NBLU.L Regulatory News (NBLU)

NB GLOBAL FLOATING RATE INCOME FUND LIMITED

Interim Report and Unaudited Consolidated Interim Financial Statements

For the six months ended 30 June 2018

COMPANY OVERVIEW | Features

Features

NB Global Floating Rate Income Fund Limited (the "Company")

The Company is a closed-ended investment company incorporated and registered in Guernsey on 10 March 2011 with registered number 53155. The Company is governed under the provisions of the Companies (Guernsey) Law, 2008 as amended (the "Law"), and the Registered Collective Investment Scheme Rules 2015 issued by the Guernsey Financial Services Commission. It is a non-cellular Company limited by shares and has been declared by the Guernsey Financial Services Commission to be a registered closed-ended collective investment scheme. On 20 April 2011, the Company was admitted to the Official List of the U.K. Listing Authority with a premium listing trading on the Main Market of the London Stock Exchange ("LSE"). The Company was admitted to the FTSE 250 in March 2012.

Alternative Investment Fund Manager ("AIFM") and Manager

Investment management services are provided to the Company by Neuberger Berman Investment Advisers LLC (the "AIFM") and Neuberger Berman Europe Limited (the "Manager"), collectively the "Investment Manager". The AIFM is responsible for risk management and discretionary management of the Company's portfolio and the Manager provides certain administrative services to the Company.

Investment Objective

The Company's investment objective is to provide its shareholders with regular dividends, at levels that are sustainable, whilst preserving the capital value of its investment portfolio, utilising the investment skills of the Investment Manager.

Investment Policy

To pursue its investment objective, the Company invests mainly in floating rate senior secured loans issued in U.S. Dollars, Pound Sterling and Euros by primarily North American and European Union corporations, partnerships and other business issuers. These loans are at the time of investment often non-investment grade if, at the time of investment, they are rated below the four highest categories (Aaa, Aa, A and Baa) by at least two independent credit ratings agencies or, if unrated, are deemed by the Investment Manager to be of comparable quality.

The Company will generally seek to focus on loans of issuers that the Investment Manager believes have the ability to generate cash

flow through a full business cycle, maintain adequate liquidity, possess an enterprise value in excess of senior debt and have access to both debt and equity capital.

The Company may also make investments in senior bonds on an opportunistic basis if the Investment Manager believes that such investments are attractively valued up to a maximum in aggregate of 20% of the Net Asset Value ("NAV") at the time of investment, provided that no more than 10% of NAV may be invested in unsecured bonds at the time of investment.

Capital Structure

As at 30 June 2018 the Company's share capital comprised 944,820,831 Sterling Ordinary Shares ("NBLS") of no par value (of which 75,000,000 were held in treasury) and 44,954,622 U.S. Dollar Ordinary Shares ("NBLU") of no par value (of which 1,342,627 were held in treasury).

For the purposes of efficient portfolio management, the Company has established a wholly-owned Luxembourg incorporated subsidiary, NB Global Floating Rate Income Fund (Lux) 1 S.à.r.l. which in turn holds a wholly-owned subsidiary, NB Global Floating Rate Income Fund (Lux) 2 S.à.r.l. Part of the portfolio of the Company is held through NB Global Floating Rate Income Fund (Lux) 2 S.à.r.l. All references to the Company in this document refer to the Company together with its wholly-owned Luxembourg subsidiaries.

Non-Mainstream Pooled Investments

The Company currently conducts its affairs so that the shares issued by the Company can be recommended by Independent Financial Advisers to ordinary retail investors in accordance with the Financial Conduct Authority's ("FCA") rules in relation to non-mainstream investment products and intends to continue to do so for the foreseeable future.

The Company's shares are excluded from the FCA's restrictions which apply to non-mainstream investment products.

Dividends

Paid quarterly in respect of each calendar quarter.

Rolling 12 month dividend yield (based on the previous four quarterly dividends paid and share price as at 30 June 2018):

· Sterling Ordinary Shares: 3.70%

· U.S. Dollar Ordinary Shares: 3.72%

STRATEGIC REVIEW | Financial Highlights

Financial Highlights

Key Figures

1 In the period ended 30 June 2018, the Company re-purchased 93.5m Sterling Ordinary Shares at a total U.S. Dollar equivalent cost of $119.7m and 0.58m U.S. Dollar Ordinary Shares at a total cost of $0.56m.

2 Rolling 12 month dividend yield based on the four quarterly dividends paid and share price as at 30 June 2018.

3 The total return is the NAV return per share plus dividends paid during the period.

4 2018 figures relate to the period 1 January 2018 to 30 June 2018 while 2017 comparative data relates to the year 1 January 2017 to 31 December 2017.

5 Management fees and all other operating expenses expressed as a percent of average net assets during the period.

STRATEGIC REVIEW | Chairman's Statement

Chairman's Statement 

Dear Shareholder,

It is my pleasure to present to you the Interim Report for the six months ended 30 June 2018.

