BlackRock Frontiers Investment Trust
plc
(LEI: 5493003K5E043LHLO706)
Annual results announcement for the year ended 30 September 2023
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
30 September
2023
|
As at
30 September
2022
|
|
US Dollar
|
|
|
|
Net assets (US$’000)1
|
363,598
|
302,656
|
|
Net asset value per ordinary share (cents)
|
192.05
|
159.86
|
|
Ordinary share price (mid-market)2
(cents)
|
175.76
|
142.61
|
|
|
---------------
|
---------------
|
|
British Pound Sterling
|
|
|
|
Net assets (£’000)1,2
|
297,897
|
271,124
|
|
Net asset value per ordinary share2
(pence)
|
157.35
|
143.21
|
|
Ordinary share price (mid-market) (pence)
|
144.00
|
127.75
|
|
Discount3
|
8.5%
|
10.8%
|
|
|
=========
|
=========
|
|
Performance
|
For the year
ended
30 September
2023
%
|
For the year
ended
30 September
2022
%
|
Since
inception4
%
|
US Dollar
|
|
|
|
Net asset value per share (with dividends
reinvested)3
|
+25.1
|
-10.9
|
+100.0
|
Benchmark Index (NR)5,6
|
+5.0
|
-7.3
|
+42.1
|
MSCI Frontier Markets Index (NR)6
|
+6.5
|
-25.2
|
+32.8
|
MSCI Emerging Markets Index (NR)6
|
+11.7
|
-28.1
|
+17.3
|
Ordinary share price (with dividends reinvested)3
|
+28.8
|
-10.0
|
+81.1
|
|
---------------
|
---------------
|
---------------
|
British Pound Sterling
|
|
|
|
Net asset value per share (with dividends
reinvested)3
|
+14.3
|
+7.7
|
+154.6
|
Benchmark Index (NR)5,6
|
-3.9
|
+12.0
|
+80.1
|
MSCI Frontier Markets Index (NR)6
|
-2.6
|
-9.6
|
+69.6
|
MSCI Emerging Markets Index (NR)6
|
+2.2
|
-13.2
|
+49.9
|
Ordinary share price (with dividends reinvested)3
|
+17.7
|
+8.7
|
+130.2
|
|
=========
|
=========
|
=========
|
1 The
change in net assets reflects dividends paid and portfolio
movements during the year.
2 Based
on an exchange rate of US$1.2206 to
£1 at 30 September 2023 and
US$1.1163 to £1 at 30 September 2022.
3 Alternative
Performance Measures, see Glossary in the Company’s Annual Report
for the year ended 30 September
2023.
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 + MSCI Saudi
Arabia 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 Net
return (NR) indices calculate the reinvestment of dividends net of
withholding taxes.
Sources: BlackRock and Datastream.
Chairman’s statement
Overview
Over the year to 30 September 2023,
your Company’s Net Asset Value per share produced a total return of
+25.1%, compared to an increase in the Benchmark Index of +5.0%,
resulting in an outperformance of 20.1%1.
For Sterling based shareholders, the equivalent return for the year
was +14.3%, with the Benchmark Index returning -3.9%, representing
an outperformance of 18.2%1.
Since the financial year end, and up to close of business on
27 November 2023, the Company’s NAV
has increased by 0.6% compared with an increase in the Benchmark
Index of 0.9% over the same period1.
For Sterling based shareholders, the equivalent return for the
financial year to date was -2.6%, with the Benchmark Index
returning -2.3%, representing an underperformance of
0.3%1.
Our portfolio managers provide a detailed description of the key
contributors and detractors to performance during the period,
insight into the positioning of the portfolio and their views on
the outlook for the forthcoming year in their report which
follows.
I am also pleased to be able to tell you that the Company won the
Investment Week Investment Company of the Year Award 2023 – Global
Emerging Markets category for the second year in a row. The Company
also won the AJ Bell Investment Award 2023 in the Emerging Markets
Equity – Active category and the CityWire Investment Trust Award
2023 - Global Emerging Markets Equities Trust. I am sure
shareholders will join me in congratulating the investment team on
these achievements.
Revenue return and dividends
The Company’s revenue return per share for the year amounted to
8.38 cents (2022: 6.35 cents). The Directors are recommending the
payment of a final dividend of 4.90
cents per ordinary share (2022: 4.25
cents) in respect of the year ended 30 September 2023. Together with the interim
dividend of 3.10 cents per share
(2022: 2.75 cents), this represents a
total of 8.00 cents per share (2022:
7.00 cents).
Subject to shareholder approval, this dividend will be paid on
14 February 2024 to shareholders on
the register at close of business on 5
January 2024. The ex-dividend date will be 4 January 2024. The Company does not have a
policy of actively targeting income; nevertheless, this return
represents an attractive yield of 4.6% (please see the Glossary in
the Company’s Annual Report for the year ended 30 September 2023 for the inputs to the yield
calculation).
Fees and charges
Following an impressive outperformance of the Benchmark Index
during the financial year, the Manager has generated a performance
fee of US$8.27m for the year ending
30 September 2023. As per best
practice, the performance fee structure is subject to a maximum cap
and a high water mark. This mechanism requires the Manager to catch
up any previous cumulative underperformance against the benchmark
before a performance fee can be generated. Further details of the
Company’s costs and charges can be found in note 4 and in the
Glossary in the Company’s Annual Report for the year ended
30 September 2023.
Share capital management
For the year under review, the Company’s ordinary shares have
traded at an average discount to NAV of 8.4% and were trading at a
discount of 7.3% on a cum-income basis at 27
November 2023, the latest practicable date prior to the
issue of this report.
The Directors recognise the importance to investors of ensuring
that the Company’s share price should not trade at a significant
discount or premium to NAV. Accordingly, the Directors monitor the
share price closely and will consider the issue of shares at a
premium or the repurchase at a discount to help balance demand and
supply in the market. The Board monitors the Company's discount to
NAV closely and receives regular updates from the Manager and our
corporate broker, Winterflood Securities. In the Board’s opinion it
is important to consider the discount in the context of the wider
market conditions, with investor sentiment and discounts being
influenced by various external factors, including the war in
Ukraine, the conflict in the
Middle East and prolonged higher
rates of inflation. Against this backdrop, the average discount for
the investment company sector as a whole has recently exceeded 16%,
a level not seen since the global financial crisis of 2008. The
Company’s discount compares favourably to this, as it does to the
average discount of the Global Emerging Markets sector average
which stood at 9.1% on 27 November
2023, the latest practicable date prior to the publication
of this report. Therefore, the Board decided not to buy back any of
its shares during the financial year. The Company also provides a
five yearly opportunity for shareholders to realise the value of
their ordinary shares at the applicable NAV less costs. The next
such opportunity will occur in early 2026.
The Board believes that the best way to encourage a narrowing of
the discount at which the Company’s shares trade is to continue to
deliver strong investment performance and to communicate the unique
attractiveness of our investment proposition to both existing and
new shareholders.
As at 30 September 2023, the Company
had 189,325,748 ordinary shares in issue, excluding 52,497,053
shares held in treasury. The Board will consider whether it is in
shareholders’ interests to continue to hold shares in treasury or
whether they should be cancelled. No shares were issued or bought
back during the year under review or post year end from
1 October 2023 up to the date of this
report.
The Directors have been granted the authority by shareholders to
buy back up to 14.99% of the Company’s issued share capital
(excluding any shares held in treasury) and also to issue or sell
from treasury on a non-pre-emptive basis up to 10% of the Company’s
issued share capital. Both authorities expire on the conclusion of
the forthcoming Annual General Meeting (AGM) to be held on Tuesday,
6 February 2024, at which time
resolutions will be put to shareholders seeking a renewal of these
powers. Further information can be found in the Directors’ Report
in the Company's Annual Report for the year ended 30 September 2023.
Consolidation opportunities
The Board is aware of an ongoing trend of consolidation within the
wealth management industry and the implications this may have on
smaller investment companies given the demand for larger, more
liquid investment vehicles. With net assets of £290million as at
27 November 2023, the Board believes
the Company is in a good position in this
regard.
Further, the Board believes the Company’s strong long term
performance record, relatively narrow discount and attractive
dividend should position it well to act as a
consolidator.
As part of the Board's ongoing strategic considerations, and
against the backdrop of a number of mergers amongst closed-ended
investment companies in recent years, the Board regularly considers
possible consolidation opportunities that might enhance value for
the Company’s shareholders.
The Board will always continue to consider whether any transaction
would be in shareholders’ long-term interests.
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 utilised its ability to
gear the portfolio through its CFD exposure during the year. As at
the year end, net gearing stood at 12.0%. This is a higher level
than in the recent past, reflecting our portfolio managers'
positive view on the smaller emerging and frontier markets
opportunity set where they see value in both currencies and equity
markets across our investment universe.
Board composition
On 1 February 2023 the Board
announced that, as part of its ongoing succession plans, and having
each served for a tenure of in excess of 12 years, both
Sarmad Zok and I would step down
from the Board at the next AGM to be held in February 2024. In accordance with our succession
plans, the Board is currently undertaking a process to identify a
replacement for Sarmad whose in-depth knowledge and on the ground
insights into the culture, customs and business practices in the
Frontier Markets have been invaluable. The Board intends to
announce the new Board appointment in due course.
As announced in the Half-Yearly Report earlier this year, it has
been agreed that Katrina Hart, our
current Senior Independent Director, will succeed me as Chairman
upon my retirement from the Board at the AGM in 2024. Katrina
possesses a great deal of investment trust specific expertise and
asset management experience, both through her executive career in
investment banking and equities research and in her current
involvement with a number of complementary boards. It has also been
agreed that Elisabeth Airey, also a
serving Director, will succeed Katrina as our Senior Independent
Director.
Further information on their respective backgrounds and experience
can be found in the Company’s Annual Report for the year ended
30 September 2023.
As at 30 September 2023 the Board
consisted of six independent non-executive Directors. As part of
its succession plan 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
effectively discharge its duties. The Directors submit themselves
for re-election annually and therefore all Directors, other than
myself and Sarmad Zok, will stand
for re-election at the forthcoming AGM.
Corporate governance
The Board takes its governance responsibilities very seriously and
follows best practice requirements as closely as possible. The UK
Code of Corporate Governance (the UK Code) requires enhanced
disclosure setting out how we, as Directors, have fulfilled our
duties in taking into account the wider interests of stakeholders
in promoting the success of the Company.
As it does each year, and as required by the Corporate Governance
Code, the Company undertook a comprehensive Board evaluation this
year. The overall conclusion was very positive in terms of the
effectiveness of the Board, and the skills, expertise and
commitment of the Directors. The combination of our succession plan
and structured search and selection process through which the Board
identifies new appointments and the annual Board evaluation of
their ongoing performance means that the Board remains confident
that each Director is discharging their role
effectively.
The Board is also cognisant of the risk of “overboarding” and has
considered the time commitment required by the Directors’ other
roles, taking into account their nature and complexity. The Board
reviews this information annually, for each Director, including my
own as Chairman of the Board, to ensure that all Directors have
sufficient capacity to carry out their role effectively. Before
recommending a Director for re-election, their independence,
attendance record and ongoing commitment to the affairs of the
Company are also considered.
Board diversity
I am pleased to report that 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 50:50 gender
ratio. For the first time this year, and in accordance with the
Listing Rules, we have also disclosed the ethnicity of the Board
and our policy on matters of diversity. The disclosure can be found
in the Company’s Annual Report for the year ended 30 September 2023.
Environmental, Social and Governance (ESG)
considerations
Material ESG issues can present both opportunities and risks to
long-term investment performance. While the Company does not have
an ESG investment objective or exclude investments based only on
ESG criteria, these ethical and sustainability issues are a
consideration of the Company, and your Board is committed to a
diligent oversight of the activities of our Investment Manager in
these areas. The frontier markets in which the Company can invest
are home to over 3 billion of the world’s population and through
our investments we bring much needed capital to markets largely
overlooked by developed world investors.
We believe that the companies in which the portfolio is invested
should operate within a healthy ecosystem of all their stakeholders
whether these be shareholders, employees, customers, regulators or
suppliers and that this can aid the sustainability of long-term
returns. Further information can be found in the Company’s Annual
Report for the year ended 30 September
2023.
Annual general meeting
I am pleased to report that it is the Board’s intention that this
year’s AGM will be held in person at 12:30
p.m. on Tuesday, 6 February
2024 at the offices of BlackRock at 12 Throgmorton Avenue,
London EC2N 2DL.
The Board very much looks forward to meeting shareholders and
answering any questions you may have on the day. We hope you can
attend this year’s AGM.
Shareholder communication
We appreciate how important access to regular information is to our
shareholders. To supplement our Company website, we continue to
offer shareholders the ability to sign up to the Trust Matters
newsletter which includes information on the Company as well as
news, views and insights. Further information on how to sign up is
included on the inside cover of this report.
Outlook
While developed market economies have been experiencing heightened
inflation, slowing growth and the spectre of recession, by
contrast, many of the countries in our frontier market universe are
in the growth phase of their economies. Moreover, a significant
proportion of frontier markets are further along the curve in their
monetary tightening cycle, having raised interest rates earlier,
and in many cases have now already cut interest rates. Our
portfolio managers believe that this represents a more stable and
benign environment for growth. Moreover, this lack of correlation
with developed market economies remains one of the Company’s key
attractions for investors seeking portfolio
diversification.
Our managers also note that the rise in geo-political tensions
globally is leading major developed economies to diversify their
food, energy and technology supply chains, to the benefit of many
of the countries in which they invest. This, combined with an
investment universe of countries with favourable demographics, a
growing and more affluent middle-class, relatively low debt and low
stock market valuations, both versus developed markets and their
own history, presents an ever more compelling investment case for
exposure to frontier markets. In addition, alongside capital
growth, the Company’s dividend yield remains an attractive element
of the Company’s investment proposition. I am pleased that we have
again been able to grow our earnings and increase the dividend
distributed to shareholders this year.
As I look back over my tenure as Chairman of the Board since launch
in late 2010, I am reminded of the various political and economic
crises through which we have had to navigate, both domestically and
globally. I am proud of what the Company has achieved, and I thank
my fellow directors, past and present, for the benefit of their
collective wisdom, experience, and expertise and their contribution
to the success of the Company. I would also like to take this
opportunity to thank our portfolio managers for their dedication to
and passion for frontier market investing, and their unwavering
commitment to travelling the globe in search of the best and
brightest companies that frontier markets have to offer.
As I sign off on my tenure, I am confident that the leadership of
the Company is in safe hands with my successor, Katrina. I am also
reassured that our portfolio managers continue to express the same
infectious enthusiasm and excitement about the opportunities
available in frontier markets as they did when we launched the
Company in 2010. I believe the Company’s offering is truly unique
and continues to provide our shareholders with access to dynamic
markets and fast growing, exciting companies. I wish the team well
for the future and thank shareholders for their loyalty and
support.
AUDLEY
TWISTON-DAVIES
Chairman
29 November 2023
1 All
numbers in US Dollar terms with dividends reinvested.
Investment Manager’s Report For the year ended 30 September 2023
Market review
The 2020s look set to be a decade dominated by geopolitics and 2023
was no exception. Tensions between China and the West remain at elevated levels,
the conflict between Russia and
Ukraine continues and post year
end we have seen devastating loss of life in the Middle East. Remarkably, despite this
backdrop, 2023 was a very strong year for Trust
performance.
For the year ended 30 September 2023,
the Company’s NAV returned 25.1%, compared with a Benchmark Index
return of 5.0% in US Dollar terms. In British Pound Sterling terms,
the Company’s NAV was up by 14.4%, relative to a Benchmark Index
return of -3.9%. For reference, the MSCI Emerging Markets Index was
up by 11.7% and the MSCI World Index by 22.0% over the same period
(in US Dollar terms). Under the hood, the drivers of various parts
of the frontier markets universe are unsurprisingly quite
divergent.
Many of the countries where we invest have sought to walk the
tightrope of occupying neutral ground between the global super
powers of East and West. US policy looking to reshore manufacture
of sensitive technology items is pressuring companies to consider
expanding their production bases. Coming on the back of the supply
chain challenges that we saw during COVID and the concerns that
brought around food and energy security, we have seen companies
continue to invest in geographic diversification. ASEAN, Emerging
Europe and Latin America are the
likely beneficiaries and should benefit disproportionately given
the smaller size of the economies relative to the global supply
chains. Investment has come from both East and West. As an example,
Vietnam has not only seen Global
players such as Apple and Dell announce expanded manufacturing
operations, but has also seen an uptick in foreign direct
investment from Chinese exporters looking fearful of losing their
market share.
Inflation has dominated global investor conversations through 2023.
Notably in our markets, inflation peaked in almost all countries
around the end of Q1 2023. Central banks in frontier and small
emerging markets have generally exercised orthodox monetary policy,
having started increasing rates co-incident with inflation,
equating to around 12 months ahead of the West. This has meant that
they have had some scope through H2 2023 to start to reduce rates.
Latin America and Eastern Europe contain good examples of this:
Chile has cut rates 100bps since
July from 11.25% and Hungary has
reduced its rate from 18% to 13%. Normalisation of rates would
typically be a good set up for our markets, allowing domestic
growth to recover and accelerate.
2023 was a notable year from a political context for many markets
with elections taking place in Greece, Thailand, and Turkey. Over the next twelve months there will
be elections in Indonesia and
Ecuador to name a few. The market
reactions to these recent elections have been the strongest
deservedly mixed. In Greece,
political party New Democracy, led by PM Mitsotakis picked up 41%
of the vote to Syriza’s 20%, exceeding poll predictions and, giving
a strong mandate for a second term. We expect their agenda of
bureaucratic reform, privatisation and investment to provide a
strong underpin for the economy. In Thailand, the Move Forward party won more
seats than Pheu Thai, the expected
leaders. However, Pita Limjaroenrat, leader of Move Forward was not
able to form a sufficiently large coalition government to win a
majority in the combined upper and lower house. We were initially
hopeful for change in policy direction, but expect the current
government to lean towards policy continuity. Finally in
Turkey, the opposition lost once
more! We observe the turn towards economic orthodoxy by President
Erdogan since his recent election win out of necessity but remain
cautious on the exchange rate given the recent inflation print of
61.5% for September 2023.
