services|6.5 | |______________________|____| |Information Technology|5.7 | |______________________|____| |Utilities |2.2 | |______________________|____| |Health Care |0.8 | |______________________|____|
Sector allocation relative to the Benchmark Index (%) 1
___________________________ | |% | |______________________|____| |Industrials |7.6 | |______________________|____| |Energy |5.3 | |______________________|____| |Information Technology|4.3 | |______________________|____| |Consumer Discretionary|4.3 | |______________________|____| |Real Estate |4.1 | |______________________|____| |Consumer Staples |3.8 | |______________________|____| |Materials |0.5 | |______________________|____| |Financials |-0.6| |______________________|____| |Communication Services|-1.4| |______________________|____| |Health Care |-2.3| |______________________|____| |Utilities |-2.5| |______________________|____|
1 Includes exposure gained through equity positions and long and short CFD positions.
Sources: BlackRock and Datastream.
Investments as at
Equity portfolio by country of exposure
Principal Gross market country of Fair value1 exposure as a Company operation Sector US$’000 % of net assets3 Bank Central Indonesia Financials 18,794 4.7 Asia Astra Indonesia Industrials 8,716 2.2 International Ciputra Indonesia Real Estate 7,609 1.9 Development Bank Rakyat Indonesia Financials 7,528 1.9 Mitra Indonesia Consumer 7,382 1.9 Adiperkasa Discretionary Bank Syariah Indonesia Financials 6,775 1.6 Indonesia --------------- --------------- 56,804 14.2 ========= ========= Ayala Land Philippines Real Estate 11,533 2.9 International Container Philippines Industrials 8,262 2.1 Terminal Services Bloomberry Philippines Consumer 8,185 2.1 Discretionary Metrobank Philippines Financials 7,516 1.9 Jollibee Foods Philippines Consumer 4,639 1.1 Discretionary --------------- --------------- 40,135 10.1 ========= ========= JSC Kaspi Kazakhstan Financials 15,103 3.8 Halyk Savings Kazakhstan Financials 9,130 2.3 Bank Kazatomprom Kazakhstan Energy 7,700 1.9 --------------- --------------- 31,933 8.0 ========= ========= OTP Bank Hungary Financials 9,040 2.3 Wizz Air Hungary Industrials 7,636 1.9 Holdings MOL Group Hungary Energy 7,489 1.8 --------------- --------------- 24,165 6.0 ========= ========= Athens International Greece Industrials 10,146 2.6 Airport National Bank Greece Financials 8,181 2.1 of Greece OPAP Greece Consumer 4,981 1.4 Discretionary --------------- --------------- 23,308 6.1 ========= ========= Emaar United Arab Real Estate 13,418 3.4 Properties Emirates Air Arabia United Arab Industrials 7,403 1.9 Emirates --------------- --------------- 20,821 5.3 ========= ========= Cervecerias Chile Consumer 6,753 1.7 Unidas Staples Empresas CMPC Chile Materials 6,266 1.6 Sociedad Quimica y Chile Industrials 6,054 1.4 Minera – ADR --------------- --------------- 19,073 4.7 ========= ========= CP All Thailand Consumer 9,299 2.3 Staples Advanced Info Thailand Communication 9,068 2.3 Service Services --------------- --------------- 18,367 4.6 ========= ========= Komercni Banka Czech Republic Financials 8,804 2.2 Moneta Money Czech Republic Financials 6,855 1.7 Bank --------------- --------------- 15,659 3.9 ========= ========= PZU Poland Financials 7,590 1.9 LPP Poland Consumer 3,614 0.9 Discretionary --------------- --------------- 11,204 2.8 ========= ========= Bank of Georgia Georgia Financials 10,220 2.6 --------------- --------------- 10,220 2.6 ========= ========= Vista Oil & Gas Argentina Energy 10,203 2.6 --------------- --------------- 10,203 2.6 ========= ========= EPAM Systems Multi-International Information 10,120 2.5 Technology --------------- --------------- 10,120 2.5 ========= ========= Equity Group Kenya Financials 5,116 1.3 Safaricom Kenya Communication 3,599 0.9 Services Kenya Kenya Financials 1,033 0.3 Commercial Bank --------------- --------------- 9,748 2.5 ========= ========= Bancolombia Colombia Financials 9,016 2.3 --------------- --------------- 9,016 2.3 ========= ========= Frontken Corp Malaysia Industrials 8,361 2.1 --------------- --------------- 8,361 2.1 ========= ========= Eldorado Gold Turkey Materials 8,288 2.1 --------------- --------------- 8,288 2.1 ========= ========= MCB Bank Pakistan Financials 6,506 1.6 Lucky Cement Pakistan Materials 886 0.2 --------------- --------------- 7,392 1.8 ========= ========= BRD–Groupe