Blackstone Loan Regulatory News (BGLF)

30 APRIL 2019

FOR IMMEDIATE RELEASE

RELEASED BY BNP PARIBAS SECURITIES SERVICES S.C.A., JERSEY BRANCH FINAL RESULTS

ANNOUNCEMENT

THE BOARD OF DIRECTORS OF BLACKSTONE / GSO LOAN FINANCING LIMITED ANNOUNCE FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2018

Strategic report

Reconciliation of IFRS NAV to Published NAV

At 31 December 2018, there was a difference between the NAV per Euro Ordinary Share as disclosed in the Statement of Financial Position, of €0.8065 per Euro Ordinary share, ("IFRS NAV") compared to the published NAV, of €0.8963 per Euro Ordinary share, which was released to the LSE on 22 January 2019 ("Published NAV"). A reconciliation is provided in Note 16. Almost the entire difference between the two numbers is due to the different valuation bases used to determine the value of the investments.

Valuation Policy for the Published NAV

The Company publishes a NAV per Euro Ordinary Share on a monthly basis in accordance with its Prospectus. The Published NAV is based on a monthly valuation process that incorporates the valuation of its CSWs and PPNs, which in turn are based on the valuation of the BGCF portfolio using a CLO intrinsic calculation methodology per the Company's Prospectus, which we refer to as a "mark to model" approach. As documented in the Prospectus, certain "Market Colour" (market clearing levels, market fundamentals, bids wanted in competition ("BWIC"), broker quotes or other indications) is not incorporated into this methodology. The Directors believe that valuations on this basis are the appropriate way of tracking the long-term performance of the Company as the underlying portfolio of CLOs held by BGCF are comparable to held to maturity instruments and the Company expects to receive the benefit of the underlying cash-flows over the CLOs' entire life cycle.

Valuation Policy for the IFRS NAV

For financial reporting purposes annually and semi-annually, to comply with IFRS as adopted by the EU, the valuation of BGCF's portfolio of assets is at fair value using models that incorporate Market Colour at the period end date, which we refer to as a "mark to market" approach. IFRS fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as at the measurement date, and is an "exit price" e.g. the price to sell an asset. An exit price embodies expectations about the future cash inflows and cash outflows associated with an asset or liability from the perspective of a market participant. IFRS fair value is a market-based measurement, rather than an entity-specific measurement, and is measured using assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Both the mark to model Published NAV and mark to market IFRS NAV valuation bases use modelling techniques and input from third-party valuation specialists.

Previous Financial Year Ends

At previous year-ends, there has been no material difference in the two valuation approaches and, consequently the financial statements prior to 31 December 2018 have not required a reconciliation.

Market Conditions at 31 December 2018

At the end of Q4 2018, there was a large market selloff in the broadly syndicated loan market, being the underlying collateral for the CLO Income Notes, and as a result, the CLO Income Notes' NAVs dropped. This drove down the fair value of CLO positions despite a lack of observed CLO Income Note trades in the market. Due to these market technicals driving the loan market decline, the higher estimated discount rate on the year-end date is a large contributing factor to the lower IFRS NAV. Projected cash flows from the CLO Income Notes have generally not materially changed from DFME's expectations. The average price of the Credit Suisse US Leveraged Loan Index fell -4.50% to 94.09 at the end of Q4 2018 from 98.52 at the end of Q3 2018. The lower IFRS NAV is generally consistent with the overall market decline, higher perceived risk sentiment and bids wanted in competition, and underpins the lower IFRS fair value of the Company's investments at the point in time of the year-end date. Consequently, at 31 December 2018, there was a material divergence between valuations calculated on the different bases. Further information is given below that explains the key differences in the assumptions used for each methodology.

Market Conditions Update Q1 2019

Observed market colour and technical factors have begun to recover in 2019, as demonstrated by the Credit Suisse Leveraged Loan Index, which returned +3.78% from 31 December 2018 to 29 March 2019.

The Directors, as set out in the Prospectus, will continue to assess the performance of the Company using the Published NAV. Going forward, the Directors, in conjunction with the Portfolio Adviser, are also considering presenting additional information and commentary on Market Colour, credit risk exposure and any material divergence from the different valuation bases referred to above.

Key Performance Indicators

Further information on the reconciliation between the IFRS NAV and the Published NAV can be found above.

Performance

(1) Refer to Glossary for an explanation of the terms used above and elsewhere within this report

(2) Bloomberg closing price at period end

Dividend History

Whilst not forming part of the investment objective or policy of the Company, dividends will be payable in respect of each calendar quarter, two months after the end of such quarter. The Company continued to target a dividend of €0.025 a quarter throughout the year ended 31 December 2018.

Year Highs and Lows

Schedule of Investments

Schedule of Significant Transactions

Chair's Statement

Dear Shareholders,

After two years of stable growth in asset prices, 2018 proved to be more challenging for investors, particularly in the final quarter. Heading into 2018, tax cuts in the US provided an added boost for investors and indeed the US economy did advance an annualised 2.9% in 2018, ahead of the 2.2% rate of growth in 2017. US inflation emerged as a topical risk in 2018 given increased pressure on commodity prices, signs of wage growth, and an increase of Consumer Price Index above 3%. Inflation is typically coupled with rising rates, and, in 2018, the Federal Open Market Committee ("FOMC") increased short-term rates four times. As a result, the 10-year US Treasury yield reached a peak of over 3.2% in 2018. Toward the end of 2018, heightened tensions surrounding US-China trade relations, uncertainty surrounding an array of geopolitical situations, and the US government shutdown began to feed concerns that economic growth may be slowing. This ultimately resulted in a rise in risk premium and a spike in volatility in the equity and credit markets during the fourth quarter. Against this backdrop, in January, the FOMC made it clear that they would hold off on further rate increases until the impact of the prior rate increases was realised.

Economic growth in Europe also started strongly in 2018, but decelerated in the second half of the year as many economic indicators dipped and global growth became less synchronised. Despite the decline in reported numbers in Europe, the major constituents of the Eurozone Composite PMI (manufacturing, services, and construction) all reported above 50 each month, the demarcation line between growth and contraction. In January of 2019, however, the European Central Bank ("ECB") downgraded GDP growth projections for the year, with expectations for a 1.6% expansion in 2019 after 1.9% growth in 2018. This is in line with messaging from the International Monetary Fund, which cut its forecast for the world economy and now predicts it will grow at a rate of 3.5% in 2019, its weakest pace in three years, due to softening consumer demand across Europe, palpitations in financial markets and fresh trade tensions.

Total Return(3)

The Company delivered an IFRS NAV total return per Euro Ordinary share of -3.99% in 2018 (+1.38% in 2017), ending the year at €0.8065 (€0.9378 at 31 December 2017). The return was composed of dividend income +11.38% and of net portfolio movement of -15.37%.

On a Published NAV basis, the Company delivered a total return per Euro Ordinary share of 6.70% in 2018 (+1.38% in 2017), ending the year at €0.8963 (€0.9378 at 31 December 2017). The return was composed of dividend income +11.38% and of net portfolio movement of -4.68%.

The Company's performance was impacted by a compression of the net interest margin of underlying CLO investments due to spread narrowing within the loan portfolios held within the CLOs. While loan spread tightening persisted throughout much of the early part of the year, many of BGCF's CLO positions had undergone liability refinancing at lower costs, which helped to offset the impact. Performance in 2018 was further supported by stronger than modelled fundamental performance in the underlying CLO portfolios, namely lower defaults. Volatility in both the loan and CLO markets had a significant impact on the IFRS NAV compared to the Company's Published NAV, which remains relatively stable due to its hold to maturity strategy and its valuation of long-term CLO Income Note investments based on expected cash flows.

An explanation of the difference between the IFRS NAV and the Published NAV is included above.

The Company paid four dividends in respect of the year ended 31 December 2018, totaling €0.10 per share. Details of all dividend payments can be found within the "Dividend History" section above.

Discount Management

While the share price discount to IFRS NAV averaged 1.4% (average of 2.1% based on Published NAV) throughout 2018, the shares ended the year trading at a discount of 5.77% to the IFRS NAV and 15.21% discount to the Published NAV (versus premium to NAV of 5.03% at 2017 year-end). The discount is -7.4% based on the Published NAV as at the time of this publication. As a Board, we regularly weigh the balance between maintaining liquidity of the Euro shares, the stability of any discount or premium relative to Published NAV, and the desire of Shareholders to see the Euro shares trade as closely as possible to their intrinsic value. On 23 January 2019, the Board announced that, under the general authority conferred by the Company's Shareholders at its Annual General Meeting on 22 June 2018, it retains the right to buy back shares in the market with the goal of reducing the discount.

BGLF Rollover Opportunity

On 21 December 2018, BGLF announced the results of the Rollover Opportunity, whereby shareholders in Carador Income Fund plc ("Carador") were provided with the opportunity to elect to rollover their investment in Carador into an investment in newly issued BGLF shares (" C Shares"). Approximately 34% of the Carador US Dollar Share register elected to rollover into Euro-denominated BGLF C Shares. In consideration for the transfer of Rollover Assets, equating to approximately $90 million, BGLF issued 133,451,107 BGLF C shares. These began trading on the Specialist Fund Segment of the Main Market of the LSE on 7 January 2019.

As outlined in the Prospectus, BGLF intends that the C Shares will convert into BGLF Ordinary Shares after a transitional period, expected to be between six to twelve months in length, during which the Rollover Assets will be realised and the proceeds reinvested in accordance with BGLF's investment policy. Rollover Assets, which primarily consist of CLO Income Notes, carry no risk retention requirements, and the investment strategy of the Company is to sell such positions as opportunities arise. As at the date of this publication, 31% of the Rollover Assets have been realised.

Brexit Update

Geopolitical volatility has become a key driver of uncertainty, and will remain one over the next few years. The board continues to monitor the ongoing negotiations regarding the UK's exit from the European Union ("Brexit"). The potential implications to BGLF have been evaluated in terms of any likely impact on credit quality in respect of BGCF's portfolio of investments and across its service providers, including areas such as human resources, counterparty relationships, supply chains, macroeconomic, and regulatory policy, as well as with regards to its marketing registrations, all of which have been deemed to have a negligible impact on the long-term sustainability of the Company. The longer-term impact of Brexit will continue to be monitored as the uncertainty resolves.

The Board

Good governance remains at the heart of our work as a Board and is taken very seriously. We believe that the Company maintains high standards of corporate governance. The Board was very active during the year convening a total of 21 Board meetings and 31 Committee meetings, as well as undertaking an offsite due diligence review in January 2018 of DFME. The Board used this visit to discuss various aspects of operational risk and controls, the loan and CLO markets, and current market conditions. A follow up visit was undertaken in March 2019 and the Board is holding its next quarterly board meeting in July 2019 in New York in order to meet with several personnel in the wider Blackstone Group. In addition, as can be seen from the corporate activity during the year, the Board and its advisers have worked hard to ensure the continued success and growth of the Company to put it in the best position to take advantage of all appropriate opportunities. The work of the Board is assisted by the Audit Committee, Management Engagement Committee, the Remuneration and Nomination Committee and the Risk Committee. The joint work of the Risk and Audit committees has given valuable support to the longer-term viability considerations of the Board as described in the Strategic Report - Risk Overview section.

The Company is a member of the AIC and adheres to the AIC Code which is endorsed by the FRC, and meets the Company's obligations in relation to the UK Corporate Governance Code 2016 (the "UK Code").

Shortly after year end, with effect from 8 January 2019, the Board appointed Mark Moffat as a non-executive director. Mark has been involved in structuring, managing and investing in CLOs for over 20 years. As Mark was employed by GSO Capital Partners LP ("GSO") until early 2015, the Board does not currently consider him to be an independent director; however, we believe that with his knowledge and experience he will be a valuable addition to the Board.

Shareholder Communications

During 2018, using our Adviser and Brokers, we have continued our programme of engagement with current and prospective Shareholders. We sincerely hope that you found the monthly factsheets and other information valuable. We are always pleased to have contact with Shareholders and we welcome any opportunity to meet with you and obtain your feedback. The Board along with its Portfolio Adviser is currently reviewing the format of shareholder communications with a view to providing more detail on underlying BGCF investments including market colour and credit risk exposure.

Prospects and Opportunities in 2019

Looking ahead to 2019, there are many compelling market scenarios to consider. While we do not expect that the US economy will move into a recession this year, we do acknowledge that markets began the year pricing in about a 50% chance of a recession. There are two core drivers of recession: excess capacity and Fed overtightening. In our view, the present state of these drivers indicates that the current credit cycle is likely to extend beyond 2019.