Markets in Central Europe have
been notable performers over the 1-year period. Hungary (+76%) and Poland (+59%) have performed well, with banks
leading the way in both markets. Higher interest rates have
resulted in significant increases in net interest margins,
particularly in countries where rates are tied to European rates,
the change in profitability has been dramatic.
In Latin America all markets have
generated positive returns. Within the region, Argentina (+62%) was the best performing
market ahead of elections. These elections concluded 19 November 2023, with libertarian Javier Milei
picking up a majority of the votes ahead of Sergio Massa, the centrist rival. We believe
Milei’s victory will bring with it a significant change in policy
direction, and initial market reactions to his win have been
positive. We do however believe that the economic situation in
Argentina will remain challenging
and difficult due to a plethora of issues, including high
inflation.
In Southeast Asia, performance was
more fragmented with Philippines
(+18%) being the top performer. Philippines performance was helped by
market-friendly policies set forth by current president
Ferdinand Marcos Jr, who won the
election in June last year. Vietnam on the other hand lagged. Tight
liquidity conditions, a government corruption crackdown and a
slowdown in the property sector impacted the market which fell -9%
over the 1-year horizon.
Due diligence on the ground
We have continued to travel extensively across the emerging and
frontier world in the pursuit of alpha. Travel is an integral part
of our responsibilities as Fund Managers as the information we
obtain on these trips serves as important input in our
decision-making progress. Speaking to companies on the ground,
understanding the ecosystem surrounding the company and talking to
suppliers and clients all matter in our effort to form a holistic
view of the companies in which we invest. To that end, travel
continued as normal throughout the period, and we have visited many
countries. We will highlight just a couple here.
Recent travel to Malaysia left us
more optimistic about how the country can benefit from regional
semiconductor and tech packaging supply chains diversifying away
from China and Taiwan amid growing geopolitical risks. We
also visited Egypt and came back
more cautious. Although policy makers have allowed the Egyptian
Pound to materially devalue we felt there was little appetite to
allow a free float, with clear preference to sell domestic assets
to raise dollars. Whilst the plan has merits, with high inflation
and an unwillingness to raise rates further, we don’t think they’ll
be able to sell assets fast enough to fund that gap.
Another country the team visited over the period was Bangladesh, a fruitful trip that left us
positive on the opportunity set within the country. For example,
Bangladesh is famous for its
garmenting and is now the world’s second largest garment
manufacturer. We believe the country can use its manufacturing
expertise to gain market share in other manufacturing sectors. Our
experience tells us that there are real benefits to investing in an
emerging market when the country is in real need of foreign capital
and before other foreign investors get there - Bangladesh meets those criteria. However,
there are challenges which still need resolving - among them the
currency needs to weaken and the floor on stock market prices needs
to be dismantled.
Portfolio performance
Over the 12-month period, the Company generated positive returns in
a number of countries.
Elm
(+146%), the Saudi IT company, was the biggest contributor to
relative returns over the period. The company has done well on the
back of profit growth and re-rating from the digitisation theme we
are seeing in the Kingdom. The Qatar-based oil services holding
company
Gulf International Services
(+48.4%) also did well. The company’s Q2 earnings surprised on the
upside and the share price
was also helped by the company successfully concluding a debt
restructuring deal at favourable terms with lenders.
In Argentina our off-benchmark
position in energy company
Vista
(+146%) was amongst the top contributors at the company level. We
expect growth in shale production in Argentina to continue its dramatic growth
profile and Vista will remain at the centre of this. The company
still believes they can nearly double production volumes from this
point.
Financials exposure has benefitted the Company, primarily through
our exposure to banks across CEEMEA markets. Polish bank
PKO
(+80%),
National Bank of Greece
(+90%) and Hungary’s
OTP Bank
(+103%) are all amongst the top contributing companies over the
period. In addition to a beneficial rates environment in these
markets, asset quality of the bank portfolios has been very benign,
which has translated into stronger than expected earnings.
Financials exposure in Kazakhstan
also contributed positively, our overweight in
Kaspi
(+80%), the payments and e-commerce company, was a significant
contributor to overall returns. This has been a long-term holding
in the Fund with a proposed US listing in Q4 this year, which
should hopefully lead to further value unlocking.
In Asia, Vietnamese tech
conglomerate
FPT Corp
(+29%) did well. This business contains a fast-growing IT services
business that retains a cost advantage and has been able to win new
mandates in developed markets. Given its relatively small size
compared to Indian and global peers, the company has a long runway
for growth. Indonesian clothing retailer, Mitra Adiperkasa (+70%)
did well on the back of strong results as strong like-for-like
sales continued from market share gains in the apparel market in
Indonesia.
While Financials exposure has benefitted the Fund more broadly,
some names have lagged with
Saudi National Bank
(-28%) being the biggest detractor over the period. The bank made a
non-core investment in Credit Suisse which had to be written off.
The market has penalised the bank for poor capital allocation and
the domestic corporate credit growth picture remains murky at best.
However, this remains our preferred bank exposure in Saudi Arabia, as it prices in rates
normalisation and the valuation is compelling at current levels.
Elsewhere in the Kingdom,
Saudi Telecom
also fell (-9%). While earnings per share have been good, there has
been no uplift in dividend which disappointed the market. We exited
the position in February. Another detractor over the period was our
off-benchmark holding in Nagacorp (-37%), the Cambodian
integrated-gambling resort operator. The recovery of Chinese
travellers to pre-covid levels has been slower than expected, but
despite that, the company is still generating strong free cash
flows.
Investment activity
We have reduced our overall exposure to the Middle East, primarily through reducing our
financial holdings in Saudi
Arabia. In the banking sector in particular, we believe
margins have peaked out, liquidity is tight and valuations are high
overall. On this view, we rotated some financials exposure from the
Kingdom to UAE by exiting our holding in
Riyad Bank
and rotating this into
Abu Dhabi Commercial Bank.
We also exited
Saudi British Bank
on a similar view. We are however finding value in other sectors
within the country and have increased exposure to petrochemical
names. We initiated a position in
Saudi Basic
Industries
on the view that margins are at 10-year troughs and as the company
is still free cash flow positive, it should do well
on an eventual economic upswing.
We have continued to increase our exposure to countries we see
benefitting from the recalibration of supply chains, many of which
are in Southeast Asia. In
the Philippines we have initiated
positions in sectors spanning from real estate to financials. We
initiated a position in property developer
Ayala Land
as the stock has meaningfully corrected and we see a potential
turnaround in the local real estate cycle. We also recently
re-initiated a position in
Bloomberry Resorts,
a Philippines based resort and
casino operator, on the view that strong volume growth will
continue and that leverage is likely to fall from current levels.
Elsewhere in the region, we increased our exposure to the telecom
space in Thailand on the back of
consolidation in the sector. We also continue to be positive on
Indonesia.
We have taken profits in various European banks like
National Bank of Greece,
OTP Bank
in Hungary and in Polish
bank
PKO.
We exited
Titan Cement,
the Greek cement and building materials producer as our investment
view played out. In Latin
America, we exited pan-American airline
Copa
as the stock reached our target price following a strong earnings
release.
Outlook
We believe global markets are starting to feel the impact of higher
interest rates, noting slowing credit growth as evidence that a
demand slowdown is imminent in developed markets. When combined
with a Chinese economy which is struggling to find its footing we
find it difficult to see where a meaningful pick up in global
growth could come from.
In contrast we see better fundamentals in frontier and smaller
emerging markets. Monetary tightening across much of our universe
was ahead of that in developed markets as well as, in many cases,
stronger than in past cycles, particularly in Latin America and Eastern Europe. With inflation falling across
many countries within our universe, rate cuts have already taken
place or are underway in some of our markets. This is typically a
good set up as domestic economies should see a cyclical pick up.
This is in stark contrast to many countries in the developed world,
where major economies like the US are still in a tightening
cycle.
We continue to like Indonesia and
the country is currently the largest absolute weight in the
portfolio. We are positive on the country's ability to grow, due in
part to beneficial policymaking. For example, by banning the export
of raw ore, Indonesia has
increased the value of its mineral exports, enhanced its domestic
processing and refining capabilities, and created more economic
opportunities for its people. We therefore remain positive on their
ability to grow the value added from their nickel exports. We are
also positive on other ASEAN markets as we believe many of these
countries stand to benefit from increased geopolitical tensions
worldwide. These countries will likely maintain trade relations
with both the West and the East, and can therefore benefit from the
shifting in global supply chains away from China.
Elsewhere we note the growth in oil and gas production in
Argentina which is on an
impressive trajectory and where we have exposure. This shift is
especially important for a country short on foreign currency;
Argentina needs to get this export
project ramped up to meaningfully change its economic
circumstance.
A growing collection of the smaller markets including Pakistan, Sri
Lanka, Kenya and
Nigeria have started to pique our
interest again. Despite previously having positions in some of
these markets, they have been relatively un-investible for the last
few years as imbalances built up and policy makers responded with
significant capital controls. Year to date we have now seen more
orthodox steps to let the FX find a market equilibrium, through
reducing intervention and import controls. Many countries have
hiked rates and secured an International Monetary Fund (IMF)
package. All these measures will help rebalance economies and will
allow markets to function properly. If they follow through on this
there could be some interesting investment opportunities in this
cohort of countries.
We remain positive on the outlook for small emerging and frontier
markets versus developed markets, and we find significant value in
currencies and equity markets across our investment opportunity
set. We are optimistic over the long-term in our under-researched
frontiers universe which should continue to offer compelling
investment opportunities.
SAM VECHT, EMILY FLETCHER
AND SUDAIF NIAZ
BLACKROCK INVESTMENT MANAGEMENT (UK)
LIMITED
29 November 2023
Ten largest investments
as at 30 September
20231
The Company’s ten largest investments represented 32.2% of
the Company’s portfolio as at 30 September
2023 (2022: 35.2%).
1
+
Bank Central
Asia
(2022: n/a)
Financials (Indonesia)
Portfolio value: US$16,590,000
Percentage of net assets: 4.6% (2022:
nil%)
Bank Central Asia is an Indonesian
commercial bank headquartered in Jakarta. It is the largest private bank in the
country, offering commercial banking and other financial
services.
2
=
Saudi National Bank2
(2022: 2nd)
Financials (Saudi
Arabia)
Portfolio value: US$15,365,000
Percentage of net assets: 4.2% (2022:
4.6%)
Saudi National Bank is a commercial bank based in Saudi Arabia. The bank offers current,
savings, time, and other deposit accounts, auto leases, home
financing, corporate loans, currency exchange, money transfer,
asset management, share brokerage, initial public offering
subscription and private banking services.
3
+
JSC Kaspi
(2022: 4th)
Financials (Kazakhstan)
Portfolio value: US$11,468,000
Percentage of net assets: 3.2% (2022:
3.4%)
JSC Kaspi is the largest payments, marketplace and fintech
ecosystem in Kazakhstan. The
company has seen strong growth particularly in its marketplace and
payments verticals. The company began as a bank at first but
expanded into peer-to-peer payments and online marketplaces,
particularly proving vital for businesses during the lockdowns of
2020. The company is working on expanding into other markets in
Central Asia.
4
+
Bank Mandiri
(2022: 23rd)
Financials (Indonesia)
Portfolio value: US$11,348,000
Percentage of net assets: 3.1% (2022:
2.0%)
Bank Mandiri is one of the largest banks in Indonesia. The bank offers a range of banking
products and services segments from corporate to retail
banking.
5 + Astra International
(2022: 12th)
Industrials (Indonesia)
Portfolio value: US$10,861,000
Percentage of net assets: 3.0% (2022:
2.6%)
Astra International is an Indonesian auto conglomerate and the
largest independent automotive group in South East Asia.
6 - Emaar Properties
(2022: 1st)
Real Estate (United Arab
Emirates)
Portfolio value: US$10,687,000
Percentage of net assets: 2.9% (2022:
4.7%)
Emaar Properties is an Emirati real estate developer. The company
is involved in property investment, development, shopping malls,
retail centres, hospitality and property management services, and
serves customers in the UAE.
7
+
FPT2
(2022: 11th)
Information Technology (Vietnam)
Portfolio value: US$10,336,000
Percentage of net assets: 2.8% (2022:
2.6%)
FPT is Vietnam’s largest information 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.
8
+
CP All
(2022: n/a)
Consumer Staples (Thailand)
Portfolio value: US$10,302,000
Percentage of net assets: 2.8% (2022:
nil%)
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.
9
+
Saudi Basic Industries
Corporation2
(2022: n/a)
Materials (Saudi
Arabia)
Portfolio value: US$10,108,000
Percentage of net assets: 2.8% (2022:
nil%)
Saudi Basic Industries Corporation (SABIC), headquartered in
Riyadh, is a steel and chemicals
manufacturer. The company is a subsidiary of Saudi Arabian Oil Co,
and engages in the production of petrochemicals, chemicals,
industrial polymers, fertilisers and metals.
10 + Advanced Info Service
(2022: n/a)
Communication Services (Thailand)
Portfolio value: US$10,062,000
Percentage of portfolio: 2.8% (2022:
nil%)
Advanced Info Service is a Thailand based telecom services provider. The
company operates through three segments: mobile phone services,
mobile phone and equipment sales, and Datanet and broadband
services.
1 Gross
market exposure as a % of net assets.
2 Exposure
gained via long contracts for difference (CFDs) only.
Percentages in brackets represent the portfolio holding as at
30 September 2022.
Symbols indicate the change in the relative ranking of the position
in the portfolio compared to its ranking as at 30 September 2022.
Portfolio analysis as at 30
September 2023
Country allocation: Absolute weights (Gross market exposure
as a % of net assets)1
|
%
|
Saudi Arabia
|
17.6
|
Indonesia
|
14.4
|
Thailand
|
9.1
|
United Arab Emirates
|
8.5
|
Kazakhstan
|
7.6
|
Philippines
|
7.3
|
Hungary
|
5.9
|
Vietnam
|
5.7
|
Chile
|
5.5
|
Qatar
|
4.8
|
Malaysia
|
4.7
|
Poland
|
4.2
|
Colombia
|
3.3
|
Multi-International
|
2.6
|
Argentina
|
2.2
|
Czech Republic
|
2.0
|
Georgia
|
2.0
|
Turkey
|
2.0
|
Greece
|
1.5
|
Peru
|
1.3
|
Romania
|
1.2
|
Kuwait
|
1.1
|
Cambodia
|
1.0
|
Egypt
|
1.0
|
Ukraine
|
0.6
|
Kenya
|
0.5
|
Bangladesh
|
0.4
|
Country allocation relative to the Benchmark Index
(%)1
|
%
|
Kazakhstan
|
7.0
|
Hungary
|
4.6
|
Philippines
|
3.8
|
Indonesia
|
3.4
|
Vietnam
|
3.2
|
Colombia
|
2.7
|
Chile
|
2.7
|
Multi-International
|
2.6
|
Argentina
|
2.2
|
Georgia
|
2.0
|
Czech Republic
|
1.1
|
Cambodia
|
1.0
|
United Arab Emirates
|
0.7
|
Ukraine
|
0.6
|
Egypt
|
0.5
|
Kenya
|
0.3
|
Romania
|
0.3
|
Bangladesh
|
0.1
|
Poland
|
0.0
|
Sri Lanka
|
-0.1
|
Lithuania
|
-0.1
|
Estonia
|
-0.1
|
Tunisia
|
-0.1
|
Peru
|
-0.1
|
Mauritius
|
-0.2
|
Jordan
|
-0.2
|
Pakistan
|
-0.2
|
Bahrain
|
-0.2
|
Croatia
|
-0.3
|
Nigeria
|
-0.3
|
Qatar
|
-0.3
|
Oman
|
-0.4
|
Slovenia
|
-0.4
|
Other
|
-0.8
|
Morocco
|
-0.9
|
Greece
|
-1.0
|
Thailand
|
-1.2
|
Turkey
|
-2.2
|
Malaysia
|
-3.0
|
Kuwait
|
-3.4
|
Saudi Arabia
|
-5.3
|
Sector allocation: Absolute weights (Gross market exposure
as a % of net assets)1
|
%
|
Financials
|
39.1
|
Industrials
|
15.2
|
Energy
|
13.7
|
Materials
|
12.4
|
Consumer Staples
|
10.5
|
Information Technology
|
7.3
|
Communication Services
|
6.7
|
Consumer Discretionary
|
6.0
|
Real Estate
|
4.7
|
Utilities
|
2.0
|
Health Care
|
0.4
|
Sector allocation relative to the Benchmark Index
(%)1
|
%
|
Industrials
|
7.6
|
Energy
|
6.2
|
Information Technology
|
5.9
|
Consumer Staples
|
4.4
|
Materials
|
2.4
|
Consumer Discretionary
|
1.8
|
Real Estate
|
0.5
|
Communication Services
|
-1.9
|
Utilities
|
-2.7
|
Health Care
|
-2.7
|
Financials
|
-3.5
|
1
Includes exposure gained through equity positions and long and
short CFD positions.
Sources: BlackRock and Datastream.