Société Romania Financials 6,226 1.6 Générale --------------- --------------- 6,226 1.6 ========= ========= Qatar Gas Transport Qatar Energy 5,863 1.5 Company --------------- --------------- 5,863 1.5 ========= ========= Guaranty Trust Nigeria Financials 2,749 0.7 Holding United Bank for Nigeria Financials 2,255 0.6 Africa --------------- --------------- 5,004 1.3 ========= ========= NagaCorp Cambodia Consumer 3,449 0.9 Discretionary --------------- --------------- 3,449 0.9 ========= ========= Square Bangladesh Health Care 2,983 0.8 Pharmaceuticals --------------- --------------- 2,983 0.8 ========= ========= Commercial International Egypt Financials 2,066 0.4 Bank --------------- --------------- 2,066 0.4 ========= ========= Equity 360,408 90.7 investments ========= ========= BlackRock’s Institutional Cash Series plc – US Dollar 49,538 12.5 Liquid Environmentally Aware Fund (Cash Fund) --------------- --------------- Total equity investments 409,946 103.2 (including Cash Fund) ========= =========
CFD portfolio
Principal Gross market Gross market country of Fair exposure3 exposure as a Company Sector value1 US$’000 % of net operation US$’000 assets3 Long positions Saudi Saudi Financials 19,071 4.8 NationalBank Arabia Abdullah Al Saudi Consumer Othaim Arabia Staples 11,792 3.0 Markets Etihad Saudi Communication 10,868 2.7 Etisalat Arabia Services Saudi Basic Saudi Industries Arabia Materials 9,569 2.4 Corporation Al Rajhi Bank Saudi Financials 8,311 2.1 Arabia Yanbu Saudi National Arabia Materials 8,134 2.0 Petrochemical MBC Group Saudi Communication 2,415 0.6 Arabia Services --------------- --------------- 70,160 17.6 ========= ========= FPT Vietnam Information 12,716 3.2 Technology Petrovietnam Drilling & Vietnam Energy 6,860 1.7 Well Services Vietnam Dairy Vietnam Consumer 1,237 0.3 Products Staples --------------- --------------- 20,813 5.2 ========= ========= Gulf International Qatar Energy 7,712 1.9 Services Qatar Gas Transport Qatar Energy 2,189 0.6 Company --------------- --------------- 9,901 2.5 ========= ========= Jeronimo Poland Consumer 7,910 2.0 Martins Staples --------------- --------------- 7,910 2.0 ========= ========= United Borouge Arab Materials 6,673 1.7 Emirates --------------- --------------- 6,673 1.7 ========= ========= Wizz Air Hungary Industrials 2,819 0.7 Holdings --------------- --------------- 2,819 0.7 ========= ========= Total long (2,271) 118,276 29.7 CFD positions ========= ========= Total short (149) (10,804) (2.7) CFD positions --------------- --------------- Total CFD (2,420) 107,472 27.0 portfolio ========= =========
Fair value and gross market exposure of investments as at
Gross market Gross market exposure as Fair value1 exposure2,3 a % of net assets3 Portfolio US$’000 US$’000 31 March 2024 31 March 2023 30 September 2023 Long equity investment positions (excluding BlackRock’s Institutional 360,408 360,408 90.7 76.9 85.2 Cash Series plc – US Dollar Liquid Environmentally Aware Fund) Long CFD (2,271) 118,276 29.7 29.4 29.8 positions Short CFD (149) (10,804) (2.7) (3.9) (3.0) positions --------------- --------------- --------------- --------------- --------------- Subtotal of long and short 357,988 467,880 117.7 102.4 112.0 investment positions ========= ========= ========= ========= ========= Cash Fund 49,538 49,538 12.5 22.4 17.8 --------------- --------------- --------------- --------------- --------------- Total investment and 407,526 517,418 130.2 124.8 129.8 derivatives ========= ========= ========= ========= ========= Cash and cash 1,035 (108,857) (27.4) (22.9) (25.9) equivalents Other net current (11,180) (11,180) (2.8) (1.9) (3.9) liabilities Non-current (19) (19) 0.0 0.0 0.0 liabilities --------------- --------------- --------------- --------------- --------------- Net assets 397,362 397,362 100.0 100.0 100.0 ========= ========= ========= ========= =========
The nature of the Company’s portfolio and the fact the Company gains significant exposure to a number of markets through long and short CFDs means that the Company will aim to hold a level of cash (or an equivalent holding in a
The Company was geared through the use of long and short CFD positions and gross and net gearing as at
1 Fair value is determined as follows:
– Long equity investment positions are valued at bid prices where available, otherwise at latest market traded quoted prices.
