REG-BlackRock Frontiers Investment Trust Plc: Half-year Report
29/05/2025 07:02
BlackRock Frontiers Investment Trust plc
(LEI: 5493003K5E043LHLO706)
HALF YEARLY FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 MARCH 2025
Performance record
The Company’s financial statements are presented in US Dollars. The
Company’s shares are listed on the London Stock Exchange and quoted in
British Pound Sterling. The British Pound Sterling amounts for performance
returns shown below are presented for convenience. The difference in
performance returns measured in US Dollars and in British Pound Sterling
reflects the change in the value of British Pound Sterling versus the US
Dollar over the period.
As at As at 30
31 March September
2025 2024
US Dollar
Net assets (US$’000)(1) 395,700 406,243
Net asset value per ordinary share (cents) 209.07 214.57
Ordinary share price (mid-market) (cents)(2) 189.74 194.50
--------------- ---------------
British Pound Sterling
Net assets (£’000)(1,2) 306,566 302,850
Net asset value per ordinary share (pence)(2) 161.98 159.96
Ordinary share price (mid-market) (pence) 147.00 145.00
Discount(3) 9.2% 9.4%
========= =========
Performance For the six For the
months ended year ended
31 March 30 September Since
2025 2024 inception(4)
% % %
US Dollar
Net asset value per share (with dividends reinvested)(3) +0.3 +16.5 +133.5
Benchmark Index(5,6) -2.5 +15.7 +60.4
MSCI Frontier Markets Index(6) +6.7 +15.1 +63.0
MSCI Emerging Markets Index(6) -5.3 +26.1 +40.1
Ordinary share price (with dividends reinvested)(3) +0.5 +15.8 +110.8
--------------- --------------- ---------------
British Pound Sterling
Net asset value per share (with dividends reinvested)(3) +4.2 +6.0 +181.0
Benchmark Index(5,6) +1.3 +5.3 +92.2
MSCI Frontier Markets Index(6) +10.9 +4.7 +96.9
MSCI Emerging Markets Index(6) -1.6 +14.7 +69.2
Ordinary share price (with dividends reinvested)(3) +4.4 +5.4 +153.3
========= ========= =========
(1) The change in net assets reflects dividends paid and portfolio
movements during the period.
(2) Based on an exchange rate of US$1.2908 to £1 at 31 March 2025 and
US$1.3414 to £1 at 30 September 2024.
(3) Alternative Performance Measures, see Glossary in the half yearly
report and financial statements.
(4) The Company was incorporated on 15 October 2010 and its shares
were admitted to trading on the London Stock Exchange on 17 December 2010.
(5) With effect from 1 April 2018, the Benchmark Index changed to the
MSCI Emerging Markets Index ex Selected Countries + MSCI Frontier Markets
Index. Prior to 1 April 2018, the Benchmark Index was the MSCI Frontier
Markets Index. The performance returns of the Benchmark Index since inception
have been blended to reflect this change.
(6) Total return indices calculate the reinvestment of dividends net
of withholding taxes.
Sources: BlackRock and LSEG Datastream.
Chair’s statement
Dear Shareholder,
I am pleased to present the Company’s Half Yearly Financial Report for the
six months to 31 March 2025.
Period highlights
- NAV total return of +0.3%, ahead of the Benchmark Index return
of -2.5% (in US Dollar terms with dividends reinvested);
- Share price total return of +0.5% (in US Dollar terms with
dividends reinvested);
- Share price total return of +4.4% (in British Pound Sterling
terms with dividends reinvested);
- Declared interim dividend of 3.65 cents per share; and
- Yield of 5.1% (based on the share price as at 31 March 2025,
interim dividend for 2025 and final dividend for 2024).
Performance and overview
The portfolio managers’ unique strategy and investment process have once
again enabled the Company to perform well during the period, comfortably
beating our Benchmark Index. This means the Company has outperformed its
benchmark in five of the past six six-month periods. The portfolio managers’
ability to identify and expose the portfolio to exciting and uncorrelated
ideas is, we believe, a key competitive advantage and differentiator.
During the six months to 31 March 2025, the Company achieved a NAV total
return in US Dollars of +0.3%, outperforming its Benchmark Index which
returned -2.5%. Over the same period, the Company’s share price total return
in US Dollar terms with dividends reinvested was a similar +0.5%, reflecting a
stable relationship between the Company’s NAV and share price. Since
inception in December 2010, the Company’s NAV has returned +133.5%, compared
with +60.4% for its Benchmark Index. For reference, the MSCI Emerging Markets
Index and the MSCI Frontier Markets Index have returned +40.1% and +63.0%,
respectively. As well as outperforming these indices by a significant margin,
the Company’s NAV has also materially outperformed the AIC Global Emerging
Markets peer group, which has returned approximately 80.4% since the
Company’s inception (all percentages in US Dollar terms with dividends
reinvested).
Subsequent to the end of the period and, as at 23 May 2025, the NAV per share
of the Company of 219.77 cents has increased by 5.1%. For comparison, the
Company’s Benchmark Index has increased by 4.4%.
As you will read in the Investment Manager’s Report which follows, our
portfolio managers describe an improving macroeconomic backdrop for many
countries across Frontier Markets. The implementation of more orthodox fiscal
policy, relatively low interest rates and greater political stability, are
combining to provide a fertile environment for growth, in sharp contrast to
the turmoil provoked by President Trump’s unpredictable foreign policy
throughout much of the world. The implementation of reciprocal tariffs by the
US on its key trade partners China, Canada, Mexico and the EU resulted in
significant equity market volatility, a sell-off of US treasuries and
associated concerns about the resilience of the US Dollar as a reserve
currency. Investors sought safe haven assets such as gold and reduced their
exposure to US equities. Although a trade truce with China appears to have
been reached, the upheaval caused may have longer-term impact as companies
seek to de-risk their supply chains. By contrast, the portfolio is exposed to
a broad range of fast-growing companies across Latin America, Central Eastern
Europe, the Middle East and the ASEAN region and our portfolio managers
continue to add exposure selectively where they see the greatest opportunity,
evolving the portfolio judiciously through economic and market cycles.
We believe exposure to an opportunity set within which uncorrelated markets
offer strong growth potential against an ever more challenging macroeconomic
backdrop globally, continues to represent a compelling investment opportunity.
In addition, the Company provides shareholders with an attractive yield. At
the time of writing the Company’s yield is 4.6%, the highest in our AIC
Global Emerging Markets peer group.
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 31 March
2025 amounted to 1.90 cents (six months ended 31 March 2024: 3.30 cents) a
decrease of 42.4% over the prior year interim period. This decline is
primarily due to timing, with many dividend payments from portfolio companies
being made in April instead of March this year. Hence revenue per share for
the seven months to 30 April 2025 amounted to 4.99 cents per share compared to
4.03 cents per share for the seven months to 30 April 2024, an uplift of
23.8%.
Recognising the importance of yield to shareholders and the significant uplift
in dividend income in April 2025, the Board is pleased to declare an interim
dividend of 3.65 cents per share, an increase of 4.3% compared to the 2024
interim dividend of 3.50 cents per share. The interim dividend is payable on
24 June 2025 to shareholders on the Company’s register on 6 June 2025. The
shares will go ex-dividend on 5 June 2025.
During the period, the final dividend of 6.00 cents per share for the year
ended 30 September 2024, which was declared on 5 December 2024, was paid to
shareholders on 14 February 2025.
Fees and charges
As a result of the outperformance of the Benchmark Index during the period as
at 31 March 2025 a performance fee of US$1,627,000 has been accrued but not
paid. Should this outperformance continue to the end of the financial year,
the Investment Manager will earn a performance fee.
During the period, the Board conducted a comprehensive review of the
Company’s investment management and performance fee arrangements, which
included seeking a formal opinion on all aspects of the fee structure from an
independent third party.
As previously announced, a tiered fee structure has been introduced. With
effect from 1 October 2024, our management fee of 1.1% per annum is levied on
the Company’s net assets up to US$650 million, reducing to 1% per annum on
net assets above this amount. The Board believes the current fee structure is
appropriate and will continue to keep the Company's costs and charges under
regular review. 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.
Share capital
For the period under review, the Company’s ordinary shares traded at an
average discount to NAV of -8.1%, and this had widened to -9.2% on a
cum-income basis at 31 March 2025. By comparison, the weighted average
discount of the AIC Global Emerging Markets peer group during the period under
review was -8.47%.
The Directors 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 Directors believe that it is in shareholders’ interests that the
Company’s share price does not trade at a significant or volatile discount
or premium to its underlying NAV. Accordingly, the Directors, in conjunction
with the Company’s broker, monitor the relationship between the share price
and NAV closely and will consider the issue of ordinary shares at a premium or
repurchase at a discount to help balance demand and supply in the market if
they believe it is in shareholders’ interests to do so. In determining the
merits, the Directors review a range of factors, including the ongoing
attractiveness of the investment offering, the prevailing market conditions
and the discount level in absolute terms and relative to that of the peer
group. Based on the Directors’ assessment of the reasons behind the
Company’s discount and its lack of volatility, it was only considered
necessary to buy back 55,500 shares. The shares were repurchased for a total
consideration of US$107,000 during the six months to 31 March 2025. The Board
continues to evaluate other levers by which it can stimulate demand for the
Company’s shares. It is currently undertaking a full-scale review of its
marketing and communications strategy with the help of external advisors to
ensure that the attractions of the Company are conveyed as effectively and
widely as possible.