In Europe, the ECB ended its quantitative easing ("QE") programme in December, and the market priced in the ECB's first rate increase since 2011 to occur toward the end of 2019. With recessionary conditions evident in Italy, and France and Germany seeming likely to fall into recession as well, we expected that the ECB would soon need to restart QE. Indeed, as European global growth expectations weakened amid rising geopolitical uncertainty, in March of 2019, the ECB announced a third injection of stimulus in the form of a new series of quarterly targeted longer-term refinancing operations ("TLTRO-III"), which will be launched in September 2019 and continue through to March 2021. By providing cheap loans to banks, TLTRO-III should lower funding costs for businesses and households and help offset the effect of negative interest rates on banks.

With weakening economic data, the global economy appears to be in the later stages of this current economic cycle. The position of senior loans at the top of the credit structure, secured by the vast majority of the borrowing company's assets, provides us, the Board, with comfort in the event of a global downturn. Amid headlines of increasing leverage, weakening documentation, and increasing focus on "covenant lite" loans, we strongly believe the conservative investment process embedded in BGCF's portfolio construction is key to selecting an underlying portfolio of high quality companies supported by robust underlying protections. As we move into 2019, we continue to believe that the Company is well positioned to access favourable investment opportunities in loans, CLOs and warehouses through its investment in BGCF.

Dividends

Whilst not forming part of the investment objective or policy, and as outlined in the Prospectus, the Company has targeted an annualised mid teen total return over the medium term with a view to delivering this return through a combination of dividend payments and capital appreciation. The actual dividend generated by the Company in pursuing its investment objective depends on a wide range of factors, including, but not limited to: general economic and market conditions; fluctuating currency exchange rates; prevailing interest rates; and credit spreads and the terms of the investments made by the company. The aim is that excess cash or interest from the portfolio is reinvested by BGCF with the objective of growing the NAV of the Company.

The Board regularly considers the balance between the sustainability of dividends to investors and capital growth. When considering sustainability of dividends the Board has regard to past and forecast operational performance and the prevailing macro-economic outlook. The Company is well positioned to continue to fund its dividend, which continues to be covered by cash generated from its underlying investments. Details of the Company's continuing viability and going concern can be found in the "Strategic Report - Risk Overview" section. The ability of the Board to maintain future dividend policy will be influenced by the principal risks, and in particular the risk regarding investment performance and the income distribution model. Accordingly, the Company anticipates maintaining a dividend of 10c per annum distributed as a quarterly dividend of 2.5c per Euro Ordinary share. However, the Board will continue to undertake further analysis in the short term and monitor whether this provides the right balance between sustainability of dividends and the reinvestment of investment returns to grow the capital value of the Company.

The Board wishes to express its thanks to the Company's Shareholders for their support.

Charlotte ValeurChair

30 April 2019

(3) Past performance is not necessarily indicative of future results, and there can be no assurance that the Company will achieve comparable results, will meet its target returns, achieve its investment objectives, or be able to implement its investment strategy.

Portfolio Adviser's Review

We are pleased to present our review of 2018 and outlook for 2019.

Bank Loan Market Overview (4,5)

In 2018, European bank loans returned 0.55% (vs. 3.30% in 2017) and US bank loans returned 1.14% (vs. 4.25% in 2017). The somewhat muted full year performance of loans for 2018 was a result of a change in risk sentiment that triggered high velocity loan retail fund outflows in the US and an eventual technical sell off in the final quarter. While this affected both the US and European markets, loans proved their resilience and outperformed most asset categories in 2018.

Loan spread compression stabilised in 2018 and overall spreads in the European loan market tightened by only 1bp in 2018 (compared to 55bp in 2017) to end the year at 345bp. In the US, spread tightening moderated from narrowing 34bp in 2017 to 9bp over the year to end 2018 at 348bp. US loan coupons were further supported by a 111bp increase in 3M LIBOR over 2018 to 281bp.

Gross total loan issuance was €96.7 billion in Europe and $621.8 billion in the US for 2018. The largest use of this capital in both markets was related to M&A activity (69.5% in Europe and 55.8% in the US) - a shift from 2017, where recap and refinancing was the largest use of issuance globally. Both the European loan market and the US loan market experienced growth in 2018. The Credit Suisse Western European Leveraged Loan Index par outstanding rose from €217 billion in December 2017 to €283 billion in December 2018 (+30%), while the Credit Suisse Leveraged Loan Index par outstanding rose from $1,075 billion to $1,225 billion (+14%). We expect net new issue loan supply to decline year-on-year for 2019, due in large part to the volatility experienced in the fourth quarter 2018.

Default rates for loans remained below historical averages throughout 2018 and ended the year at 1.6% in the US and 0.1% in Europe.(5) We expect that they will remain below 2% throughout 2019 as loan issuer fundamentals remain strong. For US loan issuers, EBITDA grew by 10% on average in Q4 and revenue growth was 9%. Total leverage for US loan issuers decreased to 5.2x in Q4 and average interest coverage ratios improved to 4.6x.(4) While less broad based data is publicly available for European loan issuers, in Q3 we saw year-on-year revenue growth of 7% and interest coverage increased by 0.5x to 5.08x in the portfolio companies that we monitor.(6)

These strong corporate fundamentals, combined with low projected default rates, lead us to remain constructive on credit in 2019 and continue to believe that floating rate senior loans offer a compelling risk‐reward opportunity. This is further supported by our view that the seniority of loans in the corporate structure offers defensive positioning unique to the asset class and one that is well suited for portfolio construction in a late cycle environment.

CLO Market Overview (7)

CLO issuance in 2018 was strong globally with record post-crisis CLO issuance in both Europe and the US. European CLO new issuance totalled €27.3 billion from 66 CLOs, (2017 issuance of €20.9 billion from 51 CLOs) and US CLO new issuance totalled $128.9 billion from 241 CLOs (2017 issuance of $118.1 billion from 212 CLOs).

In the early part of 2018, US CLOs' liability cost reached post-crisis tights, but these were soon overwhelmed by the volumes spurred on by the roll-back of US risk retention requirements, which caused spreads to widen. Loan price volatility during the fourth quarter caused further widening of CLO liability costs, which led to a slow-down of CLO issuance. CLO liabilities continue to remain wide into 2019, posing a challenge to the CLO Income Note arbitrage.

In contrast to new issuance, CLO refinancing and reset activity moderated in 2018 as CLO spreads widened globally. In 2018, €18.2 billion of European CLOs and $155.9 billion of US CLOs were refinanced or reset, the majority of which occurred in the first nine months of the year. In comparison, total refinancing and reset volume in 2017 was €24.8 billion in Europe and $167.0 billion in the US.

From a CLO fundamentals perspective, there was a divergence in some tests between Europe and the US. In Europe, CLO minimum overcollateralization ("OC") cushions declined slightly from 4.56% to 4.37% over the year and Weighted Average Rating Factor ("WARF") deteriorated from 2760 to 2858 on average. CCC buckets in the market improved and were broadly down by 0.90%. In the US, Caa holdings dropped by 0.40% and minimum OC cushions improved 0.20% to 4.35%, while WARF improved from 2811 to 2807 on average.(8)

Looking ahead, we expect that 2019 CLO gross issuance could reach €25 billion in Europe and $90 billion in the US. However, it should be noted that late 2018 and early 2019 market conditions have resulted in a downward trend for CLO issuance forecasts.

Portfolio Update

BGLF, through its investment in BGCF, increased its exposure to US assets during 2018. As at 31 December, based on NAV, 46% of BGCF's portfolio was composed of US CLO Income Notes and CLO warehouses, compared to 33% in December 2017. Exposure to directly held loans, net of leverage, decreased from 27% to 18%, and European CLO Income Notes remained relatively stable at 37% from 39% at the end of 2017.

Within the CLO portfolio, newer vintage CLOs have made first distributions that exceeded modelled cash flows, which helped to support the current distribution rate and to offset the diminishing cash flows from older vintage CLOs in the portfolio.

Portfolio vintage diversification remains an important part of the BGCF investment strategy. The continued pace of CLO issuance in 2018 increased the portfolio's concentration in newer vintage CLOs with longer reinvestment periods, which benefit from additional time to invest in loans, including the ability to take advantage of secondary market dislocations should they occur. As of 31 December, the weighted average remaining CLO reinvestment periods for European and US CLOs in the portfolio were 2.2 years and 3.8 years, respectively, compared to 2.2 years and 4.2 years at the end of 2017.

Throughout 2018, BGCF originated €2.8 billion of senior secured loans and floating rate notes (€2.3 billion in 2017), and invested €90.6 million (€72.3 million in 2017) in four European CLOs and $238.7 million ($232.7 million in 2017) in six US CLOs. BGCF also invested a total of $242.9 million ($255.6 million in 2017) in seven US CLO warehouses during the year.

We believe that resetting and extending CLO liability terms is supportive of both credit quality within a CLO portfolio, as well as sustainability of equity cash flows. Accordingly, BGCF continued to refinance/reset existing CLO investments soon after expiration of their respective non-call periods throughout 2018. In total, five CLOs (vs. five in 2017) were refinanced or reset, reducing average cost of debt by approximately 0.6%. While the cost of capital for additional CLO refinancings and resets had risen by the end of December, our process remains to evaluate the long-term value of extending the term of the CLOs in the BGCF portfolio at the expiration of their non-call periods.

All investments made to-date have been consistent with the strategy of principal preservation and minimising credit-related losses, while generating stable returns through income and capital appreciation.

Current Asset Coupon, Current Liability Cost and Net Interest Margin in the above table have been rounded to 2 decimal places.

As at 31 December 2018, the portfolio was invested in accordance with BGCF's investment policy and was diversified across 682 issuers (623 issuers in 2017) through the directly held loans and CLO portfolio, and across 19 countries (21 countries in 2017) and 30 different industries (29 in 2017). No individual borrower represented more than 2% of the overall portfolio at the end of 2018.

Key Portfolio Statistics (9)

Top 10 Holdings

Top 5 Industries

Top 5 Countries

Regulatory Update

2018 was an eventful year on the US regulatory front. In February 2018, the US Court of Appeals for the D.C. Circuit published its decision to repeal US risk retention requirements for managers of open-market CLOs, which then became effective on 10 May 2018. This ruling has not materially impacted the Company's long-term investment strategy, investment performance, or capital deployment, as the Company continued, and continues, to invest in US CLOs, albeit directly through BGCF instead of through Blackstone / GSO Corporate Funding Limited (the "US Majority Owned Affiliate" or "US MOA").

In Japan, the Japanese Financial Services Agency ("JFSA"), concerned by the growing exposure of many large domestic banks to the CLO market, published draft regulations in late 2018 that were finalised on 15 March 2019. The final regulation imposes additional regulatory capital requirements applicable to Japanese banks and certain other financial institutions that invest in securitisation. While the regulation does not categorically exempt CLOs, it does provide a path forward that does not require a Japanese risk retention obligation based on a determination by the affected Japanese investors that the underlying loans were not "inadequately formed." We believe that the regulation will result in increased diligence by Japanese investors but that it will not result in a significant wholesale change in the demand for CLOs from Japanese investors. We see this result as positive, given that the Japanese investor base remains among the largest buyers of the senior-most AAA tranches in CLOs.

In Europe, the European Union (the "EU") issued a new regulation effective 1 January 2019 that seeks to harmonise the previous rules for securitisations that were issued by sector (the "Securitisation Regulation"). The rules in the Securitisation Regulation apply to securitisation positions issued on or after 1 January 2019 and to a large degree they adopt the same concepts of the prior regulation on risk retention. The Securitisation Regulation does not change, in substance, the definition of "securitisation", acceptable methods of risk retention, or the level of risk retention required. There have been some extensions of the new regulation, which now includes, among other things, that risk retention obligations now apply directly to originators, sponsors, and original lenders established in the EU / EEA and/or regulated by a European competent authority (rather than only to their investors). Additionally, risk retention obligations now consequently apply indirectly to non-EU originators, sponsors, and original lenders for securitisations that have EU institutional investors, who have direct due diligence obligations to ensure compliance with risk retention.

DFME does not believe that any of the EU securitisation regulation changes should have a significant effect on BGCF or BGLF and that certain of the obligations are consistent with GSO's existing obligations as investment adviser to these funds.

