Blackrock Fr Regulatory News (BRFI)

BlackRock Frontiers Investment Trust Plc - Half-year Report

PR Newswire

London, May 28

BLACKROCK FRONTIERS INVESTMENT TRUST PLC

LEI: 5493003K5E043LHLO706 - Article 5 Transparency Directive, DTR 4.2

HALF YEARLY FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 MARCH 2019

PERFORMANCE RECORD

FINANCIAL HIGHLIGHTS

1 The change in net assets reflects shares issued in the period, proceeds from the C share issue and market movements.2 Based on an exchange rate of US$1.3031 to £1 at 31 March 2019 and US$1.3041 to £1 at 30 September 2018.

3 The Company was incorporated on 15 October 2010 and its shares were admitted to trading on the London Stock Exchange on 17 December 2010.4 Alternative Performance Measures, see Glossary contained within the Half Yearly Financial Report.5 With effect from 1 April 2018, the Benchmark Index changed to the MSCI Emerging Markets Index ex Selected Countries + MSCI Frontier Markets Index + MSCI Saudi Arabia Index. Prior to 1 April 2018, the Benchmark Index was the MSCI Frontier Markets Index. The performance of the Benchmark Index during the prior year has been blended to reflect this change.6 Net return (NR) indices calculate the reinvestment of dividends net of withholding taxes using the tax rates applicable to non-resident institutional investors.

Source: BlackRock.

CHAIRMAN’S STATEMENT FOR THE SIX MONTHS TO 31 MARCH 2019

Dear Shareholder

I am pleased to present the Company’s half-yearly financial report for the six months to 31 March 2019.

PERIOD HIGHLIGHTS

Interim dividend of 3.00 US cents per share;

Yield of 4.3% (based on share price at 28 May 2019, interim dividend for 2019 and final dividend for 2018);

NAV total return of +2.0% (in US Dollar terms with dividends reinvested);

Share price total return of -2.0% (in US Dollar terms with dividends reinvested);

6,150,000 new ordinary shares issued via tap issuance; and

PERFORMANCE AND OVERVIEWDuring the six months to 31 March 2019 the Company generated a NAV total return in US Dollars of +2.0%; its Benchmark Index returned +3.4%. The Company’s share price total return was -2.0%. By comparison, the Company’s previous Benchmark Index, the MSCI Frontier Markets Index, returned +2.2% and the MSCI Emerging Markets Index returned +1.7%. The Company’s investment objective is to achieve long-term capital growth. Since launch in December 2010, the Company’s NAV total return has been +51.7%, compared to the Benchmark Index total return of +40.5% (in US Dollar terms with dividends reinvested). For Sterling based investors the NAV total return has been +81.0% since launch versus the Benchmark Index total return of +66.8% (in Sterling terms with dividends reinvested).

Although the period under review was characterised by considerable volatility, your Company has generated a positive absolute NAV return over the past six months. A sell-off in frontier markets occurred in Q4 of 2018 resulting in a significant fall in valuations. However, the markets gained some ground back in Q1 of 2019. A slow-down in global economic growth and a tightening of global liquidity acted as headwinds to frontier market performance during 2018 and ongoing geo-political tensions also added to volatility. To date, 2019 appears to be a more benign environment for frontier market investing, with signs that the upward pressure on US interest rates has begun to reduce.

A full description of the key contributors and detractors to performance during the period, portfolio activity and the investment managers’ views on the outlook for the second half of the year are set out in their report which follows.

REVENUE RETURN AND DIVIDENDSThe Company’s revenue return per share for the six months ended 31 March 2019 amounted to 3.19 US cents (2018: 2.27 US cents). The Board is pleased to declare an interim dividend of 3.00 US cents per share (2018: 3.00 US cents per share) payable on 28 June 2019 to shareholders on the Company’s register on 7 June 2019. The shares will go ex-dividend on 6 June 2019. The final dividend of 4.40 US cents per share for the year ended 30 September 2018 was declared on 10 December 2018 and paid to shareholders on 7 February 2019. The Company also declared a special dividend of 1.00 US cent at this time reflecting additional non-recurring income received during that financial year and ahead of the C share conversion.

SHARE CAPITALThe Directors recognise the benefit of ensuring that the Company’s share price remains close to its underlying Net Asset Value (NAV). Accordingly, the Directors monitor the share price closely and will consider the issue at a premium or repurchase at a discount of ordinary shares to balance demand and supply in the market. For the period under review, the Company’s ordinary shares have traded at an average premium to NAV of 2.6%, and were trading at a premium of 1.1% on a cum-income basis at 28 May 2019. The Directors currently have the authority to buy back an amount of shares in the market equivalent to 14.99% of the Company’s issued share capital and also to issue new shares equivalent to 10% of the Company’s issued share capital (excluding any shares held in treasury).