–
The exposure to securities held through long CFD positions directly in the market would have amounted to
–
The notional exposure of selling the securities gained via the short CFD positions would have been
2 The gross market exposure column for cash and cash equivalents has been adjusted to assume the Company traded direct holdings rather than exposure being gained through long and short CFDs.
3 Gross market exposure for equity investments is the same as fair value; bid prices are used where available and, if unavailable, latest market traded quoted prices are used. For both long and short CFD positions, the gross market exposure is the market value of the underlying shares to which the portfolio is exposed via the contract.
Interim Management Report and Responsibility Statement
The Chair’s Statement and the Investment Manager’s Report above 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:
-- Investment Performance Risk; -- Income/Dividend Risk; -- Legal and Regulatory Risk; -- Counterparty Risk; -- Operational Risk; -- Political Risk; -- Financial Risk; and -- Market 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
Certain financial markets have been volatile during the financial period due primarily to continuing geo-political tensions arising from Russia’s invasion of
In the view of the Board, other than those noted above, 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 Board remains mindful of the ongoing uncertainty surrounding the potential duration of the
Based on the above, the Board is satisfied that it is appropriate to 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 them. Ongoing charges (excluding performance fees, finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation, prior year expenses written back and certain non-recurring items) were approximately 1.38% of average daily net assets for the year ended
Related party disclosures and transactions with the AIFM and Investment Manager
Directors’ Responsibility Statement
The Disclosure Guidance and Transparency Rules (DTR) of the
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 theUK -adopted International Accounting Standard 34 – Interim Financial Reporting; and -- the Interim Management Report, together with the Chair’s Statement and Investment Manager’s Report, includes a fair review of the information required by 4.2.7R and 4.2.8R of theFinancial Conduct Authority (FCA) Disclosure Guidance 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
For and on behalf of the Board
Independent Review Report to the members of
Conclusion
We have been engaged by
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
Basis for Conclusion
We conducted our review in accordance with International Standard on Review Engagements 2410 (
As disclosed in note 2, the annual financial statements of the Company are prepared in accordance with
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for Conclusion section of this report, nothing has come to our attention to suggest that management have inappropriately adopted the going concern basis of accounting or that management have identified material uncertainties relating to going concern that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with this ISRE, however future events or conditions may cause the entity to cease to continue as a going concern.
Responsibilities of the Directors
The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the
In preparing the half-yearly financial report, the Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.
Use of our report
This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (
Statement of Comprehensive Income for the six months ended
Six months ended Six months ended Year ended 31 March 2024 31 March 2023 30 September 2023 (unaudited) (unaudited) (audited) Revenue Capital Total Revenue Capital Total Revenue Capital Total Notes US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 Income from investments held at fair 3 7,334 – 7,334 5,692 – 5,692 17,402 – 17,402 value through profit or loss Net income from contracts for 3 785 – 785 927 565 1,492 1,985 565 2,550 difference Other income 3 75 – 75 171 – 171 251 – 251 --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- Total income 8,194 – 8,194 6,790 565 7,355 19,638 565 20,203 ========= ========= ========= ========= ========= ========= ========= ========= ========= Net profit on investments held at fair – 46,084 46,084 – 41,339 41,339 – 58,566 58,566 value through profit or loss Net loss on foreign – (229) (229) – (47) (47) – (1,980) (1,980) exchange Net (loss)/profit – (3,694) (3,694) – 424 424 – 12,523 12,523 from derivatives --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- Total 8,194 42,161 50,355 6,790 42,281 49,071 19,638 69,674 89,312 ========= ========= ========= ========= ========= ========= ========= ========= ========= Expenses Investment management and 4 (412) (5,609) (6,021) (357) (4,192) (4,549) (757) (11,298) (12,055) performance fees Other operating 5 (500) (38) (538) (488) (22) (510) (942) (68) (1,010) expenses --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- Total operating (912) (5,647) (6,559) (845) (4,214) (5,059) (1,699) (11,366) (13,065) expenses ========= ========= ========= ========= ========= ========= ========= ========= ========= Net profit on ordinary activities 7,282 36,514 43,796 5,945 38,067 44,012 17,939 58,308 76,247 before finance costs and taxation Finance costs 6 (14) (55) (69) (12) (49) (61) (23) (94) (117) --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- Net profit on ordinary 7,268 36,459 43,727 5,933 38,018 43,951 17,916 58,214 76,130 activities before taxation ========= ========= ========= ========= ========= ========= ========= ========= ========= Taxation 7 (1,029) 343 (686) (750) 350 (400) (2,044) 770 (1,274) (charge)/credit Profit for the 6,239 36,802 43,041 5,183 38,368 43,551 15,872 58,984 74,856 period Earnings per ordinary share 9 3.30 19.43 22.73 2.74 20.26 23.00 8.38 31.1639.54 (cents) ========= ========= ========= ========= ========= ========= ========= ========= =========
The total columns of this statement represent the Company’s Statement of Comprehensive Income, prepared in accordance with
The Company does not have any other comprehensive income. 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
Called Capital up share redemption Special Capital Revenue capital reserve reserve reserves reserve Total Note US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 For the six months ended 31 March 2024 (unaudited) At 30 September 2,418 5,798 308,804 36,153 10,425 363,598 2023 Total comprehensive income: Net profit for the – – – 36,802 6,239 43,041 period Transactions with owners, recorded directly to equity: Dividends 8 – – – – (9,277) (9,277) paid1 --------------- --------------- --------------- --------------- --------------- --------------- At 31 March 2,418 5,798 308,804 72,955 7,387 397,362 2024 ========= ========= ========= ========= ========= ========= For the six months ended 31 March 2023 (unaudited) At 30 September 2,418 5,798 308,804 (22,831) 8,467 302,656 2022 Total comprehensive income: Net profit for the – – – 38,368 5,183 43,551 period Transactions with owners, recorded directly to equity: Dividends – – – – (8,046) (8,046) paid2 --------------- --------------- --------------- --------------- --------------- --------------- At 31 March 2,418 5,798 308,804 15,537 5,604 338,161 2023 ========= ========= ========= ========= ========= ========= For the year ended 30 September 2023 (audited) At 30 September 2,418 5,798 308,804 (22,831) 8,467 302,656 2022 Total comprehensive income: Net profit – – – 58,984 15,872 74,856 for the year Transactions with owners, recorded directly to equity: Dividends – – – – (13,914) (13,914) paid3 --------------- --------------- --------------- --------------- --------------- --------------- At 30 September 2,418 5,798 308,804 36,153 10,425 363,598 2023 ========= ========= ========= ========= ========= =========
1
Final dividend of
2
Final dividend of
3
Final dividend of
For information on the Company’s distributable reserves, please refer to note 11.
Statement of Financial Position as at
31 March 31 March 30 September 2024 2023 2023 (unaudited) (unaudited) (audited) Notes US$’000 US$’000 US$’000 Non current assets Investments held at fair value through profit or 12 409,946 335,699 374,517 loss --------------- --------------- --------------- Current assets Current tax asset 404 430 444 Other receivables 7,521 2,856 5,085 Derivative financial assets held at fair value 12 1,347 3,997 1,402 through profit or loss – contracts for difference Cash and cash equivalents 1,035 6,098 5,308 Cash collateral pledged 7,729 553 2,435 with brokers --------------- --------------- --------------- Total current assets 18,036 13,934 14,674 ========= ========= ========= Total assets 427,982 349,633 389,191 ========= ========= ========= Current liabilities Bank overdraft – – (25) Other payables (25,064) (8,895) (20,015) Derivative financial liabilities held at fair value through profit or 12 (3,767) (1,148) (3,234) loss – contract for differences Liability for cash (1,770) (1,410) (2,300) collateral received --------------- --------------- --------------- Total current liabilities (30,601) (11,453) (25,574) ========= ========= ========= Total assets less current 397,381 338,180 363,617 liabilities ========= ========= ========= Non current liabilities Management shares of £1.00 (19) (19) (19) each (one quarter paid up) --------------- --------------- --------------- Net assets 397,362 338,161 363,598 ========= ========= ========= Equity attributable to equity holders Called up share capital 10 2,418 2,418 2,418 Capital redemption reserve 5,798 5,798 5,798 Special reserve 308,804 308,804 308,804 Capital reserves 72,955 15,537 36,153 Revenue reserve 7,387 5,604 10,425 --------------- --------------- --------------- Total equity 397,362 338,161 363,598 ========= ========= ========= Net asset value per 9 209.88 178.61 192.05 ordinary share (cents) ========= ========= =========
Cash Flow Statement for the six months ended