Investments as at 30 September
2023
Equity portfolio by country of exposure
Company
|
Principal
country of
operation
|
Sector
|
Fair value1
US$’000
|
Gross market
exposure as a
% of net assets3
|
Bank Central Asia
|
Indonesia
|
Financials
|
16,590
|
4.6
|
Bank Mandiri
|
Indonesia
|
Financials
|
11,348
|
3.1
|
Astra International
|
Indonesia
|
Industrials
|
10,861
|
3.0
|
Indofood CBP Sukses Makmur
|
Indonesia
|
Consumer Staples
|
6,903
|
1.9
|
Mitra Adiperkasa
|
Indonesia
|
Consumer Discretionary
|
6,499
|
1.8
|
|
|
|
---------------
|
---------------
|
|
|
|
52,201
|
14.4
|
|
|
|
=========
|
=========
|
CP All
|
Thailand
|
Consumer Staples
|
10,302
|
2.8
|
Advanced Info Service
|
Thailand
|
Communication Services
|
10,062
|
2.8
|
Bangkok Bank
|
Thailand
|
Financials
|
5,560
|
1.5
|
True Corporation
|
Thailand
|
Communication Services
|
4,726
|
1.3
|
|
|
|
---------------
|
---------------
|
|
|
|
30,650
|
8.4
|
|
|
|
=========
|
=========
|
JSC Kaspi
|
Kazakhstan
|
Financials
|
11,468
|
3.2
|
Kazatomprom
|
Kazakhstan
|
Energy
|
8,499
|
2.3
|
Halyk Savings Bank
|
Kazakhstan
|
Financials
|
7,781
|
2.1
|
|
|
|
---------------
|
---------------
|
|
|
|
27,748
|
7.6
|
|
|
|
=========
|
=========
|
Bloomberry
|
Philippines
|
Consumer Discretionary
|
6,881
|
1.9
|
Ayala Land
|
Philippines
|
Real Estate
|
6,519
|
1.8
|
Metrobank
|
Philippines
|
Financials
|
5,124
|
1.4
|
Jollibee Foods
|
Philippines
|
Consumer Discretionary
|
4,585
|
1.3
|
LT Group
|
Philippines
|
Industrials
|
3,322
|
0.9
|
|
|
|
---------------
|
---------------
|
|
|
|
26,431
|
7.3
|
|
|
|
=========
|
=========
|
Sociedad Quimica y Minera - ADR
|
Chile
|
Industrials
|
7,352
|
2.0
|
Cervecerias Unidas
|
Chile
|
Consumer Staples
|
7,151
|
2.0
|
Empresas CMPC
|
Chile
|
Materials
|
5,600
|
1.5
|
|
|
|
---------------
|
---------------
|
|
|
|
20,103
|
5.5
|
|
|
|
=========
|
=========
|
OTP Bank
|
Hungary
|
Financials
|
7,151
|
2.0
|
Wizz Air Holdings
|
Hungary
|
Industrials
|
6,604
|
1.8
|
MOL Group
|
Hungary
|
Energy
|
5,192
|
1.4
|
|
|
|
---------------
|
---------------
|
|
|
|
18,947
|
5.2
|
|
|
|
=========
|
=========
|
Emaar Properties
|
United Arab Emirates
|
Real Estate
|
10,687
|
2.9
|
Air Arabia
|
United Arab Emirates
|
Industrials
|
7,401
|
2.1
|
|
|
|
---------------
|
---------------
|
|
|
|
18,088
|
5.0
|
|
|
|
=========
|
=========
|
Malaysia Airports Holdings Berhad
|
Malaysia
|
Industrials
|
7,075
|
1.9
|
Frontken Corp
|
Malaysia
|
Industrials
|
5,142
|
1.4
|
Pentamaster
|
Malaysia
|
Industrials
|
5,002
|
1.4
|
|
|
|
---------------
|
---------------
|
|
|
|
17,219
|
4.7
|
|
|
|
=========
|
=========
|
PKO Bank Polski
|
Poland
|
Financials
|
9,536
|
2.6
|
PZU
|
Poland
|
Financials
|
5,877
|
1.6
|
|
|
|
---------------
|
---------------
|
|
|
|
15,413
|
4.2
|
|
|
|
=========
|
=========
|
Bancolombia
|
Colombia
|
Financials
|
6,680
|
1.8
|
Ecopetrol
|
Colombia
|
Energy
|
5,445
|
1.5
|
|
|
|
---------------
|
---------------
|
|
|
|
12,125
|
3.3
|
|
|
|
=========
|
=========
|
EPAM Systems
|
Multi-International
|
Information Technology
|
9,377
|
2.6
|
|
|
|
---------------
|
---------------
|
|
|
|
9,377
|
2.6
|
|
|
|
=========
|
=========
|
Vista Oil & Gas
|
Argentina
|
Energy
|
7,770
|
2.2
|
|
|
|
---------------
|
---------------
|
|
|
|
7,770
|
2.2
|
|
|
|
=========
|
=========
|
Eldorado Gold
|
Turkey
|
Materials
|
7,274
|
2.0
|
|
|
|
---------------
|
---------------
|
|
|
|
7,274
|
2.0
|
|
|
|
=========
|
=========
|
Bank of Georgia
|
Georgia
|
Financials
|
7,205
|
2.0
|
|
|
|
---------------
|
---------------
|
|
|
|
7,205
|
2.0
|
|
|
|
=========
|
=========
|
Komercni Banka
|
Czech Republic
|
Financials
|
7,141
|
2.0
|
|
|
|
---------------
|
---------------
|
|
|
|
7,141
|
2.0
|
|
|
|
=========
|
=========
|
National Bank of Greece
|
Greece
|
Financials
|
5,534
|
1.5
|
|
|
|
---------------
|
---------------
|
|
|
|
5,534
|
1.5
|
|
|
|
=========
|
=========
|
Qatar Gas Transport Company
|
Qatar
|
Energy
|
5,477
|
1.5
|
|
|
|
---------------
|
---------------
|
|
|
|
5,477
|
1.5
|
|
|
|
=========
|
=========
|
Credicorp
|
Peru
|
Financials
|
4,699
|
1.3
|
|
|
|
---------------
|
---------------
|
|
|
|
4,699
|
1.3
|
|
|
|
=========
|
=========
|
BRD–Groupe Société Générale
|
Romania
|
Financials
|
4,356
|
1.2
|
|
|
|
---------------
|
---------------
|
|
|
|
4,356
|
1.2
|
|
|
|
=========
|
=========
|
Mobile Telecommunications
|
Kuwait
|
Communication Services
|
3,887
|
1.1
|
|
|
|
---------------
|
---------------
|
|
|
|
3,887
|
1.1
|
|
|
|
=========
|
=========
|
NagaCorp
|
Cambodia
|
Consumer Discretionary
|
3,810
|
1.0
|
|
|
|
---------------
|
---------------
|
|
|
|
3,810
|
1.0
|
|
|
|
=========
|
=========
|
Equity Group
|
Kenya
|
Financials
|
1,685
|
0.5
|
|
|
|
---------------
|
---------------
|
|
|
|
1,685
|
0.5
|
|
|
|
=========
|
=========
|
Square Pharmaceuticals
|
Bangladesh
|
Health Care
|
1,344
|
0.4
|
|
|
|
---------------
|
---------------
|
|
|
|
1,344
|
0.4
|
|
|
|
=========
|
=========
|
Ferrexpo
|
Ukraine
|
Materials
|
1,158
|
0.3
|
|
|
|
---------------
|
---------------
|
|
|
|
1,158
|
0.3
|
|
|
|
=========
|
=========
|
Equity investments
|
|
|
309,642
|
85.2
|
|
|
|
=========
|
=========
|
BlackRock’s Institutional Cash Series plc - US Dollar Liquid
Environmentally Aware Fund (Cash Fund)
|
|
|
64,875
|
17.8
|
|
|
|
---------------
|
---------------
|
Total equity investments (including Cash
Fund)
|
|
|
374,517
|
103.0
|
|
|
|
=========
|
=========
|
CFD portfolio by country of exposure
Company
|
Principal
country of
operation
|
Sector
|
Fair value1
US$’000
|
Gross market
exposure3
US$’000
|
Gross market
exposure as a
% of net assets3
|
Long positions
|
|
|
|
|
|
Saudi National Bank
|
Saudi Arabia
|
Financials
|
|
15,365
|
4.2
|
Saudi Basic Industries Corporation
|
Saudi Arabia
|
Materials
|
|
10,108
|
2.8
|
Yanbu National Petrochemical
|
Saudi Arabia
|
Materials
|
|
9,108
|
2.5
|
Abdullah Al Othaim Markets
|
Saudi Arabia
|
Consumer Staples
|
|
8,870
|
2.4
|
Elm
|
Saudi Arabia
|
Information Technology
|
|
6,968
|
1.9
|
Arabian Contracting Services
|
Saudi Arabia
|
Communication Services
|
|
5,353
|
1.5
|
Lumi
|
Saudi Arabia
|
Consumer Discretionary
|
|
69
|
0.0
|
|
|
|
|
---------------
|
---------------
|
|
|
|
|
55,841
|
15.3
|
|
|
|
|
=========
|
=========
|
FPT
|
Vietnam
|
Information Technology
|
|
10,336
|
2.8
|
Petrovietnam Drilling & Well Services
|
Vietnam
|
Energy
|
|
5,571
|
1.5
|
Vietnam Dairy Products
|
Vietnam
|
Consumer Staples
|
|
5,237
|
1.4
|
|
|
|
|
---------------
|
---------------
|
|
|
|
|
21,144
|
5.7
|
|
|
|
|
=========
|
=========
|
Borouge
|
United Arab Emirates
|
Materials
|
|
7,101
|
2.0
|
Abu Dhabi Commercial Bank
|
United Arab Emirates
|
Financials
|
|
5,632
|
1.5
|
|
|
|
|
---------------
|
---------------
|
|
|
|
|
12,733
|
3.5
|
|
|
|
|
=========
|
=========
|
Gulf International Services
|
Qatar
|
Energy
|
|
9,664
|
2.7
|
Qatar Gas Transport Company
|
Qatar
|
Energy
|
|
2,045
|
0.6
|
|
|
|
|
---------------
|
---------------
|
|
|
|
|
11,709
|
3.3
|
|
|
|
|
=========
|
=========
|
Commercial International Bank
|
Egypt
|
Financials
|
|
3,507
|
1.0
|
|
|
|
|
---------------
|
---------------
|
|
|
|
|
3,507
|
1.0
|
|
|
|
|
=========
|
=========
|
Wizz Air Holdings
|
Hungary
|
Industrials
|
|
2,439
|
0.7
|
|
|
|
|
---------------
|
---------------
|
|
|
|
|
2,439
|
0.7
|
|
|
|
|
=========
|
=========
|
Ferrexpo
|
Ukraine
|
Materials
|
|
886
|
0.3
|
|
|
|
|
---------------
|
---------------
|
|
|
|
|
886
|
0.3
|
|
|
|
=========
|
=========
|
=========
|
Total long CFD positions
|
|
|
(1,919)
|
108,259
|
29.8
|
|
|
|
=========
|
=========
|
=========
|
Total short CFD positions
|
|
|
87
|
(10,775)
|
(3.0)
|
|
|
|
=========
|
=========
|
=========
|
Total CFD portfolio
|
|
|
(1,832)
|
97,484
|
26.8
|
|
|
|
=========
|
=========
|
=========
|
Fair value and gross market exposure of investments as at
30 September 2023
Portfolio
|
Fair value1
US$’000
|
Gross market
exposure3
US$’000
|
Gross market exposure as
a % of net assets3
|
2023
|
2022
|
Equity investments (see footnote 1(a) below)
|
309,642
|
309,642
|
85.2
|
74.8
|
Total long CFD positions (see footnote 1(b) below)
|
(1,919)
|
108,259
|
29.8
|
31.3
|
Total short CFD positions (see footnote 1(b) below)
|
87
|
(10,775)
|
(3.0)
|
(5.2)
|
|
---------------
|
---------------
|
---------------
|
---------------
|
Total gross market exposure
|
307,810
|
407,126
|
112.0
|
100.9
|
Cash Fund
|
64,875
|
64,875
|
17.8
|
23.6
|
|
---------------
|
---------------
|
---------------
|
---------------
|
Total investments and derivatives
|
372,685
|
472,001
|
129.8
|
124.5
|
|
=========
|
=========
|
=========
|
=========
|
Cash and cash equivalents1,2
|
5,283
|
(94,033)
|
(25.9)
|
(25.7)
|
Other net current (liabilities)/assets
|
(14,351)
|
(14,351)
|
(3.9)
|
1.2
|
Non-current liabilities
|
(19)
|
(19)
|
0.0
|
0.0
|
|
---------------
|
---------------
|
---------------
|
---------------
|
Net assets
|
363,598
|
363,598
|
100.0
|
100.0
|
|
=========
|
=========
|
=========
|
=========
|
The nature of the Company’s portfolio and the fact the Company
gains significant exposure to a number of markets through long and
short CFDs means that the Company will aim to hold a level of cash
(or an equivalent holding in a Cash Fund) on its balance sheet
representing of 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.
The Company was geared through the use of long and short CFD
positions and gross and net gearing as at 30
September 2023 was 17.9% and 12.0% respectively
(30 September 2022: 11.3% and 1.0%
respectively). Gross and net gearing are Alternative Performance
Measures, see Glossary in the Company’s Annual Report for the year
ended 30 September 2023.
1 Fair
value is determined as follows:
(a) Listed
investments are valued at bid prices where available, otherwise at
latest market traded quoted prices.
(b) The
sum of the fair value column for the CFD contracts totalling
US$(1,832,000) represents the net
fair valuation of all the CFD contracts, which is determined based
on the difference between the notional transaction price and market
value of the underlying shares in the contract (in effect the
unrealised gains/(losses) on the exposed long and short CFD
positions). The cost of purchasing the securities held through long
CFD positions directly in the market would have amounted to
US$110,178,000 at the time of
purchase, and subsequent movements in market prices have resulted
in unrealised losses on the long CFD positions of US$1,919,000 resulting in the value of the total
long CFD market exposure to the underlying securities decreasing to
US$108,259,000 as at 30 September 2023. If the long positions had been
closed on 30 September 2023 this
would have resulted in a loss of US$1,919,000 for the Company. The notional price
of selling the securities to which exposure was gained via the
short CFD positions would have been US$10,862,000 at the time of entering into the
contract, and subsequent movements in market prices have resulted
in unrealised gains on the short CFD positions of US$87,000 resulting in the value of the total
short CFD market exposure of these investments decreasing to
US$10,775,000 at 30 September 2023. If the short positions had
been closed on 30 September 2023,
this would have resulted in a gain of US$87,000 for the Company.
2 The
gross market exposure column for cash and cash equivalents has been
adjusted to assume the Company purchased/sold direct holdings
rather than exposure being gained through long and short CFDs and
forward currency positions.
3 Gross
market exposure in the case of equity investments is the same as
fair value. In the case of long and short CFDs it is the market
value of the underlying shares to which the portfolio is exposed
via the contract. Market exposure in the case of forward currency
positions is the value of the receivable portion of the forward
currency contracts.
Strategic report
The Directors present the Strategic Report of the Company for the
year ended 30 September
2023.
Principal activity
The Company carries on business as an investment trust and its
principal activity is portfolio investment.
Investment objective
The Company’s investment objective is to achieve long-term capital
growth by investing in companies domiciled or listed in or
exercising the predominant part of their economic activity in, less
developed countries. These countries (the “Frontiers Universe”) are
any country which is neither part of the MSCI World Index of
developed markets, nor one of the eight largest countries by market
capitalisation in the MSCI Emerging Markets Index: being
Brazil, China, India,
South Korea, Mexico, Russia, South
Africa and Taiwan (the
“Selected Countries”).
Strategy, business model and investment
policy
Strategy
To achieve its objective, the Company invests globally in the
securities of companies domiciled or listed in or exercising the
predominant part of their economic activity in, the Frontiers
Universe.
Business model
The Company’s business model follows that of an externally managed
investment trust; therefore the Company does not have any employees
and outsources its activities to third party service providers,
including BlackRock Fund Managers Ltd (BlackRock or BFM) (‘the
Manager’) which is the principal service provider.
The management of the investment portfolio and the administration
of the Company have been contractually delegated to the Manager.
The Manager has delegated certain investment management and other
ancillary services to BlackRock Investment Management (UK) Limited
(BIM (UK)) (‘the Investment
Manager’). The contractual arrangements with, and assessment of,
the Manager are summarised in the Company's Annual Report for the
year ended 30 September 2023. The
Investment Manager, operating under guidelines determined by the
Board, has direct responsibility for the decisions relating to the
day-to-day running of the Company and is accountable to the Board
for the investment, financial and operating performance of the
Company. Other service providers include the Depositary and the
Fund Accountant, The Bank of New York Mellon (International)
Limited (BNYM), and the Registrar, Computershare Investor Services
PLC (Computershare). Details of the contractual terms with third
party service providers are set out in the Directors’ Report
in the Company's Annual Report for the year ended 30 September 2023.
Investment policy
The Company will seek to maximise total return and will invest
globally in the securities of companies domiciled or listed in or
exercising the predominant part of their economic activity in, the
Frontiers Universe. Performance is measured against the Company’s
Benchmark Index, which is a composite of the MSCI Emerging Markets
Index ex Selected Countries + MSCI Frontier Markets Index + MSCI
Saudi Arabia Index (net total return, USD). The Investment Manager
is not constrained by the geographical weightings of the Benchmark
Index and the Company’s portfolio may frequently be overweight or
underweight any particular country relative to the Benchmark Index.
The Company will exit any investment as soon as reasonably
practicable following the relevant company ceasing to be domiciled
or listed in or exercising the predominant part of its economic
activity in, the Frontiers Universe.
In order to achieve the Company’s investment objective, the
Investment Manager selects investments through a process of
fundamental and geopolitical analysis, seeking long-term
appreciation from mispriced value or growth. The Investment Manager
employs both a top-down and bottom-up approach to investing. It is
expected that the Company will have exposure to between 35 to 65
holdings.