In response to demand for its shares the Company has issued 6,150,000 new ordinary shares during the period for a gross total consideration of US$10,845,000. The new shares were issued at a premium to the prevailing NAV and were therefore accretive to the Company’s NAV. The Board believes that the issue of new shares by the Company – where demand cannot be met in the market – helps to regulate the share price premium/discount to NAV and the economies of scale achieved through the enlargement of the Company are beneficial to shareholders. Since the period end and up to the date of this report, the Company has issued no further new ordinary shares. No shares were bought back in the period under review or up to the date of this report.

C SHARE ISSUEFollowing shareholder approval in a General Meeting, the Company issued 44,927,580 C shares with a nominal value of 10 cents each on 27 November 2018, the majority of which were issued in connection with the reconstruction of BlackRock Emerging Europe plc. The C shares were subsequently converted into ordinary shares on 11 January 2019 in accordance with the terms of the C share Prospectus and Circular. The C share issue raised US$57,010,000, which consisted of cash and other assets transferred under the rollover option in connection with the scheme of reconstruction of BlackRock Emerging Europe plc and proceeds received from the placing and offer for subscription. These assets were invested in accordance with the Company’s existing investment policy. Please see note 11 for further information.

OUTLOOKYour Board believes that the Company’s frontier market universe continues to represent a compelling proposition for the medium to long-term investor. These markets generally exhibit superior gross domestic product (GDP) growth to developed markets and obtaining exposure to them through a diversified portfolio significantly reduces the volatility inherent in the individual markets themselves, as demonstrated by the table below. The volatility of the Company’s returns has been surprisingly low thanks to the low correlation between different frontier markets, which tend to be driven by internal developments and domestic investor flows. Since launch in December 2010, the volatility of the Company’s NAV has been lower than that of major indices, such as S&P 500 Index, FTSE All-Share Index and MSCI Emerging Markets Index.

BLACKROCK FRONTIERS INVESTMENT TRUST: SURPRISINGLY LOW VOLATILITY

The figures shown relate to past performance. Past performance is not a reliable indicator of future results and should not be the sole factor of consideration when selecting a product or strategy.

Source: Bloomberg, MSCI, as at end February 2019. Volatility of weekly returns since 17 December 2010, inception date of the Company.

The Board also believes that the Company’s revised investment policy provides the investment managers with a more sustainable investment universe within which they can take best advantage of the opportunities available outside the developed and major emerging markets. The Board remains confident that the investment managers possess the potential to maintain their strong track record of outperformance over the long run, having extensive resources deployed to these inefficient markets, and the local market knowledge required to manage this dynamic and exciting asset class. Furthermore, the strong underlying cash flows and high dividend yields of companies in the Frontiers Universe, combined with historically low valuations, especially when compared to developed markets, present a unique and compelling investment opportunity.

AUDLEY TWISTON-DAVIESChairman30 May 2019

INVESTMENT MANAGER’S REPORT

PORTFOLIO & MARKET COMMENTARYIn the six months ended 31 March 2019, the Company returned +2.0% (on a US Dollar basis with dividends reinvested) versus its Benchmark Index which returned +3.4%. Over this time period, the MSCI Emerging Markets Index rose by 1.7% and the MSCI Frontier Markets Index rose by 2.2%. Since inception the Company has returned +51.7%, compared to the +40.5% return of its Benchmark Index and the +25.2% return of the MSCI Frontier Markets Index, while MSCI Emerging Markets Index lagged returning +16.1%.

Indonesia (+14.0%) was the best performing market in the frontiers universe as its currency benefitted from a weaker US Dollar given softening signals from the Federal Reserve of a pause in the rate hiking cycle. Our positions in Semen Indonesia (building materials manufacturer), Mitra Adiperkasa (retailer) and Astra International (conglomerate) contributed well to returns over the period.

Saudi Arabia (+14.0%) rose driven by inflows to the market in anticipation of inclusion in the MSCI Emerging Markets index by MSCI, despite a falling oil price for most of the period. With the market trading at a significant premium to emerging markets on a forward price/earnings multiple of 16x, we maintain our view that the market is overly expensive and there are better opportunities elsewhere. Hence, we currently hold very little exposure to Saudi Arabia. With the market rising during the period our significant (13.0%) underweight in Saudi Arabia relative to the Benchmark Index detracted from relative performance.

Stock selection in Malaysia contributed well to returns through telecommunications company, Telekom Malaysia (+24.0%), which improved from a very low valuation and auto manufacturer, UMW (+15.0%), which delivered strong results and saw upgrades in analyst expectations.

Our holding of Acacia Mining (+66.0%), a gold mining business operating in Tanzania, added to returns on expectations of a resolution of the dispute with the Tanzanian Government following the appointment of a new CEO at Barrick Gold. The company also reported strong operating results. We have since fully exited our position.

Greek banks, National Bank of Greece and Alpha Bank, were both strong contributors to performance during Q1 of 2019 as they rallied amid increased expectations of an agreed solution for the reduction of outstanding non-performing loan exposures and a sovereign debt upgrade.

Participation in the initial public offering of Kazakh uranium company, Kazatomprom (+23.0%), benefited the Company. Kazatomprom holds the world’s largest uranium reserves, accounting for 23.0% of total global uranium production and is one of the world’s lowest cost producers.