Risk Management

Given the natural asymmetry of fixed income, our experienced credit team focuses on truncating downside risk and avoiding principal impairment and believes that the best way to control and mitigate risk is by remaining disciplined in all market cycles and by making careful credit decisions while maintaining adequate diversification.

BGCF's portfolio of Loans and CLO Income Notes is managed so as to minimise default risk and credit related losses, which is achieved through in-depth fundamental credit analysis and diversifying the portfolio so as to avoid the risk of any one issuer or industry adversely impacting overall returns. As outlined in the portfolio update section, BGCF is broadly diversified across issuers, industries, and countries.

BGCF's base currency is denominated in Euro, though investments are also made and realised in other currencies. Changes in rates of exchange may have an adverse effect on the value, price, or income of the investments of BGCF. BGCF may utilise different financial instruments to seek to hedge against declines in the value of its positions as a result of changes in currency exchange rates.

Through the construction of solid credit portfolios and our emphasis on risk management, capital preservation, and fundamental credit research, we believe the Company's investment strategy will continue to be successful.

Blackstone / GSO Debt Funds Management Europe Limited

30 April 2019

(4) Source: S&P LCD, data as of 31 December 2018

(5) Source: Credit Suisse, data as of 31 December 2018

(6) 3Q18 quarterly financials are used to provide the most complete dataset given European company reporting calendars.

(7) Sources: S&P/LCD, Wells Fargo, data as of 31 December 2018

(8) Sources: S&P/LCD, Wells Fargo, data as of 31 December 2018

(9) As at 31 December 2018

Strategic Overview

Purpose

As an investment company, our purpose is to provide permanent capital to BGCF, a company established by DFME as part of its loan financing programme, with a view to generating stable and growing total returns for Shareholders through dividends and value growth.

We deliver our purpose through working in line with our values, which form the backbone of what the Company does and are an important part of our culture.

Values

Integrity and Trust - The Company seeks to act with integrity in everything it does and to be trustworthy. We seek to uphold the highest standards of professionalism driven by our corporate governance processes.

Transparency - The Company aims to ensure all of its activities are undertaken with the utmost transparency and openness to sustain trust.

Opportunity - The ability to see and seize opportunity in the best interests of shareholders.

Sustainability - As an investment company we aim to maintain and deliver attractive and sustainable returns for our shareholders.

Principal Activities

The Company was incorporated on 30 April 2014 as a closed-ended investment company limited by shares under the laws of Jersey and is authorised as a listed fund under the Collective Investment Funds (Jersey) Law 1988. The Company continues to be registered and domiciled in Jersey and the Company's Euro shares are quoted on the Premium Segment of the Main Market of the LSE.

The Company's share capital consists of an unlimited number of shares. As at 31 December 2018, the Company's issued share capital was 404,700,446 Euro shares.

The Company has a wholly-owned Luxemburg subsidiary, Blackstone / GSO Loan Financing (Luxembourg) S.à r.l. , which has an issued share capital of 2,000,000 Class A shares and 1 Class B share. All of the Class A and Class B shares were held by the Company as at 31 December 2018 together with 291,343,213 Class B CSWs issued by the Lux Subsidiary. The Lux Subsidiary invests in PPNs issued by BGCF, an Underlying Company.

The Company is a self-managed company. DFME acts as Portfolio Adviser to the Company and, pursuant to the Advisory Agreement, provides advice and assistance to the Company in connection with its investment in the CSWs. BNP Paribas Securities Services S.C.A. acts as Administrator, Company Secretary, Custodian and Depositary to the Company.

Investment Objective

As outlined in the Company's Prospectus, the Company's investment objective is to provide Shareholders with stable and growing income returns, and to grow the capital value of the investment portfolio by exposure to floating rate senior secured loans and bonds directly and indirectly through CLO Securities and investments in Loan Warehouses. The Company seeks to achieve its investment objective through exposure (directly or indirectly) to one or more companies or entities established from time to time ("Underlying Companies").

Investment Policy

As outlined in the Company's Prospectus, the Company's investment policy is to invest (directly, or indirectly through one or more Underlying Companies) in a diverse portfolio of senior secured loans (including broadly syndicated, middle market or other loans) (such investments being made by the Underlying Companies directly or through investments in Loan Warehouses), bonds and CLO Securities, and generate attractive risk-adjusted returns from such portfolios. The Company intends to pursue its investment policy by investing (through one or more subsidiaries) in profit participating instruments (or similar securities) issued by one or more Underlying Companies.

Each Underlying Company will use the proceeds from the issue of the profit participating instruments (or similar securities), together with the proceeds from other funding or financing arrangements it has in place currently or may have in the future, to invest in: (i) senior secured loans, bonds, CLO Securities and Loan Warehouses; or (ii) other Underlying Companies which, themselves, invest in senior secured loans, bonds, CLO Securities and Loan Warehouses. The Underlying Companies may invest in European or US senior secured loans, bonds, CLO Securities, Loan Warehouses and other assets in accordance with the investment policy of the Underlying Companies. Investments in Loan Warehouses, which are generally expected to be subordinated to senior finance provided by third-party banks, will typically be in the form of an obligation to purchase preference shares or a subordinated loan. There is no limit on the maximum US or European exposure. The Underlying Companies do not invest substantially directly in senior secured loans or bonds domiciled outside North America or Western Europe.

The Company's investment strategy is to implement its investment policy by investing directly or indirectly through the Underlying Companies, in a portfolio of senior secured loans and bonds or in Loan Warehouses containing senior secured loans and bonds and, in connection with such strategy, to own debt and equity tranches of CLOs and, in the case of European CLOs and certain US CLOs, to be the risk retention provider in each.

The Underlying Companies may periodically securitise a portion of the loans, or a Loan Warehouse in which they invest, into CLOs which may be managed either by such Underlying Company itself, by DFME or DFM (or one of their affiliates), in their capacity as the CLO Manager.

Where compliance with the European Risk Retention Requirements is sought (which, with certain exceptions, will not be the case for the US CLOs) the Underlying Companies will retain exposures of each CLO, which may be held as:

· CLO Income Notes equal to: (i) between 51% and 100% of the CLO Income Notes issued by each such CLO in the case of European CLOs; or (ii) CLO Income Notes representing at least 5% of the credit risk relating to the assets collateralising the CLO in the case of US CLOs (each of (i) and (ii), (the "horizontal strip"); or

· Not less than 5% of the principal amount of each of the tranches of CLO Securities in each such CLO (the "vertical strip").

In the case of deals structured to be compliant with the European Risk Retention Requirements, the applicable Underlying Company may determine that, due to its role as an "originator" with respect to such transaction, such Underlying Company should also comply with the US Risk Retention Regulations. In addition, an Underlying Company may invest in CLOs, such as middle market CLOs, which are not exempt from the US Risk Retention Regulations and, as a result, may be required to retain exposure to such CLOs in accordance with such rules. In such a scenario, the Underlying Company will retain exposures to such transactions for the purpose of complying with the US Risk Retention Regulations, which may be held as:

· CLO Income Notes representing at least 5% of the fair market value of the CLO Securities (including CLO Income Notes) issued by such CLO (the "US horizontal strip");

· A vertical strip; or

· A combination of a vertical strip and US horizontal strip.

To the extent attributable to the Company, the value of the CLO Income Notes retained by Underlying Companies in any CLO will not exceed 25% of the NAV of the Company at the time of investment.

Investments in CLO Income Notes and loan warehouses are highly leveraged. Gains and losses relating to underlying senior secured loans will generally be magnified.

Further, to the extent attributable to the Company, the aggregate value of investments made by Underlying Companies in vertical strips of CLOs (net of any directly attributable financing) will not exceed 15% of the NAV of the Company at the time of investment. This limitation shall apply to Underlying Companies in aggregate and not to Underlying Companies individually.

Loan Warehouses may eventually be securitised into CLOs managed either by an Underlying Company itself or by DFME or DFM (or one of their affiliates), in their capacity as the CLO Manager. To the extent attributable to the Company, the aggregate value of investments made by Underlying Companies in any single externally financed warehouse (net of any directly attributable financing) shall not exceed 20% of the NAV of the Company at the time of investment, and in all externally financed warehouses taken together (net of any directly attributable financing) shall not exceed 30% of the NAV of the Company at the time of investment. These limitations shall apply to Underlying Companies in aggregate and not to Underlying Companies individually.

The following limits (the "Eligibility Criteria") apply to senior secured loans and bonds (and, to the extent applicable, other corporate debt instruments) directly held by any Underlying Company (and not through CLO Securities or Loan Warehouses):

For the purposes of these Eligibility Criteria, "gross asset value" shall mean gross assets, including any investments in CLO Securities and any undrawn commitment amount of any gearing under any debt facility. Further, for the avoidance of doubt, the "maximum exposures" set out in the Eligibility Criteria shall apply on a trade date basis.

Each of these Eligibility Criteria will be measured at the close of each Business Day on which a new investment is made, and there will be no requirement to sell down in the event the limits are breached at any subsequent point (for instance, as a result of movement in the gross asset value, or the sale or downgrading of any assets held by an Underlying Company).

In addition, each CLO in which an Underlying Company holds CLO Securities and each Loan Warehouse in which an Underlying Company invests will have its own eligibility criteria and portfolio limits. These limits are designed to ensure that: (i) the portfolio of assets within the CLO meets a prescribed level of diversity and quality as set by the relevant rating agencies rating securities issued by such CLO, or (ii) in the case of a Loan Warehouse, that the warehoused assets will eventually be eligible for a rated CLO. The CLO Manager will seek to identify and actively manage assets which meet those criteria and limits within each CLO or Loan Warehouse. The eligibility criteria and portfolio limits within a CLO or Loan Warehouse may include the following:

· A limit on the weighted average life of the portfolio;

· A limit on the weighted average rating of the portfolio;

· A limit on the maximum amount of portfolio assets with a rating lower than B-/B3/B-; and

· A limit on the minimum diversity of the portfolio.

CLOs in which an Underlying Company may hold CLO Securities or Loan Warehouses in which an Underlying Company may invest also have certain other criteria and limits, which may include:

· A limit on the minimum weighted average of the prescribed rating agency recovery rate;

· A limit on the minimum amount of senior secured assets;

· A limit on the maximum aggregate exposure to second lien loans, high yield bonds, mezzanine loans and unsecured loans;

· A limit on the maximum portfolio exposure to covenant-lite loans;

· An exclusion of project finance loans;

· An exclusion of structured finance securities;

·  An exclusion on investing in the debt of companies domiciled in countries with a local currency sub-investment grade rating; and

· An exclusion of leases.

This is not an exhaustive list of the eligibility criteria and portfolio limits within a typical CLO or Loan Warehouse and the inclusion or exclusion of such limits and their absolute levels are subject to change depending on market conditions. Any such limits applied shall be measured at the time of investment in each CLO or Loan Warehouse.

Any material change to the investment policy of the Company would be made only with the approval of Ordinary Shareholders.

It is intended that the investment policy of each substantial Underlying Company will mirror the Company's investment policy, subject to such additional restrictions as may be adopted by a substantial Underlying Company from time to time. The Company will receive periodic reports from each substantial Underlying Company in relation to the implementation of such substantial Underlying Company's investment policy to enable the Company to have oversight of its activities.

If a substantial Underlying Company proposes to make any changes (material or otherwise) to its investment policy, the Directors will seek Ordinary Shareholder approval of any changes which are either material in their own right or, when viewed as a whole together with previous non-material changes, constitute a material change from the published investment policy of the Company. If Ordinary Shareholders do not approve the change in investment policy of the Company such that it is once again materially consistent with that of such substantial Underlying Company, the Directors will redeem the Company's investment in such substantial Underlying Company (either directly or, if the Company's investment in a subsidiary is invested by such subsidiary in such substantial Underlying Company (either directly or through one or more other Underlying Companies), by redeeming the securities held by the Company in such subsidiary and procuring that the subsidiary redeems its investment in such substantial Underlying Companies (either directly or through one or more other Underlying Companies)), as soon as reasonably practicable but at all times subject to the relevant legal, regulatory and contractual obligations.

The Board consider BGCF to be a substantial Underlying Company.

Company Borrowing Limit

The Company will not utilise borrowings for investment purposes. However, the Directors are permitted to borrow up to 10% of the Company's NAV for day-to-day administration and cash management purposes. For the avoidance of doubt, this limit only applies to the Company and not the Underlying Companies.

In accordance with the Company's Prospectus, the Company may use hedging or derivatives (both long and short) for the purposes of efficient portfolio management. It is intended that up to 100% (as appropriate) of the Company's exposure to any non-Euro assets will be hedged, subject to suitable hedging contracts being available at appropriate times and on acceptable terms.