Where possible, investment will generally be made directly in the
stock markets of the Frontiers Universe. Where the Investment
Manager determines it appropriate, investment may be made through
collective investment schemes, although such investments are not
likely to be significant. Investment in other closed-ended
investment funds admitted to the Official List will not exceed more
than 10%, in aggregate, of the value of the Gross Assets
(calculated at the time of any relevant investment). It is intended
that the Company will generally be invested in equity investments;
however, the Investment Manager may invest in equity-related
investments, such as derivatives or convertibles, and, to a lesser
extent, in bonds or other fixed-income securities, including high
risk debt securities. These securities may be below investment
grade.
Due to national and/or international regulation, excessive
operational risk, prohibitive costs and/or the time period involved
in establishing trading and custody accounts in certain countries
in the Frontiers Universe, the Company may be unable to invest
(whether directly or through nominees) in companies in certain
countries in the Frontiers Universe or, in the opinion of the
Company and/or the Investment Manager, it may not be advisable to
do so. In such circumstances, or in countries where acceptable
custodial and other arrangements are not in place to safeguard the
Company’s investments, the Company intends to gain economic
exposure to companies in such countries by investing indirectly
through derivatives. Derivatives are financial instruments linked
to the performance of another asset or security, such as promissory
notes, contracts for difference, futures or traded options. Save as
provided below, there is no restriction on the Company investing in
derivatives in such circumstances or for efficient portfolio
management purposes.
The Company may be geared through borrowings and/or by entering
into derivative transactions (taking both long and short positions)
that have the effect of gearing the Company’s portfolio to enhance
performance. The Company may also use borrowings for the settlement
of transactions, to facilitate share repurchases (where applicable)
and to meet on-going expenses.
The respective limits on gearing (whether through the use of
derivatives, borrowings or a combination of both) are set out
below:
-
Maximum
gearing through the use of derivatives or borrowings to gain
exposure to long positions in securities: 140% of net
assets
-
Maximum
exposure to short positions (for shorting purposes the Company may
use indices or individual stocks): 10% of net
assets
-
Maximum
gross exposure (total long exposure plus total short exposure):
150% of net assets
-
Maximum
net exposure (total long exposure minus total short exposure): 130%
of net assets
In normal circumstances, the Company will typically have net
exposure of between 95% and 120% of net assets.
When investing via derivatives, the Company will seek to mitigate
and/or spread its counterparty risk exposure by collateralisation
and/or contracting with a potential range of counterparty banks, as
appropriate, each of which shall, at the time of entering into such
derivatives, have a Standard & Poor’s credit rating of at least
A- on its long-term senior unsecured debt.
The Company may invest up to 5% of its Gross Assets (at the time of
such investment) in unquoted securities. The Company will invest so
as not to hold more than 15% of its Gross Assets in any one stock
or derivative position at the time of investment (excluding cash
management activities).
No material change will be made to the investment policy without
the approval of shareholders by ordinary resolution.
A detailed analysis of the Company’s portfolio has been provided
above.
Investment approach and process
Portfolio construction is a continuous process, with the Investment
Manager analysing constantly the impact of new ideas and
information on the portfolio as a whole. The approach is flexible,
varying through market and economic cycles to create a portfolio
appropriate to the focused and unconstrained strategy of the
Company. The macro environment is factored into all portfolio
decisions. In general, macro analysis is a more dominant factor in
investment decision making when the outlook is negative. The macro
process is comprised of three parts: political assessment,
macroeconomic analysis and appraisal of the valuation of a
country’s market, which can only take place with thorough analysis
of stock specific opportunities.
The Investment Manager’s research team generates ideas from a
diverse range of sources. When permitted, these include frequent
travel to the markets in which the Company invests and regular
conversations with contacts that allow the Frontiers team to assess
the entire eco system around a company, namely competitors,
suppliers, financiers, customers and regulators. The team leverages
the internal research network, sharing information between
BlackRock’s investment teams using a proprietary research
application and database and develops insights from macroeconomic
analysis. The Board believes that BlackRock’s research platform is
a significant competitive advantage, both in terms of information
specific to emerging and frontier market equities and through its
global insights across asset classes. Access to companies is
extremely good given BlackRock’s market presence, which makes it
possible to develop a detailed knowledge of a company and its
management.
The research process focuses on cash flow and future earnings
growth, as the investment team believes that this is
ultimately
the driver of share prices over time. The process is designed with
the aim of identifying companies that can translate top line
revenue growth to free cash flow and investing in these companies
when the analysis suggests that the cash flow stream is
undervalued. Financial models are developed focusing on company
financials, particularly cash flow statements, rather than relying
on third party research.
ESG integration
The Manager defines Environmental, Social and Governance (ESG)
integration as the practice of incorporating material ESG
information and consideration of sustainability risks into
investment decisions in order to enhance ‘long term’ risk adjusted
returns. Inclusion of this statement does not imply that the
Company has a sustainability-aligned investment objective or
constrain the Investment Manager’s investable universe and does not
mean that a sustainable or impact focused investment strategy or
any exclusionary screens have been or will be adopted by the
Company, but rather describes how ESG information is considered as
part of the overall investment process.
In making investment decisions, the Manager assesses a variety of
economic and financial indicators which include ESG considerations
in combination with other information in the research phase of the
investment process to make investment decisions appropriate to the
Company’s objectives. This may also include relevant third party
insight, as well as internal engagement commentary and input from
BlackRock Investment Stewardship (BIS) on governance issues. The
portfolio managers conduct regular portfolio reviews with the
BlackRock Risk and Quantitative Analysis (RQA) team. These reviews
include discussion of the portfolio’s exposure to material ESG
risks, as well as exposure to sustainability related business
involvements, climate related metrics, traditional financial risks
and other factors.
The portfolio managers’ approach to ESG integration is to broaden
the total amount of information its investment professionals
consider in order to improve investment analysis, seeking to meet
or exceed economic return and financial risk targets. ESG factors
can be useful and relevant indicators for investment purposes and
can help portfolio managers with their decision making through
identifying potentially negative events or corporate behaviour. The
Portfolio Manager works closely with BIS to assess the governance
quality of companies and investigate any potential issues, risks or
opportunities.
The Manager’s research team monitors differing levels of risk
throughout the process and believes that avoiding major downside
events can generate significant outperformance over the long term.
Inputs from the RQA team are an integral part of the investment
process. The RQA team analyse market and portfolio risk factors
including stress tests, correlations, factor returns, cross
sectional volatility and attributions. The Manager’s evaluation
procedures and financial analysis of the companies within the
portfolio also take into account environmental, social and
governance matters and other business issues.
The Company does not meet the criteria for Article 8 or 9 products
under the EU Sustainable Finance Disclosure Regulation (“SFDR”) and
the investments within the portfolio do not take into account the
EU criteria for environmentally sustainable economic
activities.
Further information on the Manager’s approach to ESG and Socially
Responsible Investing can be found in the Strategic Report in the
Company's Annual Report for the year ended 30 September 2023.
Performance
Details of the Company’s performance for the year are given in the
Chairman’s Statement above. The Investment Manager’s Report above
includes a review of the main developments during the period,
together with information on investment activity within the
Company’s portfolio.
Results and dividends
The results for the Company are set out in the Statement of
Comprehensive Income below. The total profit for the year, after
taxation, was US$74,856,000 (2022:
loss of US$36,869,000) of which the
revenue return amounted to US$15,872,000 (2022: US$12,013,000) and the capital profit amounted to
US$58,984,000 (2022: loss of
US$48,882,000).
The Directors are recommending the payment of a final dividend of
4.90 cents per ordinary share in
respect of the year ended 30 September
2023 (2022: final dividend of 4.25
cents) as set out in the Chairman’s Statement
above.
Key performance indicators
The Directors consider a number of performance measures to assess
the Company’s success in achieving its objectives. The key
performance indicators (KPIs) used to measure the progress and
performance of the Company over time and which are comparable to
those reported by other investment trusts are set out
below.
Performance measured against the Benchmark
Index
At each meeting the Board reviews the performance of the portfolio
as well as the net asset value and share price for the Company and
compares this to the return of the Company’s benchmark. The Board
considers this to be an important key performance indicator and has
determined that it should also be used to calculate whether a
performance fee is payable to BlackRock. The Company’s absolute and
relative performance is set out in the performance record table in
the Company’s Annual Report for the year ended 30 September 2023.
Share rating and discount/premium
The Directors recognise the importance to investors that the
Company’s share price should not trade at a significant discount or
premium to NAV. Accordingly, the Directors monitor the share rating
closely and will consider share repurchases in the market if the
discount widens significantly, or the issue of shares to the market
to meet demand to the extent that the Company’s shares are trading
at a premium. In addition, in accordance with the Directors’
commitment at launch the Company will formulate and submit to
shareholders proposals to provide them with an opportunity at each
five year anniversary since launch to realise the value of their
ordinary shares at the prevailing NAV per share less applicable
costs. Such an opportunity took place in the year ended
30 September 2021. The next
opportunity will take place in early 2026.
For the year under review the Company’s shares traded at an average
discount to the cum-income NAV of 8.4% and were trading at a
discount of 7.3% on a cum-income basis at 27
November 2023. The Directors have the authority to buy back
up to 14.99% of the Company’s issued share capital (excluding
treasury shares). The Directors sought and received shareholder
authority at the last AGM to issue up to 10% of the Company’s
issued share capital (via the issue of new shares or sale of shares
from treasury) on a non pre-emptive basis. Further information can
be found in the Directors’ Report in the Company's Annual Report
for the year ended 30 September
2023.
Ongoing charges
The ongoing charges reflect those expenses which are likely to
recur in the foreseeable future, whether charged to capital or
revenue, and which relate to the operation of the investment
company as a collective investment fund, excluding the costs of
acquisition or disposal of investments, financing charges and gains
or losses arising on investments and performance fees. The ongoing
charges are based on actual costs incurred in the year as being the
best estimate of future costs. The Board reviews the ongoing
charges and monitors the expenses incurred by the
Company.
The table below sets out the key KPIs for the Company (see Glossary
in the Company’s Annual Report for the year ended 30 September 2023).
|
Year ended
30 September 20231
|
Year ended
30 September 20221
|
|
£%
|
US$%
|
£%
|
US$%
|
Net asset value total return2
|
+14.3
|
+25.1
|
+7.7
|
-10.9
|
Share price total return3
|
+17.7
|
+28.8
|
+8.7
|
-10.0
|
Benchmark Index return4
|
-3.9
|
+5.0
|
+12.0
|
-7.3
|
Discount to cum income NAV
|
|
8.5
|
|
10.8
|
Ongoing charges5
|
|
1.38
|
|
1.36
|
Ongoing charges including performance fees6
|
|
3.78
|
|
1.36
|
|
=========
|
=========
|
=========
|
=========
|
1 Based
on an exchange rate of US$1.2206 to
£1 at 30 September 2023 and
US$1.1163 to £1 at 30 September 2022.
2 Calculated
with dividends reinvested.
3 Calculated
on a mid to mid basis with dividends reinvested.
4 The
Benchmark Index is a composite of the MSCI Emerging Markets Index
ex Selected Countries + MSCI Frontier Markets Index + MSCI Saudi
Arabia Index. Benchmark Index return calculates the reinvestment of
dividends net of withholding taxes.
5 Ongoing
charges represent the management fee and all other operating
expenses, excluding performance fees, finance costs, direct
transaction costs, custody transaction charges, VAT recovered,
taxation, prior year expenses written back and certain
non-recurring items, as a % of average daily net assets.
6 Ongoing
charges represent the management fee and all other operating
expenses, including performance fees, but excluding finance costs,
direct transaction costs, custody transaction charges, VAT
recovered, taxation, prior year expenses written back and certain
non-recurring items, as a % of average daily net assets.
The Board regularly reviews a number of indices and ratios to
understand the impact on the Company’s relative performance of the
various components such as asset allocation and stock selection.
The Board also reviews the performance of the Company against a
peer group of frontier market focussed open and closed-ended
funds.
Principal risks
As required by the 2018 UK Code of Corporate Governance, the Board
has in place a robust, ongoing process to identify, assess and
monitor the principal and emerging risks of the Company, including
those that they consider would threaten its business model, future
performance, solvency or liquidity. Emerging risks are considered
by the Board as they come into view and are incorporated into the
Company’s risk register where applicable. Additionally, the Manager
considers emerging risks in numerous forums and the Risk and
Quantitative Analysis team produces an annual risk survey. Any
material risks of relevance to the Company identified through the
annual risk survey will be communicated to the Board.
A core element of this is the Company’s risk register, which
identifies the risks facing the Company and assesses the likelihood
and potential impact of each risk, and the quality of the controls
operating to mitigate the risk. A residual risk rating is then
calculated for each risk based on the outcome of this assessment.
This approach allows the effect of any mitigating procedures to be
reflected in the final assessment.
The risk register, its method of preparation and the operation of
the key controls in BlackRock’s and other third party service
providers’ systems of internal control are reviewed on a regular
basis by the Company’s Audit and Management Engagement Committee.
In order to gain a more comprehensive understanding of BlackRock’s
and other third party service providers’ risk management processes
and how these apply to the Company’s business, the Audit and
Management Engagement Committee periodically receives presentations
from BlackRock’s Internal Audit and Risk & Quantitative
Analysis teams, and reviews Service Organisation Control (SOC 1)
reports from BlackRock and the Company’s Custodian and Fund
Accountant, The Bank of New York Mellon (International) Limited
(BNYM).
The current risk register includes a range of risks spread between
performance risk, income/dividend risk, legal and regulatory risk,
counterparty risk, operational risk, market risk, political risk
and financial risk.
The principal risks and uncertainties faced by the Company during
the year, together with the potential effects, controls and
mitigating factors, are set out below.
Investment Performance Risk
Principal risk
The Board is responsible for:
-
setting
the investment policy to fulfil the Company’s objectives;
and
-
monitoring
the performance of the Company’s Investment Manager and the
strategy adopted.
An inappropriate policy or strategy may lead to:
-
poor
performance compared to the Company’s benchmark peer group or
shareholder expectations;
-
a
widening discount to NAV;
-
a
reduction or permanent loss of capital; and
-
dissatisfied
shareholders and reputational damage.
The Board is also cognisant of the long-term risk to performance
from inadequate attention to ESG issues and in particular the
impact of climate change.
Mitigation/Control
To
manage this risk the Board:
-
regularly
reviews the Company’s investment mandate and long term
strategy;
-
has
set, and regularly reviews, the investment guidelines and has put
in place appropriate limits on levels of gearing and the use of
derivatives;
-
receives
from the Investment Manager a regular explanation of stock
selection decisions, portfolio gearing and any changes in gearing
and the rationale for the composition of the investment
portfolio;
-
receives
from the Investment Manager regular reporting on the portfolio’s
exposure through derivatives, including the extent to which the
portfolio is geared in this manner and the value of any short
positions;
-
monitors
the maintenance of an adequate spread of investments in order to
minimise the risks associated with particular countries or factors
specific to particular sectors, based on the diversification
requirements inherent in the Company’s investment policy;
and
-
regularly
reviews detailed performance attribution
analysis.
ESG analysis is integrated into the Manager’s investment process,
as set out above. This is monitored by the Board.
Income/Dividend Risk
Principal risk
The amount of dividends and future dividend growth will depend on
the Company’s underlying portfolio. In addition, any change in the
tax treatment of the dividends or interest received by the Company
(including as a result of withholding taxes or exchange controls
imposed by jurisdictions in which the Company invests) may reduce
the level of dividends received by shareholders.
Mitigation/Control
Although the Company does not have a policy of actively seeking
income, the Board monitors this risk through the receipt of
detailed income forecasts and considers the level of income at each
meeting. The Company also has a revenue reserve and powers to pay
dividends from capital which can be used to support the Company’s
dividend if required.
Legal and Regulatory Risk
Principal risk
The Company has been approved by HM Revenue & Customs as an
investment trust, subject to continuing to meet the relevant
eligibility conditions, and operates as an investment trust in
accordance with Chapter 4 of Part 24 of the Corporation Tax Act
2010. As such, the Company is exempt from capital gains tax on the
profits realised from the sale of its investments.
Any breach of the relevant eligibility conditions could lead to the
Company losing its investment trust status and being subject to
corporation tax on capital gains realised within the Company’s
portfolio.
In such event the investment returns of the Company may be
adversely affected. Any serious breach could result in the Company
and/or the Directors being fined or the subject of criminal
proceedings or the suspension of the Company’s shares which would
in turn lead to a breach of the Corporation Tax Act 2010. Amongst
other relevant laws and regulations, the Company is required to
comply with the provisions of the Companies Act 2006, the
Alternative Investment Fund Managers’ Directive, the Market Abuse
Act, the UK Listing Rules and the Disclosure Guidance &
Transparency Rules.
Mitigation/Control
The Investment Manager monitors investment movements, the level of
forecast income and expenditure and the amount of proposed
dividends, if any, to ensure that the provisions of Chapter 4 of
Part 24 of the Corporation Tax Act 2010 are not breached, and the
results are reported to the Board at each meeting.
Following authorisation under the Alternative Investment Fund
Managers’ Directive (AIFMD), the Company and its appointed
Alternative Investment Fund Manager (AIFM) are subject to the risks
that the requirements of this Directive are not correctly complied
with. The Board and the AIFM also monitor changes in government
policy and legislation which may have an impact on the
Company.
Compliance with the accounting standards applicable to quoted
companies and those applicable to investment trusts are also
regularly monitored to ensure compliance.
The Company Secretary and the Company’s professional advisers
monitor developments in relevant laws and regulations and provide
regular reports to the Board in respect of the Company’s
compliance.