Our position in United Arab Emirates (UAE) property company, Emaar Development (-21.0%), detracted from returns. Whilst the outlook for the Dubai property market remains muted, we feel that investors have overly discounted this for what remains the country’s most prestigious developer and that the stock looks relatively cheap, hence we continue to hold it.

Our holding in Turkish gold mining company, Koza Altin (-27.0%), detracted from returns as the stock declined in line with the rest of the market, despite strong operating performance. As an exporter, the company should benefit operationally from the recent decline in the Turkish Lira.

An overweight position in Romanian financials, BRD Groupe Société Générale (-10.0%) and Banca Transilvania (-14.0%), weighed on performance due to the announcement of potential adverse tax policy developments in early December 2018. These measures were actually reversed in early 2019 and the stocks have now recovered the majority of their underperformance.

PORTFOLIO ACTIVITYIn terms of positioning, we reduced exposure to Saudi Arabia amid expensive valuations, which have not been reflecting the lower oil price environment. We exited Thai petrochemical company, Indorama, on concern over weakening demand trends across developed markets. We also initiated a position in drinks company, Thai Beverage, which should benefit from a pickup in activity in Thailand. The stock trades at an attractive valuation relative to the Thai market and the market has heavily discounted the valuation of its acquisition of Sabeco, Vietnam’s leading beer company. We allocated more capital to one of our most preferred countries, Indonesia, by initiating a position in Semen Indonesia where we see operating profit accelerating above expectations. The Company continued to increase its exposure to Egypt by adding to medical diagnostic services operator, Integrated Diagnostics, and real estate developer, Medinet Nasr, on the back of improvements in the economy’s fiscal health, inflation that looks to have peaked and a more sustainable current account deficit. We added more exposure to Vietnam which we think will benefit from greater manufacturing outsourcing from China. We also bought copper miner, Kaz Minerals, in Kazakhstan where we see an underappreciation of their high quality assets and flexibility on capital expenditure spending which should protect the balance sheet in the case of market stress. Most recently, we have reduced exposure to Greek financials post their strong first quarter rally and have also trimmed positions in Argentina.

OUTLOOKWe continue to be positive on frontier markets, especially where those markets are experiencing improved macroeconomic conditions, better political governance, cash flow growth and cheap valuations relative to peers. Furthermore, the Company has offered an attractive and growing dividend over time, despite income not featuring in its objectives, thanks to growing earnings on its underlying investments.

Dividend payments per share (GBP) – Company dividend growth has been driven by strong frontier market company fundamentals

The figures shown relate to past performance. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.

Based on interim and final dividends declared for the period (and where applicable special dividends).Source: BlackRock, end December 2018.

While emerging and frontier markets delivered strong returns in Q1 2019, indicators of market sentiment look far from overstretched. Countries in our frontiers universe offer significant value compared to developed markets and some of them have a market capitalisation equal to (or even smaller than) the market capitalisation of a single stock listed in the developed world. The market capitalisation of California-based media services provider, Netflix, is more than the market capitalisation of Greece and Turkey combined. We note that the GDP of these two economies totals more than US$1,100 billion, while the net income of Netflix is circa US$1 billion. We believe that active managers and long-term investors can find compelling opportunities in Frontier Markets, which in our opinion currently are out of favour with the majority of global investors.

We continue to position for a positive environment for emerging and frontier markets in aggregate, supported by a lower interest rate environment. Together, the wide subset of countries that make up our investible universe continue to exhibit strong GDP growth, have low government debt levels, and offer an opportunity to invest in companies with strong cash flow and high dividend yields, on some of the lowest valuations in the world. The low correlation between frontier markets and all developed and emerging markets mean that the inclusion of a frontier markets fund within a portfolio can bring significant diversification benefits.

All percentage movements are expressed in US Dollar terms.

SAM VECHT AND EMILY FLETCHERBLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED30 May 2019

INTERIM MANAGEMENT REPORT AND RESPONSIBILITY STATEMENT

The Chairman’s Statement and the Investment Manager’s Report give details of the important events which have occurred during the period and their impact on the financial statements.

PRINCIPAL RISKS AND UNCERTAINTIESA detailed explanation of the risks relating to the Company can be divided into various areas as follows:

Investment Performance Risk;

Income/Dividend Risk;

Legal & Regulatory Risk;

Operational Risk;

Counterparty Risk;

Market Risk;

Political Risk; and

The Board reported on the principal risks and uncertainties faced by the Company in the Annual Report and Financial Statements for the year ended 30 September 2018. A detailed explanation can be found in the Strategic Report on pages 20 to 23 and in note 17 on pages 67 to 80 of the Annual Report and Financial Statements which are available on the website maintained by BlackRock at: www.blackrock.co.uk/brfi.

In the view of the Board, there have not been any material changes to the fundamental nature of these risks since the previous report and these principal risks and uncertainties, as summarised, are equally applicable to the remaining six months of the financial year as they were to the six months under review.