As at 23 May 2025, the discount stood at -4.19% (compared to a weighted
average discount for the peer group of -4.88%). This tightening reflects a
combination of favourable currency movements between the US Dollar and
Sterling during the period and the natural pull to NAV ahead of the
Company’s five-yearly exit opportunity as discussed below.
Periodic opportunity for the return of capital
When the Company was launched in late 2010, the Board made a commitment that
before the Company’s fifth AGM and at five-yearly intervals thereafter, it
would formulate and submit to shareholders proposals to provide them with an
opportunity to realise the value of their ordinary shares at the applicable
NAV per ordinary share less costs. This would usually be effected by way of a
100% Tender Offer as was the case in 2021 when this last took place. The
Directors believe that shareholders value the five yearly exit opportunity and
therefore intend to continue to provide it at five yearly intervals, in line
with the investment horizon of the underlying strategy. The next event will
take place around the time of the Company’s AGM in February 2026. Detailed
proposals will be issued to shareholders by way of a shareholder Circular in
early 2026.
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 31 March
2025, net gearing stood at 14.3%, compared to 4.0% at 30 September 2024,
reflecting our portfolio managers’ positive views on the outlook and
opportunities in Frontier markets.
Board composition
As at 31 March 2025, the Board consisted of five independent non-executive
Directors. As part of its succession planning, the Board regularly considers
its composition to ensure that a suitable balance of skills, knowledge,
experience, independence and diversity is achieved to enable the Board to
discharge its duties most effectively. Following due consideration, the Board
has commenced a search and selection process to identify a successor to our
audit chair, Stephen White, who, following nine years of diligent service on
the Board, will step down at the conclusion of the AGM in February 2026. The
Board will announce the appointment of a new non-executive Director in the
coming months. In order to facilitate an orderly transition, there may be a
short period of overlap as Stephen hands over the leadership of the
Company’s Audit & Management Engagement Committee, an important and complex
role which he has discharged with great skill during his tenure.
The Directors submit themselves for re-election annually and therefore all
Directors will stand for either election or re-election at the forthcoming
AGM. The Board is compliant with the recommendations of the Parker Review and
the FTSE Women Leaders Review and, at the date of this report, we have a 60:40
female to male gender ratio. In accordance with the Listing Rules, we have
also disclosed the ethnicity of the Board and our policy on matters of
diversity in our annual report.
Portfolio Management Arrangements
Following changes to BlackRock’s Global Emerging Markets team structure,
which were designed to enhance investment focus and alignment of expertise and
portfolio management responsibilities, Sudaif Niaz stepped down as
Co-Portfolio Manager on 16 April 2025. No changes are being made to the way
the Company’s portfolio is managed on a day-to-day basis as a result of this
change. The Board would like to thank Sudaif for his contribution to the
management of the Company’s investment portfolio and wishes him well.
Outlook
Markets are currently grappling with heightened geopolitical volatility and
unprecedented macroeconomic shifts that have global ramifications. The impact
of yoyo-ing US tariffs on global trading relationships is a key concern for
markets, with economists downgrading growth forecasts and interest rate
expectations turning more dovish. The outcome of the tariff negotiations is
still unknown. Since ‘Liberation Day’ on 2 April, the US dollar has been
notably weak, but this could reverse if the Trump administration’s policies
exert upward pressure on US inflation, which may have a knock-on negative
impact on emerging markets. The outcome of Trump’s unpredictable foreign
policy is highly uncertain and our portfolio managers expect to see continued
volatility as we move through the second half of the financial year. Although
not immune to the geopolitical turmoil created by Trump’s desire to reshape
global trade relationships, our portfolio managers believe the markets in
which they invest will continue to be driven to a significant extent by local
factors and by domestic investor flows, thereby potentially offering investors
diversification benefits. In addition, several of our markets may become
beneficiaries of the rewiring of global supply chains, in particular the
shifting of manufacturing away from China as existing US/China tensions are
exacerbated by the imposition of trade tariffs and inevitable retaliation by
trade partners. Indeed, our unique mandate should become increasingly
attractive to investors seeking diversified ex-China exposure as they finally
pivot away from the US.
Another positive trend within our investment universe is the marked increase
in intra-emerging markets trade. Whilst the developed markets are concerned
with the impact of the trade tensions and protectionist policy, the emerging
markets have recently seen an increase in intra-country trade, in Asia in
particular. For example, countries such as Vietnam and Indonesia, to which
our portfolio is well exposed, have benefited from their ability to act as
regional trade hubs. This trend is set to continue, driven by increasing
domestic demand, regional free trade agreements, and robust economic growth.
The frontier markets comprise a large and diverse range of countries which are
under-researched, generally have relatively low levels of foreign debt, higher
yields and superior demographics compared with more developed economies. In
many cases they trade at significant valuation discounts relative to both
developed markets and their own history. Our portfolio managers view this as a
fertile hunting ground and one which presents exceptional opportunity. Through
BlackRock’s scale and reach, they are afforded unrivalled access and have
the expertise and resources to effectively navigate these markets, seeking out
the best and brightest companies this dynamic region can offer.
Whilst we may be in uncharted territory with respect to global trade and the
increasing polarisation of the major economic powers, our frontier universe
continues to provide shareholders with capital growth through a diversified
portfolio of fast growing, exciting companies that are uncorrelated to both
each other and the developed markets. In an environment of uncertainty and
instability, the Board believes our unique offering represents an ever more
compelling addition to the discerning investor’s portfolio.
KATRINA HART
Chair
28 May 2025
Investment Manager’s report
Market review
Over the past six months, the global economic landscape has been shaped by
persistent geopolitical uncertainty, impacting both developed and emerging
markets. In our view, the re-election of President Donald Trump has further
entrenched a narrative of a world increasingly divided between the East and
the West. Against this backdrop, the countries in which we invest—those
navigating a political middle ground—continue to stand out as
well-positioned.
Beyond the global headlines, several encouraging developments have emerged
within our investment universe, many of which have received limited
international attention. Several smaller economies, such as Pakistan,
Bangladesh and Turkey have made notable strides in political and economic
reform, embracing a more orthodox approach to fiscal and monetary policy.
These moves have enhanced their appeal to investors. Meanwhile, the Gulf
Co-operation Council (GCC) region has continued to experience population
growth and attract new business, capturing a greater share of global financial
flows. Following the end of the reporting period, we observed a significant
increase in tensions between India and Pakistan, triggered by a terrorist
attack in Pahalgam, Indian-administered Kashmir. Although the region has been
embroiled in conflict for the past 40 years, this recent flare-up marked a
notable escalation in hostilities between the two nations. To date the
ceasefire agreement agreed on May 10(th )has held and there has been a
de-escalation of tensions.
Our investment universe remains characterised by low correlations—both among
its constituent countries and with more developed markets. Despite this, it
continues to trade at significantly lower valuations than both developed and
broader emerging markets, with the current discount among the widest since the
Company’s inception. As ongoing volatility across the developed world
appears all but certain in 2025, the case for a diversified asset class like
ours becomes increasingly compelling.
In terms of performance, a variety of different markets within our investment
universe have done well. Pakistan (+43.9%) was the best-performing market in
our investment universe over the period, driven by sharp interest rate cuts
and continued inflow of International Monetary Fund (IMF) loans as the
government takes steps to reduce its fiscal deficit, including tax reform.
This has supported a recovery in activity, visible in cement dispatches and
car sales.
Across Asia, Sri Lanka (+33.7%) performed well. Similarly to Pakistan, the
government enacted an economic reform agenda supported by the IMF. On the
negative side, performance in Association of South East Asian (ASEAN) markets
faced challenges as the region grappled with political changes at home, while
the re-election of President Donald Trump made the external environment more
difficult. Indonesia (-25.6%) lagged due to concerns about the extent to which
the policy direction under the new government will remain market-friendly.
Thailand (-22.4%) has continued to experience political instability since the
banning of the largest opposition party last August. Vietnam (-3.3%) has yet
to see growth re-accelerate following the government-led corruption clampdown
of the past few years.
In Europe, performance was characterised by similar levels of dispersion. The
Czech Republic (+29.9%) was the best-performing market in the region amid
interest rate cuts and increasing domestic demand supported by a rebound in
real wage growth. Additionally, the market is typically defensive within the
region. The Central and Eastern European countries also experienced a
significant uplift from the talk of a potential Russia-Ukraine ceasefire, with
Poland (+16.5%) seeing an uptick in consumer confidence. By contrast, Turkey
(-11.9%) lagged the rest of the region as Turkish equities fell on the day the
police detained the mayor of Istanbul, Ekrem İmamoğlu, the primary
opposition candidate expected in the 2028 presidential elections.
The Middle East posted solid returns as Financials and Real Estate companies
in Kuwait (+12.7%) and the United Arab Emirates (UAE) (+14.3%) benefitted from
increased foreign investment, with the UAE being one of the biggest
beneficiaries of rising geopolitical tensions.
In Latin America, country performance showed notable variation. One standout
performer was Colombia (+33.1%) where the market continued its positive
momentum, underpinned by expectations of higher real incomes and lower
borrowing costs. Although Argentina posted record returns in 2024, its
performance has since moderated as concerns remain on the size of the foreign
exchange imbalance.
From the road
In times of elevated market volatility, travelling and visiting the companies
in our investment universe becomes even more important to ensure that we
accurately gauge the sentiment on the ground and understand how our portfolio
companies are adapting to a world we believe will be characterised by
increasing uncertainty going forward. Over the past six months, we have
visited a number of countries within our universe. These visits provide
valuable insights that help us make informed investment decisions and
ultimately deliver alpha for our clients.