Counterparty Risk
Principal risk
The Company’s investment policy also permits the use of both
exchange-traded and over-the-counter derivatives (including
contracts for difference). The potential loss that the Company
could incur if a counterparty is unable (or unwilling) to perform
on its commitments.
Mitigation/Control
Due diligence is undertaken before contracts are entered into and
exposures are diversified across a number of counterparties. The
Board reviews the controls put in place by the Investment Manager
to monitor and to minimise counterparty exposure, which include
intra-day monitoring of exposures to ensure that these are within
set limits.
Operational Risk
Principal risk
In common with most other investment trust companies, the Company
has no employees. The Company therefore relies upon the services
provided by third parties and is dependent on the control systems
of BlackRock (the Investment Manager and AIFM), and of The Bank of
New York Mellon (International) Limited (the Custodian, Depositary
and Fund Accountant), which ensures safe custody of the Company’s
assets and maintains the Company’s accounting records. The
Company’s share register is maintained by the Registrar,
Computershare.
Failure by any service provider to carry out its obligations to the
Company could have a material adverse effect on the Company’s
performance. Disruption to the accounting, payment systems or
custody records, as a result of a cyberattack or otherwise, could
impact the monitoring and reporting of the Company’s financial
position.
The security of the Company’s assets, dealing procedures,
accounting records and maintenance of regulatory and legal
requirements, depend on the effective operation of these
systems.
Mitigation/Control
The Board reviews the overall performance of the Manager,
Investment Manager and all other third-party service providers and
compliance with the investment management agreement on a regular
basis.
The Fund Accountant’s and the Manager’s internal control processes
are regularly tested and monitored throughout the year and are
evidenced through their Service Organisation Control (SOC 1)
reports, which are subject to review by an Independent Service
Assurance Auditor. The SOC 1 reports provide assurance in respect
of the effective operation of internal controls.
The Company’s assets are subject to a strict liability regime and
in the event of a loss of financial assets held in custody, the
Depositary must return assets of an identical type or the
corresponding amount, unless able to demonstrate that the loss was
a result of an event beyond its reasonable control.
The Board considers succession arrangements for key employees of
the Manager and the Board also considers the business continuity
arrangements of the Company’s key service providers on an ongoing
basis and reviews these as part of its review of the Company’s risk
register.
The Board also receives regular reports from BlackRock’s internal
audit function.
Political Risk
Principal risk
Investments in the Frontiers Universe may include a higher element
of risk compared to more developed markets due to greater political
instability. Political and diplomatic events in the Frontiers
Universe where the Company invests (for example, governmental
instability, corruption, adverse changes in legislation or other
diplomatic developments such as the outbreak of war or imposition
of sanctions) could substantially and adversely affect the
economies of such countries or the value of the Company’s
investments in those countries.
Mitigation/Control
The Investment Manager mitigates this risk by applying stringent
controls over where investments are made and through close
monitoring of political risks. The Investment Manager’s approach to
filtering the investment universe takes account of the political
background to regions and is backed up by rigorous stock specific
research and risk analysis, individually and collectively, in
constructing the portfolio. The management team has a wide network
of business and political contacts which provides economic insights
with public and private bodies. This enables the Investment Manager
to assess potential investments in an informed and disciplined way,
as well as being able to conduct regular monitoring of investments
once made. However, given the nature of political risk, all
investments will be exposed to a degree of risk and the Investment
Manager will ensure that the portfolio remains diversified across
countries to mitigate the risk.
Financial Risk
Principal risk
The Company’s investment activities expose it to a variety of
financial risks which include foreign currency risk, liquidity
risk, currency risk and interest rate risk.
Mitigation/Control
Details of these risks are disclosed in note 17 to the financial
statements in the Company’s Annual Report for the year ended
30 September 2023, together with a
summary of the policies for managing these risks.
Market Risk
Principal risk
Market risk arises from volatility in the prices of the Company’s
investments. It represents the potential loss the Company might
suffer through realising investments in the face of negative market
movements. The securities markets of the Frontiers Universe are not
as large as the more established securities markets and have
substantially less trading volume, which may result in a lack of
liquidity and higher price volatility. There are fewer attractive
investment opportunities in frontier markets, and this may lead to
a delay in investment and may affect the price at which such
investments may be made and reduce potential investment returns for
the Company.
There is also exposure to currency, market and political risk due
to the location of the operation of the businesses in which the
Company may invest. As a consequence of this and other market
factors the Company may invest in a concentrated portfolio of
shares and this focus may result in higher risk when compared to a
portfolio that has spread or diversified investments more
broadly.
Corruption also remains a significant issue across the Frontiers
Universe and the effects of corruption could have a material
adverse effect on the Company’s performance. Accounting, auditing
and financial reporting standards and practices and disclosure
requirements applicable to many companies in developing countries
may be less rigorous than in developed markets. As a result, there
may be less information available publicly to investors in these
securities, and such information as is available is often less
reliable.
The Company may also gain exposure to the Frontiers Universe by
investing indirectly through Participatory Notes (P-Notes) which
presents additional risk to the Company as P-Notes are
uncollateralised resulting in the Company being subject to full
counterparty risk via the P-Note issuer. P-Notes also present
liquidity issues as the Company, being a captive client of a P-Note
issuer, may only be able to realise its investment through the
P-Note issuer and this may have a negative impact on the liquidity
of the P-Notes which does not correlate to the liquidity of the
underlying security.
The Portfolio Managers seek to understand the environmental, social
and governance (ESG) risks and opportunities facing companies and
industries in the portfolio. The Company does not exclude
investment in stocks based on ESG criteria, but the Portfolio
Managers consider ESG information when conducting research and due
diligence on new investments and again when monitoring investments
in the portfolio.
Mitigation/Control
Market risk represents the risks of investment in a particular
market, country or geographic region. Therefore, this is largely
outside of the scope of the Board’s control. However, the Board
carefully considers asset allocation, stock selection and levels of
gearing on a regular basis and has set investment restrictions and
guidelines which are monitored and reported on by the Investment
Manager. Market risk is also mitigated through portfolio
diversification across countries and regions. The Board monitors
the implementation and results of the investment process with the
Investment Manager regularly.
The Investment Manager regularly reports to the Board on relative
market risks associated with investment in such regions. Further
information is provided under ‘Political Risk’.
The Board recognises the benefits of a closed-end fund structure in
extremely volatile markets such as those affected by the COVID-19
pandemic, and more recently the Russia-Ukraine conflict. Unlike open-ended
counterparts, closed-end funds are not obliged to sell-down
portfolio holdings at low valuations to meet liquidity requirements
for redemptions. During times of elevated volatility and market
stress, the ability of a closed-end fund structure to remain
invested for the long term enables the Investment Manager to adhere
to disciplined fundamental analysis from a bottom-up perspective
and be ready to respond to dislocations in the market as
opportunities present themselves.
Companies operating in the sectors in which the Company invests may
be impacted by new legislation governing climate change and
environmental issues, which may have a negative impact on their
valuation and share price.
Viability statement
In accordance with the provisions of the UK Corporate Governance
Code, the Directors have assessed the prospects of the Company over
a longer period than the twelve months referred to by the ‘Going
Concern’ guidelines. The Board is cognisant of the uncertainty
surrounding the potential duration of the Russia-Ukraine conflict, its impact on the global
economy, and the prospects for many of the Company’s portfolio
holdings. The same is true of the more recent hostilities in the
Middle-East. Notwithstanding these
crises, and given the factors stated below, the Board expects the
Company to continue to meet its liabilities as they fall due for
the foreseeable future and has therefore conducted this review for
a period of five years. Five years is considered by the Board to be
a reasonable time horizon over which the performance of the Company
can be assessed.
The Board also notes that this aligns with the five-yearly
assessment period adopted when the Company was launched (on the
basis that this was an appropriate time frame for shareholders to
judge performance and have the opportunity to exit the fund at the
applicable
NAV per ordinary share less relevant costs.) The Board conducted
this review for the period up to the AGM in 2029.
In determining this period, the Board took into account the
Company’s investment objective to achieve long-term capital growth
and the Company’s projected income and expenditure. The Directors
believe that five years is an appropriate investment horizon to
assess the viability of the Company. It is satisfied that the
Company has adequate resources to continue in operational existence
for the foreseeable future and is financially sound.
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 shareholders with an opportunity to realise
the value of their ordinary shares at the applicable NAV per
ordinary share less applicable costs. The Board put proposals to
shareholders in 2021. The Company received elections to tender
representing 21.5% of the Company, with the vast majority of
shareholders choosing to retain their investment. The Board
believes this is indicative of the ongoing attractiveness of the
Company’s investment strategy and offering. The next such
opportunity will occur in early 2026.
In making the longer-term viability assessment the Board has
considered the following factors:
-
the
Company’s principal risks as set out above;
-
the
level of ongoing demand for the Company’s ordinary
shares;
-
the
impact of a significant fall in Frontier equity markets on the
value of the Company’s investment portfolio;
-
the
ongoing relevance of the Company’s investment objective, business
model and investment policy in the current
environment;
-
the
operational resilience of the Company and its key service providers
and their ability to continue to provide a good level of service
for the foreseeable future; and
-
the
effectiveness of business continuity plans in place for the Company
and key service providers.
The Board has also considered a number of financial metrics,
including:
-
the
level of current and historic ongoing charges incurred by the
Company;
-
the
Company’s borrowings and its ability to meet its liabilities as
they fall due;
-
the
premium or discount to NAV;
-
the
level of income generated by the Company;
-
future
income forecasts; and
-
the
liquidity of the Company’s portfolio.
The Company is an investment company with a relatively liquid
equity portfolio (as at 30 September
2023, 94.1% of the equity portfolio was capable of being
realised in less than 20 days in normal market conditions) and
largely fixed overheads (excluding performance fees) which comprise
a very small percentage of net assets (1.38%). In addition, any
performance fees are capped at 1% of gross assets in years where
the NAV per share has fallen or 2.5% of gross assets in years where
the NAV per share has increased. Therefore, the Board has concluded
that even in exceptionally stressed operating conditions, the
Company would comfortably be able to meet its ongoing operating
costs as they fall due.
However, investment companies may face other challenges, such as
regulatory changes and the tax treatment of investment trusts, or a
significant decrease in size due to substantial share buy-back
activity or market falls, which may result in the Company no longer
being of sufficient market capitalisation to represent viable
investment propositions or no longer being able to continue in
operation.
The Board has determined that the factors considered are applicable
to the period up to the AGM in 2029 and beyond.
In addition, the Board’s assessment of the Company’s ability to
operate in the foreseeable future is included in the Going Concern
Statement which can be found in the Directors’ Report.
Based on the results of their analysis, the Directors have a
reasonable expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the period
of their assessment.
Section 172 Statement: Promoting the success of the
BlackRock Frontiers Investment Trust Plc
The Companies (Miscellaneous Reporting) Regulations 2018 require
directors to explain more fully how they have discharged their
duties under Section 172(1) of the Companies Act 2006 in promoting
the success of their companies for the benefit of members as a
whole. This enhanced disclosure covers how the Board has engaged
with and understands the views of stakeholders and how
stakeholders’ needs have been taken into account, the outcome of
this engagement and the impact that it has had on the Board’s
decisions.
As the Company is an externally managed investment company and does
not have any employees or customers, the Board considers the main
stakeholders in the Company to be the shareholders, key service
providers (being the Manager and Investment Manager, the Custodian,
Depositary, Registrar and Broker) and investee
companies.
A summary of the principal areas of engagement undertaken by the
Board with its key stakeholders in the year under review and how
Directors have acted upon this to promote the long-term success of
the Company is set out in the tables below.
Stakeholders
Shareholders
Continued shareholder support and engagement are critical to the
continued existence of the Company and the successful delivery of
its long-term strategy. The Board is focused on fostering good
working relationships with shareholders and on understanding the
views of shareholders in order to incorporate them into the Board’s
strategy and objectives in delivering long-term growth and
income.
Manager and Investment Manager
The Board’s main working relationship is with the Manager, who is
responsible for the Company’s portfolio management (including asset
allocation, stock and sector selection) and risk management, as
well as ancillary functions such as administration, secretarial,
accounting and marketing services. The Manager has sub-delegated
portfolio management to the Investment Manager. Successful
management of shareholders’ assets by the Investment Manager is
critical for the Company to successfully deliver its investment
strategy and meet its objective. The Company is also reliant on the
Manager as AIFM to provide support in meeting relevant regulatory
obligations under the AIFMD and other relevant
legislation.
Other key service providers
In order for the Company to function as an investment trust with a
listing on the premium segment of the official list of the
Financial Conduct Authority (FCA) and trade on the London Stock
Exchange’s (LSE) main market for listed securities, the Board
relies on a diverse range of advisors for support in meeting
relevant obligations and safeguarding the Company’s assets. For
this reason, the Board considers the Company’s Custodian,
Depositary, Registrar and Broker to be stakeholders. The Board
maintains regular contact with its key external providers and
receives regular reporting from them through the Board and
committee meetings, as well as outside of the regular meeting
cycle.
Investee companies
Portfolio holdings are ultimately shareholders’ assets, and the
Board recognises the importance of good stewardship and
communication with investee companies in meeting the Company’s
investment objective and strategy. The Board monitors the Manager’s
stewardship activities and receives regular feedback from the
Manager in respect of meetings with the management of portfolio
companies.
A summary of the key areas of engagement undertaken by the Board
with its key stakeholders in the year under review and how
Directors have acted upon this to promote the long-term success of
the Company are set out below.
Area of Engagement
Responsible investing
Issue
The Board is committed to promoting the role and success of the
Company in delivering on its investment mandate to shareholders
over the long term. However, the Board recognises that securities
within the Company’s investment remit may involve significant
additional risk due to the political volatility and environmental,
social and governance concerns facing many of the countries in the
Company’s investment universe. While the Company does not have a
sustainable investment objective or exclude investments based only
on ESG criteria, these ethical and sustainability issues should be
a consideration of our Manager’s research. More than ever,
consideration of sustainable investment is a key part of the
investment process and should be factored in when making investment
decisions. The Board also has responsibility to shareholders to
ensure that the Company’s portfolio of assets is invested in line
with the stated investment objective and in a way that ensures an
appropriate balance between spread of risk and portfolio
returns.
Engagement
The Board believes that responsible investment and sustainability
are important to the longer-term delivery of growth in capital and
income and has worked very closely with the Manager throughout the
year to regularly review the Company’s performance and investment
strategy and to understand how ESG considerations are integrated
into the investment process.
The Manager’s approach to the consideration of ESG factors in
respect of the Company’s portfolio, as well as its engagement with
investee companies to encourage the adoption of sustainable
business practices which support long-term value creation, are kept
under review by the Board. The Manager reports to the Board in
respect of its consideration of ESG factors and how these are
integrated into the investment process; a summary of BlackRock’s
approach to ESG and sustainability is set out in the Company's
Annual Report for the year ended 30
September 2023. The Investment Manager’s engagement and
voting policy is detailed in the Company’s Annual Report for the
year ended 30 September 2023 and on
the BlackRock website.
Impact
The Board and the Manager believe there is a positive long-term
correlation between strong ESG practices and investment
performance. Details regarding the Company’s NAV and share price
performance can be found in the Chairman’s Statement above. The
portfolio activities undertaken by the Manager, can be found in the
Investment Manager’s Report above.
Discount Strategy
Issue
The Board believes that the Company’s unique investment offering,
strong performance and an attractive dividend yield enhances demand
for the Company’s shares, which should help to maintain the
Company’s discount at as close to the underlying NAV as
possible.
The Company has also put in place a 5-yearly mechanism which
provides shareholders with a periodic opportunity to exit at NAV
less costs. This last occurred in March
2021, with the next opportunity to take place in early
2026.
Engagement
The Manager reports total return performance statistics to the
Board on a regular basis, along with the portfolio yield and the
impact of dividends paid on brought forward distributable
reserves.
The Board reviews the Company’s discount/premium to NAV on a
regular basis and holds regular discussions with the Manager and
the Company’s broker regarding the discount/premium
level.
The Board also seeks shareholder authority each year to buy back up
to 14.99% of the Company’s issued share capital for cancellation or
to be held in treasury for potential re-issue. Buying back the
Company’s shares can, in certain circumstances, help to narrow the
discount and/or reduce the volatility in the share
rating.
Impact
The average discount for the year to 30
September 2023 was 8.4%. During the year the Company’s share
price traded at a maximum discount of 12.7% and a minimum discount
of 3.7%.
Service levels of third party providers
Issue
The Board acknowledges the importance of ensuring that the
Company’s principal suppliers are providing a suitable level of
service, including the Manager in respect of investment performance
and delivering on the Company’s investment mandate; the Custodian
and Depositary in respect of their duties towards safeguarding the
Company’s assets; the Registrar in its maintenance of the Company’s
share register and dealing with investor queries and the Company’s
Brokers in respect of the provision of advice and acting as a
market maker for the Company’s shares.
Engagement
The Manager reports to the Board on the Company’s performance on a
regular basis. The Board carries out a robust annual evaluation of
the Manager’s performance, their commitment and available
resources. As previously announced, the Board is pleased that the
portfolio management team has been bolstered this year by the
appointment of a third portfolio manager, Sudaif Niaz.
The Board performs an annual review of the service levels of all
third party service providers and concludes on their suitability to
continue in their role.
The Board receives regular updates from the AIFM, Depositary,
Registrar and Brokers on an ongoing basis.
The Board works closely with the Manager to gain comfort that
relevant business continuity plans are operating effectively for
all of the Company’s service providers.
Impact
All performance evaluations were performed on a timely basis and
the Board concluded that all third-party service providers,
including the Manager, Custodian, Depositary and Fund Accountant
were operating effectively and providing a good level of
service.