GOING CONCERNThe Directors, having considered the nature and liquidity of the portfolio, the Company’s investment objective and the Company’s projected income and expenditure, are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future and is financially sound. For this reason, they continue to adopt the going concern basis in preparing the financial statements. The Company has a portfolio of investments which are considered to be readily realisable and is able to meet all of its liabilities from its assets and income generated from these assets. Ongoing charges (excluding any performance fees, VAT refunded, transaction charges, finance costs and taxation) were approximately 1.42% of average net assets for the year ended 30 September 2018.

RELATED PARTY DISCLOSURE AND TRANSACTIONS WITH THE AIFM AND INVESTMENT MANAGERBlackRock Fund Managers Limited (‘BFM’) is the Company’s AIFM. BFM has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services to BlackRock Investment Management (UK) Limited (‘BIM (UK)’). Both BFM and BIM (UK) are regarded as related parties under the Listing Rules. Details of the management and performance fees payable are set out in note 4 and note 14. The related party transactions with the Directors are set out in note 13.

DIRECTORS’ RESPONSIBILITY STATEMENTThe Disclosure Guidance and Transparency Rules (‘DTR’) of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Interim Management Report and Financial Statements.

The Directors confirm to the best of their knowledge that:

the condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with the International Accounting Standard 34 – Interim Financial Reporting; and

The half yearly financial report has been reviewed by the Company’s Auditors.

The half yearly financial report was approved by the Board on 30 May 2019 and the above responsibility statement was signed on its behalf by the Chairman.

AUDLEY TWISTON-DAVIESFOR AND ON BEHALF OF THE BOARD30 May 2019

TEN LARGEST INVESTMENTS1 AS AT 31 MARCH 2019

Banco Macro (Argentina, Financials, 3.6% (2018: 2.5%)) is the second largest private bank in Argentina with around 6% share of total assets in the banking system. Around 80% of the bank’s branches are located outside of the City of Buenos Aires and Province of Buenos Aires. Banco Macro is the leading bank in personal lending in Argentina with around 14% market share.

LT Group (Philippines, Industrials, 3.1% (2018: 1.8%)) is a diversified investment company that is involved in beverages, tobacco, property development, and banking businesses in the Philippines.

Vincom Retail (Vietnam, Real Estate, 3.1% (2018: 1.5%))2 is a Vietnam-based company primarily engaged in the leasing of retail outlets in its shopping malls, comprising Vincom Center, Vincom Mega Mall, Vincom Plaza and Vincom+. The company’s business activities also include the development and operation of commercial buildings, residential properties and office spaces.

Eastern Tobacco (Egypt, Consumer Staples, 2.9% (2018: 1.4%)) is an Egypt-based company, which is engaged in manufacturing tobacco products. The company’s product portfolio includes cigarettes, cigars, pipe tobacco, and molasses tobacco, as well as other related products such as cigarettes’ filter rods and homogenized tobacco.

Thai Beverage (Thailand, Consumer Staples, 2.8% (2018: 2.1%)) is Thailand’s and one of Southeast Asia’s largest beverage companies. Their business consists of three segments, namely spirits, beer and non-alcoholic beverages under more than 100 brands. The company has recently purchased Sabeco, a beer producer in Vietnam.

Emaar Properties (United Arab Emirates, Real Estate 2.8% (2018: 3.1%)) is a real estate development company located in the United Arab Emirates. The company operates internationally providing property development and management services. The company is also one of the largest real estate developers in the UAE and is known for various large-scale projects such as developing Burj Khalifa, the tallest building in the world.

Halyk Savings Bank (Kazakhstan, Financials, 2.8% (2018: 3.3%)) is one of Kazakhstan’s leading financial services groups and a leading retail bank with the largest customer base and distribution network in Kazakhstan. The company‘s branch network consists of over 600 outlets across the country, with over 1,900 ATMs.

Kaz Minerals (Kazakhstan, Materials, 2.7% (2018: Nil))2 is a copper company focused on large scale, low cost open pit mining in Kazakhstan. The company is focused on the mining of copper and the development of new copper mining projects in Kazakhstan and Russia.

Astra International (Indonesia, Consumer Discretionary, 2.7% (2018: 4.6%))3 is an Indonesian conglomerate. It owns Southeast Asia’s largest independent automotive group and is the leading provider of a full range of automobile and motor-cycle products. The company also has interests in financial services, heavy equipment, mining, construction and energy, agribusiness, infrastructure and logistics, information technology, and property. It is also an active participant in the development of Indonesia’s strategic infrastructure, including toll roads, energy, transportation and logistics and sea ports.

Zenith Bank (Nigeria, Financials, 2.7% (2018: 2.6%)) is Nigeria’s second largest bank with 350 branches in Nigeria accounting for over 10% of the country’s banking assets. The company offers a full range of retail and corporate banking services and has subsidiaries in Ghana, Gambia and Sierra Leone.