First Half 2018 Performance

The Board remains satisfied with the performance of the Company and the progress made by the Investment Manager during the first six months of 2018. Including dividends declared during the period, the Company's Net Asset Value ("NAV") total return per share was 1.05% for the Sterling share class and 1.51% for the U.S. Dollar shares. During the same period the Company's share price return was (0.74%) per Sterling share and (0.26%) per U.S. Dollar share compared to the equivalent period in 2017, which produced total share price returns of (2.06%) per Sterling share and (1.39%) per U.S. Dollar share.

As at 30 June 2018, the Company's dividend yield was 3.70% and 3.72% per Sterling Share and U.S. Dollar Share respectively (calculated as the last four quarterly dividends expressed as a percentage of the share price). As a Board, we believe this represents attractive value on both an absolute and a risk-adjusted basis given the current low interest rate environment and taking account of the prudent investment approach taken by the Investment Manager. As at 30 June 2018, 93.40% of the Company's portfolio was invested in issuers with a credit rating of BBB (7.69%), BB (40.62%) and B (45.09%), reflecting the Investment Manager's preference for higher quality issuers, with the balance in unrated issuers and cash.

The portfolio remains fully invested, with a strong U.S. bias. As at 30 June 2018, 84.69% of the Company was invested in U.S. Dollar denominated assets, with 12.82% invested in Euro denominated assets and 2.49% in Sterling denominated assets (all excluding cash). The Company's Sterling share class hedges all U.S. Dollar and Euro exposure back to Sterling. The Board does not currently expect volatility in the foreign exchange markets to impact materially on the Company's NAV.

Discount / Premium Management

During the six months to 30 June 2018 the Company's discount ranged between (5.76%) and (1.57%) per Sterling Ordinary Share and (6.28%) and (1.68%) per U.S. Dollar Share. Throughout this period, the Board continued to address imbalances between supply and demand in the Company's shares as necessary by buying back shares. During the first half of 2018, the Company repurchased 93,470,522 Sterling Ordinary Shares at a cost of $119,650,041 and 582,876 U.S. Dollar Shares at a cost of $555,486 with a respective accretion to NAV of 0.371% and 0.048%.

The Board will remain vigilant in its approach to both discount and premium control on behalf of shareholders and reaffirms its belief that it is undesirable for the Company's shares to trade at a wider than 3% discount or premium in normal market conditions.

Outlook for the remainder of the financial year

Your Board believes the Company continues to offer a risk-adjusted return which compares favourably to other corporate credit investment vehicles. Central to that belief is the combination of the Company's investment in an established, liquid asset class with a track record of capital preservation, supplemented by the Investment Manager's experienced, broad team and active portfolio management, operating a defensively positioned portfolio which is diversified by issuer and sector.

We believe that the outlook for the remainder of 2018 is favourable for short-duration asset classes such as senior secured floating rate loans. The Directors consider that the portfolio is in a strong position to benefit from the broadly expected rising interest rate outlook in major economies. That scenario over the coming years is of a measured continuation in Federal Reserve interest rate increases in the United States, a gradual lifting of the Bank of England base rate in the U.K., noting the rate rise by the Bank of England in August 2018, and the signalled imminent but gradual start of quantitative tightening by the European Central Bank in the Eurozone. While specific timing is impossible to predict, we expect to see further rate rises in 2018 in the U.S. towards the end of the year.

Commensurate with policymakers' stated gradual and measured approach to interest rate increases, the Investment Manager believes that default rates will remain below historical levels and that credit quality is expected to remain favourable with the exception of some identifiable areas, such as within the commodity sector. Furthermore, the constraints put on lending banks by regulators through the Interagency Guidance on Leveraged Lending should continue to limit excess leverage in new issuance. These positive tailwinds come with the caveat of significant political uncertainty in several key markets. Such factors, which include potential disruption in global trade relations and the outcome of the U.K.'s Brexit negotiations, have the potential to derail positive momentum and could lead to increased volatility across global markets. However, at a portfolio level, your Board expects the continued impact of Brexit negotiations to be limited given the robust investment process the Investment Manager has always adopted and its positioning in better-rated, better performing issuers.

In terms of income outlook, the Board is encouraged by the recent signs of an uplift in investment performance, as demonstrated by the dividend increase for the second quarter, as well as with the resilience of the asset class during the interest rate-induced volatility in the first quarter. However, we would wish to see several further quarters of increased portfolio income before committing to a cyclical upturn in the Company's dividend profile.

The Investment Manager's defensive positioning, combined with good liquidity in the shares and your Board's continuing support to maintain a tight discount or premium to NAV continue to reinforce the Company's sound investment proposition. The Investment Manager will continue to update you on the Company's progress by way of the monthly fact sheets and updates.