The Board has received updates in respect of business continuity
planning from the Company’s Manager, Custodian, Depositary, Fund
Accountant, Broker, Registrar and printer, and is confident that
arrangements are in place to ensure that a good level of service
will continue to be provided.
Board composition
Issue
The Board is committed to ensuring that its own composition brings
an appropriate balance of knowledge, experience and skills, and
that it is compliant with best corporate governance practice under
the UK Code, including guidance on tenure and the composition of
the Board’s committees.
Engagement
The Board recognises the benefits of diversity and regular
refreshment but does not believe tenure alone should determine
whether a Director remains independent.
As it does each year, the Board, discharging the duties of a
Nomination Committee, considers the composition of the Board to
ensure that it is suitably aligned with the activities and needs of
the Company. Following this review, and in accordance with
corporate governance best practice, the Board has resolved to
appoint Katrina Hart as Chair-elect,
to take office from the conclusion of the AGM and to appoint
Elisabeth Airey as Senior
Independent Director. The Board has also commenced a search and
selection process to identify a suitable replacement for
Sarmad Zok who will step down at the
conclusion of the AGM. It has appointed an independent third party
recruiter, Odgers Berndtson, to
assist with this important process.
The Board will continue to keep the composition of the Board under
regular review. If it is determined that a new appointment to the
Board is required, it will agree the selection criteria, which will
take into account the need to maintain a suitable balance of
skills, knowledge, independence and diversity.
All Directors are subject to a formal evaluation process on an
annual basis (more details and the conclusions in respect of the
2023 evaluation process are given in the Company’s Annual Report
for the year ended 30 September
2023). All eligible Directors stand for re-election by
shareholders annually. Shareholders may attend the AGM and raise
any queries in respect of Board composition or individual Directors
in person or may contact the Company Secretary or the Chairman
using the details provided below if they wish to raise any
issues.
Impact
The Directors are not aware of any issues that have been raised
directly by shareholders in respect of Board composition in 2023.
Details for the proxy voting results in favour and against
individual Directors’ re-election at the 2022 AGM are given on the
Company’s website at
www.blackrock.com/uk/brfi.
Shareholders
Issue
Continued shareholder support and engagement are critical to the
continued existence of the Company and the successful delivery of
its long-term strategy.
Engagement
The Board is committed to maintaining open channels of
communication and engaging with shareholders. The Company welcomes
and encourages attendance and participation from shareholders at
its Annual General Meetings. Shareholders therefore have the
opportunity to meet the Directors and Investment Manager and to
address questions to them directly.
The Annual Report and Half Yearly Financial Report are available on
the BlackRock website and are also circulated to shareholders
either in printed copy or via electronic communications. In
addition, regular updates on performance, monthly factsheets, the
daily NAV and other information are published on the website
at
www.blackrock.com/uk/brfi.
The Board works closely with the Manager to develop the Company’s
marketing strategy, with the aim of ensuring effective
communication with shareholders in respect of the investment
mandate and objective. Unlike trading companies, one-to-one
shareholder meetings usually take the form of a meeting with the
Investment Manager as opposed to members of the Board. As well as
attending regular investor meetings the Investment Manager holds
regular discussions with wealth management desks and offices to
build on the case for, and understanding of, long-term investment
opportunities in frontier markets.
The Manager coordinates public relations activity, including
meetings between the Investment Manager and relevant industry
publications to set out their vision for the portfolio strategy and
outlook for the region.
The Manager releases monthly portfolio updates to the market to
ensure that investors are kept up to date in respect of performance
and other portfolio developments and maintains a website on behalf
of the Company that contains relevant information in respect of the
Company’s investment mandate and objective.
If shareholders wish to raise issues or concerns with the Board,
they are welcome to do so at any time. The Chairman is available to
meet directly with shareholders periodically to understand their
views on governance and the Company’s performance where they wish
to do so. He may be contacted via the Company Secretary whose
details are given below.
Impact
The Board values any feedback and questions from shareholders ahead
of and during Annual General Meetings in order to gain an
understanding of their views and will take action when and as
appropriate. Feedback and questions will also help the Company
evolve its reporting, aiming to make reports more transparent and
understandable.
Feedback from all substantive meetings between the Investment
Manager and shareholders is shared with the Board. The Directors
also receive updates from the Company’s broker on any feedback from
shareholders, as well as share trading activity, share price
performance and an update from the Investment Manager.
The Board’s approach to ESG
considerations
Material environmental, social and governance (ESG) issues can
present both opportunities and threats to long-term investment
performance. The securities within the Company’s investment remit
may involve significant additional risk due to the political
volatility and ESG concerns facing many of the countries in the
Company’s investment universe. While the Company does not have a
sustainable investment objective or exclude investments based only
on ESG criteria, these ethical and sustainability issues are a
consideration of the Board, and your Board is committed to a
diligent oversight of the activities of the Manager in these areas.
The Board believes engagement with management is, in most cases,
the most effective way of driving meaningful positive change in the
behaviour of investee company management. The Board believes that
BlackRock is well placed as Manager to fulfil these requirements
due to the integration of ESG into its investment processes, the
emphasis it places on sustainability, its long-term approach to
stewardship and corporate governance, and its position in the
industry as one of the largest suppliers of sustainable investment
products in the global market. More information on BlackRock’s
approach to responsible ownership is set out in the Company's
Annual Report for the year ended 30
September 2023.
Future prospects
The Board’s main focus is on the achievement of capital growth and
the future of the Company is dependent upon the success of the
investment strategy. The outlook for the Company is discussed in
both the Chairman’s Statement and in the Investment Manager’s
Report above.
Social, community and human rights
issues
As an investment trust, the Company has no direct social or
community responsibilities. However, the Company believes that it
is in shareholders’ interests to consider environmental, social and
governance factors and human rights issues when selecting and
retaining investments. Details of the Company’s policy on socially
responsible investment are set out above and the Manager’s approach
is described in the Company's Annual Report for the year ended
30 September 2023.
Modern slavery
As an investment vehicle the Company does not provide goods or
services in the normal course of business and does not have
customers. Accordingly, the Directors consider that the Company is
not required to make any slavery or human trafficking statement
under the Modern Slavery Act 2015. In any event, the Board
considers the Company’s supply chain, dealing predominantly with
professional advisers and service providers in the financial
services industry, to be low risk in relation to this
matter.
Directors, gender representation and
employees
The Directors of the Company on 30 September
2023 are set out in the Directors’ biographies section
above. As at 29 November 2023, the
Board consisted of three men and three women constituting 50%
female Board representation. The Company does not have any
employees.
BY ORDER OF THE BOARD
KEVIN
MAYGER
FOR AND ON BEHALF OF
BLACKROCK INVESTMENT MANAGEMENT (UK)
LIMITED
Company Secretary
29 November 2023
Related Party Transactions
BlackRock Fund Managers Limited (BFM) provides management and
administration services to the Company under a contract which is
terminable on six months’ notice. BFM has (with the Company’s
consent) delegated certain portfolio and risk management services,
and other ancillary services, to BlackRock Investment Management
(UK) Limited (BIM (UK)). Further
details of the investment management contract are disclosed in the
Directors’ Report in the Company’s Annual Report for the year ended
30 September 2023.
The investment management fee due for the year ended 30 September 2023 amounted to US$3,783,000 (2022: US$3,785,000). The performance fee payable for
the year ended 30 September 2023
amounted to US$8,272,000 (2022:
US$nil).
At the year end, US$2,902,000 (2022:
US$882,000) was outstanding in
respect of management fees and US$8,272,000 (2022: US$nil) was outstanding in
respect of performance fees.
In addition to the above services, BIM
(UK) has provided the Company with marketing services. The
total fees paid or payable for these services for the year ended
30 September 2023 amounted to
US$90,000 (2022: US$76,000) excluding VAT. Marketing fees of
US$143,000 (US$53,000) excluding VAT were outstanding at the
year end.
The Company has an investment in the BlackRock Institutional Cash
Series plc – US Dollar Liquid Environmentally Aware Fund of
US$64,875,000 (2022: US$71,415,000) at the year end, which is a fund
managed by a company within the BlackRock Group.
Disclosures of the Directors’ interests in the ordinary shares of
the Company and fees and expenses payable to the Directors are set
out in the Directors’ Remuneration Report in the Company's Annual
Report for the year ended 30 September
2023. At 30 September 2023,
US$20,000 (£17,000) (2022:
US$17,000 (£15,000)) was outstanding
in respect of Directors’ fees.
Statement of Directors’ responsibilities in respect of the
Annual Report and Financial Statements
The Directors are responsible for preparing the Annual Report, the
Directors’ Remuneration Report and the financial statements in
accordance with applicable United
Kingdom law and regulations.
Company law requires the Directors to prepare financial statements
for each financial year. Under that law, the Directors are required
to prepare the financial statements under international accounting
standards in conformity with UK-adopted International Accounting
Standards (IAS). Under Company law the Directors must not approve
the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Company and of
the profit or loss of the Company for that period.
In preparing these financial statements, the Directors are required
to:
-
present
fairly the financial position, financial performance and cash flows
of the Company;
-
select
suitable accounting policies in accordance with IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors and then apply
them consistently;
-
present
information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable
information;
-
make
judgements and estimates that are reasonable and
prudent;
-
state
whether the financial statements have been prepared in accordance
with IAS, subject to any material departures disclosed and
explained in the financial statements;
-
provide
additional disclosures when compliance with the specific
requirements in IAS is insufficient to enable users to understand
the impact of particular transactions, other events and conditions
on the Company’s financial position and financial performance;
and
-
prepare
the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in
business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act
2006.
They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities. The Directors are
also responsible for preparing the Strategic Report, the Directors’
Report, the Directors’ Remuneration Report, Corporate Governance
Statement and the Report of the Audit and Management Engagement
Committee in accordance with the Companies Act 2006 and applicable
regulations, including the requirements of the Listing Rules and
the Disclosure Guidance and Transparency Rules. The Directors have
delegated responsibility to the Investment Manager and the AIFM for
the maintenance and integrity of the Company’s corporate and
financial information included on BlackRock’s website. Legislation
in the United Kingdom governing
the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Each of the Directors, who were appointed as at the date of the
Annual Report, confirms to the best of their knowledge
that:
-
the
financial statements, which have been prepared in accordance with
IAS, give a true and fair view of the assets, liabilities,
financial position and loss of the Company; and
-
the
Strategic Report contained in the Annual Report and Financial
Statements includes a fair review of the development and
performance of the business and the position of the Company,
together with a description of the principal risks and
uncertainties that it faces.
The 2018 UK Corporate Governance Code also requires Directors to
ensure that the Annual Report and Financial Statements are fair,
balanced and understandable. In order to reach a conclusion on this
matter, the Board has requested that the Audit and Management
Engagement Committee advise on whether it considers that the Annual
Report and Financial Statements fulfil these requirements. The
process by which the Committee has reached these conclusions is set
out in the Audit and Management Engagement Committee’s report in
the Company’s Annual Report for the year ended 30 September 2023. As a result, the Board has
concluded that the Annual Report and Financial Statements for the
year ended 30 September 2023, taken
as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company’s
position and performance, business model and strategy.
FOR AND ON BEHALF OF THE BOARD
AUDLEY
TWISTON-DAVIES
Chairman
29 November 2023
Statement of comprehensive income for the year ended
30 September 2023
|
|
2023
|
2022
|
|
Notes
|
Revenue
US$’000
|
Capital
US$’000
|
Total
US$’000
|
Revenue
US$’000
|
Capital
US$’000
|
Total
US$’000
|
Income from investments held at fair value through profit or
loss
|
3
|
17,402
|
–
|
17,402
|
12,369
|
74
|
12,443
|
Net income from contracts for difference
|
3
|
1,985
|
565
|
2,550
|
2,328
|
–
|
2,328
|
Other income
|
3
|
251
|
–
|
251
|
55
|
–
|
55
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
Total income
|
|
19,638
|
565
|
20,203
|
14,752
|
74
|
14,826
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
Net profit/(loss) on investments held at fair value through profit
or loss
|
|
–
|
58,566
|
58,566
|
–
|
(41,473)
|
(41,473)
|
Net loss on foreign exchange
|
|
–
|
(1,980)
|
(1,980)
|
–
|
(205)
|
(205)
|
Net profit/(loss) from derivatives
|
|
–
|
12,523
|
12,523
|
–
|
(4,425)
|
(4,425)
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
Total
|
|
19,638
|
69,674
|
89,312
|
14,752
|
(46,029)
|
(31,277)
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
Expenses
|
|
|
|
|
|
|
|
Investment management and performance fees
|
4
|
(757)
|
(11,298)
|
(12,055)
|
(757)
|
(3,028)
|
(3,785)
|
Other operating expenses
|
5
|
(942)
|
(68)
|
(1,010)
|
(899)
|
(78)
|
(977)
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
Total operating expenses
|
|
(1,699)
|
(11,366)
|
(13,065)
|
(1,656)
|
(3,106)
|
(4,762)
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
Net profit/(loss) on ordinary activities before finance
costs and taxation
|
|
17,939
|
58,308
|
76,247
|
13,096
|
(49,135)
|
(36,039)
|
Finance costs
|
|
(23)
|
(94)
|
(117)
|
(3)
|
(14)
|
(17)
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
Net profit/(loss) on ordinary activities before
taxation
|
|
17,916
|
58,214
|
76,130
|
13,093
|
(49,149)
|
(36,056)
|
Taxation (charge)/credit
|
|
(2,044)
|
770
|
(1,274)
|
(1,080)
|
267
|
(813)
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
Profit/(loss) for the year
|
|
15,872
|
58,984
|
74,856
|
12,013
|
(48,882)
|
(36,869)
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
Earnings/(loss) per ordinary share
(cents)
|
7
|
8.38
|
31.16
|
39.54
|
6.35
|
(25.82)
|
(19.47)
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
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
year. All income is attributable to the equity holders of the
Company.
The Company does not have any other comprehensive income. The
profit/(loss) for the year disclosed above represents the Company’s
total comprehensive income/(loss).
Statement of changes in equity for the year ended
30 September 2023
|
Notes
|
Called
up share
capital
US$’000
|
Capital
redemption
reserve
US$’000
|
Special
reserve
US$’000
|
Capital
reserves
US$’000
|
Revenue
reserve
US$’000
|
Total
US$’000
|
For the year ended 30 September 2023
|
|
|
|
|
|
|
|
At 30 September 2022
|
|
2,418
|
5,798
|
308,804
|
(22,831)
|
8,467
|
302,656
|
Total comprehensive income:
|
|
|
|
|
|
|
|
Net profit for the year
|
|
–
|
–
|
–
|
58,984
|
15,872
|
74,856
|
Transactions with owners, recorded directly to equity:
|
|
|
|
|
|
|
|
Dividends paid1
|
6
|
–
|
–
|
–
|
–
|
(13,914)
|
(13,914)
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
At 30 September 2023
|
|
2,418
|
5,798
|
308,804
|
36,153
|
10,425
|
363,598
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
For the year ended 30 September 2022
|
|
|
|
|
|
|
|
At 30 September 2021
|
|
2,418
|
5,798
|
308,804
|
26,051
|
9,707
|
352,778
|
Total comprehensive (loss)/income:
|
|
|
|
|
|
|
|
Net (loss)/profit for the year
|
|
–
|
–
|
–
|
(48,882)
|
12,013
|
(36,869)
|
Transactions with owners, recorded directly to equity:
|
|
|
|
|
|
|
|
Dividends paid2
|
6
|
–
|
–
|
–
|
–
|
(13,253)
|
(13,253)
|
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
At 30 September 2022
|
|
2,418
|
5,798
|
308,804
|
(22,831)
|
8,467
|
302,656
|
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
1 Final
dividend of 4.25 cents per share for
the year ended 30 September 2022,
declared on 8 December 2022 and paid
on 14 February 2023 and an interim
dividend of 3.10 cents per share for
the year ended 30 September 2023,
declared on 6 June 2023 and paid on
7 July 2023.
2 Final
dividend of 4.25 cents per share for
the year ended 30 September 2021,
declared on 1 December 2021 and paid
on 11 February 2022 and an interim
dividend of 2.75 cents per share for
the year ended 30 September 2022,
declared on 26 May 2022 and paid on
24 June 2022.
For information on the Company’s distributable reserves please
refer to note 9 below.