1 All percentages reflect the gross market exposure of the holding as a percentage of net assets. Percentages in brackets represent the value of the holding as at 30 September 2018. Together, the ten largest investments represent 29.2% of net assets (30 September 2018: 33.4%).2 Includes exposure gained via contracts for difference.3 Includes exposure gained via contracts for difference and equity holdings.

COUNTRY AND SECTOR ALLOCATION AS AT 31 MARCH 2019

Country allocation

Sources: BlackRock and Datastream.

1 Includes exposure gained through equity positions and long and short CFD positions.

Sector allocation

Source: BlackRock and Datastream.

1 Includes exposure gained through equity positions and long and short CFD positions.

INVESTMENTS AS AT 31 MARCH 2019

*Includes warrant investments.

* Includes warrant investments.

FAIR VALUE AND GROSS MARKET EXPOSURE OF INVESTMENTS

1 Fair value is determined as follows:– Listed investments are valued at bid prices where available, otherwise at latest market traded quoted prices.– The sum of the fair value column for the CFD contracts totalling US$(2,913,000) represents the fair valuation of all the CFD contracts, which is determined based on the difference between the transaction price and value of the underlying shares in the contract (in effect the unrealised gains/(losses) on the exposed positions). The cost of purchasing the securities held through long CFD positions directly in the market would have amounted to US$129,672,000 at the time of purchase, and subsequent market movement in prices have resulted in unrealised losses on the long CFD positions of US$2,203,000 resulting in the value of the total market exposure to the underlying securities decreasing to US$127,469,000 as at 31 March 2019. The notional price of selling the securities to which exposure was gained via the short CFD positions would have been US$27,065,000 at the time of entering into the contract, and subsequent market movement in prices have resulted in unrealised losses on the short CFD positions of US$710,000 and the value of the market exposure of these investments increasing to US$27,775,000 at 31 March 2019. If the short positions had been closed on 31 March 2019 this would have resulted in a loss of US$710,000 for the Company.2 Market exposure in the case of equity investments is the same as fair value. In the case of CFDs it is the market value of the underlying shares to which the portfolio is exposed via the contract.3 The gross market exposure column for cash and cash equivalents has been adjusted to assume the Company purchased/sold direct holdings rather than exposure being gained through CFDs.4 Unquoted investment.

INDEPENDENT REVIEW REPORT TO BLACKROCK FRONTIERS INVESTMENT TRUST PLC

INTRODUCTIONWe have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2019 which comprises the Statement of Comprehensive Income, the Statement of Changes in Equity, the Statement of Financial Position, the Cash Flow Statement and the Notes to the Financial Statements. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.

DIRECTORS’ RESPONSIBILITIESThe half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority.

As disclosed in note 2, the annual financial statements of the Company are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting”, as adopted by the European Union.

OUR RESPONSIBILITYOur responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

SCOPE OF REVIEWWe conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

CONCLUSIONBased on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2019 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority.

ERNST & YOUNG LLPLondon30 May 2019

STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 31 MARCH 2019

The total column of this statement represents the Company’s Statement of Comprehensive Income, prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies (AIC). All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period. All income is attributable to the equity holders of the Company.

The Company does not have any other comprehensive income/(loss). The net profit/(loss) for the period disclosed above represents the Company’s total comprehensive income/(loss).

STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 31 MARCH 2019

(a) Final dividend of 4.40 cents per share for the year ended 30 September 2018, declared on 10 December 2018 and paid on 7 February 2019 and special dividend paid in respect of the year ended 30 September 2018 of 1.00 cent per share, declared on 10 December 2018 and paid on 7 February 2019.(b) Final dividend of 4.20 cents per share for the year ended 30 September 2017, declared on 1 December 2017 and paid on 9 February 2018.(c) Final dividend of 4.20 cents per share for the year ended 30 September 2017, declared on 1 December 2017 and paid on 9 February 2018 and interim dividend paid in respect of the year ended 30 September 2018 of 3.00 cents per share, declared on 17 May 2018 and paid on 29 June 2018.

Costs related to the acquisition and disposal of investments amounted to US$341,000 and US$248,000 respectively for the six months ended 31 March 2019 (six months ended 31 March 2018: US$312,000 and US$195,000; year ended 30 September 2018: US$561,000 and US$519,000).

The share premium account and capital redemption reserve are not distributable profits under the Companies Act 2006. The special reserve may be used as distributable profits for all purposes and, in particular, for the repurchase by the Company of its ordinary shares and for payment as dividends. In accordance with the Company’s articles, net capital reserves may be distributed by way of the repurchase by the Company of its ordinary shares and for payment as dividends.

STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2019

CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 31 MARCH 2019

* Cash Fund represents funds held on deposit with BlackRock’s Institutional Cash Series plc – US Dollar Liquidity Fund.

NOTES TO THE FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 MARCH 2019

1. PRINCIPAL ACTIVITYThe principal activity of the Company is that of an investment trust company within the meaning of section 1158 of the Corporation Tax Act 2010.