31 March 31 March 30 September 2024 2023 2023 (unaudited) (unaudited) (audited) US$’000 US$’000 US$’000 Operating activities Net profit on ordinary 43,727 43,951 76,130 activities before taxation Add back finance costs 69 61 117 Net profit on investments held at fair value through profit or (46,084) (41,339) (58,566) loss (including transaction costs) Net loss/(profit) from derivatives (including 3,694 (424) (12,523) transaction costs) Financing costs on derivatives (2,507) (1,804) (4,107) Net loss on foreign exchange 229 47 1,980 Sales of investments held at fair value through profit or 107,625 84,218 183,095 loss Purchases of investments held at fair value through profit or (112,303) (76,240) (207,654) loss Sales of Cash Fund1 88,244 78,977 163,097 Purchases of Cash Fund1 (72,909) (83,371) (156,544) Amounts paid for losses on (22,016) (27,288) (42,659) closure of derivatives Amounts received on profit on 21,415 22,810 57,263 closure of derivatives Increase in other receivables (807) (2,105) (855) Increase in other payables 3,325 4,859 10,651 (Increase)/decrease in amounts (1,629) 594 (2,885) due from brokers Increase/(decrease) in amounts 1,724 (822) 4,506 due to brokers Cash collateral pledged with (5,294) 6,851 4,969 brokers Cash collateral received from (530) 760 1,650 brokers Taxation paid (646) (384) (1,272) --------------- --------------- --------------- Net cash inflow from operating 5,327 9,351 16,393 activities ========= ========= ========= Financing activities Interest paid (69) (61) (117) Dividends paid (9,277) (8,046) (13,914) --------------- --------------- --------------- Net cash outflow from financing (9,346) (8,107) (14,031) activities ========= ========= ========= (Decrease)/increase in cash and (4,019) 1,244 2,362 cash equivalents Effect of foreign exchange rate (229) (47) (1,980) changes --------------- --------------- --------------- Change in cash and cash (4,248) 1,197 382 equivalents ========= ========= ========= Cash and cash equivalents at the 5,283 4,901 4,901 start of the period/year --------------- --------------- --------------- Cash and cash equivalents at the 1,035 6,098 5,283 end of the period/year Comprised of: Cash at bank 1,035 6,098 5,308 Bank overdraft – – (25) --------------- --------------- --------------- 1,035 6,098 5,283 ========= ========= =========
1
The notes below form part of these financial statements.
Notes to the Financial Statements for the six months ended
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 for the period ended
Insofar as the Statement of Recommended Practice (SORP) for investment trust companies and venture capital trusts, issued by the
Adoption of new and amended International Accounting Standards and interpretations:
IFRS 17 – Insurance contracts (effective 1 January 2023).
This standard replaced IFRS 4 and applies to all types of insurance contracts. IFRS 17 provides a consistent and comprehensive model for insurance contracts covering all relevant accounting aspects.
This standard is unlikely to have any impact on the Company as it has no insurance contracts.
IAS 12 - Deferred tax related to assets and liabilities arising from a single transaction (effective 1 January 2023). The IASB has amended IAS 12 Income Taxes to require companies to recognise deferred tax on particular transactions that, on initial recognition, give rise to equal amounts of taxable and deductible temporary differences. According to the amended guidance, a temporary difference that arises on initial recognition of an asset or liability is not subject to the initial recognition exemption if that transaction gave rise to equal amounts of taxable and deductible temporary differences. These amendments might have a significant impact on the preparation of financial statements by companies that have substantial balances of right-of-use assets, lease liabilities, decommissioning, restoration and similar liabilities. The impact for those affected would be the recognition of additional deferred tax assets and liabilities.
The amendment of this standard is unlikely to have any significant impact on the Company.
IAS 8 - Definition of accounting estimates (effective 1 January 2023). The IASB has amended IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to help distinguish between accounting policies and accounting estimates, replacing the definition of accounting estimates.
IAS 1 and IFRS Practice Statement 2 – Disclosure of accounting policies (effective
IAS 12 – International Tax Reform Pillar Two Model Rules (effective
IAS 1 – Classification of liabilities as current or non-current (effective 1 January 2024). The IASB has amended IAS 1 Presentation of Financial Statements to clarify its requirement for the presentation of liabilities depending on the rights that exist at the end of the reporting period. The amendment requires liabilities to be classified as non-current if the entity has a substantive right to defer settlement for at least 12 months at the end of the reporting period. The amendment no longer refers to unconditional rights.
Relevant International Accounting Standards that have yet to be adopted:
IAS 1 – Classification of liabilities as current or non current
(effective
IAS 1 - Non current liabilities with covenants
(effective
None of the standards that have been issued, but are not yet effective, are expected to have a material impact on the Company.