Investment Strategy

Whether the senior secured loans, bonds or other assets are held directly by an Underlying Company or via CLO Securities or Loan Warehouses, it is intended that, in all cases, the portfolios will be actively managed (by the Underlying Companies or the CLO Manager, as the case may be) to minimise default risk and potential loss through comprehensive credit analysis performed by the Underlying Companies or the CLO Manager (as applicable).

Vertical strips in CLOs in which Underlying Companies may invest are expected to be financed partly through term finance for investment-grade CLO Securities, with the balance being provided by the relevant Underlying Company investing in such CLO. This term financing may be full-recourse, non-mark to market, long-term financing which may, among other things, match the maturity of the relevant CLO or match the reinvestment period or non-call period of the relevant CLO. In particular, and although not forming part of the Company's investment policy, the following levels of, or limitations on, leverage are expected in relation to investments made by Underlying Companies:

· Senior secured loans and bonds may be levered up to 2.5x with term finance;

· Investments in "first loss" positions or the "warehouse equity" in Loan Warehouses will not be levered;

· CLO Income Notes will not be levered;

· Investments in CLO Securities rated B- and above at the time of issue may be funded entirely with term finance; and

· Investments in a vertical strip may be levered 6.0-7.0x, with term finance as described above.

To the extent that they are financed, vertical strips are anticipated to require less capital than horizontal strips, which is expected to result in more efficient use of the Underlying Companies' capital. In addition, since the return profile on financed vertical strips is different to retained CLO Income Notes, GSO believes that vertical strips may be more robust through a market downturn, although projected IRRs may be slightly lower. However, an investment in vertical strips is not expected to impact the Company's stated target return.

From time to time, as part of its ongoing portfolio management, the Underlying Companies may sell positions as and when suitable opportunities arise. Where not bound by risk retention requirements, it is the intention that the Underlying Companies would seek to maintain control of the call option of any CLOs securitised.

With respect to investments in CLO Securities, while the Underlying Companies maintain a focus on investing in newly issued CLOs, it will also evaluate the secondary market for sourcing potential investment opportunities in CLO Securities.

Whilst the intention is to pursue an active, non-benchmark total return strategy, the Company is cognisant of the positioning of the loan portfolios against relevant indices. Accordingly, the Underlying Companies will track the returns and volatility of such indices, while seeking to outperform them on a consistent basis. In-depth, fundamental credit research dictates name selection and sector over-weights/under-weights relative to the benchmark, backstopped by constant portfolio monitoring and risk oversight. The Underlying Companies will typically look to diversify their portfolios to avoid the risk that any one obligor or industry will adversely impact overall returns. The Underlying Companies also place an emphasis on loan portfolio liquidity to ensure that if their credit outlook changes, they are free to respond quickly and effectively to reduce or mitigate risk in their portfolio. The Company believes this investment strategy will be successful in the future as a result of its emphasis on risk management, capital preservation and fundamental credit research. The Directors believe the best way to control and mitigate risk is by remaining disciplined in market cycles, by making careful credit decisions and maintaining adequate diversification.

The portfolio of the Underlying Companies in which the Company invests (through its wholly-owned subsidiary) remains broadly divided between European CLOs and US CLOs.

The Company operates with Euro as its functional currency. The Rollover Assets and a significant proportion of the portfolio of assets held by Underlying Companies to which the Company has exposure may, from time to time, be denominated in currencies other than Euro. In accordance with the Company's investment policy, up to 100 per cent. (as appropriate) of the Company's exposure to such non-Euro assets is hedged, subject to suitable hedging contracts being available at appropriate times and on acceptable terms.

Corporate Activity

Rollover Offer Proposal

On 28 August 2018, the Board announced a rollover proposal to offer newly issued C Shares to electing shareholders of Carador, in consideration for the transfer of a pool of CLO assets from Carador to the Company (the "Rollover"). Carador is an Ireland-domiciled investment company with a similar underlying portfolio to the Company, managed by GSO / Blackstone Debt Funds Management LLC. The proposed rollover was announced pursuant to a strategic review by Carador, from which the Board recognised opportunities for the Company in terms of asset diversification and the spread of fixed costs over a larger pool of assets for its own Ordinary Shareholders.

On 23 November 2018, the Company also announced a placing programme of up to 400 million new Ordinary Shares (the "Placing Programme"), and published a shareholder circular (the "Circular") with further details of the Rollover and Placing Programme. An EGM Notice was also published, and both documents were mailed to the Company's Ordinary Shareholders.

At the EGM held on 12 December 2018, the Company sought Ordinary Shareholder approval for the following special resolutions: (i) the amendment of the existing articles to provide for the issue of Rollover shares, by replacing the Existing Articles in their entirety with the New Articles; and (ii) the disapplication of pre-emption rights in respect of any C Shares to be issued pursuant to the Rollover and the Placing Programme.

On 12 December 2018, the Company announced that the two special resolutions proposed at the EGM were duly passed, and that the results of the Rollover election would be announced on 21 December 2018.

On 21 December 2018 it was announced that Carador had received valid rollover elections in respect of 133,451,107 ordinary shares, representing approximately 34% of the Carador US Dollar share register. These ordinary shares were replaced with Carador rollover shares, before the Company issued one new C Share for each Carador rollover share in consideration for the transfer of the rollover assets from Carador.

On 3 January 2019, the Company announced that the 133,451,107 C Shares arising from the transaction would be allotted and admitted to trading on the Specialist Fund Segment of the Main Market of the LSE with effect from Monday 7 January 2019.

Allotment and admission to trading on the SFS of the LSE was completed on the 7 January 2019.

Risk Overview

Principal Risks and Uncertainties

Each Director is aware of the risks inherent in the Company's business and understands the importance of identifying, evaluating and monitoring these risks. The Board has adopted procedures and controls to enable it to manage these risks within acceptable limits and to meet all of its legal and regulatory obligations.

The Board considers the process for identifying, evaluating and managing any significant risks faced by the Company on an ongoing basis and these risks are reported and discussed at Board meetings. It ensures that effective controls are in place to mitigate these risks and that a satisfactory compliance regime exists to ensure all applicable local and international laws and regulations are upheld.

The Directors have carried out a robust assessment of the principal risks facing the Company, an overview of which, along with the applicable mitigants put in place, is set out below:

Going Concern

The Directors have considered the Company's investment objective, risk management and capital management policies, its assets and the expected income from its investments. The Directors are of the opinion that the Company is able to meet its liabilities and ongoing expenses as they fall due and they have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, these financial statements have been prepared on a going concern basis and the Directors believe it is appropriate to continue to adopt this basis for a period of at least 12 months from the date of approval of these financial statements.

Viability Statement

At least once a year the Directors carry out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency and liquidity. The Directors also assess the Company's policies and procedures for monitoring, managing and mitigating its exposure to these risks. In assessing viability the Directors have considered the principal risks of the Company as detailed above along with market conditions, the Company's current position, investment objective and strategy and the performance of the Portfolio Adviser.

As explained above, the Company's underlying investment exposure is to the investment portfolio of BGCF. BGCF's portfolio comprises the following categories of investments: (i) CLO Debt and CLO Income Notes securitised by BGCF, (ii) a portfolio of senior secured loans and bonds; and (iii) preference shares. The CLO investments in the portfolio have a non-call period of approximately two years from their origination date and cannot be redeemed until these expire. The Directors have considered each of the principal risks of the Company that could materially affect the cash flows derived from these investments and hence how these could impact the cash flows received by BGLF from BGCF.

In conjunction with the Portfolio Adviser, the Directors have considered the impact that extreme market scenarios could have on BGCF and where appropriate has analysed the effect on the Company's net cash flows. These market scenarios were modelled using inputs based on actual conditions observed or experienced by the Portfolio Adviser during the global financial crisis and included assumptions on prepayment rates, default rates and reinvestment spreads and prices that would be impacted by severe but plausible scenarios. The Directors are satisfied that the outcomes under these modelled extreme market scenarios would allow the Company to generate sufficient cash flow and ensure that the Company would be able to meet its liabilities.

The Directors have assessed the prospects of the Company over the five-year period to 30 April 2024, which the Directors have determined constitutes an appropriate period to provide its viability statement. The Directors believe that financial forecasts to support its investment strategy can be subject to changes dependent upon investment performance, deployment of capital and regulatory, legal and tax developments for which the impact beyond a five year term is difficult to assess. In addition, the extent to which macroeconomic, political, social, technological and regulatory changes beyond a five-year term may have a plausible impact on the Company are difficult to envisage.

The Directors also considered the other principal risks. Whilst each of these risks is a principal risk and could have an impact on the long-term sustainability of the Company, the Directors concluded that each was sufficiently mitigated and would therefore not impact the viability of the Company over a five-year period.

On the basis of this assessment of the principal risks facing the Company and the modelled extreme market scenarios used to assess the Company's prospects, and in the absence of any unforeseen circumstances, the Directors confirm that they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the five-year period of their assessment. However, it is worth noting that there is no intention for the life of the Company to be limited to this five-year period.

Source of the Company's Dividend

The Company through its investments in the Lux Subsidiary receives interest income, on a quarterly basis, on the PPNs held by the latter in BGCF, which continues to generate positive cash flows from its CLO Income Note investments and from its portfolio of directly held and warehoused loans.

The Company redeems CSWs on a quarterly basis to transfer the income from the Lux Subsidiary. As detailed above, the Company redeemed 44,169,444 CSWs in the Lux Subsidiary during the year with a fair value of €50,326,172 to fund the quarterly dividend.

Alternative Performance Measures

In accordance with ESMA Guidelines on Alternative Performance Measures ("APMs") the Board has considered which APMs are included in the Annual Report and Audited Financial Statements and require further clarification. An APM is defined as a financial measure of historical or future financial performance, financial position, or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework. APMs included in the financial statements, which are unaudited and outside the scope of IFRS, are detailed in the table below.

As noted above, the Published NAV and the IFRS NAV may diverge because of different key assumptions used to determine the valuation of the BGCF portfolio. Key assumptions which are different between the two bases as at 31 December 2018 are detailed below:

All of the assumptions above are based on weighted averages.

Certain assumptions, which underpin the year-end Published NAV, such as a lower conditional prepayment rate and a 12-month recovery lag on assumed defaulted assets, are generally more conservative. The below table further explains the rationale regarding the differences in the assumptions that significantly contributed to the valuation divergence as at 31 December 2018.

Alternative Investment Fund Managers' Directive

The Alternative Investment Fund Managers' Directive ("AIFMD") requires certain information to be made available to investors in alternative investment funds ("AIFs") before they invest and requires that material changes to this information be disclosed in the annual report of each AIF. There have been no material changes (other than those reflected in these financial statements) to this information requiring disclosure.

Future Developments

Significant Events after the Reporting Period

Following the announcements made on the 23 November 2018 and 21 December 2018, the Company announced on 3 January 2019 that new C Shares would be allotted and admitted to trading on 7 January 2019. Allotment and admission were completed on 7 January 2019.

On 8 January 2019, the Company announced that Mark Moffat had been appointed as a non-executive director with effect from 8 January 2019.

On 22 January 2019, the Board declared a dividend of €0.025 per Euro Ordinary share in respect of the period from 1 October 2018 to 31 December 2018 with an ex-dividend date of 31 January 2019. A total payment of €10,117,511 was processed on 1 March 2019.

On 22 January 2019, the Board declared a dividend of €0.01452 per C share in respect of the period from

1 October 2018 to 31 December 2018 with an ex-dividend date of 31 January 2019. A total payment of €1,937,710 was processed on 1 March 2019.

On 23 January 2019, the Company announced that, under the general authority to buy back shares conferred by the Company's Ordinary Shareholders at its AGM on 22 June 2018, it intended to buy back shares in the market using available cash.

On 18 April 2019, the Company declared a dividend of €0.025 per Euro Ordinary share in respect of the period from 1 January 2019 to 31 March 2019. This dividend is payable on 31 May 2019 to Shareholders on the register as at the close of business on 3 May 2019, and the corresponding ex-dividend date will be 2 May 2019.

On 18 April 2019, the Company declared a dividend of €0.0205 per C share in respect of the period from

1 January 2019 to 31 March 2019. This dividend is payable on 31 May 2019 to Shareholders on the register as at the close of business on 3 May 2019, and the corresponding ex-dividend date will be 2 May 2019.