2. BASIS OF PREPARATIONThe half yearly financial statements have been prepared using the same accounting policies as set out in the Company’s Annual Report and Financial Statements for the year ended 30 September 2018 which were prepared in accordance with International Financial Reporting Standards (‘IFRS’) as adopted by the European Union and applied in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’.

Insofar as the Statement of Recommended Practice (‘SORP’) for investment trust companies and venture capital trusts issued by the Association of Investment Companies (‘AIC’), revised in November 2014 and updated in January 2017 and February 2018 is compatible with IFRS, the Financial Statements have been prepared in accordance with guidance set out in the SORP.

Adoption of new and amended standards and interpretationsIFRS 9 Financial InstrumentsThe classification and measurement requirements of IFRS 9 have been adopted retrospectively as of the date of initial application on 1 October 2018, however, the Company has chosen to take advantage of the option not to restate comparatives. Therefore, the 2018 comparative figures are presented and measured under IAS 39. All financial assets previously held at fair value continue to be measured at fair value and accordingly there has been no impact as a result of the adoption of IFRS 9. All financial assets that were classified as loans and receivables and measured at amortised cost continue to be so.

IFRS 15 Revenue from contracts with customersThe Company adopted IFRS 15 as of the date of initial application of 1 October 2018. IFRS 15 replaces IAS 18 Revenue and establishes a five-step model to account for revenue arising from contracts with customers. In addition, guidance on interest and dividend income have been moved from IAS 18 to IFRS 9 without significant changes to the requirements. Therefore, there was no impact of adopting IFRS 15 for the Company.

C share liabilityOn 27 November 2018 the Company issued 44,927,580 C shares with a nominal value of 10 cents each at a price of £1.00 per share. On 11 January 2019 the C shares were converted into Ordinary shares. The conversion ratio, which has been calculated by reference to the net assets of the Company attributable to the Ordinary shares and the net assets of the Company attributable to the C shares as at the close of business on 7 January 2019 was 0.7547 Ordinary shares for every C share held.

The C shares (when in issue) were listed on the London Stock Exchange. After the conversion of the C shares into Ordinary shares, the C shares were delisted on 22 January 2019.

Whilst the C shares were in issue, the results, assets and liabilities attributable to the C shares were accounted for in a separate pool to the results, assets and liabilities of the Ordinary shares. A share of the management fee and other expenses for the period the C shares had been in issue was allocated to the C share pool.

C shares are recognised on issue at fair value less directly attributable transaction costs. After initial recognition, C shares are subsequently measured at amortised cost using the effective interest method. Amortisation is credited or charged to finance income or finance costs in the Statement of Comprehensive Income. Transaction costs are amortised to the earliest conversion period.

The C shares issued represented contracts for conversion into a variable number of Ordinary shares and therefore the C shares are classified as liabilities under IAS 32. The classification resulted in the issue costs and the return on the C shares being presented as finance costs in the Company’s Statement of Comprehensive Income. The return on the C shares represented an increase in the assets attributable to the C shares over and above the proceeds raised from their issue.

At the time that it arose, the Directors considered whether the C share liability should be valued at fair value or stated at amortised cost.

The C shares were traded on the London Stock Exchange. The amortised cost value of the C share pool equated to the net asset value of the C shares, which the Directors considered was the most appropriate way to value the liability. The liability was extinguished on 11 January 2019 upon the conversion of C shares into Ordinary shares.

3. INCOME

Dividends and interest received in cash in the six months ended 31 March 2019 amounted to US$4,130,000 and US$1,040,000 (six months ended 31 March 2018: US$3,626,000 and US$34,000; year ended 30 September 2018: US$17,706,000 and US$1,771,000) respectively.

No special dividends have been recognised in capital (six months ended 31 March 2018: US$nil; year ended 30 September 2018: US$nil).

4. INVESTMENT MANAGEMENT FEE

An investment management fee equivalent to 1.10% per annum of the Company’s gross assets (defined as the aggregate net assets of the long equity and CFD portfolios of the Company) is payable to the Manager. In addition, the Manager is also entitled to receive a performance fee at a rate of 10% of any increase in the NAV at the end of a performance period over and above what would have been achieved had the NAV since launch increased in line with the Benchmark Index, which, since 1 April 2018, is a composite of the MSCI Emerging Markets Index ex Selected Countries + MSCI Frontier Markets Index + MSCI Saudi Arabia Index. Prior to 1 April 2018, the Benchmark Index was the MSCI Frontier Markets Index. For the purposes of calculation of performance fee for the six months ended 31 March 2019 and for the year to 30 September 2018, the performance of the Net Asset Value total return has been measured against the performance of the benchmark indices on a blended basis during the period/year.

For the six months ended 31 March 2019, the Company’s NAV did not outperform the Benchmark Index on a US Dollar basis therefore a performance fee of US$nil has been accrued (six months ended 31 March 2018: US$2,510,000; year ended 30 September 2018: US$nil).