Statement of financial position as at 30 September 2023
|
Notes
|
2023
US$’000
|
2022
US$’000
|
Non current assets
|
|
|
|
Investments held at fair value through profit or loss
|
|
374,517
|
297,945
|
|
|
---------------
|
---------------
|
Current assets
|
|
|
|
Current tax asset
|
|
444
|
446
|
Other receivables
|
|
5,085
|
1,345
|
Derivative financial assets held at fair value through profit or
loss – contracts for difference
|
|
1,402
|
755
|
Cash and cash equivalents
|
|
5,308
|
4,901
|
Cash collateral pledged with brokers
|
|
2,435
|
7,404
|
|
|
---------------
|
---------------
|
Total current assets
|
|
14,674
|
14,851
|
|
|
=========
|
=========
|
Total assets
|
|
389,191
|
312,796
|
|
|
=========
|
=========
|
Current liabilities
|
|
|
|
Bank overdraft
|
|
(25)
|
–
|
Other payables
|
|
(20,015)
|
(4,858)
|
Derivative financial liabilities held at fair value through profit
or loss – contracts for difference
|
|
(3,234)
|
(4,613)
|
Liability for cash collateral received
|
|
(2,300)
|
(650)
|
|
|
---------------
|
---------------
|
Total current liabilities
|
|
(25,574)
|
(10,121)
|
|
|
=========
|
=========
|
Total assets less current liabilities
|
|
363,617
|
302,675
|
|
|
=========
|
=========
|
Non current liabilities
|
|
|
|
Management shares of £1.00 each (one quarter paid up)
|
|
(19)
|
(19)
|
|
|
---------------
|
---------------
|
Net assets
|
|
363,598
|
302,656
|
|
|
=========
|
=========
|
Equity attributable to equity holders
|
|
|
|
Called up share capital
|
8
|
2,418
|
2,418
|
Capital redemption reserve
|
9
|
5,798
|
5,798
|
Special reserve
|
9
|
308,804
|
308,804
|
Capital reserves
|
9
|
36,153
|
(22,831)
|
Revenue reserve
|
9
|
10,425
|
8,467
|
|
|
---------------
|
---------------
|
Total equity
|
|
363,598
|
302,656
|
|
|
=========
|
=========
|
Net asset value per ordinary share
(cents)
|
7
|
192.05
|
159.86
|
|
|
=========
|
=========
|
Cash flow statement for the year ended 30 September 2023
|
2023
US$’000
|
2022
US$’000
|
Operating activities
|
|
|
Net profit/(loss) on ordinary activities before taxation
|
76,130
|
(36,056)
|
Add back finance costs
|
117
|
17
|
Net (profit)/loss on investments held at fair value through profit
or loss (including transaction costs)
|
(58,566)
|
41,473
|
Net (profit)/loss from derivatives (including transaction
costs)
|
(12,523)
|
4,425
|
Financing costs on derivatives
|
(4,107)
|
(1,450)
|
Net loss on foreign exchange
|
1,980
|
205
|
Sales of investments held at fair value through profit or
loss
|
183,095
|
193,129
|
Purchases of investments held at fair value through profit or
loss
|
(207,654)
|
(203,288)
|
Sales of Cash Fund1
|
163,097
|
214,616
|
Purchases of Cash Fund1
|
(156,544)
|
(189,800)
|
Amounts paid for losses on closure of derivatives
|
(42,659)
|
(62,302)
|
Amounts received on profit on closure of derivatives
|
57,263
|
69,002
|
(Increase)/decrease in other receivables
|
(855)
|
862
|
Increase/(decrease) in other payables
|
10,651
|
(4,680)
|
(Increase)/decrease in amounts due from brokers
|
(2,885)
|
2,017
|
Increase/(decrease) in amounts due to brokers
|
4,506
|
(2,059)
|
Cash collateral pledged with brokers
|
4,969
|
(7,074)
|
Cash collateral received from brokers
|
1,650
|
(5,537)
|
Taxation paid
|
(1,272)
|
(841)
|
|
---------------
|
---------------
|
Net cash inflow from operating
activities
|
16,393
|
12,659
|
|
=========
|
=========
|
Financing activities
|
|
|
Interest paid
|
(117)
|
(17)
|
Dividends paid
|
(13,914)
|
(13,253)
|
|
---------------
|
---------------
|
Net cash outflow from financing
activities
|
(14,031)
|
(13,270)
|
|
=========
|
=========
|
Increase/(decrease) in cash and cash
equivalents
|
2,362
|
(611)
|
Effect of foreign exchange rate changes
|
(1,980)
|
(205)
|
|
---------------
|
---------------
|
Change in cash and cash equivalents
|
382
|
(816)
|
Cash and cash equivalents at the start of the year
|
4,901
|
5,717
|
|
---------------
|
---------------
|
Cash and cash equivalents at the end of the
year
|
5,283
|
4,901
|
|
=========
|
=========
|
Comprised of:
|
|
|
Cash at bank
|
5,308
|
4,901
|
Bank overdraft
|
(25)
|
–
|
|
---------------
|
---------------
|
|
5,283
|
4,901
|
|
=========
|
=========
|
1 Cash
Fund represents investment in the BlackRock Institutional Cash
Series plc - US Dollar Liquid Environmentally Aware
Fund.
Notes to the financial statements for the year ended
30 September 2023
1. Principal activity
The principal activity of the Company is that of an investment
trust company within the meaning of Section 1158 of the Corporation
Tax Act 2010. The Company was incorporated on 15 October 2010, and this is the thirteenth
Annual Report.
2. Accounting policies
The principal accounting policies adopted by the Company have been
applied consistently, other than where new policies have been
adopted and are set out below.
(a) Basis of preparation
On 31 December 2020, International
Financial Reporting Standards (IFRS) as adopted by the European
Union at that date was brought into UK law and became UK-adopted
International Accounting Standards (IAS), with future changes being
subject to endorsement by the UK Endorsement Board and with the
requirements of the Companies Act 2006 as applicable to companies
reporting under those standards.
The financial statements have been prepared under the historic cost
convention modified by the revaluation of certain financial assets
and financial liabilities held at fair value through profit or loss
and in accordance with UK-adopted IAS. All of the Company’s
operations are of a continuing nature.
Insofar as the Statement of Recommended Practice (SORP) for
investment trust companies and venture capital trusts, issued by
the Association of Investment Companies (AIC) in October 2019 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.
Substantially, all of the assets of the Company consist of
securities that are readily realisable and, accordingly, the
Directors are satisfied that the Company has adequate resources to
continue in operational existence for the foreseeable future for
the period to 30 September 2024,
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. The Directors have reviewed
the income and expense projections and the liquidity of the
investment portfolio in making their assessment.
The Directors have considered the impact of climate change on the
value of the investments included in the Financial Statements and
have concluded that:
-
there
was no further impact of climate change to be considered as the
investments are valued based on market pricing as required by IFRS
13; and
-
the
risk is adequately captured in the assumptions and inputs used in
measurement of Level 3 assets, if any, as noted in note 17 of the
Financial Statements in the Company’s Annual Report for the year
ended 30 September
2023.
None of the Company’s other assets and liabilities were considered
to be potentially impacted by climate change.
The Company’s financial statements are presented in US Dollars,
which is the functional currency of the Company and the currency of
the primary economic environment in which the Company operates. All
values are rounded to the nearest thousand dollars (US$’000) except
where otherwise indicated.
Adoption of new and amended International Accounting
Standards and interpretations:
IFRS 9 – Fees in the ‘10 per cent’ Test for Derecognition
of Financial Liabilities
(effective 1 January 2022). The
International
Accounting Standards Board (IASB) has amended IFRS 9 Financial
Instruments to clarify the fees that a company includes when
assessing whether the terms of a new or modified financial
liability are substantially different from the terms of the
original financial liability.
Relevant International Accounting Standards that have yet
to be adopted:
IFRS 17 – Insurance contracts
(effective 1 January 2023). This
standard replaces IFRS 4, which currently permits a wide
range of accounting practices in accounting for insurance
contracts. IFRS 17 will fundamentally change the accounting by all
entities that issue insurance contracts and investment contracts
with discretionary participation features.
This standard is unlikely to have any impact on the Company as it
has no insurance contracts.
IAS 12 – Deferred tax related to assets and liabilities
arising from a single transaction
(effective 1 January 2023).
The
International Accounting Standards Board (IASB) has amended IAS 12
Income Taxes to require companies to recognise deferred tax on
particular transactions that, on initial recognition, give rise to
equal amounts of taxable and deductible temporary differences.
According to the amended guidance, a temporary difference that
arises on initial recognition of an asset or liability is not
subject to the initial recognition exemption if that transaction
gave rise to equal amounts of taxable and deductible temporary
differences. These amendments might have a significant impact on
the preparation of financial statements by companies that have
substantial balances of right-of-use assets, lease liabilities,
decommissioning, restoration and similar liabilities. The impact
for those affected would be the recognition of additional deferred
tax assets and liabilities.
The amendment of this standard is unlikely to have any significant
impact on the Company.
IAS 8 – Definition of accounting estimates
(effective 1 January 2023). The IASB
has amended IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors to help distinguish
between accounting policies and accounting estimates, replacing the
definition of accounting estimates.
IAS 1 and IFRS Practice Statement 2 – Disclosure of
accounting policies
(effective 1 January 2023). The IASB
has amended
IAS 1 Presentation of Financial Statements to help preparers in
deciding which accounting policies to disclose in their financial
statements by stating that an entity is now required to disclose
material accounting policies instead of significant accounting
policies.
IAS 12 – International Tax Reform Pillar Two Model
Rules
(effective 1 January 2023). The IASB
has published amendments
to IAS 12 Income Taxes to respond to stakeholders’ concerns about
the potential implications of the imminent implementation of the
OECD pillar two rules on the accounting for income taxes. The
amendment is an exception to the requirements in IAS 12 that an
entity does not recognise and does not disclose information about
deferred tax assets as liabilities related to the OECD pillar two
income taxes and a requirement that current tax expenses must be
disclosed separately to pillar two income taxes.
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.
None of the standards that have been issued but are not yet
effective are expected to have a material impact on the
Company.
(b) Presentation of the Statement of Comprehensive
Income
In order to better reflect the activities of an investment trust
company and in accordance with guidance issued by the AIC,
supplementary information which analyses the Statement of
Comprehensive Income between items of a revenue and a capital
nature has been presented alongside the Statement of Comprehensive
Income.
(c) Segmental reporting
The Directors are of the opinion that the Company is engaged in a
single segment of business being investment business.
(d) Income
Dividends receivable on equity shares are recognised as revenue for
the year on an ex-dividend basis. Where no ex-dividend date is
available, dividends receivable on or before the year end are
treated as revenue for the year. Provision is made for any
dividends and interest income not expected to be received. Special
dividends, if any, are treated as a capital or a revenue receipt
depending on the facts or circumstances of each particular case.
The return on a debt security is recognised on a time apportionment
basis so as to reflect the effective yield on the debt security.
Interest income and deposit interest are accounted for on an
accruals basis.
Where the Company has elected to receive its dividends in the form
of additional shares rather than in cash, the cash equivalent of
the dividend is recognised as income. Any excess in the value of
the shares received over the amount of the cash dividend is
recognised in capital.
(e) Expenses
All expenses, including finance costs, are accounted for on an
accruals basis. Expenses have been charged wholly to the revenue
account of the Statement of Comprehensive Income, except as
follows:
-
expenses
which are incidental to the acquisition or sale of an investment
are charged to the capital account of the Statement of
Comprehensive Income. Details of transaction costs on the purchases
and sales of investments are disclosed within note 10 to the
financial statements in the Company's Annual Report for the year
ended 30 September 2023;
-
expenses
are treated as capital where a connection with the maintenance or
enhancement of the value of the investments can be
demonstrated;
-
the
investment management fee and finance costs have been allocated 20%
to the revenue account and 80% to the capital account of the
Statement of Comprehensive Income in line with the Board’s expected
long term split of returns, in the form of capital gains and
income, respectively, from the investment portfolio;
and
-
performance
fees are allocated 100% to the capital account of the Statement of
Comprehensive Income as fees are generated in connection with
enhancing the value of the investment portfolio.
(f) Taxation
The tax expense represents the sum of the tax currently payable and
deferred tax. The tax currently payable is based on the taxable
profit for the year. Taxable profit differs from net profit as
reported in the Statement of Comprehensive Income because it
excludes items of income or expenses that are taxable or deductible
in other years and it further excludes items that are never taxable
or deductible. The Company’s liability for current tax is
calculated using tax rates that were applicable at the balance
sheet date.
Where expenses are allocated between capital and revenue accounts,
any tax relief in respect of the expenses is allocated between
capital and revenue returns on the marginal basis using the
Company’s effective rate of corporation tax for the accounting
period.
Deferred taxation is recognised in respect of all temporary
differences that have originated but not reversed at the financial
reporting date, where transactions or events that result in an
obligation to pay more taxation in the future or right to pay less
taxation in the future have occurred at the financial reporting
date. This is subject to deferred taxation assets only being
recognised if it is considered more likely than not that there will
be suitable profits from which the future reversal of the temporary
differences can be deducted. Deferred taxation assets and
liabilities are measured at the rates applicable to the legal
jurisdictions in which they arise.
(g) Investments held at fair value through profit or
loss
In accordance with IFRS 9, the Company classifies its investments
at initial recognition as held at fair value through profit or loss
and are managed and evaluated on a fair value basis in accordance
with its investment strategy and business model.
All investments are measured initially and subsequently at fair
value through profit or loss. Purchases of investments are
recognised on a trade date basis. Sales of investments are
recognised at the trade date of the disposal.
The fair value of the financial investments is based on their
quoted bid price at the financial reporting date, without deduction
for the estimated future selling costs. This policy applies to all
current and non-current asset investments held by the Company. The
fair value of the P-Notes
are, when held, based on the quoted bid price of the underlying
equity to which they relate.
Changes in the value of investments held at fair value through
profit or loss and gains and losses on disposal are recognised in
the Statement of Comprehensive Income as “Net profit/(loss) on
investments held at fair value through profit or loss”. Also
included within the heading are transaction costs in relation to
the purchase or sale of investments.
For all financial instruments not traded in an active market, the
fair value is determined by using various valuation techniques.
Valuation techniques include market approach (i.e., using recent
arm’s length market transactions adjusted as necessary and
reference to the current market value of another instrument that is
substantially the same) and the income approach (i.e., discounted
cash flow analysis and option pricing models making as much use of
available and supportable market data where possible). See note
2(o) below.
(h) Derivatives
The Company can hold long and short positions in contracts for
difference (CFDs) which are held at fair value based on the bid
prices of the underlying securities in respect of long positions,
and the offer prices of the underlying securities in respect of
short positions.
Profits and losses on derivative transactions are recognised in the
Statement of Comprehensive Income. They are shown in the capital
account of the Statement of Comprehensive Income if they are of a
capital nature and are shown in the revenue account of the
Statement of Comprehensive Income if they are of a revenue nature.
To the extent that any profits or losses are of a mixed revenue and
capital nature, they are apportioned between revenue and capital
accordingly.
(i) Other receivables and other
payables
Other receivables and other payables do not carry any interest and
are short term in nature and are accordingly stated on an amortised
cost basis.
(j) Dividends payable
Under IAS, final dividends should not be accrued in the financial
statements unless they have been approved by shareholders before
the financial reporting date. Interim dividends should not be
recognised in the financial statements unless they have been
paid.
Dividends payable to equity shareholders are recognised in the
Statement of Changes in Equity.
(k) Foreign currency translation
Transactions involving foreign currencies are converted at the rate
ruling at the date of the transaction. Foreign currency monetary
assets and liabilities and non-monetary assets held at fair value
are translated into US Dollars at the rate ruling on the financial
reporting date. Foreign exchange differences arising on translation
are recognised in the Statement of Comprehensive Income as a
revenue or capital item depending on the income or expense to which
they relate. For investment transactions and investments held at
the year end, denominated in a foreign currency, the resulting
gains or losses are included in the profit/(loss) on investments
held at fair value through profit or loss in the Statement of
Comprehensive Income.
(l) Cash and cash equivalents
Cash comprises cash in hand, bank overdrafts and on demand
deposits. Cash equivalents are short term, highly liquid
investments that are readily convertible to known amounts of cash
and that are subject to an insignificant risk of changes in
value.
The Company’s investment in the Cash Fund is managed as part of the
Company’s investment policy and, accordingly, this investment along
with purchases and sales of this investment has been classified in
the Statement of Financial Position as an investment and not as a
cash equivalent as defined under IAS 7.
(m) Bank borrowings
Bank overdrafts and loans are recorded as the proceeds received.
Finance charges, including any premium payable on settlement or
redemption and direct issue costs, are accounted for on an accruals
basis in the Statement of Comprehensive Income using the effective
interest rate method and are added to the carrying amount of the
instrument.
(n) Share repurchases and share
reissues
Shares repurchased and subsequently cancelled – share capital is
reduced by the nominal value of the shares repurchased and the
capital redemption reserve is correspondingly increased in
accordance with Section 733 of the Companies Act 2006. The full
cost of the repurchase is charged to the special
reserve.
Shares repurchased and held in treasury – the full cost of the
repurchase is charged to the special reserve.
Where treasury shares are subsequently re-issued:
-
amounts
received to the extent of the repurchase price are credited to the
special reserve and capital reserves based on a weighted average
basis of amounts utilised from these reserves on repurchases;
and
-
any
surplus received in excess of the repurchase price is taken to the
share premium account.
Where new shares are issued, amounts received to the extent of any
surplus received in excess of the par value are taken to the share
premium account.
Share issue costs are charged to the share premium account. Costs
on share reissues are charged to the special reserve and capital
reserves.
(o) Critical accounting estimates and
judgements
The Company makes estimates and assumptions concerning the future.
The resulting accounting estimates and assumptions will, by
definition, seldom equal the related actual results. Estimates and
judgements are regularly evaluated and are based on historical
experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
The Directors do not believe that any accounting judgements or
estimates have a significant risk of causing a material adjustment
to the carrying amount of assets and liabilities within the next
financial year.
3. Income
|
2023
US$’000
|
2022
US$’000
|
Investment income:
|
|
|
UK dividends
|
362
|
–
|
Stock dividend
|
14
|
–
|
Overseas dividends
|
12,997
|
10,327
|
Overseas special dividends
|
1,006
|
1,329
|
Interest from Cash Fund
|
3,023
|
713
|
|
---------------
|
---------------
|
Total investment income
|
17,402
|
12,369
|
|
=========
|
=========
|
Net income from contracts for difference
|
1,985
|
2,328
|
Interest received on cash collateral
|
68
|
–
|
Deposit interest
|
183
|
55
|
|
---------------
|
---------------
|
Total income
|
19,638
|
14,752
|
|
=========
|
=========
|
Dividends and interest received in cash during the year amounted to
US$14,859,000 and US$3,182,000 (2022: US$13,766,000 and
US$591,000).
Special dividends of US$nil from equity investments have been
recognised in capital (2022: US$74,000). Special dividends of
US$565,000 from long contracts for difference have been recognised
in capital (2022: US$nil) and is included within net income from
contracts for difference in the capital account of the Statement of
Comprehensive Income.