One market that has experienced elevated volatility over the period is Turkey.
We travelled to the country in March, following the arrest of Istanbul’s
mayor and main opposition leader. The arrest triggered a sharp sell-off due to
fears that Turkey was moving in a more autocratic direction. However, our
on-the-ground checks suggest that we haven’t seen a meaningful change, and
we walked away fairly positive about the market prospects over a two-year
period. The locals’ confidence in continued economic orthodoxy by the
current regime, evidenced by the limited dollarisation following the recent
political event, keeps us optimistic. Valuations are cheap, currently at low
single-digit price to earnings for many of the banks, making this a market
worth paying close attention to.
Another country we visited was Georgia. We travelled there in the weeks
leading up to the general election in October 2024, noting a certain degree of
polarisation within the population. We believe the elections were seen by many
as a choice between aligning more closely with Russia or moving towards
greater integration with the European Union, but the reality on the ground is
more nuanced. While the political situation in the country continues to
evolve, the economic backdrop remains solid. Representatives from government
bodies spoke about strong exports and an increase in tourism. The country has
also seen an influx of migrants, particularly from Ukraine and Russia, which
has helped boost domestic consumption and gross domestic product (GDP) growth.
We note that there are several interesting bottom-up stock ideas, particularly
in the Financials space. We believe the market should perform well in 2025,
supported by strong GDP growth, a benign inflation picture and attractive real
rates.
We recently visited Poland and met with several companies. Poland has notably
ramped up its defense spending, allocating 4.7% of GDP for 2025 — a move
expected to result in a sizeable fiscal deficit for the year. Despite this,
the country continues to offer higher interest rates and stronger economic
growth than many of its EU neighbours. This dynamic has historically attracted
substantial capital flows from the rest of Europe. Looking ahead, we
anticipate that both fiscal spending and European capital inflows will remain
elevated, supporting our view that the Polish market looks relatively
attractive.
We also visited the UAE, a market the team has been investing in for almost
twenty years. The focus for our recent travels was to assess whether the
significant growth witnessed in the real estate sector is vulnerable to
turning into a bubble. However, we returned with the view that the UAE is
still likely far from a cyclical peak as population growth remains strong.
Dubai, in particular, has done well to position itself as a global hub, not
just a regional one, with attractive incentives for new businesses.
Portfolio review
In the six months to 31 March 2025, the Company’s NAV returned +0.3%,
outperforming its Benchmark Index which returned -2.5%. Over the same period
the MSCI Emerging Markets Index fell by -5.3% and the MSCI Frontier Markets
Index rose by +6.7%. Since inception, the Company’s NAV has returned
+133.5%, compared with +60.4% for its Benchmark Index. For reference, the MSCI
Emerging Markets Index and the MSCI Frontier Markets Index returned +40.1% and
+63.0%, respectively (all percentages in US Dollar terms with
dividends reinvested).
Contributing stocks over the past six months were from a diverse set of
markets. Emaar Properties (+52.9%), the UAE-based property developer, was the
biggest contributor to relative returns over the period. The stock price rose
due to strong third quarter 2024 results and a higher-than-expected dividend
announcement later in the year. An off-benchmark position in Lucky Cement
(+67.8%), a Pakistani conglomerate involved in local cement production,
chemicals, passenger vehicle assembly, power generation and international
cement operations in the Middle East and Africa, also performed well. The
stock benefitted from expectations of improved activity as interest rates
significantly decreased in Pakistan. Our position in DigiPlus Interactive Corp
(+78.8%), a Philippines-based gaming conglomerate, contributed to returns,
driven by strong activity indicators and plans to expand into other gaming
verticals and new markets. Additionally, a collection of names exposed to a
potential resolution in the war between Ukraine and Russia performed well,
including Bank of Georgia (+43.2%), Hungarian OTP Bank (+27.8%) and Polish
clothing retailer LPP (+14.6%).
On the flipside, select ASEAN exposures detracted from performance. Indonesia
and the Philippines saw their stock markets fall by -25.6% and -14.4%,
respectively. The biggest detractor over the period was Bloomberry (-64.0%), a
Philippines-based resort and casino operator. In addition to earnings being
cannibalised by new physical and virtual gaming capacity, the stock traded
down with the broader Philippine market. Ciputra Development (-48.7%) and
Ayala Land (-37.5%), property developers in Indonesia and Philippines,
respectively, also detracted from performance; in Indonesia, news flow on
fiscal policy remained precarious, while the Philippines property market is
still recovering from excess capacity. Despite these challenges, we maintain
our conviction in these stocks over the medium term. Elsewhere, Information
Technology (IT) services company EPAM Systems (-15.3%) also detracted. The
stock sold off sharply following weaker-than-expected forecasted earnings per
share and revenue growth for the first quarter of 2025.
Over the past six months, we made some changes to the portfolio. We increased
our exposure to Turkey, reflecting our view of the positive long-term outlook
for the country. We expressed this optimism primarily through initiating a
position in Turkish bank Akbank. Additionally, we began rebuilding our Eastern
European exposure at the end of 2024. One example is LPP in Poland, which we
believe has the right ingredients to expand its footprint across the region.
Another example is Raiffeisen Bank International, which has a significant
portion of its profitability stuck in Russia that was effectively written off
to zero by the market following Russia’s invasion of Ukraine. Any steps
towards an amicable resolution here should be significantly positive for the
bank.
Elsewhere, we rotated our bank exposure within Indonesia from Bank Central
Asia to Bank Mandiri due to the latter’s attractive valuation and a
sequentially better liquidity environment for the banking sector. We also
initiated a position in technology services company Endava, reflecting our
positive view on the IT services sector and its potential as a beneficiary of
the global artificial intelligence capital expenditure spend. The stock is
trading at an attractive valuation and is expected to be further supported by
a US$100m buyback expected throughout the year.
Outlook
The six-month period leading up to 31 March 2025 has reinforced our view that
accelerated geopolitical polarisation will lead to increased competition among
the world’s largest economies. This evolving geopolitical environment
signifies a period of potential market volatility, as evidenced by the
tariff-induced market turmoil experienced in April, but also presents unique
opportunities across a variety of sectors, industries and geographies within
our investment universe.
We think that investing in markets that are largely underrepresented in global
portfolios and receive less sell-side attention offers significant alpha
potential. These frontier and smaller emerging markets generally trade at
lower valuations compared to developed markets and display lower correlation
among themselves. This provides an opportunity to diversify risk and reduce
overall volatility, something which we believe to be particularly important in
times of elevated market uncertainty.
In summary, we remain positive on the outlook for small emerging and frontier
markets compared to developed markets. We find significant value in currencies
and equity markets across our opportunity set. Our investment universe, both
in absolute and relative terms, remains under-researched and we believe this
should enable compelling alpha opportunities.
SAM VECHT AND EMILY FLETCHER
BLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED
28 May 2025
Ten largest investments(1 )as at 31 March 2025
Together, the Company’s ten largest investments represented 41.9% of the
Company’s portfolio as at 31 March 2025 (30 September 2024: 35.0%)
1 ▲ Al Rajhi Bank(2) (2024: 22nd)
Financials (Saudi Arabia)
Portfolio value: US$22,973,000
Percentage of net assets: 5.8% (2024: 2.1%)
Al Rajhi Bank is a major financial institution in Saudi Arabia providing a
wide range of banking and investment services. It is known for its strong
presence in the Islamic banking sector.
2 ► Emaar Properties (2024: 2nd)
Real Estate (United Arab Emirates)
Portfolio value: US$18,729,000
Percentage of net assets: 4.7% (2024: 4.4%)
Emaar Properties is an Emirati real estate developer. The group is involved in
property investment, development, shopping malls, retail centres, hospitality,
and property management services and serves customers in the UAE.
3 ▲ OTP Bank (2024: 4th)
Financials (Hungary)
Portfolio value: US$18,441,000
Percentage of net assets: 4.7% (2024: 3.6%)
OTP Bank is a leading financial institution in Hungary providing a wide range
of retail, private, and commercial banking services. The bank offers savings
and current accounts, personal and corporate loans, credit and debit cards,
and investment products. The bank is known for its innovative digital banking
solutions and extensive network of branches and ATMs across Hungary.
4 ▲ LPP (2024: 46th)
Consumer Discretionary (Poland)
Portfolio value: US$18,199,000
Percentage of net assets: 4.6% (2024: 0.9%)
LPP is a Polish clothing retailer. The company operates a large network of
stores across Europe and is recognised for its dynamic growth and market
presence.
5 ▲ Bank Mandiri (2024: n/a)
Financials (Indonesia)
Portfolio value: US$16,613,000
Percentage of net assets: 4.1% (2024: nil%)
Bank Mandiri is one of the largest banks in Indonesia offering a wide range of
financial services including retail, corporate, and investment banking. It
plays a significant role in the Indonesian banking sector.
6 ▲ PZU (2024: 20th)
Financials (Poland)
Portfolio value: US$14,899,000
Percentage of net assets: 3.8% (2024: 2.3%)
Powszechny Zaklad Ubezpieczen, commonly known as PZU, is an insurance company
in Poland. It offers a wide range of insurance products including life,
health, property, and casualty insurance.
7 ► Etihad Etisalat(2) (2024: 7th)
Communication Services (Saudi Arabia)
Portfolio value: US$14,861,000
Percentage of net assets: 3.8% (2024: 3.1%)
Etihad Etisalat is also known as Mobily and is a Saudi Arabia-based
telecommunications operator. The group manages, installs, and operates
telephone networks, terminals, and telecommunication unit
systems. It also sells and maintains mobile phones and telecommunication
units in Saudi Arabia.