Continuation Vote

In accordance with the Company's Articles of Incorporation (the "Articles"), at the AGM held on 13 June 2018, the Company proposed a resolution to shareholders to consider the Company's continuation as a closed-ended investment company which was passed comfortably. This resolution will be proposed again at the 2019 AGM.

Board Composition

This is my last address to you as Chairman. I will step down from the Board effective 30 September 2018, having served as Chairman since inception. My departure reflects the Board's belief in the value of diversity and its recognition of the importance of rotation and balance of Directors' tenure. To that end, the Board some time ago commenced a programme of Director succession and rotation.

While I am sad to be leaving the Board, my move reflects the ongoing execution of this programme. I am delighted to announce that I will be handing the reins over to Rupert Dorey, who has served on the Board since March 2014. Further, David Staples was appointed as a Director on 14 June 2018 as part of our programme of rotation following a robust interview process, and brings a wealth of experience. David has also joined the Audit and Risk Committee, Remuneration and Nomination Committee and Management Engagement Committee.

Conclusion

Considering the seven-year period since the Company's initial public offering in April 2011, I have been constantly assured by the Investment Manager's ability to execute, to navigate benign or challenging market conditions, and to deal with specific sector or issuer challenges. I would like to thank my fellow shareholders for your commitment and support, and place on record my appreciation of my fellow Board members' outstanding guidance and contribution during my tenure. It has been a great pleasure to lead the Board since inception and I look forward to the Company's future performance with confidence.

William Frewen

Chairman

15 August 2018

STRATEGIC REVIEW | Investment Manager's Report 

Investment Manager's Report

For the six months ended 30 June 2018, the NAV total return of the Company was 1.59% gross of fees.

One trend that we have witnessed in the year-to-date period is increasing aggressiveness of the new issue market. This aggressiveness takes various forms including increased total leverage, increased secured leverage, EBITDA adjustments and looser baskets within credit agreements (including restricted payments and incremental debt). As a result, our approval rate on new deals is substantially below our long term average, especially on lower rated deals.

Demand for loans was robust, with over $68 billion of new collateralized loan obligation ("CLO") creation and $12 billion of inflows from retail funds. These figures do not take into account demand from pensions, endowments and other institutional investors in separate account format. For comparison, the first half of 2017 saw $50 billion of CLO creation and $20 billion of inflows from retail funds. Although down 8% from the first half of 2017, institutional loan issuance was strong at $274 billion. The mix of issuance was materially different in the most recent period as Mergers & Acquisitions ("M&A")/Leveraged Buyout ("LBO") activity increased while refinancing activity decreased. The increase in M&A/LBO activity led to growth in the loan market, which ended the period at $1.05 trillion versus $943 billion one year ago. The average bid ended the period at a healthy 98.05 while the trailing 12 month U.S. default rate was 1.95%, well below its long term average of approximately 3%.

In Europe, the S&P European Leveraged Loan Index ("ELLI") returned 0.90% through 30 June 2018 (all numbers excluding currency) and the average bid finished at 98.52. Demand was strong and CLO creation issuance totalled €13 billion through 30 June 2018, up significantly from the €9 billion posted in the first half of 2017. The par amount outstanding of the ELLI ended the quarter at €160 billion, an increase on the €118 billion one year ago. By principal amount the trailing 12 month default rate for the ELLI was negligible at 0.10%, down from 2.20% one year ago.

The portfolio has remained very much weighted towards U.S. Dollar investments, which accounted for approximately 85% of the portfolio at the end of June. The bond allocation remained well below the 20% of NAV permitted, at 8.5%, as we remained focused on keeping duration low and limiting potential areas of volatility. We continued to allocate to better-rated assets, and the BBB/BB weighting ended June at 48% versus 45% for B.

Outlook

Against a backdrop of continued strong GDP growth in the U.S. and 3 or 4 expected rate hikes over the next 12 months, our outlook for the loan market remains positive. Companies continue to report strong cash flow growth, which has allowed them to generate strong free cash flow and keep leverage at reasonable levels. We continue to believe that loans remain compelling given the combination of attractive income, short duration and low volatility.

Neuberger Berman Investment Advisers LLC Neuberger Berman Europe Limited

15 August 2018 15 August 2018

STRATEGIC REVIEW | Portfolio Information

Portfolio Information

Top 10 Issuers as at 30 June 2018 (excluding cash)

Top 10 S&P Sector Breakdown

Click on, or paste the following link into your web browser, to view page 1 of the associated PDF document.http://www.rns-pdf.londonstockexchange.com/rns/9476X_1-2018-8-15.pdf

Key Statistics as at 30 June 2018

1 The Company's Current Gross Portfolio Yield is a market-value weighted average of the current yields of the holdings in the portfolio, calculated as the coupon (base rate plus spread) divided by current price. The calculation does not take into account any fees, fund expenses or sales charges paid, which would reduce the results. The Current Gross Portfolio Yield for the Company will fluctuate from month to month. The Current Gross Portfolio Yield should be regarded as an estimate of the Company's rate of investment income and it will not equal the realised distribution rate for each share class.