4. Investment management and performance
fees
|
2023
|
2022
|
|
Revenue
US$’000
|
Capital
US$’000
|
Total
US$’000
|
Revenue
US$’000
|
Capital
US$’000
|
Total
US$’000
|
Investment management fee
|
757
|
3,026
|
3,783
|
757
|
3,028
|
3,785
|
Performance fee
|
–
|
8,272
|
8,272
|
–
|
–
|
–
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
Total
|
757
|
11,298
|
12,055
|
757
|
3,028
|
3,785
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
=========
|
An investment management fee equivalent to 1.10% per annum of the
Company’s gross assets (defined as the aggregate net assets of the
long equity and CFD portfolios of the Company) is payable to the
Manager. In addition, the Manager is entitled to receive a
performance fee at a rate of 10% of any increase in the net asset
value (NAV) at the end of a performance period over and above what
would have been achieved had the NAV since launch increased in line
with the Benchmark Index, which, since 1 April 2018, is a composite
of the MSCI Emerging Markets Index ex Selected Countries + MSCI
Frontier Markets Index + MSCI Saudi Arabia Index.
For the purposes of the calculation of the performance fee, the
performance of the NAV total return was measured against the
performance of the Benchmark Index on a blended basis.
For the year ended 30 September 2023, the Company’s NAV
outperformed the Benchmark Index on a US Dollar basis by 20.1%
resulting in a cumulative outperformance since launch of 57.9%
(2022: underperformed by 3.6%); therefore, a performance fee of
US$8,272,000 has been accrued (2022: US$nil). Any accrued
performance fee is included within other payables in the Statement
of Financial Position.
The performance fee payable in any year is capped at 2.5% of the
gross assets of the Company if there is an increase in the NAV per
share, or 1% of the gross assets of the Company if there is a
decrease of the NAV per share, at the end of the relevant
performance period. Any capped excess outperformance for a period
may be carried forward to the next two performance periods, subject
to the then applicable annual cap. The performance fee is also
subject to a high watermark such that any performance fee is only
payable to the extent that the cumulative relative outperformance
of the NAV is greater than what would have been achieved had the
NAV increased in line with the Benchmark Index since the last date
in relation to which a performance fee had been paid.
This mechanism requires the Manager to catch up any previous
cumulative underperformance against the benchmark before a
performance fee can be generated.
The investment management fee is allocated 20% to the revenue
account and 80% to the capital account and the performance fee is
wholly allocated to the capital account of the Statement of
Comprehensive Income. There is no additional fee for company
secretarial and administration services.
5. Other operating expenses
|
2023
US$’000
|
2022
US$’000
|
Allocated to revenue:
|
|
|
Custody fee
|
229
|
274
|
Auditor’s remuneration:
|
|
|
– audit services
|
62
|
52
|
– other assurance services1
|
9
|
7
|
Registrar’s fee
|
32
|
38
|
Directors’ emoluments2
|
243
|
196
|
Broker fees
|
38
|
36
|
Depositary fees3
|
33
|
29
|
Marketing fees
|
90
|
76
|
AIC fees
|
24
|
22
|
FCA fees
|
18
|
16
|
Printing and postage fees
|
58
|
35
|
Employer NI contributions
|
31
|
22
|
Stock exchange listings
|
13
|
12
|
Legal and professional fees
|
21
|
18
|
Write back of prior year expenses4
|
(27)
|
(6)
|
Other administrative costs
|
68
|
72
|
|
---------------
|
---------------
|
|
942
|
899
|
|
=========
|
=========
|
Allocated to capital:
|
|
|
Custody transaction charges5
|
68
|
78
|
|
---------------
|
---------------
|
|
1,010
|
977
|
|
=========
|
=========
|
The Company’s ongoing charges6,
calculated as a percentage of average daily net assets and using
the management fee and all other operating expenses, 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:
|
1.38%
|
1.36%
|
The Company’s ongoing charges6,
calculated as a percentage of average daily net assets and using
the management fee and all other operating expenses and including
performance fees but excluding finance costs, direct transaction
costs, custody transaction charges, VAT recovered, taxation, prior
year expenses written back and certain non-recurring items,
were:
|
3.78%
|
1.36%
|
|
=========
|
=========
|
1 Fees
for other assurance services of £7,100 (US$9,000) (2022: £6,500
(US$7,000)) relate to the review of the interim financial
statements.
2 Further
information on Directors’ emoluments can be found in the Directors’
Remuneration Report in the Company's Annual Report for the year
ended 30 September 2023. 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 Directors’ expenses, miscellaneous fees and legal fees written
back during the year (2022: Directors’ expenses and miscellaneous
fees).
5 For
the year ended 30 September 2023, expenses of £56,000 (US$68,000)
(2022: £70,000 (US$78,000)) were charged to the capital account of
the Statement of Comprehensive Income. These relate to transaction
costs charged by the Custodian on sale and purchase
trades.
6 Alternative
Performance Measures, see Glossary in the Company’s Annual Report
for the year ended 30 September 2023.
No fees were payable in 2023 or 2022 in relation to investing in
new markets.
6. Dividends
Dividends paid on equity shares
|
Record date
|
Payment date
|
2023
US$’000
|
2022
US$’000
|
2022 final of 4.25 cents (2021: 4.25 cents) per ordinary
share
|
6 January 2023
|
14 February 2023
|
8,046
|
8,046
|
2023 interim of 3.10 cents (2022: 2.75 cents) per ordinary
share
|
16 June 2023
|
7 July 2023
|
5,868
|
5,207
|
|
|
|
---------------
|
---------------
|
|
|
|
13,914
|
13,253
|
|
|
|
=========
|
=========
|
The total dividends payable in respect of the year ended 30
September 2023 which form the basis of Section 1158 of the
Corporation Tax Act 2010 and Section 833 of the Companies Act 2006,
and the amounts proposed, meet the relevant requirements as set out
in this legislation.
Dividends paid, proposed or declared on equity shares
|
2023
US$’000
|
2022
US$’000
|
Interim dividend of 3.10 cents per ordinary share (2022: 2.75
cents)
|
5,868
|
5,207
|
Final proposed dividend of 4.90 cents per ordinary share (2022:
4.25 cents)1
|
9,277
|
8,046
|
|
---------------
|
---------------
|
|
15,145
|
13,253
|
|
=========
|
=========
|
1 Based
on 189,325,748 ordinary shares in issue on 29 November
2023.
7. Earnings and net asset value per ordinary
share
Revenue, capital earnings/(loss) and net asset value per ordinary
share are shown below and have been calculated using the
following:
|
Year ended
30 September
2023
|
Year ended
30 September
2022
|
Net revenue profit attributable to ordinary shareholders
(US$’000)
|
15,872
|
12,013
|
Net capital profit/(loss) attributable to ordinary shareholders
(US$’000)
|
58,984
|
(48,882)
|
|
---------------
|
---------------
|
Total profit/(loss) attributable to ordinary shareholders
(US$’000)
|
74,856
|
(36,869)
|
|
=========
|
=========
|
Equity shareholders’ funds (US$’000)
|
363,598
|
302,656
|
|
=========
|
=========
|
The weighted average number of ordinary shares in issue during the
year on which the earnings per ordinary share was calculated
was:
|
189,325,748
|
189,325,748
|
The actual number of ordinary shares in issue at the year end on
which the net asset value per ordinary share was calculated
was:
|
189,325,748
|
189,325,748
|
|
---------------
|
---------------
|
Earnings per share
|
|
|
Revenue earnings per share (cents) – basic and diluted
|
8.38
|
6.35
|
Capital earnings/(loss) per share (cents) – basic and
diluted
|
31.16
|
(25.82)
|
|
---------------
|
---------------
|
Total earnings/(loss) per share (cents) – basic and
diluted
|
39.54
|
(19.47)
|
|
=========
|
=========
|
|
As at
30 September
2023
|
As at
30 September
2022
|
Net asset value per ordinary share (cents)
|
192.05
|
159.86
|
Ordinary share price (cents)1
|
175.76
|
142.61
|
Net asset value per ordinary share (pence)1
|
157.35
|
143.21
|
Ordinary share price (pence)
|
144.00
|
127.75
|
|
=========
|
=========
|
1 Based
on an exchange rate of US$1.2206 to £1 at 30 September 2023 and
US$1.1163 to £1 at 30 September 2022.
8. Called up share capital
|
Ordinary
shares
in issue
number
|
Treasury
shares
number
|
Total
shares
number
|
Nominal
value
US$’000
|
Allotted, called up and fully paid share capital
comprised:
|
|
|
|
|
Ordinary shares of 1 cent each:
|
|
|
|
|
At 30 September 2022
|
189,325,748
|
52,497,053
|
241,822,801
|
2,418
|
|
-----------------
|
-----------------
|
-----------------
|
-----------------
|
At 30 September 2023
|
189,325,748
|
52,497,053
|
241,822,801
|
2,418
|
|
==========
|
==========
|
==========
|
==========
|
During the year, the Company did not issue or buyback any ordinary
shares (2022: nil). Additionally, during the year no shares were
transferred into treasury (2022: nil).
Since 30 September 2023 and up to the date of this report, no
ordinary shares have been issued or bought back.
9. Reserves
For the year ended 30 September 2023
|
|
Distributable reserves
|
|
Capital
redemption
reserve
US$’000
|
Special
reserve
US$’000
|
Capital
reserve
arising on
investments
sold
US$’000
|
Capital
reserve
arising on
revaluation of
investments
held
US$’000
|
Revenue
reserve
US$’000
|
At 30 September 2022
|
5,798
|
308,804
|
21,748
|
(44,579)
|
8,467
|
Movement during the year:
|
|
|
|
|
|
Total comprehensive income:
|
|
|
|
|
|
Net profit for the year
|
–
|
–
|
10,017
|
48,967
|
15,872
|
Transactions with owners, recorded directly to equity:
|
|
|
|
|
|
Dividends paid
|
–
|
–
|
–
|
–
|
(13,914)
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
At 30 September 2023
|
5,798
|
308,804
|
31,765
|
4,388
|
10,425
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
For the year ended 30 September 2022
|
|
Distributable reserves
|
|
Capital
redemption
reserve
US$’000
|
Special
reserve
US$’000
|
Capital
reserve
arising on
investments
sold
US$’000
|
Capital
reserve
arising on
revaluation of
investments
held
US$’000
|
Revenue
reserve
US$’000
|
At 30 September 2021
|
5,798
|
308,804
|
12,959
|
13,092
|
9,707
|
Movement during the year:
|
|
|
|
|
|
Total comprehensive income/(loss):
|
|
|
|
|
|
Net profit/(loss) for the year
|
–
|
–
|
8,789
|
(57,671)
|
12,013
|
Transactions with owners, recorded directly to equity:
|
|
|
|
|
|
Dividends paid
|
–
|
–
|
–
|
–
|
(13,253)
|
|
---------------
|
---------------
|
---------------
|
---------------
|
---------------
|
At 30 September 2022
|
5,798
|
308,804
|
21,748
|
(44,579)
|
8,467
|
|
=========
|
=========
|
=========
|
=========
|
=========
|
The share premium account and capital redemption reserve are not
distributable reserves under the Companies Act 2006. In accordance
with ICAEW Technical Release 02/17BL on Guidance on Realised and
Distributable Profits under the Companies Act 2006, the special
reserve and capital reserves 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 reserves and the revenue reserve may be
distributed by way of dividend. The gain on the capital reserve
arising on the revaluation of investments of US$4,388,000 (2022:
loss of US$44,579,000) 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.
10. 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) to the Financial Statements
above.
Categorisation within the hierarchy has been determined on the
basis of the lowest level of 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 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 year 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 year 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 all
been classified as Level 2 investments as their valuation has been
based on market observable inputs represented by the market prices
of the underlying quoted securities and exchange rates 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
The table below sets out fair value measurements using IFRS 13 fair
value hierarchy.
Financial assets/(liabilities) at fair value through profit or loss
at 30 September 2023
|
Level 1
US$’000
|
Level 2
US$’000
|
Level 3
US$’000
|
Total
US$’000
|
Assets:
|
|
|
|
|
Equity investments
|
309,642
|
–
|
–
|
309,642
|
Cash Fund
|
64,875
|
–
|
–
|
64,875
|
Contracts for difference (fair value)
|
–
|
1,402
|
–
|
1,402
|
|
---------------
|
---------------
|
---------------
|
---------------
|
Liabilities:
|
|
|
|
|
Contracts for difference (fair value)
|
–
|
(3,234)
|
–
|
(3,234)
|
|
---------------
|
---------------
|
---------------
|
---------------
|
|
374,517
|
(1,832)
|
–
|
372,685
|
|
=========
|
=========
|
=========
|
=========
|
Financial assets/(liabilities) at fair value through profit or loss
at 30 September 2022
|
Level 1
US$’000
|
Level 2
US$’000
|
Level 3
US$’000
|
Total
US$’000
|
Assets:
|
|
|
|
|
Equity investments
|
226,530
|
–
|
–
|
226,530
|
Cash Fund
|
71,415
|
–
|
–
|
71,415
|
Contracts for difference (fair value)
|
–
|
755
|
–
|
755
|
|
---------------
|
---------------
|
---------------
|
---------------
|
Liabilities:
|
|
|
|
|
Contracts for difference (fair value)
|
–
|
(4,613)
|
–
|
(4,613)
|
|
---------------
|
---------------
|
---------------
|
---------------
|
|
297,945
|
(3,858)
|
–
|
294,087
|
|
=========
|
=========
|
=========
|
=========
|
There were no transfers between levels of financial assets and
financial liabilities during the year recorded at fair value as at
30 September 2023. The Company held no Level 3 assets or
liabilities during the year ended 30 September 2023 (2022:
nil).
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 price related risks, including
climate risk, in accordance with the fair value related
requirements of the Company’s financial reporting
framework.
11. Related party disclosure
Directors’ emoluments
At the date of this report, the Board consists of six non-executive
Directors, all of whom are considered to be independent of the
Manager by the Board.
Disclosures of the Directors’ interests in the ordinary shares of
the Company and fees and expenses payable to the Directors are set
out in the Directors’ Remuneration Report in the Company's Annual
Report for the year ended 30 September 2023. At 30 September 2023,
US$20,000 (£17,000) (2022: US$17,000 (£15,000)) was outstanding in
respect of Directors’ fees.
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”).
As at 30 September 2023
Total
% of shares held by Related BlackRock Funds
|
Total % of shares held by Significant Investors who are not
affiliates of BlackRock Group or BlackRock, Inc.
|
Number of Significant Investors who are not affiliates of BlackRock
Group or BlackRock, Inc.
|
4.1
|
n/a
|
n/a
|
As at 30 September 2022
Total % of shares held by Related BlackRock Funds
|
Total % of shares held by Significant Investors who are not
affiliates of BlackRock Group or BlackRock, Inc.
|
Number of Significant Investors who are not affiliates of BlackRock
Group or BlackRock, Inc.
|
8.4
|
n/a
|
n/a
|
12. 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 the investment
management contract are disclosed in the Directors’ Report in the
Company’s Annual Report for the year ended 30 September
2023.
The investment management fee due for the year ended 30 September
2023 amounted to US$3,783,000 (2022: US$3,785,000). The performance
fee payable for the year ended 30 September 2023 amounted to
US$8,272,000 (2022: US$nil).
At the year end, US$2,902,000 (2022: US$882,000) was outstanding in
respect of management fees and US$8,272,000 (2022: US$nil) was
outstanding in respect of performance fees.
In addition to the above services, BIM (UK) has provided the
Company with marketing services. The total fees paid or payable for
these services for the year ended 30 September 2023 amounted to
US$90,000 (2022: US$76,000) excluding VAT. Marketing fees of
US$143,000 (US$53,000) excluding VAT were outstanding at the year
end.
The Company has an investment in the BlackRock Institutional Cash
Series plc – US Dollar Liquid Environmentally Aware Fund of
US$64,875,000 (2022: US$71,415,000) at the year end, which is a
fund managed by a company within the BlackRock Group.
The ultimate holding company of the Manager and the Investment
Manager is BlackRock, Inc., a company incorporated in Delaware,
USA.
13. Contingent liabilities
There were no contingent liabilities at 30 September 2023 (2022:
nil).
14. PUBLICATION OF NON STATUTORY
ACCOUNTS
The financial information contained in this announcement does not
constitute statutory accounts as defined in the Companies Act 2006.
The 2023 Annual Report and Financial Statements will be filed with
the Registrar of Companies shortly.
The report of the Auditor for the year ended 30 September 2023
contains no qualification or statement under Section 498(2) or (3)
of the Companies Act 2006.
The comparative figures are extracts from the audited financial
statements of BlackRock Frontiers Investment Trust plc for the year
ended 30 September 2021, which have been filed with the Registrar
of Companies. The
report of the Auditor on those financial statements contained no
qualification or statement under Section 498 of the Companies
Act.
This announcement was approved by the Board of Directors on 29
November 2023.
15. ANNUAL REPORT
Copies of the annual report will be sent to members shortly and
will be available from the registered office, c/o The Company
Secretary, BlackRock Frontiers Investment Trust plc, 12 Throgmorton
Avenue, London EC2N 2DL.
16. ANNUAL GENERAL MEETING
The Annual General Meeting of the Company will be held at 12
Throgmorton Avenue, London EC2N 2DL on Tuesday, 6 February 2024 at
12:30 p.m.
The Annual Report will also be available on the BlackRock website
at blackrock.com/uk/brfi. Neither
the contents of the Manager’s website nor the contents of any
website accessible from hyperlinks on the Manager’s website (or any
other website) is incorporated into, or forms part of, this
announcement.
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
29 November 2023
12 Throgmorton Avenue
London EC2N 2DL
END