8 ▼ FPT(2) (2024: 5th)
Information Technology (Vietnam)
Portfolio value: US$14,659,000
Percentage of net assets: 3.7% (2024: 3.3%)
FPT is Vietnam's largest technology services company with a focus on
information and communications technologies. The core business focuses on
consulting, providing and deploying technology and telecommunications services
and solutions.
9 ▲ Eldorado Gold (2024: 10th)
Materials (Turkey)
Portfolio value: US$13,480,000
Percentage of net assets: 3.4% (2024: 2.5%)
Eldorado Gold is a Canadian mid-tier gold and base metals producer with over
30 years of experience in building and operating mines. The company has
mining, development, and exploration operations in Turkey, Canada, and Greece.
10 ▼ CP All (2024: 6th)
Consumer Staples (Thailand)
Portfolio value: US$13,028,000
Percentage of net assets: 3.3% (2024: 3.1%)
CP All is a convenience store operator based in Thailand. It also operates
wholesale business, retail business and mall, payment centres and related
supporting services. The convenience stores are operated under the 7-Eleven
trademark.
(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 30 September
2024.
Arrows indicate the change in the relative ranking of the position in the
portfolio compared to its ranking as at 30 September 2024.
Portfolio analysis as at 31 March 2025
Country allocation: Absolute weights (Gross market exposure as a % of net
assets)(1)
Saudi Arabia 18.1
Indonesia 11.3
United Arab Emirates 10.9
Poland 8.4
Turkey 7.8
Hungary 7.0
Kazakhstan 6.5
Thailand 5.9
Philippines 5.6
Pakistan 4.9
Global 4.9
Greece 4.8
Vietnam 3.7
Czech Republic 3.3
Kenya 3.2
Bangladesh 3.1
Malaysia 2.8
Georgia 2.4
Chile 2.2
Singapore 1.8
Egypt 1.7
Romania 1.7
Cambodia 0.9
Country allocation relative to the Benchmark Index (%)(1)
Kazakhstan 5.8
Hungary 5.3
Global 4.9
Pakistan 4.4
Turkey 4.3
Indonesia 3.8
Kenya 2.9
Bangladesh 2.9
Philippines 2.6
United Arab Emirates 2.5
Georgia 2.4
Poland 2.4
Czech Republic 2.3
Singapore 1.8
Greece 1.4
Egypt 1.3
Vietnam 1.2
Cambodia 0.9
Romania 0.5
Lithuania -0.1
Estonia -0.1
Tunisia -0.1
Sri Lanka -0.1
Jordan -0.2
Mauritius -0.2
Luxembourg -0.2
Bahrain -0.2
Oman -0.4
Croatia -0.4
Chile -0.6
Other -0.7
Slovenia -0.7
Colombia -0.7
Thailand -1.2
Morocco -1.5
Peru -1.8
Qatar -4.8
Kuwait -4.9
Malaysia -5.3
Saudi Arabia -6.5
Sector allocation: Absolute weights (Gross market exposure as a % of net
assets)(1)
%
Financials 47.4
Industrials 12.6
Real Estate 12.2
Consumer Discretionary 10.9
Materials 9.8
Communication Services 9.0
Information Technology 7.1
Consumer Staples 5.5
Health Care 4.8
Utilities 2.0
Energy 1.6
Sector allocation relative to the Benchmark Index (%)(1)
%
Real Estate 7.2
Consumer Discretionary 7.2
Industrials 6.8
Information Technology 6.0
Health Care 2.0
Materials 1.9
Communication Services 1.0
Consumer Staples 0.3
Financials -0.2
Utilities -3.1
Energy -6.2
(1 )Includes exposure gained through equity positions and long
and short CFD positions.
Sources: BlackRock and LSEG Datastream.
INVESTMENTS AS AT 31 MARCH 2025
EQUITY PORTFOLIO BY COUNTRY OF EXPOSURE
Company Principal Gross market
country of Fair value(1) exposure as a
operation Sector US$’000 % of net assets(3)
Bank Mandiri Indonesia Financials 16,613 4.1
Astra International Indonesia Industrials 8,085 2.0
Ciputra Development Indonesia Real Estate 6,737 1.7
Telkom Indonesia Persero Indonesia Communication Services 5,043 1.3
Bank Syariah Indonesia Financials 4,769 1.2
Mitra Adiperkasa Indonesia Consumer Discretionary 3,835 1.0
--------------- ---------------
45,082 11.3
========= =========
Emaar Properties United Arab Emirates Real Estate 18,729 4.7
Air Arabia United Arab Emirates Industrials 7,325 1.9
Emaar Development United Arab Emirates Real Estate 7,045 1.8
Aldar Properties United Arab Emirates Real Estate 3,136 0.8
--------------- ---------------
36,235 9.2
========= =========
LPP Poland Consumer Discretionary 18,199 4.6
PZU Poland Financials 14,899 3.8
--------------- ---------------
33,098 8.4
========= =========
Eldorado Gold Turkey Materials 13,480 3.4
Türkiye İş Bankası Turkey Financials 8,979 2.3
Akbank Turkey Financials 8,120 2.1
--------------- ---------------
30,579 7.8
========= =========
OTP Bank Hungary Financials 18,441 4.7
Wizz Air Holdings Hungary Industrials 7,064 1.8
--------------- ---------------
25,505 6.5
========= =========
JSC Kaspi Kazakhstan Financials 12,474 3.2
Halyk Savings Bank Kazakhstan Financials 6,680 1.7
Kazatomprom Kazakhstan Energy 6,285 1.6
--------------- ---------------
25,439 6.5
========= =========
Ayala Land Philippines Real Estate 7,172 1.8
DigiPlus Interactive Corp Philippines Consumer Discretionary 6,311 1.6
International Container Terminal Services Philippines Industrials 5,814 1.5
Bloomberry Philippines Consumer Discretionary 2,947 0.7
--------------- ---------------
22,244 5.6
========= =========
Lucky Cement Pakistan Materials 11,111 2.8
MCB Bank Pakistan Financials 8,476 2.1
--------------- ---------------
19,587 4.9
========= =========
EPAM Systems Global Information Technology 9,933 2.5
Raiffeisen Bank International Global Financials 5,984 1.5
Endava Global Information Technology 3,666 0.9
--------------- ---------------
19,583 4.9
========= =========
Athens International Airport Greece Industrials 10,853 2.7
Hellenic Telecommunications Organisation Greece Communication Services 8,496 2.1
--------------- ---------------
19,349 4.8
========= =========
CP All Thailand Consumer Staples 13,028 3.3
AMATA Corporation Thailand Real Estate 5,353 1.4
--------------- ---------------
18,381 4.7
========= =========
Kenya Commercial Bank Kenya Financials 6,385 1.6
Equity Group Kenya Financials 6,374 1.6
--------------- ---------------
12,759 3.2
========= =========
BRAC Bank Bangladesh Financials 6,867 1.7
Square Pharmaceuticals Bangladesh Health Care 5,647 1.4
--------------- ---------------
12,514 3.1
========= =========
Frontken Corp Malaysia Industrials 8,803 2.2
Top Glove Corporation Malaysia Health Care 2,527 0.6
--------------- ---------------
11,330 2.8
========= =========
Moneta Money Bank Czech Republic Financials 9,889 2.5
--------------- ---------------
9,889 2.5
========= =========
Bank Of Georgia Georgia Financials 9,347 2.4
--------------- ---------------
9,347 2.4
========= =========
Cervecerias Unidas Chile Consumer Staples 8,603 2.2
--------------- ---------------
8,603 2.2
========= =========
Sea Ltd Singapore Communication Services 7,224 1.8
--------------- ---------------
7,224 1.8
========= =========
Banca Transilvania Romania Financials 6,638 1.7
--------------- ---------------
6,638 1.7
========= =========
NagaCorp Cambodia Consumer Discretionary 3,450 0.9
--------------- ---------------
3,450 0.9
========= =========
Commercial International Bank Egypt Financials 2,629 0.7
--------------- ---------------
2,629 0.7
========= =========
Equity investments 379,465 95.9
========= =========
BlackRock’s Institutional Cash Series plc – US Dollar Liquid Environmentally Aware Fund (Cash Fund)(1) 20,688 5.2
========= =========
Total equity investments (including Cash Fund) 400,153 101.1
========= =========
(1) See note 1 below.