GOVERNANCE | Interim Management Report and Directors' Responsibility Statement

Interim Management Report and Directors' Responsibility Statement

Principal Risks and Uncertainties

The principal risks of the Company are in the following areas:

· macroeconomic conditions;

· credit risk;

· liquidity risk;

· fund performance;

· level of discount or premium; and

· operational risk.

The Board reported on each of these principal risks and uncertainties in the Strategic Report of the Company's latest annual report and audited financial statement for the year ended 31 December 2017, which can be found on the Company's website. The Board's view is that these risks remain appropriate for the remainder of 2018. A brief description of each of the Principal Risks is detailed below:

Macroeconomic Conditions

Macroeconomic conditions can change significantly and to the detriment of the portfolio or the Company causing a credit or liquidity risk to crystallise.

Credit Risk

The key risk for the Company remains credit risk i.e. that the Investment Manager buys a loan or bond of a particular Issuer and it does not perform as expected and either defaults on a payment or experiences a significant drop in the secondary market value.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its obligations as and when these fall due.

Fund Performance

The Company's Investment performance could fall below its stated objective or peer group for a variety of reasons including market conditions.

Level of Discount or Premium

A discount or premium to NAV can occur for a variety of reasons, including market conditions or to the extent investors undervalue the management activities of the Investment Manager or discount their valuation methodology and judgment.

Operational Risk

Disruption to, or the failure of either the Investment Manager's, Administrator's or Sub- Administrator's accounting, dealings or payment systems, or the Custodian's records could prevent the accurate reporting or monitoring of the Company's financial position and the receipt or transmission of payments.

Going Concern

Having reassessed the principal risks, the Directors considered it appropriate to prepare the Unaudited Consolidated Interim Financial Statements (the "Financial Statements") on a going concern basis.

Related Party Transactions

Other than fees payable in the ordinary course of business, there have been no material transactions with related parties, which have affected the financial position or performance of the Company in the six month period to 30 June 2018. Additional related party disclosures are given in Note 3.

Directors' Responsibilities Statement

The Board of Directors confirms that, to the best of its knowledge:

The Financial Statements, which have been prepared in conformity with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 270' "Interim Reporting" and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority, give a true and fair view of the assets, liabilities, financial position and profits/(losses) of the Company, as required by DTR 4.2.4R of the Disclosure Guidance and Transparency Rules ("DTR") of the U.K.'s FCA.

The combination of the Chairman's Statement, the Investment Manager's Report and this Interim Management Report meet the requirements of an Interim Management Report, and include a fair review of the information required by:

1. DTR 4.2.7R of the DTR, of the U.K.'s FCA, being an indication of important events that have occurred during the first six months of the year and their impact on the set of Financial Statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

2. DTR 4.2.8R of the DTR, of the U.K.'s FCA, being related party transactions that have taken place in the first six months of the current year and that have materially affected the financial position or performance of the Company during that period and any material changes in the related party transactions described in the last annual report that could have such a material effect.

By order of the board

William Frewen Richard Battey

Chairman Director

15 August 2018 15 August 2018

GOVERNANCE | Independent Review Report to NB Global Floating Rate Income Fund Limited

Independent review report to NB Global Floating Rate Income Fund Limited

Our conclusion

We have reviewed the accompanying consolidated interim financial information of NB Global Floating Rate Income Fund Limited (the "Company") and its subsidiaries (together the "Group") as of 30 June 2018. Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated interim financial information is not prepared, in all material respects, in accordance with the Financial Accounting Standards Board Accounting Standards Codification 270, "Interim Reporting" and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

What we have reviewed

The accompanying consolidated interim financial information comprise:

· the Unaudited Consolidated Statement of Assets and Liabilities as of 30 June 2018;

· the Unaudited Consolidated Condensed Schedule of Investments as of 30 June 2018;

· the Unaudited Consolidated Statement of Operations for the six-month period then ended;

· the Unaudited Consolidated Statement of Changes in Net Assets for the six-month period then ended;

· the Unaudited Consolidated Statement of Cash Flows for the six-month period then ended; and

· the notes, comprising a summary of significant accounting policies and other explanatory information.

The consolidated interim financial information has been prepared in accordance with the Financial Accounting Standards Board Accounting Standards Codification 270, "Interim Reporting" and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Our responsibilities and those of the directors

The Directors are responsible for the preparation and presentation of this consolidated interim financial information in accordance with the Financial Accounting Standards Board Accounting Standards Codification 270, "Interim Reporting" and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express a conclusion on this consolidated interim financial information based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of interim financial information performed by the independent auditor of the entity" issued by the International Auditing and Assurance Standards Board. A review of interim financial information consists of making inquiries, 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 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.

We have read the other information contained in the Interim Report and Unaudited Consolidated Interim Financial Statements and considered whether it contains any apparent misstatements or material inconsistencies with the information in the consolidated interim financial statements.