Outlook

It is the Board's intention that the Company will pursue its investment objective and investment policy as detailed above. Further comments on the outlook for the Company for the coming financial year and the main trends and factors likely to affects its future development, performance and position are contained within the Chair's Statement and the Portfolio Adviser's Review.

Directors' Biographies

The Directors appointed to the Board as at the date of approval of this Annual Report and Audited Financial Statements are:

Charlotte Valeur

Position: Chair of the Board (non-executive and independent director, resident in Jersey) 

Date of appointment: 13 June 2014

Charlotte Valeur has more than 30 years of experience in financial markets and is the managing director of GFG Ltd, a governance consultancy company. 

Effective 3 September 2018, Ms Valeur was appointed Chair of the Institute of Directors.

She also currently serves as a non-executive director on the boards of listed and unlisted companies including non-executive director of JP Morgan Convertible Bond Income Fund, an LSE-listed investment company; non-executive director of Phoenix Spree Deutschland Ltd, an LSE-listed company; non-executive director of Laing O'Rourke, a construction company; and a non-executive director of NTR Plc, a renewable energy company. She previously served as chair of the boards of Kennedy Wilson Europe Real Estate Plc and DW Catalyst Ltd and as a non-executive director of 3i Infrastructure plc.

Ms Valeur was the founding partner of Brook Street Partners in 2003 and the Global Governance Group in 2009. Prior to this, Ms Valeur worked in London as a director in capital markets at Warburg, BNP Paribas, Société Générale and Commerzbank, beginning her career in Copenhagen with Nordea A/S.

She is regulated by the Jersey Financial Services Commission. 

With significant experience in international corporate finance, Ms Valeur has a high level of technical knowledge of capital markets, especially debt / fixed income. Her non-executive board roles at a number of companies and her work as a governance consultant have provided her with an excellent understanding and experience of boardroom dynamics and corporate governance.

Gary Clark, ACA

Position: Chair of the Remuneration and Nomination Committee and NAV Review Committee; Senior Independent Director (non-executive and independent director, resident in Jersey) 

Date of appointment: 13 June 2014

Gary Clark acts as an independent non-executive director for a number of investment managers including Emirates NBD, Aberdeen Standard Capital and ICG. Until 1 March 2011 he was a managing director at State Street and their head of Hedge Fund Services in the Channel Islands. Mr Clark, a Chartered Accountant, served as chairman of the Jersey Funds Association from 2004 to 2007 and was managing director at AIB Fund Administrators Limited when it was acquired by Mourant in 2006. This business was sold to State Street in 2010. Prior to this Mr Clark was managing director of the futures broker, GNI (Channel Islands) Limited in Jersey.

A specialist in alternative investment funds, Mr Clark was one of several practitioners involved in a number of significant changes to the regulatory regime for funds in Jersey, including the introduction of both Jersey's Expert Funds Guide and Jersey's Unregulated Funds regime.

As a Chartered Accountant with over 30 years' experience in financial services, including many years focused on running fund administration businesses in alternative asset classes, Mr Clark brings a wealth of highly relevant experience, at both board level and as an executive, in fund / asset management operations, including in particular valuation, accounting and administrative controls and processes.

Heather MacCallum, CA

Position: Chair of the Audit Committee (non-executive and independent director, resident in Jersey) 

Date of appointment: 7 September 2017

Heather MacCallum was a partner of KPMG Channel Islands Limited from 2001, retiring from the partnership on 30 September 2016. She was with KPMG's financial services practice for 20 years, predominantly providing audit and advisory services to the investment management sector.

Ms MacCallum currently serves as a non-executive director on boards of several companies, including Jersey Water, an unlisted company; Kedge Capital Fund Management Limited, an asset management business; and Aberdeen Latin American Income Fund Limited, an LSE-listed investment company.

She is a member of the Institute of Directors and the Institute of Chartered Accountants of Scotland (ICAS). She is also a past president of the Jersey Society of Chartered and Certified Accountants.

With 20 years' experience gained in a global professional services firm, Ms MacCallum brings financial experience including technical knowledge of accounting and auditing, especially in the context of financial services, and in particular the investment management sector.

Steven Wilderspin, FCA, IMC

Position: Chair of the Risk Committee (non-executive and independent director, resident in Jersey) 

Date of appointment: 11 August 2017

Steven Wilderspin, a qualified Chartered Accountant, has been the Principal of Wilderspin Independent Governance, which provides independent directorship services, since April 2007. He has served on a number of private equity, property and hedge fund boards as well as commercial companies.

In May 2018 Mr Wilderspin was appointed as a director of HarbourVest Global Private Equity Limited.

In September 2018 Mr Wilderspin was appointed as a director of Vannin Capital.

In December 2017 Mr Wilderspin stepped down from the board of 3i Infrastructure plc where he was chairman of the audit and risk committee after ten years' service.

From 2001 until 2007, Mr Wilderspin was a director of fund administrator Maples Finance Jersey Limited where he was responsible for fund and securitisation structures. Before that, from 1997, Mr Wilderspin was Head of Accounting at Perpetual Fund Management (Jersey) Limited.

Mr Wilderspin has significant listed corporate governance experience, particularly in the area of risk management, so is well placed to lead the board through the development of its risk framework.

Mark Moffat

Position: Non-executive and non-independent director (resident in UK) 

Date of appointment: 8 January 2019

Mark Moffat has been involved in structuring, managing and investing in CLOs for over 20 years. Mr Moffat left GSO Capital Partners LP, part of the credit businesses of The Blackstone Group L.P., in April 2015 to pursue other interests.

Whilst at GSO Mr Moffat was a senior managing director and the portfolio manager responsible for investing in structured credit and co-head of the European activities of the Customised Credit Strategies division.

Mr Moffat joined GSO in January 2012 following the acquisition by GSO of Harbourmaster Capital Management Limited where he was co-head. Prior to joining Harbourmaster in 2007, Mr Moffat was head of European debt and equity capital markets and the European CLO business of Bear Stearns. At Bear Stearns, Mr Moffat was responsible for the origination, structuring and execution of CLOs in Europe over a seven-year period. Prior to Bear Stearns, Mr Moffat was global head of CLOs at ABN AMRO and a Director in the principal finance team of Greenwich NatWest.

With over 20 years of experience structuring, managing and investing in CLOs Mr Moffat brings a deep knowledge of how CLO structures and markets perform over the credit cycle.

Directors' Report

The Directors present the Annual Report and Audited Financial Statements for the Company for the year ended 31 December 2018.

Directors

The Directors of the Company on the date the financial statements were approved are detailed above. With the exception of Mark Moffat, all directors were directors of the Company throughout the year ended 31 December 2018.

Mark Moffat was appointed on 8 January 2019 following a lengthy consideration process with input from DFME and legal counsel. Having identified the need for an additional Board member with specific technical and market expertise, the Board, together with DFME, discussed possible candidates and identified Mr Moffat. A recruitment agency was not consulted due to the very specific nature of the knowledge and skills required, for which the Board felt they would be better able to source candidates in conjunction with DFME.

The Board met with Mr Moffat and considered his experience and non-independent status at appointment. They concluded that his technical expertise and his knowledge of the Portfolio Adviser would add value to and complement the existing Board.

The Board and Employees

The Board currently comprises three male and two female Directors. The Company has no employees and therefore there is nothing further to report in respect of gender representation within the Company.

Full details of the Company's policy on Board Diversity can be found in the Corporate Governance Report.

Share Capital

The Company's share capital consists of an unlimited number of shares. As at 31 December 2018, the Company's issued share capital was 404,700,446 Euro shares (31 December 2017: 404,700,446 Euro shares).

Share Repurchase Programme

At the 2018 AGM, held on 22 June 2018, the Directors were granted authority to repurchase 60,664,597 Euro shares (being equal to 14.99% of the aggregate number of Euro shares in issue at the date of the AGM) for cancellation, or to be held as treasury shares.

This authority, which has not been used, will expire at the upcoming AGM. The Directors intend to seek annual renewal of this authority from Shareholders.

Authority to Allot

At the 2018 AGM, the Directors were granted authority to allot, grant options over, or otherwise dispose of up to 40,470,044 Euro shares (being equal to 10.00% of the aggregate number of Euro shares in issue at the date of the AGM). This authority will expire at the 2019 AGM.

Shareholders' Interests

As at 31 December 2018, the Company had been notified, in accordance with Chapter 5 of the Disclosure Guidance and Transparency Rules (which covers the acquisition and disposal of major shareholdings and voting rights), of the following Shareholders with an interest of greater than 5% in the Company's issued share capital:

Between 31 December 2018 and 30 April 2019, the following notifications were received:

Statement of Disclosure of Information to the Auditor

The Directors who held office as at the date of approval of this Directors' Report confirm that, so far as they are each aware, there is no relevant audit information of which the Company's auditor is unaware and that they have taken the steps that they ought to have taken as Directors to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

Environmental, Employee, Social, Community and Human Rights Matters

The Company is a closed ended investment company with no employees, and therefore its environmental impact is minimal. The Board notes that the companies in which BGCF invests (either directly or indirectly) may have a social, employee, community and human rights impact of which the Board has no visibility or control.

Gary Clark

Director

30 April 2019

Corporate Governance Report

Statement of Compliance with Corporate Governance

The Company, having a Premium Listing on the Official List of the FCA, is subject to Listing Rule 9.8.6 which requires companies to report against the UK Code.

Having considered the principles and recommendations of the Association of Investment Companies' ("AIC") Code of Corporate Governance for Jersey-domiciled member companies, as published by the Association of Investment Companies in July 2016 (the "AIC Code") by reference to the AIC Corporate Governance Guide for Investment Companies (the "AIC Guide"), the Board believes the AIC Code addresses all of the principles set out in the UK Code as well as additional principles and recommendations on issues that are of specific relevance to the Company and will provide better information to Shareholders.

The Board can therefore confirm that during the year ended 31 December 2018, the Company has complied with the recommendations of the AIC Code and the relevant provisions of the UK Code as detailed below.

For the reasons set out in the AIC Guide and given the size and nature of operations of the Company, in that it is a self-managed investment company with no executive employees and that the providers of outsourced services have their own internal audit functions, the Board considers the below provisions of the UK Code not to be relevant and therefore has not reported further on them:

· the role of the Chief Executive;

· executive directors' remuneration; and

· the need for an internal audit function.

The Company will provide details in the future if it considers these provisions to be relevant.

Copies of the AIC Code, the AIC Guide and the UK Code can be found on the respective organisations' websites - https://www.theaic.co.uk/ and frc.org.uk.

The Board

The Board consists of five non-executive directors. Their biographies can be found above.

The Board meets at least four times a year and is in regular contact with the Portfolio Adviser, the Administrator and the Company Secretary. Furthermore, the Board is supplied with information in a timely manner from the Portfolio Adviser, the Company Secretary and other advisers in a form and of a quality appropriate for it to be able to discharge its duties.

Board Apprentices

In 2018 the Board chose to participate in the Board Apprentice scheme, which aims to give appropriate individuals first hand board experience through observation of the workings and dynamics of boards. The board selected two board apprentices from a pool of candidates, who have both attended the Company's meetings and received relevant documentation. Both board apprentice positions are effective for a period of one year to October 2019.

The Board views this as a valuable exercise in mentoring already accomplished individuals to be future directors, fostering equality and developing board culture.

Duties and Responsibilities

The Board has overall responsibility for maximising the Company's success by directing and supervising the affairs of the business and meeting the appropriate interests of Shareholders and relevant stakeholders, while enhancing the value of the Company and also ensuring the protection of investors. A summary of the Board's responsibilities is as follows:

· statutory obligations and public disclosure;

· strategic matters and financial reporting;

· risk assessment and management including reporting, compliance, governance, monitoring and control; and

· other matters having a material effect on the Company.

The Board is responsible to Shareholders for the overall management of the Company. The Board has delegated certain operational activities of the Company to the Portfolio Adviser, Administrator and Company Secretary. The Board reserves the power of decisions relating to the determination of investment policy, the approval of changes in strategy, capital structure, statutory obligations and public disclosure, and the entering into of any material contracts by the Company.

Board Attendance

The following table shows the number of meetings held by the Board and each committee for the year ended 31 December 2018, as well as the Directors' and Committee Members' attendance at each type of meeting.

\* The majority of the Ad Hoc Board meetings not attended by Ms Valeur were held following the NAV Review Committee Meetings for convenience. These dealt with routine business items and Ms Valeur received copies of all documents in advance of the meetings and fed back any comments she had.