CFD PORTFOLIO BY COUNTRY OF EXPOSURE
Company Principal Gross market Gross market
country of Fair value(1) exposure(3) exposure as a
operation Sector US$’000 US$’000 % of net assets(3)
Long positions
Al Rajhi Bank Saudi Arabia Financials 22,973 5.8
Etihad Etisalat Saudi Arabia Communication Services 14,861 3.8
Americana Restaurants International Saudi Arabia Consumer Discretionary 8,161 2.1
Yanbu National Petrochemical Saudi Arabia Materials 7,585 1.9
Mouwasat Medical Services Saudi Arabia Health Care 6,793 1.7
Derayah Financial Saudi Arabia Financials 2,111 0.5
--------------- ---------------
62,484 15.8
========= =========
FPT Vietnam Information Technology 14,659 3.7
--------------- ---------------
14,659 3.7
========= =========
Borouge United Arab Emirates Materials 6,537 1.7
--------------- ---------------
6,537 1.7
========= =========
Commercial International Bank Egypt Financials 3,906 1.0
--------------- ---------------
3,906 1.0
========= =========
Wizz Air Holdings Hungary Industrials 1,990 0.5
--------------- ---------------
1,990 0.5
========= =========
Total long CFD positions 1,244 89,576 22.7
========= =========
Total short CFD positions (1,765) (16,861) (4.3)
========= =========
Total CFD portfolio (521) 72,715 18.4
========= =========
FAIR VALUE AND GROSS MARKET EXPOSURE OF INVESTMENTS AS AT 31 MARCH 2025
Portfolio Gross market Gross market exposure as
Fair value(3) exposure(4,5) a % of net assets(5)
US$’000 US$’000
31 March 2025 31 March 2024 30 September 2024
Long equity investment positions (excluding BlackRock’s Institutional Cash Series plc – US Dollar Liquid Environmentally Aware Fund) 379,465 379,465 95.9 90.7 84.6
Long CFD positions 1,244 89,576 22.7 29.7 23.3
Short CFD positions (1,765) (16,861) (4.3) (2.7) (3.9)
--------------- --------------- --------------- --------------- ---------------
Subtotal of long and short investment positions 378,944 452,180 114.3 117.7 104.0
========= ========= ========= ========= =========
Cash Fund 20,688 20,688 5.2 12.5 16.9
--------------- --------------- --------------- --------------- ---------------
Total investment and derivatives 399,632 472,868 119.5 130.2 120.9
========= ========= ========= ========= =========
Cash and cash equivalents 1,591 (71,645) (18.1) (27.4) (18.6)
Other net current liabilities (5,504) (5,504) (1.4) (2.8) (2.3)
Non-current liabilities (19) (19) 0.0 0.0 0.0
--------------- --------------- --------------- --------------- ---------------
Net assets 395,700 395,700 100.0 100.0 100.0
========= ========= ========= ========= =========
(1) 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 Cash Fund) on its balance sheet representing the difference
between the notional cost of purchasing or selling the investments directly
and the lower initial cost of making a collateral payment on the long or short
CFD contract.
(2) The Company was geared through the use of long and short CFD
positions and gross and net gearing as at 31 March 2025 was 22.8% and 14.3%,
respectively (31 March 2024: 23.1% and 17.7% respectively; 30 September 2024:
11.8% and 4.0%, respectively). Gross and net gearing are Alternative
Performance Measures, see Glossary in the half yearly report and financial
statements.
(3) 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 US$88,332,000 at the time of purchase,
and subsequent movements in market prices have resulted in unrealised gains on
the long CFD positions of US$1,244,000 resulting in the value of the total
long CFD market exposure to the underlying securities increasing to
US$89,576,000 as at 31 March 2025. If the long positions had been closed on 31
March 2025, this would have resulted in a gain of US$1,244,000 for the
Company.
– The notional exposure of selling the securities gained via the short
CFD positions would have been US$15,096,000 at the time of entering into the
contracts, and subsequent movements in market prices have resulted in
unrealised losses on the short CFD positions of US$1,765,000, resulting in the
value of the total short CFD market exposure of these investments increasing
to US$16,861,000 at 31 March 2025. If the short positions had been closed on
31 March 2025, this would have resulted in a loss of US$1,765,000 for the
Company.
(4) 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.
(5) 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 30
September 2024. A detailed explanation can be found in the Strategic Report on
pages 38 to 42 and in note 17 on pages 103 to 116 of the Annual Report and
Financial Statements, which are available on the Company’s website at:
www.blackrock.com/uk/brfi.
Certain financial markets have been volatile during the financial period due
primarily to continuing geo-political tensions arising from Russia’s
invasion of Ukraine and the hostilities in the Middle East. The Company has no
exposure to Russia, Ukraine, Israel or Palestine. The Board and the Investment
Manager continue to monitor investment performance in line with the
Company’s investment objectives.
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 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 period to 31 May 2026, being a period of at
least twelve months from the date of approval of the financial statements, and
therefore consider the going concern assumption to be appropriate.
When the Company was launched in late 2010, the Board made a commitment that
before the Company’s fifth AGM and at five yearly intervals thereafter, it
would formulate and submit to shareholders proposals to provide them with an
opportunity to realise the value of their ordinary shares at the prevailing
NAV per ordinary share less applicable costs. The Board will once again put
proposals to shareholders later this year. When this exit event last occurred
in February 2021, the Company received elections to tender representing 21.5%
of the shares in issue, with the vast majority of shareholders choosing to
retain their investment. The Board has considered the Company’s more recent
performance, its discount, the make up of the share register, and the unique
and attractive nature of its offering. Following due consideration, it has
determined, to the best of its ability given it is a future event, that the
forthcoming exit opportunity does not represent a material uncertainty as it
pertains to the going concern assessment.
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 1.41% of average daily net assets for
the year ended 30 September 2024.
Related party disclosures and transactions with the AIFM and Investment
Manager
BlackRock Fund Managers Limited (BFM) is 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)). 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 4 and note 14 below. The related party transactions with the
Directors are set out in note 13 below.
Directors’ Responsibility Statement
The Disclosure Guidance 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
UK-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 the Financial 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 28 May 2025 and
the above Responsibility Statement was signed on its behalf by the Chair.
KATRINA HART
FOR AND ON BEHALF OF THE BOARD
28 May 2025
STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 31 MARCH 2025
Six months ended Six months ended Year ended
31 March 2025 31 March 2024 30 September 2024
(unaudited) (unaudited) (audited)
Notes 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
Income from investments held at fair value through profit or loss 3 4,937 – 4,937 7,334 – 7,334 20,656 – 20,656
Net income from contracts for difference 3 146 – 146 785 – 785 2,425 – 2,425
Other income 3 67 – 67 75 – 75 209 – 209
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total income 5,150 – 5,150 8,194 – 8,194 23,290 – 23,290
========= ========= ========= ========= ========= ========= ========= ========= =========
Net profit on investments held at fair value through profit or loss – 5,292 5,292 – 46,084 46,084 – 54,953 54,953
Net loss on foreign exchange – (172) (172) – (229) (229) – (1,197) (1,197)
Net loss from derivatives – (4,296) (4,296) – (3,694) (3,694) – (7,902) (7,902)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total 5,150 824 5,974 8,194 42,161 50,355 23,290 45,854 69,144
========= ========= ========= ========= ========= ========= ========= ========= =========
Expenses
Investment management and performance fees 4 (439) (3,382) (3,821) (412) (5,609) (6,021) (841) (6,873) (7,714)
Other operating expenses 5 (556) (49) (605) (500) (38) (538) (1,162) (92) (1,254)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total operating expenses (995) (3,431) (4,426) (912) (5,647) (6,559) (2,003) (6,965) (8,968)
========= ========= ========= ========= ========= ========= ========= ========= =========
Net profit/(loss) on ordinary activities before finance costs and taxation 4,155 (2,607) 1,548 7,282 36,514 43,796 21,287 38,889 60,176
Finance costs 6 (5) (21) (26) (14) (55) (69) (23) (92) (115)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net profit/(loss) on ordinary activities before taxation 4,150 (2,628) 1,522 7,268 36,459 43,727 21,264 38,797 60,061
========= ========= ========= ========= ========= ========= ========= ========= =========
Taxation (charge)/credit 7 (559) (43) (602) (1,029) 343 (686) (2,380) 867 (1,513)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Profit/(loss) for the period/year 3,591 (2,671) 920 6,239 36,802 43,041 18,884 39,664 58,548
========= ========= ========= ========= ========= ========= ========= ========= =========
Earnings/(loss) per ordinary share (cents) 9 1.90 (1.41) 0.49 3.30 19.43 22.73 9.97 20.95 30.92
========= ========= ========= ========= ========= ========= ========= ========= =========
The total columns of this statement represent the Company’s Statement of
Comprehensive Income, prepared in accordance with UK-adopted International
Accounting Standards (IAS). The supplementary revenue and capital accounts are
both prepared under guidance published by the Association of Investment
Companies (AIC). All items in the above statement derive from continuing
operations. No operations were acquired or discontinued during the period. All
income is attributable to the equity holders of the Company.
The Company does not have any other comprehensive income (31 March 2024:
US$nil; 30 September 2024: US$nil). The net profit/(loss) for the period
disclosed above represents the Company’s total comprehensive income.
STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 31 MARCH 2025
Note Called Capital Special Capital Revenue Total
up share redemption reserve reserves reserve US$’000
capital reserve US$’000 US$’000 US$’000
US$’000 US$’000
For the six months ended 31 March 2025 (unaudited)
At 30 September 2024 2,418 5,798 308,804 75,817 13,406 406,243
Total comprehensive (loss)/income :
Net (loss)/profit for the period – – – (2,671) 3,591 920
Transactions with owners, recorded directly to equity:
Ordinary shares repurchased into treasury – – (106) – – (106)
Share repurchase costs – – (1) – – (1)
Dividends paid(1) 8 – – – – (11,356) (11,356)
--------------- --------------- --------------- --------------- --------------- ---------------
At 31 March 2025 2,418 5,798 308,697 73,146 5,641 395,700
========= ========= ========= ========= ========= =========
For the six months ended 31 March 2024 (unaudited)
At 30 September 2023 2,418 5,798 308,804 36,153 10,425 363,598
Total comprehensive income:
Net profit for the period – – – 36,802 6,239 43,041
Transactions with owners, recorded directly to equity:
Dividends paid(2) 8 – – – – (9,277) (9,277)
--------------- --------------- --------------- --------------- --------------- ---------------
At 31 March 2024 2,418 5,798 308,804 72,955 7,387 397,362
========= ========= ========= ========= ========= =========
For the year ended 30 September 2024 (audited)
At 30 September 2023 2,418 5,798 308,804 36,153 10,425 363,598
Total comprehensive income:
Net profit for the year – – – 39,664 18,884 58,548
Transactions with owners, recorded directly to equity:
Dividends paid(3) 8 – – – – (15,903) (15,903)
--------------- --------------- --------------- --------------- --------------- ---------------
At 30 September 2024 2,418 5,798 308,804 75,817 13,406 406,243
========= ========= ========= ========= ========= =========
(1) Final dividend of 6.00 cents per share for the year ended 30
September 2024, declared on 5 December 2024 and paid on 14 February 2025.