PricewaterhouseCoopers CI LLP

Chartered Accountants

Guernsey, Channel Islands

15 August 2018

(a) The maintenance and integrity of the NB Global Floating Rate Income Fund Limited website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

(b) Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

FINANCIAL STATEMENTS | Unaudited Consolidated Statement of Assets and Liabilities

Unaudited Consolidated Statement of Assets and Liabilities

The Financial Statements were approved and authorised for issue by the Board of Directors on 15 August 2018, and signed on its behalf by:

The accompanying notes form an integral part of the Unaudited Consolidated Interim Financial Statements 

Unaudited Consolidated Condensed Schedule of Investments

The accompanying notes form an integral part of the Unaudited Consolidated Interim Financial Statements 

The accompanying notes form an integral part of the Unaudited Consolidated Interim Financial Statements 

The accompanying notes form an integral part of the Unaudited Consolidated Interim Financial Statements 

As at 30 June 2018, issuers with the following investments comprised of greater than 1% of NAV (Excluding cash):

The accompanying notes form an integral part of the Unaudited Consolidated Interim Financial Statements 

As at 31 December 2017, issuers with the following investments comprised of greater than 1% of NAV (Excluding cash):

The accompanying notes form an integral part of the Unaudited Consolidated Interim Financial Statements 

As at 30 June 2018, the below were the largest 50 investments based on the NAV:

The accompanying notes form an integral part of the Unaudited Consolidated Interim Financial Statements 

As at 31 December 2017, the below were the largest 50 investments based on the NAV:

The accompanying notes form an integral part of the Unaudited Consolidated Interim Financial Statements 

FINANCIAL STATEMENTS | Unaudited Consolidated Statement of Operations

Unaudited Consolidated Statement of Operations

The accompanying notes form an integral part of the Unaudited Consolidated Interim Financial Statements 

FINANCIAL STATEMENTS | Unaudited Consolidated Statement of Changes in Net Assets

Unaudited Consolidated Statement of Changes in Net Assets

The accompanying notes form an integral part of the Unaudited Consolidated Interim Financial Statements 

FINANCIAL STATEMENTS | Unaudited Consolidated Statement of Cash Flows

Unaudited Consolidated Statement of Cash Flows

The accompanying notes form an integral part of the Unaudited Consolidated Interim Financial Statements 

FINANCIAL STATEMENTS | Notes to the Unaudited Consolidated Interim Financial Statements

For the period ended 30 June 2018

NOTE 1 - DESCRIPTION OF BUSINESS

The Company is a closed-ended investment company incorporated and registered in Guernsey with registered number 53155. It is a non-cellular company limited by shares and has been declared by the Guernsey Financial Services Commission to be a registered closed-ended collective investment scheme. On 20 April 2011, the Company was admitted to the Official List of the U.K. Listing Authority with a premium listing trading on the Main Market of the LSE.

On 30 September 2011, the Company raised an additional $187 million by means of a Placing and Offer for Subscription of C Shares and the shares were admitted to trading on the Main Market of the LSE on 5 October 2011. On 21 March 2013 and 24 October 2013, the Company raised an additional $550 million and $705 million by means of a Placing and Offer for Subscription of C Shares and the shares were admitted to trading on the Main Market of the LSE on 26 March 2013 and 29 October 2013 respectively. On 22 July 2013, through a tap issue, the Company raised gross proceeds of $69 million. The Sterling C Shares issued on 21 March 2013 were converted into 360,521,605 Sterling Ordinary Shares on 16 July 2013 and the Sterling C Shares issued on 24 October 2013 were converted into 421,103,481 Sterling Ordinary Shares on 21 January 2014.

At the AGM of the Company held on 13 June 2018, the Directors were granted the general authority to purchase in the market up to 14.99% of the Ordinary Shares of each class in issue (as at 13 June 2018). This authority will expire at the next AGM in 2019. Pursuant to this authority, and subject to the Law and the discretion of the Directors, the Company may purchase shares of any of its classes in the market at a discount to NAV per share on an on-going basis with a view to addressing any imbalance between the supply of and demand for such shares, thereby increasing the NAV per share and assisting in managing the discount to NAV per share of the shares in relation to the price at which the shares of such class may be trading.

As required under Article 51 of the Company's Articles of Incorporation, at the AGM held on 13 June 2018 an ordinary resolution was proposed that the Company continues its business as a closed-ended investment company and was duly passed. A continuation vote will be proposed annually at each AGM.

The Company's investment objective is to provide its shareholders with regular dividends, at levels that are sustainable, whilst preserving the capital value of its investment portfolio, utilising the investment skills of the Investment Manager to pursue its investment objective. The Company invests mainly in floating rate senior secured loans issued in U.S. Dollars, Sterling and Euros by primarily North American and European Union corporations, partnerships and other business issuers. These loans will at the time of investment often be non-investment grade. The Company considers debt instruments to be non-investment grade if, at the time of investment, they are rated below the four highest categories (AAA, AA, A and BAA) by at least two independent credit rating agencies or, if unrated, are deemed by the Investment Manager to be of comparable quality.