**On 22 October 2018, it was resolved that Ms Valeur would no longer be a member of the NAV Review Committee.

Chair

The Chair is responsible for leadership of the Board, ensuring its effectiveness on all aspects of its role and setting its agenda. The Chair is also responsible for ensuring that the Directors receive accurate, timely and clear information and for effective communication with Shareholders.

Board Independence

For the purpose of assessing compliance with principles 1 and 2 of the AIC Code, the Board considers all of the current Directors, with the exception of Mark Moffat, to be independent. Mr Moffat left GSO Capital Partners LP in April 2015 and is not considered independent for this reason.

The Directors consider that there are no factors, as set out in principles 1 or 2 of the AIC Code, which compromise the other Directors' independence and all Directors contribute to the affairs of the Company in an adequate manner. The Board reviews the independence of all Directors annually. The Company Secretary acts as secretary to the Board and Committees and, in doing so, assists the Chair in ensuring that all Directors have full and timely access to all relevant documentation, organises induction of new Directors, is responsible for ensuring that the correct Board procedures are followed and advises the Board on corporate governance matters.

Board Evaluation

During 2018, the Board conducted their own review using BoardMetrix, a board evaluation tool. This evaluation assessed the Board's performance in the following areas:

· board composition/skills;

· strategic review;

· workings of the board; and

· risk oversight.

The performance of each Director and the Committees of the Board were also assessed as part of this evaluation.

The evaluation concluded that the Board was strong across all of the above areas and that the Directors and the Board's Committees were performing effectively. No significant recommendations were made which are required to be brought to the attention of the Shareholders.

A board evaluation was externally facilitated by Value Alpha during 2016. The Board intends to arrange an externally-facilitated board evaluation every three years, with the next external Board evaluation due to be conducted in 2019.

Committees of the Board

The Board has established six committees: an Audit Committee; a Management Engagement Committee; a NAV Review Committee; a Remuneration and Nomination Committee; a Risk Committee; and an Inside Information Committee. Each committee has formally delegated duties and responsibilities within written terms of reference, which are available on the Company's website, blackstone.com/bglf, under "Terms of Reference".

The current committee memberships are detailed below.

Audit Committee

The terms of reference state that the Audit Committee will meet not less than three times a year and will meet with the Auditor at least once a year. The report on the role and activities of this committee and its relationship with the Auditor is included in the Audit Committee Report below.

Management Engagement Committee

The terms of reference state that the Management Engagement Committee shall meet at least once a year; will have responsibility for monitoring and reviewing the Portfolio Adviser's performance; and will recommend to the Board whether the continued appointment of the Portfolio Adviser is in the best interests of the Company and Shareholders.

NAV Review Committee

The terms of reference state that the NAV Review Committee shall meet at least once a month to review and consider the Company's NAV calculation, fact sheet and related stock exchange announcement(s).

Remuneration and Nomination Committee

The terms of reference state that the Remuneration and Nomination Committee will meet not less than twice a year and shall be responsible for all aspects of the appointment and remuneration of Directors. The remuneration duties of the committee include determining and agreeing with the Board the framework or broad policy for the remuneration of the Directors and to review its ongoing appropriateness and relevance.

The nomination duties of the committee include regularly reviewing the structure, size and composition of the Board, including the balance of skills, experience, independence and knowledge, as well as identifying, nominating and recommending for the approval of the Board, candidates to fill Board vacancies as they arise.

Director Re-Election and Tenure

The Remuneration and Nomination Committee has considered the question of a policy on Board tenure. It is strongly committed to striking the correct balance between the benefits of continuity and those that come from the introduction of new perspectives to the Board.

As provided for in the AIC Code and in order to phase future retirements and appointments, the Board has not at this stage adopted any specific limits to tenure, but expects to continue to rotate Board members over the coming years.

The Board has adopted a policy whereby all Directors will be put up for re-election every year. Accordingly, all Directors will be put forward for re-election at the forthcoming AGM. Each of the Directors has demonstrated a strong commitment to the Company and the Board believes each Director's re-election to be in the best interests of the Company.

The Board also maintains a succession planning matrix covering the Directors' skills, the Board's diversity, and the Directors' expected year of retirement should they hold office for nine years. The matrix is used by the Remuneration and Nomination Committee to identify any additional skills that the Board would benefit from and to help the Remuneration and Nomination Committee establish when to begin recruiting for any new directors. The Board also keeps its diversity under review.

Risk Committee

The terms of reference state that the Risk Committee shall meet at least four times a year. The activities of this committee are outlined in the Risk Committee Report below.

Inside Information Committee

The Inside Information Committee is responsible for identifying inside information and monitoring the disclosure and control of such information.

Board Diversity

The Board believes in and values the importance of a broad range of skills, experience and diversity, including gender, for the effective functioning of the Board, all of which are considered when determining the optimum composition of the Board. The Board has a policy that aims to have a minimum of 40% of either gender represented on the Board, and also recognises the importance of inclusivity in its diversity policy. The Board ensures compliance with its policy in respect of any appointments to the Board. At 31 December 2018, there was 50% of each gender represented on the Board, while at the date of approval of these financial statements, 60% of the Board were male and 40% were female.

Internal Controls

The Board has applied principle 15 of the AIC Code by establishing a continuous process for identifying, evaluating and managing the significant risks that the Company faces. The Board is responsible for the Company's system of internal controls and for reviewing its effectiveness. Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.

The Board's monitoring covers all controls, including financial, operational and compliance controls and risk management. It is based principally on reviewing reports from the Portfolio Adviser and BGCF to consider whether significant risks are identified, evaluated, managed and controlled and whether any significant weaknesses are promptly remedied and indicate a need for more extensive monitoring.

The Audit Committee assists the Board in discharging its review responsibilities.

During the course of its review of the system of internal controls, the Board has not identified nor been advised of any failings or weaknesses which it has determined to be significant. Therefore, no confirmation in respect of necessary actions has been made.

The Board is also responsible for setting the overall investment policy and monitors the services provided by the Portfolio Adviser at regular Board meetings. The Board receives regular compliance reports from the Portfolio Adviser, the Administrator, the Company Secretary and the Depositary.

The Directors clearly define the duties and responsibilities of their agents and advisers, whose appointments are made after due consideration, and monitor their ongoing performance. All of the Company's agents and advisers maintain their own systems of internal control on which they report to the Board. These systems are designed to ensure effectiveness and efficient operation, internal control and compliance with laws and regulations. In establishing the systems of internal control, regard is paid to the materiality of relevant risks, the likelihood of costs being incurred and the costs of control. It follows, therefore, that the systems of internal control can only provide reasonable but not absolute assurance against the risk of material misstatement or loss.

The Directors are satisfied that the continued appointment of the relevant service providers is in the best interests of the Shareholders.

The Board has reviewed the need for an internal audit function and has decided that the systems and procedures employed by the Administrator and Portfolio Adviser, including their own internal controls and procedures, provide sufficient assurance that a sound system of risk management and internal control, to safeguard the Shareholders' investment and the Company's assets, is maintained. An internal audit function specific to the Company is therefore considered unnecessary. Full details are set out in the Audit Committee Report.

The Company has appointed Fidante Partners Europe Limited (trading as Fidante Capital) and Nplus 1 Singer Advisory LLP as its Joint Brokers. Together with these parties, the Portfolio Adviser assists the Board in communicating with and understanding the views of the Company's major Shareholders.

Risk Committee Report

Membership

The Risk Committee comprises Steven Wilderspin (Chair), Charlotte Valeur, Heather MacCallum, Gary Clark and Mark Moffat.

Key Objectives

The Risk Committee has been established to assist the Board in its oversight of risk through ensuring the Company maintains a high standard of risk identification, monitoring and management so as to minimise investment risks and any other risks not covered by the Audit Committee.

Responsibilities

During 2018, the Risk Committee reviewed its mandate to ensure effective operation in conjunction with the Audit Committee, and as a result, its key responsibilities, amongst others, remain:

· ensuring the Company's compliance with its investment objectives, policies, restrictions and borrowing limits;

· ensuring that appropriate policies and reporting exists for the monitoring of the Company's key risks;

· developing and maintaining a risk register documenting identified risks, their mitigants, likelihood and impact, which is reviewed regularly by the Board with action points and newly identified risks being appropriately dealt with;

· defining risk review activities regarding investment decisions, transactions and exposures for approval by the Board; and

· ensuring due regard is given to all regulations, codes, and laws that the Company is subject to.

Committee Meetings

In 2018, the Risk Committee met on four occasions. The Committee considered: risk reporting and monitoring, including the risk register; newly identified risks, their impact and required mitigants; the Board's risk appetite; and Principal Risks and Viability Statement.

Specific areas of focus for the Committee during the year included:

· Base erosion and profit shifting ("BEPS") - The Committee considered this initiative by the OECD to prevent erosion of the tax base by the use of international tax structures, and determined that there was not a material risk to the Company.

· General Data Protection Regulation ("GDPR") - The Committee considered the impact of this EU directive and engaged with the Company's service providers to ensure compliance.

· The Committee reviewed the corporate governance arrangements for its Luxembourg subsidiary.

· The Committee considered the risks arising from the proposed rollover of investment from Carador Income Fund plc to the Company.

Risk Monitoring

Being internally managed, the Company is responsible for both portfolio and risk management. However, due to the nature of the investment and the limited ability to look through, traditional market and credit risk techniques do not apply at the Company level.

Investment risk management and monitoring, to ensure the successful pursuance of our investment objective, is therefore mainly through the Company's monthly NAV reporting process and the monitoring of investment restrictions and eligibility criteria as carried out by our Depositary.

This year, members of the Risk Committee conducted a due diligence visit to DFME in Dublin and reviewed key aspects of the DFME compliance and risk management framework.

Risk Register and Risk Appetite Statement

At the end of the year under review the Risk Committee recommended a new risk management framework to the Board to govern how the Committee and/or Board identifies existing and emerging risks; determines risk appetite; identifies mitigation and controls; assesses, monitors and measures risk, and reports on risks.

Principal Risks and Uncertainties

In conjunction with the new risk management framework, the Board conducted a fresh exercise to identify the risks of the Company, including those which the directors consider to be emerging risks. The Board identified fifteen main risks which have a higher probability of occurring and a significant potential impact on the performance, strategy, reputation or operations of the Company. Of these, four are identified above as the principal risks faced by the Company where the combination of probability and impact is assessed as being most significant.

Another thirteen less significant risks were identified to keep under review on a watch list.

Conclusion

The development of the new risk management framework of the Company will be continued through 2019.

Steven Wilderspin

Risk Committee Chair

30 April 2019

Directors' Remuneration Report

The Company's auditor has not audited any of the disclosures provided in this Directors' Remuneration Report.

Directors' Remuneration

This report provides relevant information in respect of the Directors' remuneration.

The tables below outline the remuneration the Directors were entitled to during the year ended 31 December 2018 for their services. They reflect the increase in Directors' fees which was effective 1 July 2018.

The Chairs of the Management Engagement Committee, NAV Review Committee, Remuneration and Nomination Committee, Audit Committee and Risk Committee each received additional fees, which are included in the amounts above, for the additional responsibilities and time commitment required in undertaking these roles. Additionally, the Senior Independent Director received additional fees for the additional responsibilities and time commitment required in undertaking this role.

Directors' remuneration is payable in Sterling quarterly in arrears. No other remuneration or compensation was paid or is payable by the Company during the year to any of the Directors. There has been no change to the Company's remuneration policy as detailed below.

The Company has no employees, accordingly, there is no difference in policy on the remuneration of Directors and the remuneration of employees. No Director is entitled to receive any remuneration which is performance-related.

In reviewing the Directors' remuneration, the Remuneration Committee consulted with Mercer, as an independent remuneration consultant, and considered the following:

· the time commitment and skills required of the Directors;

· the additional responsibilities and the time commitment for additional roles;

· the remuneration set by similar companies; and

· the level of remuneration required to attract and retain Directors of suitable calibre.

Mercer has no connection with the Company.

Remuneration Policy

Directors' fees are determined by the Remuneration and Nomination Committee under the terms of the remuneration policy (the "Remuneration Policy") approved on 16 April 2015, as derived from the Company's Articles of Association. The Remuneration and Nomination Committee also considers the remuneration levels of similar companies and consults external remuneration consultants where it deems this appropriate

The Remuneration and Nomination Committee, consisting of all five Directors, is involved in deciding Directors' remuneration and ensuring that remuneration received reflects their duties, responsibilities and the value of the Directors' time.