(2) Final dividend of 4.90 cents per share for the year ended 30
September 2023, declared on 30 November 2023 and paid on 14 February 2024.
(3) Final dividend of 4.90 cents per share for the year ended 30
September 2023, declared on 30 November 2023 and paid on 14 February 2024 and
an interim dividend of 3.50 cents per share for the year ended 30 September
2024, declared on 31 May 2024 and paid on 2 July 2024.
For information on the Company’s distributable reserves, please refer to
note 11 below.
STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2025
Notes 31 March 31 March 30 September
2025 2024 2024
(unaudited) (unaudited) (audited)
US$’000 US$’000 US$’000
Non current assets
Investments held at fair value through profit or loss 12 400,153 409,946 412,308
Current assets
Current tax asset 713 404 803
Other receivables 2,492 7,521 3,934
Derivative financial assets held at fair value through profit or loss – contracts for difference 12 1,244 1,347 2,756
Cash and cash equivalents – cash at bank 1,591 1,035 2,284
Cash collateral pledged with brokers 3,952 7,729 1,305
--------------- --------------- ---------------
Total current assets 9,992 18,036 11,082
========= ========= =========
Total assets 410,145 427,982 423,390
========= ========= =========
Current liabilities
Other payables (11,941) (25,064) (12,667)
Derivative financial liabilities held at fair value through profit or loss – contract for differences 12 (1,765) (3,767) (1,561)
Liability for cash collateral received (720) (1,770) (2,900)
--------------- --------------- ---------------
Total current liabilities (14,426) (30,601) (17,128)
========= ========= =========
Total assets less current liabilities 395,719 397,381 406,262
========= ========= =========
Non current liabilities
Management shares of £1.00 each (one quarter paid up) (19) (19) (19)
--------------- --------------- ---------------
Net assets 395,700 397,362 406,243
========= ========= =========
Equity attributable to equity holders
Called up share capital 10 2,418 2,418 2,418
Capital redemption reserve 5,798 5,798 5,798
Special reserve 308,697 308,804 308,804
Capital reserves 73,146 72,955 75,817
Revenue reserve 5,641 7,387 13,406
--------------- --------------- ---------------
Total equity 395,700 397,362 406,243
========= ========= =========
Net asset value per ordinary share (cents) 9 209.07 209.88 214.57
========= ========= =========
CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 31 MARCH 2025
31 March 31 March 30 September
2025 2024 2024
(unaudited) (unaudited) (audited)
US$’000 US$’000 US$’000
Operating activities
Net profit on ordinary activities before taxation(1) 1,522 43,727 60,061
Add back finance costs 26 69 115
Net profit on investments held at fair value through profit or loss (including transaction costs) (5,292) (46,084) (54,953)
Net loss from derivatives (including transaction costs) 4,296 3,694 7,902
Financing costs on derivatives (1,683) (2,507) (4,835)
Net loss on foreign exchange 172 229 1,197
Sales of investments held at fair value through profit or loss 85,480 107,625 236,900
Purchases of investments held at fair value through profit or loss (115,853) (112,303) (216,098)
Sales of Cash Fund(2) 97,433 88,244 161,427
Purchases of Cash Fund(2) (49,594) (72,909) (165,067)
Amounts paid for losses on closure of derivatives (15,621) (22,016) (47,584)
Amounts received on profit on closure of derivatives 14,705 21,415 41,490
Decrease/(increase) in other receivables 195 (807) (489)
Increase/(decrease) in other payables 227 3,325 (4,210)
Decrease/(increase) in amounts due from brokers 1,247 (1,629) 1,640
(Decrease)/increase in amounts due to brokers (953) 1,724 (3,138)
Cash collateral pledged with brokers (2,647) (5,294) 1,130
Cash collateral received from brokers (2,180) (530) 600
Taxation paid (512) (646) (1,872)
--------------- --------------- ---------------
Net cash inflow from operating activities 10,968 5,327 14,216
========= ========= =========
Financing activities
Interest paid (26) (69) (115)
Ordinary shares repurchased into treasury (106) – –
Share repurchase costs (1) – –
Dividends paid (11,356) (9,277) (15,903)
--------------- --------------- ---------------
Net cash outflow from financing activities (11,489) (9,346) (16,018)
========= ========= =========
Decrease in cash and cash equivalents (521) (4,019) (1,802)
Effect of foreign exchange rate changes (172) (229) (1,197)
========= ========= =========
Change in cash and cash equivalents (693) (4,248) (2,999)
--------------- --------------- ---------------
Cash and cash equivalents at the start of the period/year 2,284 5,283 5,283
Cash and cash equivalents at the end of the period/year 1,591 1,035 2,284
========= ========= =========
Comprised of:
Cash at bank 1,591 1,035 2,284
--------------- --------------- ---------------
1,591 1,035 2,284
========= ========= =========
(1) Dividends and interest received in cash during the period amounted
to US$3,683,000 and US$1,195,000 (31 March 2024: US$4,480,000 and
US$1,589,000; 30 September 2024: US$15,293,000 and US$2,964,000).
(2) Cash Fund represents investment in the BlackRock Institutional
Cash Series plc – US Dollar Liquid Environmentally Aware Fund.
Notes to the financial statements for the six months ended 31 March 2025
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 31 March 2025 have
been prepared in accordance with the Disclosure Guidance and Transparency
Rules sourcebook of the Financial Conduct Authority and with the UK–adopted
International Accounting Standard 34 (IAS 34), Interim Financial Reporting.
The half yearly financial statements should be read in conjunction with the
Company’s Annual Report and Financial Statements for the year ended 30
September 2024, which have been prepared in accordance with UK–adopted
International Accounting Standards (IAS).
Insofar as the Statement of Recommended Practice (SORP) for investment trust
companies and venture capital trusts, issued by the Association of Investment
Companies (AIC) in October 2019 and updated in July 2022, is compatible with
UK–adopted IAS, the financial statements have been prepared in accordance
with the guidance set out in the SORP.
The Directors, having considered the nature and liquidity of the portfolio,
the Company’s investment objective, the forthcoming cash exit tender
opportunity in 2026 and the Company’s projected income and expenditure, are
satisfied that the Company has adequate resources to continue in operational
existence for the period to 31 May 2026 being a period of at least twelve
months from the date of approval of the financial statements, and therefore
consider the going concern assumption to be appropriate.
Adoption of new and amended International Accounting Standards and
interpretations:
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.
IAS 1 – Non current liabilities with covenants (effective 1 January 2024).
The IASB has amended IAS 1 Presentation of Financial Statements to introduce
additional disclosures for liabilities with covenants within 12 months of the
reporting period. The additional disclosures include the nature of covenants,
when the entity is required to comply with covenants, the carrying amount of
related liabilities and circumstances that may indicate that the entity will
have difficulty complying with the covenants.
The amendment of these standards did not have any significant impact on the
Company.
Relevant International Accounting Standards that have yet to be adopted:
IAS 21 – Lack of exchangeability (effective 1 January 2025). The IASB issued
amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates to
specify how an entity should assess whether a currency is exchangeable and how
it should determine a spot exchange rate when exchangeability is lacking. The
amendments also require disclosure of information that enables users of its
financial statements to understand how the currency not being exchangeable
into the other currency affects, or is expected to affect, the entity’s
financial performance, financial position and cash flows.
IFRS 18 – Presentation and disclosure in financial statements (effective 1
January 2027). The IASB issued IFRS 18, which replaces IAS 1 Presentation of
Financial Statements. IFRS 18 introduces new requirements for presentation
within the statement of profit or loss, including specified totals and
subtotals. Furthermore, entities are required to classify all income and
expenses within the statement of profit or loss into one of five categories:
operating, investing, financing, income taxes and discontinued operations,
whereof the first three are new. It also requires disclosure of newly defined
management defined performance measures, subtotals of income and expenses, and
includes new requirements for aggregation and disaggregation of financial
information based on the identified ‘roles’ of the primary financial
statements and the notes.
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
2025 2024 2024
(unaudited) (unaudited) (audited)
US$’000 US$’000 US$’000
Investment income:
UK dividends – 182 576
Overseas dividends 3,690 5,279 16,276
Overseas special dividends 283 431 913
Interest from Cash Fund 964 1,442 2,891
--------------- --------------- ---------------
Total investment income 4,937 7,334 20,656
========= ========= =========
Net income from contracts for difference 146 785 2,425
--------------- --------------- ---------------
Total income from contracts for difference 146 785 2,425
========= ========= =========
Other income:
Interest received on cash collateral 30 39 135
Deposit interest 37 36 74
--------------- --------------- ---------------
Total other income 67 75 209
========= ========= =========
Total 5,150 8,194 23,290
========= ========= =========
Dividends and interest received in cash during the period amounted to
US$3,683,000 and US$1,195,000 respectively (six months ended 31 March 2024:
US$4,480,000 and US$1,589,000; year ended 30 September 2024: US$15,293,000 and
US$2,964,000).