3. Income
Six months Six months Year ended ended ended 31 March 31 March 30 September 2024 2023 2023 (unaudited) (unaudited) (audited) US$’000 US$’000 US$’000 Investment income: UK dividends 182 – 362 Stock dividend – – 14 Overseas dividends 5,279 4,095 12,997 Overseas special dividends 431 245 1,006 Interest from Cash Fund 1,442 1,352 3,023 --------------- --------------- --------------- Total investment income 7,334 5,692 17,402 ========= ========= ========= Net income from contracts for 785 927 1,985 difference Interest received on cash 39 83 68 collateral Deposit interest 36 88 183 --------------- --------------- --------------- Total income 8,194 6,790 19,638 ========= ========= =========
Dividends and interest received in cash in the six months ended
No special dividends from equity investments have been recognised in capital for the six months ended
4. Investment management fee and performance fees
Six months ended Six months ended Year ended 31 March 2024 31 March 2023 30 September 2023 (unaudited) (unaudited) (audited) Revenue Capital Total Revenue Capital Total Revenue Capital Total US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 Investment management 412 1,647 2,059 357 1,429 1,786 757 3,026 3,783 fee Performance – 3,962 3,962 – 2,763 2,763 – 8,272 8,272 fee --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- Total 412 5,609 6,021 357 4,192 4,549 757 11,298 12,055 ========= ========= ========= ========= ========= ========= ========= ========= =========
An investment management fee equivalent to 1.10% per annum of the Company’s gross assets (defined as the aggregate net assets of the long equity and CFD portfolios of the Company) is payable to the Manager. In addition, the Manager is entitled to receive a performance fee at a rate of 10% of any increase in the net asset value (NAV) at the end of a performance period over and above what would have been achieved had the NAV since launch increased in line with the Benchmark Index, which, since
For the purposes of the calculation of the performance fee, the performance of the NAV total return since launch has been measured against the performance of the Benchmark Index on a blended basis.
For the six months ended
The performance fee payable in any year is capped at an amount equal to 2.5% of the gross assets of the Company if there is an increase in the NAV per share, or 1% of the gross assets of the Company if there is a decrease of the NAV per share, at the end of the relevant performance period. Any outperformance in excess of the cap 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 outperformance of the NAV relative to the Benchmark Index is greater than what would have been achieved had the NAV increased in line with the Benchmark Index since the last date in relation to which a performance fee had been paid. This mechanism requires the Manager to catch up any previous cumulative underperformance against the benchmark before a performance fee can be generated.
The investment management fee is allocated 20% to the revenue account and 80% to the capital account and the performance fee is wholly allocated to the capital account of the Statement of Comprehensive Income. There is no additional fee for company secretarial and administration services.
5. Other operating expenses
Six months Six months Year ended ended ended 31 March 31 March 30 September 2024 2023 2023 (unaudited) (unaudited) (audited) US$’000 US$’000 US$’000 Allocated to revenue: Custody fee 113 116 229 Auditor’s remuneration: – audit services 31 33 62 – other assurance services1 4 4 9 Registrar’s fee 20 17 32 Directors’ emoluments2 133 128 243 Broker fees 19 19 38 Depositary fees3 19 17 33 Marketing fees 64 50 90 AIC fees 12 12 24 FCA fees 10 8 18 Printing and postage fees 21 32 58 Employer NI contributions 10 18 31 Stock exchange listings 8 5 13 Legal and professional fees 10 11 21 Write back of prior year (17) – (27) expenses4 Other administrative costs 43 18 68 --------------- --------------- --------------- 500 488 942 ========= ========= ========= Allocated to capital: Custody transaction charges5 38 22 68 --------------- --------------- --------------- 538 510 1,010 ========= ========= =========
1
Fees for other assurance services of £3,550 (
2
For the six months ended
3 All expenses other than depositary fees are paid in British Pound Sterling and are therefore subject to exchange rate fluctuations.
4
Relates to legal fees, miscellaneous fees and Directors’ evaluation fees written back during the six months ended
5
For the six months ended
The transaction costs incurred on the acquisition of investments amounted to
6. Finance costs
Six months ended Six months ended Year ended 31 March 2024 31 March 2023 30 September 2023 (unaudited) (unaudited) (audited) Revenue Capital Total Revenue Capital Total Revenue Capital Total US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 Interest paid on 1 2 3 – – – – – – bank overdraft Interest paid on 13 53 66 12 49 61 23 94 117 cash collateral --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- Total 14 55 69 12 49 61 23 94 117 ========= ========= ========= ========= ========= ========= ========= ========= =========
7. Taxation
Analysis of charge/(credit) for the period:
Six months ended Six months ended Year ended 31 March 2024 31 March 2023 30 September 2023 (unaudited) (unaudited) (audited) Revenue Capital Total Revenue Capital Total Revenue Capital Total US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 Current taxation: Corporation 343 (343) – 350 (350) – 770 (770) – tax Overseas 686 – 686 400 – 400 1,274 – 1,274 tax --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- Total taxation 1,029 (343) 686 750 (350) 400 2,044 (770) 1,274 charge/ (credit) ========= ========= ========= ========= ========= ========= ========= ========= =========
8. Dividends
The Board has declared an interim dividend of
9. Earnings and net asset value per ordinary share
Revenue, capital earnings and net asset value per ordinary share are shown below and have been calculated using the following:
Six months Six months Year ended ended ended 31 March 31 March 30 September 2024 2023 2023 (unaudited) (unaudited) (audited) Net revenue profit attributable to ordinary shareholders 6,239 5,183 15,872 (US$’000) Net capital profit attributable to ordinary shareholders 36,802 38,368 58,984 (US$’000) --------------- --------------- --------------- Total profit attributable to 43,041 43,551 74,856 ordinary shareholders (US$’000) ========= ========= ========= Equity shareholders’ funds 397,362 338,161 363,598 (US$’000) --------------- --------------- --------------- The weighted average number of ordinary shares in issue during the period on which the earnings 189,325,748 189,325,748 189,325,748 per ordinary share was calculated was: The actual number of ordinary shares in issue at the period end on which the net asset value 189,325,748 189,325,748 189,325,748 per ordinary share was calculated was: --------------- --------------- --------------- Earnings per share Revenue earnings per share 3.30 2.748.38 (cents) – basic and diluted Capital earnings per share 19.43 20.2631.16 (cents) – basic and diluted --------------- --------------- --------------- Total earnings per share (cents) 22.73 23.00 39.54 – basic and diluted ========= ========= =========
As at As at As at 31 March 31 March 30 September 2024 2023 (unaudited) (unaudited) 2023 (audited) Net asset value per ordinary share (cents) 209.88 178.61 192.05 Ordinary share price(cents)1 192.96 166.30 175.76 Net asset value per ordinary share (pence) 166.14 144.45 157.35 Ordinary share price (pence) 152.75 134.50 144.00 ========= ========= =========
1
The Company’s share price is quoted in British Pound Sterling and the above represents the US Dollar equivalent, based on an exchange rate of
10. Called up share capital
Ordinary shares Treasury Total Nominal in issue shares shares value number number number US$’000 Allotted, called up and fully paid share capital comprised: Ordinary shares of1 cent each: At 30 September 189,325,748 52,497,053 241,822,801 2,418 2023 --------------- --------------- --------------- --------------- At 31 March 2024 189,325,748 52,497,053 241,822,801 2,418 ========= ========= ========= =========
The Company also has in issue 50,000 management shares which carry the right to a fixed cumulative preferred dividend. Additional information is given in note 14 to the Annual Report and Financial Statements for the year ended
During the six months ended
Since
11. Reserves
The share premium account and capital redemption reserve are not distributable reserves under the Companies Act 2006. In accordance with ICAEW Technical Release 02/17BL on Guidance on Realised and Distributable Profits under the Companies Act 2006, the special reserve and capital reserve may be used as distributable reserves for all purposes and, in particular, the repurchase by the Company of its ordinary shares and for payments such as dividends. In accordance with the Company’s Articles of Association, the special reserve, capital reserve and revenue reserve may be distributed by way of dividend. The gain on the capital reserve arising on the revaluation of investments of
In
In
In
12. Financial risks and valuation of financial instruments
The Company’s investment activities expose it to the various types of risk which are associated with the financial instruments and markets in which it invests. The risks are substantially consistent with those disclosed in the previous annual financial statements with the exception of those outlined below.
Market risk arising from price risk
Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting similar financial instruments traded in the market. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, recessions, climate change or other events could have a significant impact on the Company and the market price of its investments and could result in increased premiums or discounts to the Company’s net asset value.
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 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 2(g) as set out on page 91 of the Company’s Annual Report and Financial Statements for the year ended
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset.
The fair value hierarchy has the following levels:
Level 1 – Quoted market price for identical instruments in active markets
A financial instrument is regarded as quoted in an active market if quoted prices are readily 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.
Valuation techniques used for non–standardised financial instruments such as options, currency swaps and other over–the– counter derivatives include the use of comparable recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants making the maximum use of market inputs and relying as little as possible on entity specific inputs.
As at the period end the CFDs were valued using the underlying equity bid price and the inputs to the valuation were the exchange rates used to convert the CFD valuation from the relevant local currency in which the underlying equity was priced to US Dollars at the period end date. There have been no changes to the valuation technique since the previous year or as at the date of this report.
Contracts for difference and forward currency contracts have 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.
Level 3 – Valuation techniques using significant unobservable inputs
This category includes all instruments where the valuation technique includes inputs not based on market data and these 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. 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 including an assessment of the relevant risks including but not limited to credit risk, market risk, liquidity risk, business risk and sustainability risk. The determination of what constitutes ‘observable’ inputs requires significant judgement by the Investment Manager and these risks are adequately captured in the assumptions and inputs used in measurement of Level 3 assets or liabilities.