The performance fee payable in any year is capped at an amount equal to 2.5% or 1% of the gross assets if there is any increase or decrease in the NAV per share at the end of the relevant performance period, respectively. Any capped excess outperformance for a period may be carried forward to the next two performance periods, subject to the then applicable annual cap. The performance fee is also subject to a high watermark such that any performance fee is only payable to the extent that the cumulative relative outperformance of the NAV is greater than what would have been achieved had the NAV increased in line with the Benchmark Index since the last date in relation to which a performance fee had been paid.

Under the terms of the C share issue in November 2018, BlackRock had agreed to waive the management fees payable by the Company up to the value of issue expenses that exceeded the capped amount of 1.00% of the gross proceeds from the issue of C shares. As the issue expenses exceeded the capped amount, the excess issue expenses of US$34,000 have been offset against the investment management fee payable by the Company during the period ended 31 March 2019.

5. OTHER OPERATING EXPENSES

1 Fees for non audit services relate to the following services provided by the Auditor:– US$5,000 (six months ended 31 March 2018: US$7,000; year ended 30 September 2018: US$9,000) relating to the review of the interim financial statements.– £37,500 (US$49,000) (excluding VAT) in respect of the work on the Company’s C share issue. These fees were included as part of the C shares liability detailed in note 12, and were debited to the Company’s Statement of Comprehensive Income as finance costs.2 All expenses other than depositary fees are paid in Sterling and are therefore subject to exchange rate fluctuations.

6. FINANCE COSTS

7. TAXATION

Following the enactment of Argentine tax reform (Law No. 27,430), effective 1 January 2018, and discussions with the Company’s advisers, capital gains on American Depositary Receipts over Argentine equity held by the Company will not give rise to an Argentine Capital Gains Tax liability and accordingly the provision for capital gains tax of US$5,939,000 previously accrued by the Company was reversed during the year to 30 September 2018.

8. DIVIDENDSThe Board has declared an interim dividend of 3.00 cents per share payable on 28 June 2019 to shareholders on the register at 7 June 2019 (six months ended 31 March 2018, interim dividend of 3.00 cents per share paid on 29 June 2018 to shareholders on the register at 1 June 2018). This dividend has not been accrued in the financial statements for the six months ended 31 March 2019, as under IFRS, interim dividends are not recognised until paid. Dividends are debited directly to reserves.

9. EARNINGS AND NET ASSET VALUE PER ORDINARY SHARE

* The Company’s share price is quoted in Sterling and the above represents the US Dollar equivalent, based on exchange rates US$1.3031 to £1 at 31 March 2019, US$1.4028 to £1 at 31 March 2018 and US$1.3041 to £1 at 30 September 2018.

10. CALLED UP SHARE CAPITAL

The Company also has in issue 50,000 management shares which carry the right to a fixed cumulative preferred dividend.

During the period the Company issued 6,150,000 Ordinary shares (six months ended 31 March 2018: 15,623,000; year ended 30 September 2018: 22,748,000) for a total gross consideration of US$10,845,000 (six months ended 2018: US$34,484,000; year ended 30 September 2018: US$49,347,000). A further 33,906,693 Ordinary shares were issued following the conversion of C shares. Please see note 11 for further details. No further Ordinary shares have been issued since the period end and up to and including the date of this report.

11. C SHARES: FINANCIAL LIABILITY

On 27 November 2018 the Company issued 44,927,580 C shares with a nominal value of 10 cents each at a price of £1.00 per share. On 11 January 2019 the C shares were converted into 33,906,693 ordinary shares. The conversion ratio, which has been calculated by reference to the net assets of the Company attributable to the ordinary shares and the net assets of the Company attributable to the C shares as at the close of business on 7 January 2019 was 0.7547 Ordinary shares for every C share held.

The C shares (when in issue) were listed on the London Stock Exchange. After the conversion of the C shares to ordinary shares, the C shares were delisted on 22 January 2019.

Whilst the C shares were in issue, the results, assets and liabilities attributable to the C shares were accounted for in a separate pool to the results, assets and liabilities of the ordinary shares. A share of management fee and other expenses for the period the C shares had been in issue was allocated to the C share pool.

The table below gives a breakdown of the gross proceeds (excluding issue costs) from the issue of C shares during the period:

The tables below give a summary of the results of the C share pool up to the date of conversion.

12. VALUATION OF FINANCIAL INSTRUMENTSFinancial assets and financial liabilities are either carried in the Statement of Financial Position at their fair value (investments and derivatives) or at an amount which is a reasonable approximation of fair value (due from brokers, dividends and interest receivable, due to brokers, accruals, cash at bank and bank overdrafts). IFRS 13 requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The valuation techniques used by the Company are explained in the accounting policies note 2(g) as set out on pages 57 and 58 in the Company’s Annual Report and Financial Statements for the year ended 30 September 2018.

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset.

The fair value hierarchy has the following levels:

Level 1 – Quoted market price for identical instruments in active markets. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The Company does not adjust the quoted price for these instruments.