For the purposes of efficient portfolio management, the Company has established a wholly-owned Luxembourg incorporated subsidiary, NB Global Floating Rate Income Fund (Lux) 1 S.à.r.l. which in turn holds a wholly-owned subsidiary, NB Global Floating Rate Income Fund (Lux) 2 S.à.r.l. All references to the Company in this document refer to the Company and its wholly owned Luxembourg subsidiaries. The directors of these subsidiary companies are unrelated to the Directors of the Company. A representative of the Investment Manager was appointed as a director of NB Global Floating Rate Income Fund (Lux) 1 S.à.r.l. and NB Global Floating Rate Income Fund (Lux) 2 S.à.r.l. in January 2018.

The Company's share capital is denominated in Pound Sterling and U.S. Dollars and consists of Pound Sterling Ordinary Shares and U.S. Dollar Ordinary Shares as at 30 June 2018.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

The accompanying Unaudited Consolidated Interim Financial Statements have been presented on a going concern basis and in accordance with the Financial Accounting Standards Board Accounting Standards Codification 270, "Interim Reporting" and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. The Unaudited Consolidated Interim Financial Statements should be read in conjunction with the annual financial statements for the year ended 31 December 2017, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP").

The Company is regarded as an Investment Company and it follows the accounting and reporting requirements of the Financial Accounting Standards Board Accounting Standards ("FASB") Codification ("ASC") Topic 946 ("ASC946"). The Board believes that the underlying assumptions are appropriate and that the Company's Unaudited Consolidated Interim Financial Statements therefore present a true and fair financial position.

Basis of consolidation

The Financial Statements comprise the financial statements of the Company and its wholly owned subsidiary undertakings as at 30 June 2018. The subsidiaries are NB Global Floating Rate Income Fund (Lux) 1 S.à.r.l. which in turn holds a wholly-owned subsidiary, NB Global Floating Rate Income Fund (Lux) 2 S.à.r.l. The Company and all its wholly owned subsidiaries have U.S. Dollars as their functional and reporting currency. The results of the subsidiary undertakings are included in the Unaudited Consolidated Statement of Operations.

All intra-group balances, transactions, income and expenses are eliminated in full.

(a) Use of estimates

The preparation of Financial Statements in conformity with US GAAP requires that the Directors make estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Such estimates and associated assumptions are generally based on historical experience and various other factors that are believed to be reasonable under the circumstances, and form the basis of making the judgments about attributing values of assets and liabilities that are not readily apparent from other sources. Actual results may vary from such accounting estimates in amounts that may have a material impact on the financial results and position of the Company.

(b) Revenue recognition

Interest earned on debt instruments is accounted for net of applicable withholding taxes and is recognised as income over the terms of the loans. Discounts received or premiums paid in connection with the acquisition of loans are amortised into interest income using the effective interest method over the contractual life of the related loan. If a loan pays off prior to maturity, the recognition of the fees and costs is accelerated as appropriate. The Company raises a provision when the collection of interest is deemed doubtful.

(c) Cash and cash equivalents

The Company's cash and cash equivalents comprise cash in hand and demand deposits and highly liquid investments with original maturities of less than 90 days that are both readily convertible to known amounts of cash and so near maturity that they represent insignificant risk of changes in value. 

(d) Foreign Currency translation

Monetary assets and liabilities denominated in a currency other than U.S. Dollars are translated into U.S. Dollar equivalents using spot rates as at the reporting date. On initial recognition, a foreign currency transaction is recorded and translated at the spot exchange rate at the transaction date. Non-monetary assets and liabilities are translated at the historic exchange rate. There were no non-monetary assets held during the year. Transactions during the year, including purchases and sales of securities, income and expenses, are translated at the rate of exchange prevailing on the date of the transaction. The rates of exchange against U.S. Dollars at 30 June 2018 were 1.32025 USD: 1GBP and 1.16755 USD: 1EUR (31 December 2017 were 1.35275 USD: 1GBP and 1.20080 USD: 1EUR).

(e) Fair Value of Financial Instruments and derivatives

A financial instrument is defined by FASB ASC 825, Disclosures about Fair Value of Financial Instruments, as cash, evidence of an ownership interest in an entity, or a contract that creates a contractual obligation or right to deliver to or receive cash or another financial instrument from a second entity on potentially favourable terms. Fair value estimates are made at a discrete point in time, based on relevant market data, information about the financial instruments, and other factors.

Fair value was determined using available market information and appropriate valuation methodologies. Estimates of fair value of financial instruments without quoted market prices are subjective in nature and involve various assumptions and estimates that are matters of judgment. Accordingly, fair values are not necessarily indicative of the amounts realised on disposition of financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on estimated fair value amounts.