No special dividends from equity investments have been recognised in capital
for the six months ended 31 March 2025 (six months ended 31 March 2024:
US$nil; year ended 30 September 2024: US$nil). No special dividends from long
contracts for difference have been recognised in capital for the six months
ended 31 March 2025 and included within net income from contracts for
difference in the capital account in the Statement of Comprehensive Income
(six months ended 31 March 2024: US$nil; year ended 30 September 2024:
US$nil).
4. Investment management fee and performance fees
Six months ended Six months ended Year ended
31 March 2025 31 March 2024 30 September 2024
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Investment management fee 439 1,755 2,194 412 1,647 2,059 841 3,363 4,204
Performance fee – 1,627 1,627 – 3,962 3,962 - 3,510 3,510
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total 439 3,382 3,821 412 5,609 6,021 841 6,873 7,714
========= ========= ========= ========= ========= ========= ========= ========= =========
Up to 30 September 2024, the 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) was payable to the Manager.
From 1 October 2024, the investment management fee is levied quarterly on a
tiered basis: 1.10% per annum of the Company’s daily net asset value (NAV)
up to and including US$650 million and 1.0% per annum of the Company’s daily
NAV above US$650 million. In addition, the Manager is entitled to receive a
performance fee at a rate of 10% of the total value added to the NAV at the
end of a performance period over and above what would have been generated had
the NAV since launch performed in line with the Benchmark Index, which, since
1 April 2018, is a composite of the MSCI Emerging Markets Index ex Selected
Countries + MSCI Frontier Markets Index. Prior to 1 April 2018, the Benchmark
Index was the MSCI Frontier Markets Index.
For the purposes of the calculation of the performance fee, the performance of
the NAV total return (including the reinvestment of dividends and before the
deduction of management and performance fees) since launch has been measured
against the performance of the Benchmark Index on a blended basis.
For the six months ended 31 March 2025, the Company’s NAV outperformed the
Benchmark Index by 2.8% (six months ended 31 March 2024: outperformed by 3.4%;
year ended 30 September 2024: outperformed by 0.8%) resulting in a cumulative
outperformance since launch of 73.1% (31 March 2024: 69.6%; 30 September 2024:
68.5%); therefore, a performance fee of US$1,627,000 has been accrued (six
months ended 31 March 2024: US$3,962,000; year ended 30 September 2024:
US$3,510,000). Any accrued performance fee is included within other payables
in the Statement of Financial Position. Any final performance fee for the full
year ended 30 September 2025 will not crystallise and fall due until the
calculation date of 30 September 2025.
The performance fee payable in any year is capped at 2.5% of the net assets of
the Company if there is an increase in the NAV per share, or 1.0% of the net
assets of the Company if there is a decrease of the NAV per share, at the end
of the relevant performance period. Any outperformance in excess of the cap
for a period may be carried forward for the next two performance periods,
subject to the then applicable annual cap. The performance fee is also subject
to a high watermark such that any performance fee is only payable to the
extent that the cumulative outperformance of the NAV relative to the Benchmark
Index is greater than what would have been achieved had the NAV increased in
line with the Benchmark Index since the last date in relation to which a
performance fee had been paid. This mechanism requires the Manager to catch up
any cumulative underperformance against the Benchmark Index since launch
before a performance fee can be generated.
The investment management fee is allocated 20% to the revenue account and 80%
to the capital account and the performance fee is wholly allocated to the
capital account of the Statement of Comprehensive Income. There is no
additional fee for company secretarial and administration services.
5. Other operating expenses
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2025 2024 2024
(unaudited) (unaudited) (audited)
US$’000 US$’000 US$’000
Allocated to revenue:
Custody fee 175 113 276
Auditor’s remuneration:
– audit services 30 31 61
– other assurance services(1) 5 4 10
Registrar’s fee 16 20 38
Directors’ emoluments(2) 102 133 258
Broker fees 34 19 40
Depositary fees(3) 18 19 38
Marketing fees 31 64 211
AIC fees 15 12 25
FCA fees 14 10 23
Printing and postage fees 27 21 47
Employer NI contributions 9 10 25
Stock exchange listings 10 8 17
Legal and professional fees 9 10 24
Write back of prior year expenses(4) (1) (17) (17)
Other administrative costs 62 43 86
--------------- --------------- ---------------
Total revenue expenses 556 500 1,162
========= ========= =========
Allocated to capital:
Custody transaction charges(5) 49 38 92
--------------- --------------- ---------------
Total 605 538 1,254
========= ========= =========
(1) Fees for other assurance services of £3,550 (US$5,000) (six
months ended 31 March 2024: £3,550 (US$4,000); year ended 30 September 2024:
£7,100 (US$10,000)) relate to the review of the interim financial statements.
(2) For the six months ended 31 March 2025, Directors’ emoluments
amounted to £79,000 (US$102,000) (six months ended 31 March 2024: £105,000
(US$133,000); year ended 30 September 2024: £192,000 (US$258,000)). Further
information on Directors’ emoluments can be found in the Directors’
Remuneration Report on page 65 of the Company’s Annual Report and Financial
Statements for the year ended 30 September 2024. The Company has no employees.
(3) All expenses other than depositary fees are paid in British Pound
Sterling and are therefore subject to exchange rate fluctuations.
(4) Relates to miscellaneous fees written back during the six months
ended 31 March 2025 (six months ended 31 March 2024: legal fees, miscellaneous
fees and Directors’ evaluation fees; year ended 30 September 2024: Director
search fees, miscellaneous fees and legal fees).
(5) For the six months ended 31 March 2025, expenses of £38,000
(US$49,000) (six months ended 31 March 2024: £30,000 (US$38,000); year ended
30 September 2024: £69,000 (US$92,000)) were charged to the capital account
of the Statement of Comprehensive Income. These relate to transaction costs
charged by the custodian on sale and purchase trades.
The transaction costs incurred on the acquisition of investments amounted to
US$131,000 for the six months ended 31 March 2025 (six months ended 31 March
2024: US$220,000; year ended 30 September 2024: US$502,000). Costs relating to
the disposal of investments amounted to US$229,000 for the six months ended 31
March 2025 (six months ended 31 March 2024: US$152,000; year ended 30
September 2024: US$471,000). All transaction costs have been included within
the capital reserve.
6. Finance costs
Six months ended Six months ended Year ended
31 March 2025 31 March 2024 30 September 2024
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Interest paid on bank overdraft – – – 1 2 3 1 2 3
Interest paid on cash collateral 5 21 26 13 53 66 22 90 112
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total 5 21 26 14 55 69 23 92 115
========= ========= ========= ========= ========= ========= ========= ========= =========
7. Taxation
Analysis of charge/(credit) for the period
Six months ended Six months ended Year ended
31 March 2025 31 March 2024 30 September 2024
(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 tax 43 (43) – 343 (343) – 867 (867) –
Overseas tax 516 – 516 686 – 686 1,513 – 1,513
Overseas capital gains tax – 86 86 – – – – – –
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total taxation charge/(credit) 559 43 602 1,029 (343) 686 2,380 (867) 1,513
========= ========= ========= ========= ========= ========= ========= ========= =========
8. Dividends
The Board has declared an interim dividend of 3.65 cents per share for the
period ended 31 March 2025 which will be paid on 24 June 2025 to shareholders
on the register at 6 June 2025 (interim dividend for the six months ended 31
March 2024: 3.50 cents per share). The total cost of the dividend based on
189,270,248 ordinary shares in issue at 23 May 2025 was US$6,908,000 (six
months ended 31 March 2024: US$6,626,000). This dividend has not been accrued
in the financial statements for the six months ended 31 March 2025 as, under
IAS, interim dividends are not recognised until paid. Dividends are debited
directly to reserves.
9. Earnings and net asset value per ordinary share
Revenue earnings, capital (loss)/earnings and net asset value per ordinary
share are shown below and have been calculated using the following:
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2025 2024 2024
(unaudited) (unaudited) (audited)
Net revenue profit attributable to ordinary shareholders (US$’000) 3,591 6,239 18,884
Net capital (loss)/profit attributable to ordinary shareholders (US$’000) (2,671) 36,802 39,664
--------------- --------------- ---------------
Total profit attributable to ordinary shareholders (US$’000) 920 43,041 58,548
========= ========= =========
Equity shareholders’ funds (US$’000) 395,700 397,362 406,243
========= ========= =========
The weighted average number of ordinary shares in issue during the period on which the earnings per ordinary share was calculated was: 189,288,710 189,325,748 189,325,748
The actual number of ordinary shares in issue at the period end on which the net asset value per ordinary share was calculated was: 189,270,248 189,325,748 189,325,748
--------------- --------------- ---------------
Earnings per share
Revenue earnings per share (cents) – basic and diluted 1.90 3.30 9.97
Capital (loss)/earnings per share (cents) – basic and diluted (1.41) 19.43 20.95
--------------- --------------- ---------------
Total earnings per share (cents) – basic and diluted 0.49 22.73 30.92
========= ========= =========
As at As at As at
31 March 31 March 30 September
2025 2024 2024
(unaudited) (unaudited) (audited)
Net asset value per ordinary share (cents) 209.07 209.88 214.57
Ordinary share price (cents)(1) 189.74 192.96 194.50
Net asset value per ordinary share (pence)(1) 161.98 166.14 159.96
Ordinary share price (pence) 147.00 152.75 145.00
========= ========= =========
(1) Based on an exchange rate of US$1.2908 to £1 at 31 March 2025 (31
March 2024: US$1.2633 to £1; 30 September 2024: US$1.3414 to £1).