Level 2 – Valuation techniques used to price securities based on observable inputs. This category includes instruments valued using quoted market prices in active markets for similar instruments; quoted prices for similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data. Valuation techniques used for non-standard instruments such as options, currency swaps and other over-the-counter derivatives include the use of comparable recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants making the maximum use of market inputs and relying as little as possible on entity specific inputs.

As at the year ended 30 September 2018, the P-Notes were valued using the underlying equity bid price and the inputs to the valuation were the exchange rates used to convert the P-Note valuation from the relevant local currency to US Dollars at the year end date. No P-Notes were held as at 31 March 2019.

As at the period end the CFDs were valued using the underlying equity bid price and the inputs to the valuation were the exchange rates used to convert the CFD valuation from the relevant local currency in which the underlying equity was priced to US Dollars at the period end date. There have been no changes to the valuation technique since the previous year or as at the date of this report.

Level 3 – Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and these inputs could have a significant impact on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant entity determined adjustments or assumptions are required to reflect differences between the instruments and instruments for which there is no active market. The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety.

For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.

The determination of what constitutes ‘observable’ requires significant judgement by the investment manager. The investment manager considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

Contracts for difference and P-Notes have all been classified as level 2 investments as their valuation has been based on market observable inputs represented by the market prices of the underlying quoted securities to which these contracts expose the Company.

The table below sets out fair value measurements using IFRS 13 fair value hierarchy.

There were no transfers between levels of financial assets and financial liabilities during the period recorded at fair value as at 31 March 2019, 31 March 2018 or the year ended 30 September 2018. The Company held one Level 3 security throughout the period under review and as at 31 March 2019.

A reconciliation of fair value measurement in Level 3 is set out below.

13. RELATED PARTY DISCLOSURE: DIRECTORS’ EMOLUMENTSThe Board consists of five non-executive Directors, all of whom are considered to be wholly independent by the Board. None of the Directors has a service contract with the Company. The Chairman receives an annual fee of £37,000, the Chairman of the Audit and Management Engagement Committee receives an annual fee of £31,000 and each other Director receives an annual fee of £27,000.

As at 31 March 2019 an amount of US$16,000 (£12,000) (31 March 2018: US$17,000 (£12,000); 30 September 2018: US$16,000 (£12,000)) was outstanding in respect of Directors’ fees.

At the period end, the interests of the Directors in the ordinary shares of the Company are as set out below:

14. TRANSACTIONS WITH THE AIFM AND THE INVESTMENT MANAGERBlackRock Fund Managers Limited (BFM) provides management and administration services to the Company under a contract which is terminable on six month’s notice. BFM has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services, to Blackrock Investment Management (UK) Limited (BIM (UK)).

The investment management fee due for the six months ended 31 March 2019 amounted to US$2,108,000 (six months ended 31 March 2018: US$2,134,000; year ended 30 September 2018: US$4,280,000). No performance fee is payable for the six months ended 31 March 2019 (six months ended 31 March 2018: US$2,510,000, year ended 30 September 2018: US$nil).

At the period end US$2,108,000 was outstanding in respect of management fees (31 March 2018: US$3,076,000; 30 September 2018: US$1,024,000). Any final performance fee for the full year to 30 September 2019 will not crystallise and fall due until the calculation date of 30 September 2019.

In addition to the above services, BlackRock has provided the Company with marketing services. The total fees paid or payable for these services to 31 March 2019 amounted to US$44,000 excluding VAT (six months ended 31 March 2018: US$55,000; year ended 30 September 2018: US$93,000). Marketing fees of US$112,000 excluding VAT (31 March 2018: US$109,000; 30 September 2018: US$68,000) were outstanding at 31 March 2019.

The Company has an investment in the Cash Fund of US$65,529,000 at 31 March 2019 (31 March 2018: US$123,289,000; 30 September 2018: US$100,917,000), which is a fund managed by a company within the BlackRock Group.

15. CONTINGENT LIABILITIESThere were no contingent liabilities at 31 March 2019 (31 March 2018 and 30 September 2018: nil).

16. PUBLICATION OF NON STATUTORY ACCOUNTSThe financial information contained in this half yearly report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the six months ended 31 March 2019 has not been audited.

The information for the year ended 30 September 2018 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies, unless otherwise stated. The report of the auditors on those accounts contained no qualifications or statement under section 498(2) or 498(3) of the Companies Act 2006.

17. ANNUAL RESULTSThe Board expects to announce the annual results for the year ending 30 September 2019 in early December 2019.

Copies of the annual results announcement can be obtained from the Secretary on 020 7743 3000 or at cosec@blackrock.com. The Annual Report should be available by late December with the Annual General Meeting being held in February 2020.

FOR FURTHER INFORMATION, PLEASE CONTACT:

Simon White, Managing Director, Investment Trusts, BlackRock Investment Management (UK) Limited - Tel: 020 7743 3000

Press enquiries:Lucy Horne, Lansons Communications – Tel: 020 7294 3689E-mail: lucyh@lansons.com

30 May 2019

12 Throgmorton AvenueLondon EC2N 2DLEND