Fair values of financial assets and financial liabilities
For exchange listed equity investments, the quoted price is the bid price. Substantially, all investments are valued based on unadjusted quoted market prices. Where such quoted prices are readily available in an active market, such prices are not required to be assessed or adjusted for any business risks, including climate risk, in accordance with the fair value related requirements of the Company’s financial reporting framework.
The table below sets out fair value measurements using the IFRS 13 fair value hierarchy.
Financial assets/ (liabilities) at Level 1 Level 2 Level 3 Total fair value US$’000 US$’000 US$’000 US$’000 through profit or loss at 31 March 2024 (unaudited) Assets: Equity 360,408 – – 360,408 investments Cash Fund 49,538 – – 49,538 Contracts for difference (fair – 1,347 – 1,347 value) --------------- --------------- --------------- --------------- Liabilities: Contracts for difference (fair – (3,767) – (3,767) value) --------------- --------------- --------------- --------------- 409,946 (2,420) – 407,526 ========= ========= ========= =========
Financial assets/ (liabilities) at Level 1 Level 2 Level 3 Total fair value US$’000 US$’000 US$’000 US$’000 through profit or loss at 31 March 2023 (unaudited) Assets: Equity 259,875 – – 259,875 investments Cash Fund 75,824 – – 75,824 Contracts for difference (fair – 3,997 – 3,997 value) --------------- --------------- --------------- --------------- Liabilities: Contracts for difference (fair – (1,148) – (1,148) value) --------------- --------------- --------------- --------------- 335,699 2,849 – 338,548 ========= ========= ========= =========
Financial assets/ (liabilities) at Level 1 Level 2 Level 3 Total fair value US$’000 US$’000 US$’000 US$’000 through profit or loss at 30 September 2023 (audited) Assets: Equity 309,642 – – 309,642 investments Cash Fund 64,875 – – 64,875 Contracts for difference (fair – 1,402 – 1,402 value) --------------- --------------- --------------- --------------- Liabilities: Contracts for difference (fair – (3,234) – (3,234) value) 374,517 (1,832) – 372,685 ========= ========= ========= =========
There were no transfers between levels of financial assets and financial liabilities during the six months ended
The Company held no Level 3 assets or liabilities during the six months ended
13. Related party disclosure
Directors’ emoluments
The Board consists of five non–executive Directors, all of whom are considered to be independent of the Manager by the Board. None of the Directors has a service contract with the Company. With effect from
As at
At the period end, members of the Board, including any connected persons, held ordinary shares in the Company as set out below:
Ordinary sharesKatrina Hart (Chair)1 48,350Elisabeth Airey 75,000Hatem Dowidar Nil Lucy Taylor–Smith 10,122Stephen White 30,000 =========
1 11,336 ordinary shares are held on behalf of Mrs Hart’s dependents.
Since the period end and up to the date of this report there have been no changes in Directors’ holdings.
The transactions with the Investment Manager and AIFM are stated in note 14.
Significant holdings
The following investors are:
a.
funds managed by the
b.
investors (other than those listed in (a) above) who held more than 20% of the voting shares in issue in the Company and are as a result, considered to be related parties to the Company (
As at
Total % of shares held by Number of Significant Significant Investors who Investors who are not are not affiliates of Total % of shares held by affiliates of BlackRock Group or Related BlackRock Funds BlackRock Group or BlackRock, BlackRock, Inc. Inc. 4.9 n/a n/a ========= =========
As at
Total % of shares held by Number of Significant Significant Investors who Investors who are not are not affiliates of Total % of shares held by affiliates of BlackRock Group or Related BlackRock Funds BlackRock Group or BlackRock, BlackRock, Inc. Inc. 4.1 n/a n/a ========= =========
As at
Total % of shares held by Number of Significant Significant Investors who Investors who are not are not affiliates of Total % of shares held by affiliates of BlackRock Group or Related BlackRock Funds BlackRock Group or BlackRock, BlackRock, Inc. Inc. 8.1 n/a n/a ========= =========
14. Transactions with the Investment Manager and AIFM
The investment management fee due for the six months ended
At the period end,
In addition to the above services, BIM (
The Company has an investment in the
The ultimate holding company of the Manager and the Investment Manager is BlackRock, Inc., a company incorporated in
15. Contingent liabilities
There were no contingent liabilities at
16. 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
The information for the year ended
17. Annual results
The Board expects to announce the annual results for the year ending
Copies of the annual results announcement can be obtained from the Secretary on 020 7743 3000 or at
cosec@blackrock.com
. The Annual Report should be available by late
FOR FURTHER INFORMATION, PLEASE CONTACT:
Sarah Beynsberger, Director, Investment Trusts,
Tel: 020 7743 3000
Press enquiries:
Email:
BlackRockInvestmentTrusts@lansons.com
Tel:
020 7490 8828
END