The following estimates and assumptions were used at 30 June 2018 to estimate the fair value of each class of financial instruments:

- Valuation of financial investments - The loans and bonds are valued at bid price. The Investment Manager believes that bid price is the best estimate of fair value and is in line with the valuation policy adopted by the Company. Equity investments are carried at fair value as determined by the Investment Manager.

- Cash and cash equivalents - The net realisable value is a reasonable estimate of fair value due to the short-term nature of these instruments.

- Receivables for investments sold - The net realisable value reasonably approximates fair value as they reflect the value at which investments are sold to a willing buyer and settlement period on their balances is short term.

- Interest receivables - The net realisable value reasonably approximates fair value.

- Other receivables - The net realisable value reasonably approximates fair value.

- Derivatives - The Company estimates fair values of derivatives based on the latest available forward exchange rates.

- Payables for investments purchased - The net realisable value reasonably approximates fair value as they reflect the value at which investments are purchased from a willing seller and settlement period on their balances is short term.

- Payables to the Investment Manager and affiliates - The net realisable value reasonably approximates fair value.

- Accrued expenses and other liabilities - The net realisable value reasonably approximates fair value.

A fair value hierarchy that prioritises the inputs to valuation techniques used to measure fair value is established under FASB ASC Topic 820. The objective of a fair value measurement is to determine 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 (an exit price). Accordingly, the fair value hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3). The levels of the fair value hierarchy under FASB ASC Topic 820-10-35-39 to 55 are as follows:

The guidance establishes three levels of the fair value hierarchy as follows:

Level 1: Quoted prices are available in active markets for identical investments as of the reporting date.

Level 2: Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies.

Level 3: Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment. The inputs used in the determination of the fair value require significant management judgement or estimation.

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The following table details the Company's financial instruments that were accounted for at fair value as at 30 June 2018.

The derivatives assets and liabilities per each counterparty are offset in accordance with the guidance in Accounting Standards Codification Topic210 (ASC 210) section 210-20-45 and ASC 815 section 815-10-45 to determine the net amounts presented in the Unaudited Consolidated Statement of Assets and Liabilities. All derivative trades have an enforceable master netting agreement so the net amount based on this is the same as the net amount disclosed in the Unaudited Consolidated Statement of Assets and Liabilities. As at 30 June 2018, there were two counterparties for the forward contracts (31 December 2017: two).

Due to changes in observable inputs, the Company transferred securities from Level 2 to Level 3 and from Level 3 to Level 2 of the fair value hierarchy. Level 3 assets are valued using single broker quotes.

The following table presents the impact of derivative instruments on the Unaudited Consolidated Statement of Operations in conformity with US GAAP.

Primary underlying risks (credit risk, liquidity risk and market risk) associated with the derivatives are explained in Note 4.

There is no collateral for forward contracts.

The Company presents the gain or loss on derivatives in the Unaudited Consolidated Statement of Operations.

The Company uses independent third party vendors to price its portfolio. As part of its valuation process, the AIFM evaluates the number of broker quotes that combine to make up the valuation provided by these vendors and if it believes that the number of broker quotes is not sufficient to ensure a Level 2 price it designates those positions Level 3. As at 30 June 2018 the AIFM designated 25 (31 December 2017: 9) of its floating rate senior secured loans at Level 3. With respect to the Equity positions, the Investment Manager's Investment Committee has derived the fair value, based on comparable companies in similar industries, designating the positions as Level 3 and Level 1 respectively.

The net realised and unrealised gain/(loss) on investments shown in the Unaudited Consolidated Statement of Operations for the period ended 30 June 2018 by type of investment is as follows:

The net realised and unrealised gain/(loss) on investments shown in the Consolidated Statement of Operations for the year ended 31 December 2017 by type of investment is as follows:

(f) Investment Transactions, Investment Income, Expenses and Valuation

All investment transactions are recorded on a trade date basis. Upon sale or maturity, the difference between the consideration received and the cost of the investment is recognised as a realised gain or loss. The cost is determined based on the first in, first out ("FIFO") cost method.

Operating expenses are recognised on an accruals basis. Operating expenses include amounts directly or indirectly incurred by the Company as part of its operations. Any costs incurred by a share buyback and by a re-issue of shares held in treasury will be charged to that share class.

The Company carries investments on its Unaudited Consolidated Statement of Assets and Liabilities at fair value in accordance with US GAAP, with changes in fair value recognised within the Unaudited Consolidated Statement of Operations in each reporting period. Quoted investments are valued according to their bid price as at the close of the relevant reporting date. Investments in private securities are priced at the bid price using a pricing service for private loans. Asset backed securities are valued according to their bid price. If a price cannot be ascertained from the above sources, the Company will seek bid prices from third party broker/dealer quotes for the investments. The Investment Manager believes that bid price is the best estimate of fair value and is in line with the valuation policy adopted by the Company.