10. Called up share capital
Ordinary Treasury Total Nominal
shares shares shares value
in issue number number US$’000
number
Allotted, called up and fully paid share capital comprised:
Ordinary shares of 1 cent each:
At 30 September 2023 (audited) 189,325,748 52,497,053 241,822,801 2,418
At 31 March 2024 (unaudited) 189,325,748 52,497,053 241,822,801 2,418
At 30 September 2024 (audited) 189,325,748 52,497,053 241,822,801 2,418
Ordinary shares repurchased into treasury (55,500) 55,500 – –
At 31 March 2025 (unaudited) 189,270,248 52,552,553 241,822,801 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 30
September 2024.
During the six months ended 31 March 2025, the Company repurchased 55,500
ordinary shares (six months ended 31 March 2024 and year ended 30 September
2024: none) for a total consideration of US$107,000 (six months ended 31 March
2024 and year ended 30 September 2024: US$nil).
Since 31 March 2025 and up to the date of this report, no ordinary shares have
been issued or bought back.
11. Reserves
The capital redemption reserve of US$5,798,000 (31 March 2024: US$5,798,000;
30 September 2024: US$5,798,000) is not a distributable reserve 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 US$26,857,000 (six months
ended 31 March 2024: US$42,703,000; year ended 30 September 2024:
US$40,052,000) is subject to fair value movements and may not be readily
realisable at short notice, as such it may not be entirely distributable. The
investments are subject to financial risks, as such capital reserves (arising
on investments sold) and the revenue reserve may not be entirely distributable
if a loss occurred during the realisation of these investments.
In June 2011, the Company cancelled its share premium account pursuant to
shareholders’ approval of a special resolution and Court approval on 17 June
2011. The share premium account, which totalled US$142,704,000 was transferred
to a special reserve.
In November 2013, the Company cancelled its share premium account pursuant to
shareholders’ approval of a special resolution and Court approval on 6
November 2013. The share premium account, which totalled US$88,326,000 was
transferred to a special reserve.
In March 2021, the Company cancelled its share premium account pursuant to
shareholders’ approval of a special resolution and Court approval on 11
March 2021. The share premium account, which totalled US$165,984,000 was
transferred to a special reserve.
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
93 of the Company’s Annual Report and Financial Statements for the year
ended 30 September 2024.
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 fair value through profit or loss at 31 March 2025 (unaudited) Level 1 Level 2 Level 3 Total
US$’000 US$’000 US$’000 US$’000
Assets:
Equity investments 379,465 – – 379,465
Cash Fund 20,688 – – 20,688
Contracts for difference (fair value) – 1,244 – 1,244
Liabilities:
Contracts for difference (fair value) – (1,765) – (1,765)
--------------- --------------- --------------- ---------------
400,153 (521) – 399,632
========= ========= ========= =========
Financial assets/(liabilities) at fair value through profit or loss at 31 March 2024 (unaudited) Level 1 Level 2 Level 3 Total
US$’000 US$’000 US$’000 US$’000
Assets:
Equity investments 360,408 – – 360,408
Cash Fund 49,538 – – 49,538
Contracts for difference (fair value) – 1,347 – 1,347
Liabilities:
Contracts for difference (fair value) – (3,767) – (3,767)
--------------- --------------- --------------- ---------------
409,946 (2,420) – 407,526
========= ========= ========= =========
Financial assets/(liabilities) at fair value through profit or loss at 30 September 2024 (audited) Level 1 Level 2 Level 3 Total
US$’000 US$’000 US$’000 US$’000
Assets:
Equity investments 343,749 – – 343,749
Cash Fund 68,559 – – 68,559
Contracts for difference (fair value) – 2,756 – 2,756
Liabilities:
Contracts for difference (fair value) – (1,561) – (1,561)
--------------- --------------- --------------- ---------------
412,308 1,195 – 413,503
========= ========= ========= =========
There were no transfers between levels of financial assets and financial
liabilities during the six months ended 31 March 2025 (six months ended 31
March 2024: none; year ended 30 September 2024: none).
The Company held no Level 3 assets or liabilities during the six months ended
31 March 2025 (six months ended 31 March 2024: none; year ended 30 September
2024: none).
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 1 October
2024, the Chair receives an annual fee of £46,200, the Chair of the Audit and
Management Engagement Committee receives an annual fee of £38,600 and each of
the other Directors receives an annual fee of £33,600.
As at 31 March 2025, an amount of US$20,000 (£15,000) was outstanding in
respect of Directors’ fees (31 March 2024: US$19,000 (£15,000); 30
September 2024: US$20,000 (£15,000)).
At the period end, members of the Board, including any connected persons, held
ordinary shares in the Company as set out below:
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2025 2024 2024
(unaudited) (unaudited) (audited)
Katrina Hart (Chair) 48,912(1) 48,350(2) 48,560(3)
Elisabeth Airey 75,000 75,000 75,000
Hatem Dowidar 25,000 Nil Nil
Lucy Taylor–Smith 30,852(4) 10,122 10,122
Stephen White 30,000 30,000 30,000
========= ========= =========
(1) 11,898 ordinary shares are held on behalf of Katrina Hart’s
dependents.
(2) 11,336 ordinary shares are held on behalf of Katrina Hart’s
dependents.
(3) 11,546 ordinary shares are held on behalf of Katrina Hart’s
dependents.
(4) 20,730 ordinary shares are held on behalf of Lucy Taylor-Smith’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
below.
Significant holdings
The following investors are:
a. funds managed by the BlackRock Group or are affiliates of
BlackRock Inc. (Related BlackRock Funds); or
b. investors (other than those listed in (a) above) who held more
than 20% of the voting shares in issue in the Company and are as a result,
considered to be related parties to the Company (Significant Investors).
Total % of shares held by Total % of shares held by Number of Significant
Related BlackRock Funds Significant Investors who are Investors who are not affiliates
not affiliates of BlackRock of BlackRock Group or
Group or BlackRock, Inc. BlackRock, Inc.
As at 31 March 2025 5.0 n/a n/a
As at 30 September 2024 4.0 n/a n/a
As at 31 March 2024 4.9 n/a n/a
========= ========= =========
14. Transactions with the Investment Manager and AIFM
BlackRock Fund Managers Limited (BFM) provides management and administration
services to the Company under a contract which is terminable on six months’
notice. BFM has (with the Company’s consent) delegated certain portfolio and
risk management services, and other ancillary services, to BlackRock
Investment Management (UK) Limited (BIM (UK)). Further details of this
investment management contract are disclosed on page 51 of the Directors’
Report in the Company’s Annual Report and Financial Statements for the year
ended 30 September 2024.
The investment management fee due for the six months ended 31 March 2025
amounted to US$2,194,000 (six months ended 31 March 2024: US$2,059,000; year
ended 30 September 2024: US$4,204,000). The performance fee accrued for the
six months ended 31 March 2025 is US$1,627,000 (six months ended 31 March
2024: US$3,962,000; year ended 30 September 2024: US$3,510,000).
At the period end, US$2,194,000 was outstanding in respect of management fees
(31 March 2024: US$2,059,000; 30 September 2024: US$3,204,000) and
US$5,137,000 (31 March 2024: US$12,234,000; 30 September 2024: US$3,510,000)
was accrued in respect of performance fees of which US$3,510,000 had
crystallised and fallen due for the year ended 30 September 2024 (31 March
2024: US$8,272,000; 30 September 2024: US$3,510,000). Any final performance
fee for the full year ending 30 September 2025 will not crystallise and fall
due until the calculation date of 30 September 2025.
In addition to the above services, BIM (UK) has provided the Company with
marketing services. The total fees paid or payable for these services to 31
March 2025 amounted to US$31,000 excluding VAT (six months ended 31 March
2024: US$64,000; year ended 30 September 2024: US$211,000). Marketing fees of
US$97,000 excluding VAT (31 March 2024: US$207,000; 30 September 2024:
US$344,000) were outstanding as at 31 March 2025.
The Company has an investment in the BlackRock Institutional Cash Series plc
– US Dollar Liquid Environmentally Aware Fund of US$20,688,000 (31 March
2024: US$49,538,000; 30 September 2024: US$68,559,000) at 31 March 2025, which
is a fund managed by a company within the BlackRock Group. The Company’s
investment in the Cash Fund is held in a share class on which no management
fees are paid to BlackRock to avoid double dipping.
The ultimate holding company of the Manager and the Investment Manager is
BlackRock, Inc., a company incorporated in Delaware, USA.
15. Contingent liabilities
There were no contingent liabilities at 31 March 2025 (six months ended 31
March 2024: none; year ended 30 September 2024: none).
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 31 March 2025 and 31
March 2024 has not been audited.
The information for the year ended 30 September 2024 has been extracted from
the latest published audited financial statements which have been filed with
the Registrar of Companies, unless otherwise stated. The report of the
auditors on those accounts contained no qualifications or statement under
Sections 498(2) or 498 (3) of the Companies Act 2006.
17. Annual results
The Board expects to announce the annual results for the year ending 30
September 2025 in December 2025.
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 December 2025 with the Annual General Meeting being held in
February 2026.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Sarah Beynsberger, Director, Investment Trusts, BlackRock Investment
Management (UK) Limited
Tel: 020 7743 3000
Press enquiries:
Lansons Communications
Email: BlackRockInvestmentTrusts@lansons.com
Tel: 020 7490 8828
28 May 2025
12 Throgmorton Avenue
London EC2N 2DL
END
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