The Company does not provide pensions or other retirement or superannuation benefits, death or disability benefits, or other allowances or gratuities to the Directors or specified connected parties. The Remuneration Policy also prohibits payments to a Director for loss of office or as consideration for, or in connection with, his or her retirement from office. Whilst the Remuneration Policy permits part of their fee to be paid in the form of fully-paid up shares in the capital of the Company, the Directors' fees are not currently paid this way.

In addition, the Remuneration Policy allows for reasonable travel, hotel and other expenses incurred by the Directors in the course of performing their duties or from their performance of a special service on behalf of the Company.

The limit for the aggregate fees payable to the Directors is £300,000 per annum.

Directors' Interests

The Directors held the following number of Euro Ordinary shares in the Company as at the year end and the date these financial statements were approved:

The Directors held the following number of C shares in the Company upon issuance of the C Shares on

7 January 2019 and as at the date these financial statements were approved:

Service Contracts and Policy on Payment of Loss of Office

No Director has a service contract with the Company. The Directors have each entered into a letter of engagement with the Company setting out the terms of their appointment. Directors' appointments may be terminated at any time by giving three month's written notice, with no compensation payable upon leaving office for whatever reason.

Gary ClarkRemuneration and Nomination Committee Chair30 April 2019

Audit Committee Report

Audit Committee

The Audit Committee comprises Heather MacCallum, Steven Wilderspin and Gary Clark and is chaired by Heather MacCallum. Ms MacCallum has recent and relevant financial experience in accounting and auditing, and the Audit Committee as a whole has competence relevant to the sector in which the Company operates.

In addition to formal meetings, the Audit Committee has worked with the Portfolio Adviser and Auditor to assess the operations and controls of BGCF and to assess in particular what reliance the Audit Committee can place on the control environment. The Chair has also had a number of discussions with the Auditor, the Portfolio Adviser and the Administrator around the annual audit process.

Role of the Audit Committee

The function of the Audit Committee is to ensure that the Company maintains high standards of integrity, financial reporting and internal controls.

The Audit Committee's main roles and responsibilities include, but are not limited to, the following:

· monitoring the integrity of the financial statements and any formal announcements relating to the Company's financial performance;

· reviewing and reporting to the Board on any significant financial reporting issues and judgements;

· reviewing and monitoring the effectiveness of the Company's risk management and internal control arrangements;

· monitoring the statutory audit of the annual financial statements of the Company and its effectiveness;

· reviewing the external auditor's performance, independence and objectivity;

· making recommendations to the Board in relation to the appointment, reappointment and/or removal of the external auditor, the approval of the external auditor's remuneration and the terms of the engagement;

· implementing policies surrounding the engagement of the external auditor to supply non-audit services, where appropriate;

· reviewing and challenging where necessary significant accounting policies and practices; and

· reporting to the Board on how it has discharged its responsibilities.

How the Audit Committee Has Discharged Its Responsibilities

The Audit Committee met five times during the year. Representatives of the Company's Auditor and the Administrator were invited to the meetings as appropriate.

Monitoring the Integrity of the Financial Statements Including Significant Judgements

We reviewed the Company's 2018 Half Yearly and Annual Reports prior to discussion and approval by the Board, and the significant financial reporting issues and judgements which they contain and reviewed the external auditor's reports thereon. We reviewed the appropriateness of the Company's accounting principles and policies, and monitored changes to, and compliance with, accounting standards on an ongoing basis.

After the year end we had further meetings and we reviewed, prior to making any recommendations to the Board, the Annual Report and Audited Financial Statements for the year ended 31 December 2018. In undertaking this review, we discussed with the Auditor, the Portfolio Adviser and the Administrator the critical accounting policies and judgements that have been applied.

The Auditor reported to the Committee on any misstatements that they had found during the course of their work and confirmed that under ISA (UK) no material amounts remained unadjusted.

As requested by the Board, we also reviewed the Annual Report and are able to confirm to the Board that, in our view, the Annual Report, taken as a whole, is fair, balanced and understandable and provided the information necessary for Shareholders to assess the Company's position, performance, business model and strategy.

Significant Accounting Matters

During the year the Committee considered key accounting issues, matters and judgements regarding the Company's financial statements and disclosures including those relating to:

Assessment of Risks and Uncertainties

The risks associated with the Company's financial instruments, as disclosed in the financial statements, particularly in Note 10, represent a key accounting disclosure. The Audit Committee and the Risk Committee critically review, on the basis of input from the service providers, the process of ongoing identification and measurement of these risks disclosures.

Other Matters

During the year, the Committee considered compliance with relevant legislation, performance metrics and related disclosures in the Company's financial statements, and revisions to the UK Code.

Risk Management and Internal Controls

The Board as a whole is responsible for the Company's system of internal controls; however, the Audit Committee assists the Board in meeting its obligations in this regard. The daily operational activities of the Company were delegated to the service providers and as a result the Company has no direct internal audit function and instead places reliance on the external and internal audit controls applicable to the service providers as regulated entities. However, the Audit Committee reviews periodic reports from the service providers to ensure that no material issues have arisen in respect of the system of internal controls and risk management operated within the Company's service providers. The Committee confirms that this is an ongoing process in order to manage the risks faced by the Company. We deem that, to date, there are no significant issues in this area which need to be brought to your attention.

External Audit

It is the responsibility of the Audit Committee to monitor the performance, independence, objectivity and re-appointment of the Auditor. The Audit Committee met with Deloitte LLP ("Deloitte") to consider the audit strategy and plan for the audit. The audit plan for the reporting period was reviewed, including consideration of the key financial statement and audit risks, to seek to ensure that the audit was appropriately focused.

The Auditor attends the Audit Committee meetings throughout the year, which allows the opportunity to discuss any matters the auditor may wish to raise without the Portfolio Adviser or other service providers being present. Deloitte provides feedback at each Audit Committee meeting on topics such as the key accounting matters, mandatory communications and the control environment. The Audit Committee also discusses the performance of the Auditor independently of the Auditor.

Deloitte was formally appointed as the Company's auditor for the 2014 period end audit following a competitive tender process during 2014. The lead audit partner is rotated every five years to ensure continued independence and objectivity and consequently a new lead audit partner will be in place for the interim review to 30 June 2019 and subsequent year-end audit.

The Audit Committee continues to be satisfied with the performance of the Auditor. We have therefore recommended to the Board that the Auditor, in accordance with agreed terms of engagement and remuneration, should continue as the Company's auditor at the forthcoming Annual General Meeting. Accordingly a resolution proposing the reappointment of Deloitte as the Company's auditor will be put to the Shareholders at the 2019 AGM.

In advance of the commencement of the annual audit, the Audit Committee reviewed a statement provided by the Auditor confirming their independence within the meaning of the regulations and professional standards. In addition, in order to satisfy itself as to the Auditor's independence, the Audit Committee undertook a review of the Auditor's compensation and the balance between audit and non-audit fees.

During 2019, the Audit Committee reviewed its policy with respect to non-audit services to ensure it continued to align with best practice.

The Audit Committee has agreed the types of permitted and non-permitted ongoing non-audit services and those which require explicit prior approval. During the year, Deloitte were contracted to provide services related to the interim financial statements, US tax compliance and the Rollover Offer. The value of non-audit services (US tax compliance) provided by Deloitte and charged in the period amounted to approximately €38,158. In addition, the Company incurred €83,561 in respect of audit related services (Reporting Accountant services) in connection with the Rollover Offer. The overall quantum of non-audit services and the one-off fees incurred for Deloitte's work in 2018 in these roles is material to the overall audit fee. This has been considered, including the role of the respective engagement teams and the independence of individuals from the audit engagement team, and the Audit Committee is satisfied that the auditor has acted in an independent and professional manner.

Heather MacCallumAudit Committee Chair30 April 2019

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Report and Audited Financial Statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with IFRS, as adopted by the EU. 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 the affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, International Accounting Standard 1 requires that Directors:

· properly select and apply accounting policies;

· present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable;

· provide additional disclosures when compliance with the specific requirements in IFRS as adopted by the EU are 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

· make an assessment of the Company's ability to continue as a going concern.

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 (Jersey) Law 1991. 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 responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors confirms that, to the best of that Director's knowledge and belief:

· the financial statements, prepared in accordance with IFRS as adopted by the EU, give a true and fair view of the assets, liabilities and financial position of the Company as at 31 December 2018, and its profit for the year then ended;

· the Strategic Report and the Directors' Report include a fair review of the information required by the Disclosure Guidance and Transparency Rules ("DTR") 4.1.8 (indication of important events up to

31 December 2018 and a description of principal risks and uncertainties);

· the Strategic Report and the Directors' Report include a fair review of the information required by DTR 4.1.9 and 4.1.10 (analysis of the development and performance of the Company aided by the use of key performance indicators; and, where appropriate, information relating to environmental factors);

· the Strategic Report and the Directors' Report include a fair review of the information required by DTR 4.1.11 (disclosure of important events that have occurred after 31 December 2018; future developments; financial risk management objectives and policies and Company exposure to price, credit, liquidly and cash flow risk); and

· the annual report and audited financial statements, taken as a whole, provide the information necessary to assess the Company's performance, position, business model and strategy and are fair, balanced and understandable.

Independent Auditor's Report to the Shareholders of Blackstone / GSO Loan Financing Limited

Report on the audit of the financial statements

Report on other legal and regulatory requirements

Andrew Isham, FCA

For and on behalf of Deloitte LLP

Recognized Auditor

St Helier

Jersey, UK

30 April 2019

Statement of Financial Position

These financial statements were authorised and approved for issue by the Directors on 30 April 2019 and signed on their behalf by:

The accompanying notes form an integral part of the financial statements.

Statement of Comprehensive Income

The Company has no items of other comprehensive income, and therefore the loss for the year is also the total comprehensive loss.

All items in the above statement are derived from continuing operations. No operations were acquired or discontinued during the year.

The accompanying notes form an integral part of the financial statements.

Statement of Changes in Equity

The accompanying notes form an integral part of the financial statements.

Statement of Cash Flows

The accompanying notes form an integral part of the financial statements.

Notes to the Financial Statements

1 General information

The Company is a closed-ended limited liability investment company domiciled and incorporated under the laws of Jersey with variable capital pursuant to the Collective Investment Funds (Jersey) Law 1988. It was incorporated on 30 April 2014 under registration number 115628. The Company's Euro Ordinary shares are quoted on the Premium Segment of the Main Market of the LSE and has a premium listing on the Official List of the FCA.

The Company's investment objective is to provide Shareholders with stable and growing income returns, and to grow the capital value of the investment portfolio by exposure to floating rate senior secured loans and bonds directly and indirectly through CLO Securities and investments in Loan Warehouses. The Company seeks to achieve its investment objective through exposure (directly or indirectly) to one or more companies or entities established from time to time.

At 31 December 2018, all shares in issue were Euro Ordinary shares. The Company may issue one or more additional classes of shares in accordance with the Articles of Association.

The Company has a wholly owned Luxemburg subsidiary, Blackstone / GSO Loan Financing (Luxembourg) S.à r.l., which has an issued share capital of 2,000,000 Class A shares and 1 Class B share held by the Company. The Company also holds 291,343,213 Class B CSWs issued by the Lux Subsidiary.

The Company's registered address is IFC 1, The Esplanade, St Helier, Jersey, JE1 4BP, Channel Islands.

2 Significant accounting policies

The Annual Report and Audited Financial Statements (the "Annual Report") are prepared in accordance with the Disclosure Guidance and Transparency Rules of the FCA and with IFRS as adopted by the EU. The financial statements give a true and fair view of the Company's affairs and comply with the requirements of the Companies (Jersey) Law 1991.

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been applied consistently to all years presented except for the adoption of new and amended standards as set out below.

The Company's financial statements have been prepared on a historical cost basis, except for financial instruments measured at fair value through profit or loss.

The Company's functional currency is the Euro, which is the currency of the primary economic environment in which it operates. The Company's performance is evaluated and its liquidity is managed in Euros. Therefore, the Euro is considered as the currency that most faithfully represents the economic effects of the underlying transactions, events and conditions. The financial statements are presented in Euros, except where otherwise indicated.

The financial statements have been prepared on the going concern basis. The disclosures with respect to the Directors' assessment on the use of the going concern basis are provided in the "Strategic Report - Risk Overview" section.

A number of new and amended standards became applicable for the current reporting period and the Company changed its accounting policies as a result of adopting the following standard:

· IFRS 9 Financial Instruments

The impact of the adoption of this standard and the new accounting policy is disclosed in note 2.5 below. Other standards, amendments and interpretations issued and effective for the financial year beginning 1 January 2018, including IFRS 15 Revenue from Contracts with Customers, did not have any impact on the Company's accounting policies.

There are no standards, amendments and interpretations which have been issued but are not yet effective and not early adopted, that will affect the Company's financial statements.

This note explains the impact of the adoption of IFRS 9 Financial Instruments on the Company's financial statements and also discloses the new accounting policy that has been applied from 1 January 2018.

(a) Impact on the financial statements

The adoption of IFRS 9 did not result in a change to the recognition, classification or measurement of financial instruments held by the Company in either the current or prior financial reporting period.

(b) IFRS 9 Financial Instruments - Impact of adoption

IFRS 9 replaces the provisions of IAS 39 that relate to recognition, classification and measurement of financial assets and financial liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting. The adoption of IFRS 9 Financial Instruments from 1 January 2018 resulted in changes in accounting policies. The new accounting policies are set out below. In accordance with the transitional provisions in IFRS 9 (7.2.15), comparative figures have not been restated.

Classification and measurement

On 1 January 2018 (the date of initial application of IFRS 9), the Board has assessed which business models apply to the financial assets held by the Company and has classified its financial instruments into the appropriate IFRS 9 categories.

Cash Settlement Warrants

Under IAS 39, CSWs were classified as financial assets designated at fair value through profit or loss. This is due to the fact that these debt instruments are managed, and their performance is evaluated on a fair value basis in accordance with the Company's documented investment strategy. Under IFRS 9 and the current business model, these debt instruments are classified as financial assets at fair value through profit or loss. There was no impact on the amounts recognised in the Statement of Financial Position in relation to these assets from the adoption of IFRS 9.

Shares (Class A and Class B shares held in the Lux Subsidiary)

Under IAS 39, the shares were classified as financial assets at fair value through profit or loss. Under IFRS 9, equity investments are required to be held at fair value through profit or loss. There was therefore no impact on the amounts recognised in relation to these assets from the adoption of IFRS 9.

 (c) IFRS 9 Financial Instruments - Accounting policies applied from 1 January 2018

Investments and other financial assets

(i) Initial recognition

The Company recognises a financial asset or a financial liability in its Statement of Financial Position when, and only when, the Company becomes party to the contractual provisions of the instrument.

Purchases and sales of investments are recognised on the trade date - the date on which the Company commits to purchase or sell the investment.

(ii) Classification

From 1 January 2018, the Company classifies its financial assets in the following measurement categories:

· those to be measured subsequently at fair value (either through OCI, or through profit or loss); and

· those to be measured at amortised cost.

The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses are either to be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the company has made an irrevocable election at the time of initial recognition to account for the equity instrument at FVOCI.

The Company reclassifies debt instruments when and only when its business model for managing those assets changes.

(iii) Measurement

At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at FVPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

Debt instruments

Subsequent measurement of debt instruments depends on the Company's business model for managing the asset and the cash flow characteristics of the asset. The Company's business model is to manage its debt instruments and to evaluate their performance on a fair value basis. The Company's policy requires the Portfolio Adviser and the Board to evaluate the information about these financial assets on a fair value basis together with other related financial information. Consequently, these debt instruments are measured at fair value through profit or loss.

Equity instruments

The Company subsequently measures all equity investments at fair value. Dividends from such investments are recognised in profit or loss as other income when the Company's right to receive payments is established, a requirement which remains unchanged from IAS 39.

Changes in fair value of financial assets at FVPL are recognised in "net gain / (loss) on financial assets at fair value through profit or loss" in the Statement of Comprehensive Income.

(iv) Derecognition

Financial assets are derecognised when the rights to receive cash flows from the investments have expired or the Company has transferred substantially all risks and rewards of ownership.

(v) Fair value estimation

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

As at 31 December 2018, the Company held 291,343,213 CSWs, 2,000,000 Class A shares and 1 Class B share issued by the Lux Subsidiary (the "Investments") (31 December 2017: 337,374,822 CSWs, 2,000,000 Class A shares and 1 Class B share). These Investments are not listed or quoted on any securities exchange, are not traded regularly and, on this basis, no active market exists. The Company is not entitled to any voting rights in respect of the Lux Subsidiary by reason of their ownership of the CSWs, however, the Company controls the Lux Subsidiary through its 100% holding of the shares in the Lux Subsidiary.

The fair value of the CSWs and the Class A and Class B shares are based on the net assets of the Lux Subsidiary which is based substantially in turn on the fair value of the PPNs issued by BGCF.

(vi) Valuation process

The Directors have held discussions with DFME in order to gain comfort around the valuation of the underlying assets in the BGCF portfolio and through this, the valuation of the PPNs and CSWs as of the Statement of Financial Position date.

The Directors, through ongoing communication with the Portfolio Adviser including quarterly meetings, discuss the performance of the Portfolio Adviser and the underlying portfolio and in addition review monthly investment performance reports. The Directors analyse the mix in the portfolio. The Directors also consider the impact of general credit conditions and more specifically credit events in the US and European corporate environment on the valuation of the CSWs, PPNs and the BGCF portfolio.

The Directors discuss BGCF's valuation process to understand the methodology regarding the valuation of its underlying portfolio comprising Level 3 assets. The majority of Level 3 assets in BGCF are comprised of CLOs. In reviewing the fair value of these assets, the Directors look at the assumptions used and any significant fair value changes during the period under analysis.

The Investments are valued by the Administrator based on information from the Portfolio Adviser and are reviewed and approved by the Directors, taking into consideration a range of factors including the unaudited IFRS NAV of both the Lux Subsidiary and BGCF, and other relevant available information. The other relevant information includes the review of available financial and trading information of BGCF and its underlying portfolio, advice received from the Portfolio Adviser and such other factors as the Directors, in their sole discretion, deem relevant in considering a positive or negative adjustment to the valuation.

The estimated fair values may differ from the values that would have been realised had a ready market existed and the difference could be material.

The fair value of the CSWs and the Class A and Class B shares are assessed on an ongoing basis by the Board.

Financial liabilities

(vii) Classification

Financial liabilities include payables which are held at amortised cost using the effective interest rate method.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or where appropriate a shorter period, to the net carrying amount on initial recognition.

(viii) Recognition, measurement and derecognition

Financial liabilities are measured initially at their fair value plus any directly attributable incremental costs of acquisition or issue.

Gains and losses are recognised in the Statement of Comprehensive Income when the liabilities are derecognised.

The Company derecognises a financial liability when the obligation specified in the contract is discharged, cancelled or expires.

Interest income and expense is recognised separately through profit or loss in the Statement of Comprehensive Income, on an effective interest rate yield basis.

The shares of the Company are classified as equity, based on the substance of the contractual arrangements and in accordance with the definition of equity instruments under IAS 32 Financial Instruments: Presentation ("IAS 32").

The proceeds from the issue of shares are recognised in the Statement of Changes in Equity, net of the incremental issuance costs.

Expenses are charged through profit or loss in the Statement of Comprehensive Income on an accruals basis.

Cash comprises current deposits with banks.

Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. They are held for the purpose of meeting short term cash commitments rather than for investment or other purposes. Cash equivalents are revalued at the end of the reporting period using market rates and any increases / decreases are recognised in the Statement of Comprehensive Income. There were no such holdings during the year ended 31 December 2018 (31 December 2017: €Nil).

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the Statement of Financial Position date are translated to Euro at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the Statement of Comprehensive Income.

Foreign currency gains and losses are included in profit or loss on the Statement of Comprehensive Income as part of the "Realised gain on foreign exchange". There were no foreign currency gains or losses on financial assets classified at fair value through profit or loss for the years ended 31 December 2018 and 31 December 2017.

Profit arising in the Company for the 2018 year of assessment will be subject to Jersey tax at the standard corporate income tax rate of 0% (31 December 2017: 0%).

Dividends to Shareholders are recorded through the Statement of Changes in Equity when they are declared to Shareholders.

The preparation of the financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect items reported in the Statement of Financial Position and Statement of Comprehensive Income. It also requires management to exercise its judgement in the process of applying the Company's accounting policies. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets and liabilities affected in future periods.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

(a) Fair value

For the fair value of all financial instruments held, the Company determines fair values using appropriate techniques.

Refer to Note 2.5 and Note 12 for further details on the significant estimates applied in the valuation of the companies' financial instruments and the underlying financial instruments in BGCF.

(b) Non-consolidation of the Lux Subsidiary

The Company meets the definition of an Investment Entity as defined by IFRS 10 and is required to account for its investment at fair value through profit or loss.

The Company has multiple unrelated investors and holds multiple investments in the Lux Subsidiary. The Company has been deemed to meet the definition of an Investment Entity per IFRS 10 as the following conditions exist:

· the Company has obtained funds for the purpose of providing investors with investment management services;

· the Company's business purpose, which has been communicated directly to investors, is investing solely for returns from capital appreciation, investment income, or both; and

· the performance of investments made through the Lux Subsidiary are measured and evaluated on a fair value basis.

The Company has also considered the typical characteristics of an investment entity per IFRS 10 in assessing whether it meets the definition of an Investment Entity.

The Company controls the Lux Subsidiary through its 100% holding of the voting rights and ownership. The Lux Subsidiary is incorporated in Luxembourg.

Refer to Note 11 for further disclosures relating to the Company's interest in the Lux Subsidiary.

(c) Non-consolidation of BGCF

To determine control, there has to be a linkage between power and the exposure to risks and rewards. The main link from ownership would allow a company to control the payments of returns and operating policies and decisions of a subsidiary. To meet the definition of a subsidiary under the single control model of IFRS 10, the investor has to control the investee.

 Control involves power, exposure to variability of returns and a linkage between the two:

· the investor has existing rights that give it the ability to direct the relevant activities that significantly affect the investee's returns;

· the investor has exposure or rights to variable returns from its involvement with the investee; and

· the investor has the ability to use its power over the investee to affect the amount of the investor's returns.

In the case of BGCF, the relevant activities are the investment decisions made by it. However, in the Lux Subsidiary's case, the power to influence or direct the relevant activities of BGCF is not attributable to the Lux Subsidiary. The Lux Subsidiary does not have the ability to direct or stop investments by BGCF; therefore, it does not have the ability to control the variability of returns. Accordingly, BGCF has been determined not to be a subsidiary undertaking as defined under IFRS 10 and the Lux Subsidiary's investment in the PPNs issued by BGCF are accounted for at fair value through profit or loss.

(d) Presentation and functional currency

As outlined in Note 2.2, the Directors have used their judgement to determine that the Company's presentation and functional currency is Euro.

3 Operating expenses

Under the administration agreement, the Administrator is entitled to receive variable fees based on the Published NAV of the Company for the provision of administrative and compliance oversight services and a fixed fee for the provision of company secretarial services. The overall charge for the above-mentioned fees for the Company for the year ended 31 December 2018 was €323,379 (31 December 2017: €321,102) and the amount due at 31 December 2018 was €47,573 (31 December 2017: €49,273).

The Company incurred €38,158 (31 December 2017: €85,375) in non-audit fees during the year of which €Nil (31 December 2017: €Nil) was outstanding at the year end. The table below outlines the audit, audit related and non-audit services received during the year.

4 Directors' fees and interests

The Directors were remunerated for their services per the table below:

The Chairs of the Management Engagement Committee, NAV Review Committee, Remuneration and Nomination Committee, Audit Committee and Risk Committee each received additional fees, which were included in the amounts above, for the additional responsibilities and time commitment required in undertaking these roles. Additionally, the Senior Independent Director received additional fees for the additional responsibilities and time commitment required in undertaking this role.

The Company has no employees. The Company incurred €209,140 (31 December 2017: €201,218) in Directors' fees (consisting exclusively of short-term benefits) during the year of which €54,593 (31 December 2017: €47,316) was outstanding at the year end. Charlotte Valeur, Steven Wilderspin and Gary Clark held beneficial interests in the shares of the Company during the year ended 31 December 2018. Charlotte Valeur held 11,500 Euro shares as at 31 December 2018 (31 December 2017: 11,500). Steven Wilderspin held 20,000 Euro shares as at 31 December 2018 (31 December 2017: Nil). Gary Clark held 73,700 Euro shares as at 31 December 2018 (31 December 2017: 73,700).

No pension contributions were payable in respect of any of the Directors.

5 Other receivables