In cases where no third party price is available, or where the Investment Manager determines that the provided price is not an accurate representation of the fair value of the investment, the Investment Manager determines the valuation based on the Investment Manager's fair valuation policy. The overall criterion for fair value is a price at which the securities involved would change hands in a transaction between a willing buyer and a willing seller, neither being under compulsion to buy or sell and both having the same knowledge of the relevant facts.

Consistent with the above criterion, the following criteria are considered when applicable:

· Valuation of other securities by the same issuer for which market quotations are available;

· Reasons for absence of market quotations;

· The credit quality of the issuer and the related economics;

· Recent sales prices and/or bid and ask quotations for the security;

· Value of similar securities of issuers in the same or similar industries for which market quotations are available;

· Economic outlook of the industry;

· Issuer's position in the industry;

· The financial information of the issuer; and

· The nature and duration of any restriction on disposition of the security.

(g) Derivative Contracts

The Company may, from time to time, hold derivative financial instruments for the purposes of hedging foreign currency exposure. These derivatives are measured at fair value in accordance with US GAAP, with changes in fair value recognised within the Unaudited Consolidated Statement of Operations in each reporting period.

Depending on the product and the terms of the transaction, the fair value of the over the counter (OTC) derivative products, such as foreign exchange contracts, can be modelled taking into account the counterparties' credit worthiness and using a series of techniques, including simulation models.

Many pricing models do not entail material subjectivity because the methodologies employed do not necessitate significant judgments and the pricing inputs are observed from actively quoted markets. The forward exchange contracts valued by the Company using pricing models fall into this category and are categorised within level 2 of the fair value hierarchy.

As shares are denominated in U.S. Dollars and Pound Sterling and investments are denominated in U.S. Dollars, Euro or Sterling, holders of any class of shares are subject to foreign currency fluctuations between the currency in which such shares are denominated and the currency of the investments made by the Company. Consequently, the Investment Manager seeks to engage in currency hedging between the U.S. Dollar and any other currency in which the assets of the Company or a class of shares is denominated, subject to suitable hedging contracts such as forward currency exchange contracts being available in a timely manner and on terms acceptable to the Investment Manager, in their sole and absolute discretion.

Note 2 (e) details the gross and net derivative asset and liability position by contract type and the amount for those derivative contracts for which netting is permissible under US GAAP. The derivative assets and liabilities have been netted where an enforceable master netting arrangement is in place

(h) Taxation

The Company is exempt from Guernsey tax on income derived from non-Guernsey sources. However, certain of its underlying investments may generate income that is subject to tax in other jurisdictions, principally in the United States. The Company files tax returns for its Luxembourg entities.

In accordance with US GAAP, management is required to determine whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognised is measured as the largest amount of benefit that has 50% or higher chance of being realised upon ultimate settlement. De-recognition of a tax benefit previously recognised could result in the Company recording a tax liability that would reduce net assets. This policy also provides guidance on thresholds, measurement, de-recognition, classification, interest and

penalties, accounting in periods, disclosure, and transition that intends to provide better financial statement comparability among different entities.

As of 30 June 2018, the Company has recorded no liability for net unrecognised tax benefits relating to uncertain tax positions it has taken or expects to take in future tax returns (31 December 2017: Nil). 

NOTE 3 - AGREEMENTS AND RELATED PARTIES TRANSACTIONS

Investment Management Agreement

The Board is responsible for managing the business affairs of the Company but delegates certain functions to the Investment Manager under the Investment Management Agreement (the "Agreement") dated 18 March 2011.

The Manager of the Company is Neuberger Berman Europe Limited (which is a related party), an indirectly wholly owned subsidiary of NB Group. On 17 July 2014, the Company, the Manager and Neuberger Berman Investment Advisers LLC (which was the Sub-Investment Manager) made certain classificatory amendments to the Agreement for the purposes of the AIFM Directive.

The Sub-Investment Management Agreement was terminated on 17 July 2014 and the Sub-Investment Manager was appointed as the AIFM per the amended and restated Investment Management Agreement ("IMA") dated 17 July 2014. The Manager, Neuberger Berman Europe Limited, was appointed under the same agreement. In accordance with the terms of the IMA, the Manager shall pay a fee to the AIFM out of the Investment Management fee received from the Company. The Company does not pay any fees to the AIFM. On 31 December 2017, the Company entered into an Amendment Agreement amending the IMA in respect of the manufacture of the Company's Key Information Document, by the AIFM, MiFID II, anti-money laundering and bribery, cyber security and data protection.

The AIFM is responsible for risk management and the discretionary management of the assets held in the Company's portfolio and will conduct the day-to-day management of the Company's assets (including uninvested cash). The AIFM is not required to and generally will not submit individual investment decisions for approval by the Board. The Manager provides certain administrative services to the Company.

As per the IMA dated 17 July 2014, the Manager is entitled to a management fee, which shall accrue daily, and be payable quarterly in arrears, at the following rate per annum of the Company's NAV: