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17.09.2019 | 11:10
(176 Leser)
(1 Bewertungen)

BlackRock Latin American Investment Trust Plc - Half-year Report

PR Newswire

BlackRock Latin American Investment Trust plc
(Legal Entity Identifier: UK9OG5Q0CYUDFGRX4151)

Information disclosed in accordance with Article 5 Transparency Directive and DTR 4.2

Half Yearly Financial Results Announcement for Period Ended 30 June 2019

PERFORMANCE RECORD

As at
30 June 2019
(unaudited)
As at
31 December 2018
(audited)

Change
%
Net assets (US$'000)287,409 255,245 +12.6
Net asset value per ordinary share (US cents)732.07c 650.15c +12.6
- with dividends reinvested+15.3
Ordinary share price (mid-market) (US cents)659.26c 557.20c +18.3
- with dividends reinvested+21.6
Ordinary share price (mid-market) (pence)1518.00p 437.50p +18.4
- with dividends reinvested+21.6
Discount9.9% 14.3% n/a
MSCI EM Latin America Index (Net return) (US Dollar basis)2535.25 475.18 +12.6

For the six
months ended
30 June 2019
(unaudited)
For the six
months ended
30 June 2018
(unaudited)


Change
%
Revenue
Net profit after taxation (US$'000)3,111 3,022 +2.9
Revenue profit per ordinary share (US cents)7.92 7.68 +3.1
Dividends per ordinary share
First quarterly interim (US cents)8.56 n/a n/a
Second quarterly interim (US cents)9.15 7.57 +20.9

Source: BlackRock.

1 Based on an exchange rate of $1.2727 to £1 at 30 June 2019 and $1.2736 to £1 at 31 December 2018.
2 The Company's performance benchmark (the MSCI EM Latin America Index) may be calculated on either a Gross or a Net return basis. Net return (NR) indices calculate the reinvestment of dividends net of withholding taxes using the tax rates applicable to non-resident institutional investors, and hence give a lower total return than indices where calculations are on a Gross basis (which assumes that no withholding tax is suffered). As the Company is subject to withholding tax rates for the majority of countries in which it invests, the NR basis is felt to be the most accurate, appropriate, consistent and fair comparison for the Company.

PERFORMANCE FROM 31 DECEMBER 2013 TO 30 JUNE 2019


Share price
(total return)

NAV
(total return)
MSCI EM
Latin America Index
(total return, net return)
2014-9.6-9.2-12.3
2015-30.6-30.9-31.0
201622.225.231.0
201731.329.023.7
2018-6.9-5.4-6.6
2019*21.615.312.6

Source: BlackRock and Datastream.
Performance figures are calculated in US Dollar terms with dividends reinvested.
* Six month performance.

CHAIRMAN'S STATEMENT FOR THE SIX MONTHS TO 30 JUNE 2019

OVERVIEW AND PERFORMANCE

Latin American stock markets were strong in the first half of the year and the MSCI EM Latin America Index (Net Return) rose by 12.6%. The Company's NAV rose by 15.3% over the same period and the share price rose by 21.6%. (All calculations with dividends reinvested on a US Dollar basis.)

The progress towards social security reform in Brazil boosted investor sentiment and the Brazilian stock market produced a net return of 16.0% over the period.

Markets in Argentina were invigorated by the country's inclusion in the MSCI Emerging Markets Index, ending the first half of 2019 up by 29.2% (net return). Whilst the Mexican stock market rose less strongly over the period, it still produced a positive net return of 6.8%, as investors were encouraged by the new government displaying a more austere approach to public spending in order to maintain a prudent fiscal surplus. Chile was the only stock market that fell in the period (net return down by 0.9%) driven by currency and macroeconomic weakness. Additional information on the main contributors to and detractors from performance for the period under review are given in the Investment Manager's report below.

However, since the period end, there has been a marked deterioration in market sentiment towards the Latin American region.

The unexpected primary election results in Argentina in August suggest a change of government in October and this has worried investors, creating a currency crisis and sharp falls in equity prices. In Brazil (which comprises over 60% of the Company's benchmark index) the reports of fires for land-clearing in parts of the Amazon rainforest have sparked public outrage and developed into a politicised topic on a global level. Whilst the fires are deeply concerning from an environmental and governance perspective, none of the Company's portfolio holdings in Brazil have been associated with the fires.

From 30 June 2019 up until close of business on 13 September 2019, the Company's NAV has fallen by 10.1% in US Dollar terms and by 8.1% in Sterling terms. The share price has fallen by 9.7% in US Dollar terms and by 7.7% in Sterling terms (all percentages calculated with dividends reinvested).

EARNINGS AND DIVIDENDS
The revenue profit per share for the period amounted to 7.92 cents (30 June 2018: 7.68 cents). The Company's dividend policy is to pay regular quarterly dividends equivalent to 1.25% of the Company's US Dollar cum-income NAV on the last working day of March, June, September and December each year, with the dividends being paid in February, May, August and November each year. As at the date of this report, total dividends of 25.84 cents per share have been declared by the Company in 2019 (as set out in the table below). When the third quarterly dividend for 2018 of 7.85 cents (paid in November 2018) is factored in, dividends paid or declared in the last 12 months total 33.69 cents per share, representing a yield of 5.1%. The yield on the Company's shares projecting future quarterly dividends forward based on four quarters being paid at the same rate as the July 2019 dividend, and based on the Company's share price at 30 June 2019 converted to US Dollars at the exchange rate on 30 June 2019, would be 5.6%.

Dividend rate
(cents per share)

Announcement date

Pay date
Quarter to 31 December 20188.13 2 January 2019 8 February 2019
Quarter to 31 March 20198.56 1 April 2019 17 May 2019
Quarter to 30 June 20199.15 1 July 2019 16 August 2019
------------------
Total25.84
==========

The dividends paid and declared by the Company in 2019 have been funded from current year revenue and revenue reserves. As at 30 June 2019, a balance of US$9.7 million remained in revenue reserves, which is sufficient to cover two more quarterly dividend payments at the dividend rate of 9.15 cents per share. Dividends will be funded out of capital reserves to the extent that current year revenue and revenue reserves are insufficient. The Board believes that this removes pressure from the investment managers to seek a higher income yield from the underlying portfolio itself which could detract from total returns. The Board also believes the Company's dividend policy will enhance demand for the Company's shares and help to narrow the Company's discount, whilst maintaining the portfolio's ability to generate attractive total returns.

It is promising to note that since the dividend policy was introduced in July 2018, the Company's discount has narrowed from 14.3% as at 31 December 2018 to 9.9% as at 30 June 2019.

DISCOUNT CONTROL
The next tender offer for 24.99% of the ordinary shares in issue (excluding treasury shares) will be implemented in 2022 if either of the following conditions are met:

(i) the annualised total NAV return of the Company does not exceed the annualised benchmark index (being the MSCI EM Latin America Index (Net Return)) US Dollar total return by more than 100 basis points over the four-year period from 1 January 2018 to 31 December 2021 (the Calculation Period);

(ii) the average daily discount to the cum-income NAV exceeds 12 per cent as calculated with reference to the trading of the shares over the Calculation Period.

The tender offer is also dependent upon the continuation vote for each relevant biennial period being approved.

In respect of the above conditions, the Company's annualised total NAV return on a US Dollar basis for the 18 months to 30 June 2019 was 6.0%, outperforming the annualised benchmark return for the same period of 3.5% by 2.5%. The cum-income discount of the Company's ordinary shares has averaged 14.0% for this period and ranged from a discount of 7.6% to 20.6%, ending on a discount of 9.9% at 30 June 2019.

OUTLOOK
Some countries in Latin America appear poised for recovery and growth, notably Brazil, where social security reform and increased fiscal stability should bode well for the economy. The outlook towards the Mexican economy is still weighed by a deceleration in growth expectations, offset by lower inflation that should allow the central bank to reduce interest rates. One year following President Andres Manuel Lopez Obrador's election, the market's worst fears over his presidency have not been realised and his government's pragmatic approach towards the private sector has been viewed positively. The equity market is trading at cheap valuation multiples relative to history (at the time of this report) which gives the portfolio managers a constructive outlook on the Mexican equity market. While the Peruvian economy slowed further in the second quarter of 2019, interest rate cuts should stimulate private investment. Given underperformance in the first half of the year, Chilean equities are looking increasingly attractive due to discounted valuations. Despite the portfolio managers' guarded optimism for most of the region, uncertainty has been generated in recent months, particularly by events in Argentina and Brazil. Volatility is a constant feature of Latin American markets; the Company's investment manager is strongly focused on risk management as an important element of portfolio construction and remains confident in the current investment approach which has contributed positively to the Company's performance over time, and continues to identify interesting opportunities in the region.

CAROLAN DOBSON
Chairman

17 September 2019

INVESTMENT MANAGER'S REPORT

MARKET OVERVIEW

Performance in the Latin American region was positive through the first half of 2019, as sentiment improved across the region, benefited by reform momentum in Brazil and improving expectations towards inflation and the upcoming presidential election in Argentina. The region ended the period up +12.6%, outperforming the MSCI Emerging Markets Index by 1.9%.

Brazilian equity markets maintained positive momentum at the onset of 2019, as signs of an economic rebound persisted, and the market priced in a quick social security reform resolution. However, lacklustre economic activity and initial delays on the reform front resulted in a sharp correction early in the period. The market rebounded in the second quarter of 2019 as reform momentum resumed and a dovish Central Bank indicated the potential for further easing. Brazil ended the period up +16.0%. Argentina was the region's best performing market, despite elevated volatility early in the period. The market rallied during the semester, ending the first half of 2019 up by 29.2% as inflation and currency depreciation stabilised and was further boosted by slight improvements in economic activity and improvements in the market's perception regarding the Presidential election in the second half of 2019.

Mexico (+6.8%) was impacted by currency depreciation early in the period, and the market remained tempered amid political uncertainty over domestic policies and subdued business sentiment. Chile was the only market in the region which was down during the first half of 2019 (-0.9%), suffering from pull backs on the equity and currency front amid macroeconomic weakness. All figures in US Dollar terms (with dividends reinvested).



Regions/indices:
MSCI IndicesLocal
currency
(% vs. USD)

Local indices
(% change)
% Price
change
% Total
return1
Argentina27.2 29.2 -11.7 -10.6 (MERVAL)
Brazil14.1 16.0 0.9 -6.1 (Ibovespa)
Chile-3.5 -0.9 2.4 -4.5 (IGPA)
Colombia19.2 22.0 1.0 8.6 (IGBC)
Mexico5.0 6.8 2.2 -2.6 (IPC)
Peru6.4 8.9 2.3 -0.2 (S&P/BVL)
Commodity prices
(% change)
MSCI EM Latin America10.8 12.6 CRB Index2 -0.3
MSCI Emerging Asia8.6 9.7 Oil (WTI)3 28.8
MSCI Emerging Markets9.2 10.7 Gold 9.9
MSCI World15.6 17.4 Copper 2.8
S&P 50017.4 18.5 Corn 12.1
MSCI Europe12.7 15.9 Soybeans 2.0

1 MSCI total return indices are net of withholding taxes.
2 Commodity Research Bureau Index.
3 West Texas Intermediate.

Source: Bloomberg (all figures in US Dollar terms) for the six months to 30 June 2019.

PORTFOLIO REVIEW
During the first half of 2019, the Company posted a 15.3% gain in its NAV in US Dollar terms. These returns outperformed the 12.6% return of the MSCI EM Latin America Index (on a net return basis) over the same time period.

Argentina performed well in the period as the portfolio's overweight position benefited from returns based on improving investment inflows, stabilisation in inflation dynamics and optimism towards the political environment. Main contributors to positive performance included the leading private sector bank in Argentina, Banco Macro and the energy company, YPF. The technology services company, Globant, was also a positive contributor over the period as the company delivered solid sales growth. Underweight positioning in Chile benefited the portfolio amid weak equity markets and currency depreciation. An overweight to Brazil also contributed in the first half of 2019 as the market strongly outperformed relative to the index amid forward progress on social security reform. Brazilian home builders, Cyrela Brazil Realty and MRV Engenharia, were among the larger contributors due to reduction in borrowing costs for homebuyers and improved market sentiment in real estate. The portfolio's position in Brazilian poultry exporter, BRF, also contributed as the stock benefited from higher chicken prices due to protein supply pressures related to the impact of African Swine Fever in Asian markets. Conversely, a lack of positioning in JBS, an underweight position in Brazilian department store chain, Lojas Renner, and an overweight position in Mexican Cement producer, Cemex SAB, were among the top detractors to portfolio performance. Additionally, an underweight to Colombia weighed on returns as stronger oil prices and better than expected activity later in the period supported the market.

Top contributors:Total effect (bps):Top detractors:Total effect (bps):
Banco Macro90JBS-35
Globant57Lojas Renner-42
YPF48AmBev-42
Cyrela Brazil Realty39Cemex SAB-46
Rumo Logística Operadora Multimodal37Vale-52

Source: BlackRock.

PORTFOLIO POSITIONING
The Company continues to evolve the portfolio with enhancements in strategy made at the beginning of the year as our primary guideposts. Such enhancements include a reduction in the number of positions in the portfolio, which allows the portfolio to concentrate positions in high conviction ideas, as well as taking a more tactical approach to the use of gearing. The combination of these enhancements is designed to make individual stock selection a prominent determinant of portfolio performance.

Over the six months ended 30 June 2019, Brazil remained our largest overweight by country. As individual Brazilian stocks outperformed, we took the opportunity to recycle profits from certain holdings and redeployed the proceeds across the region, most notably in Mexico and Argentina. During the period we increased our underweight positioning in Vale, the Brazilian iron ore miner that had a tragic dam collapse earlier this year in Brumadinho. Internal and external investigations remain ongoing as to the causes of the tragedy and the company has made pledges towards responding to the social and environmental costs of the accident. Vale has stated publicly that they remain totally committed to make good the damage and over the past six months the company has made initiatives to implement repairs and to ensure safety measures are enhanced.

We took advantage of depressed valuations in Mexico early in the period to build our exposure in high conviction names. Specifically, we added exposure to our position in FEMSA, one of the largest operators of convenience stores in Mexico. We also initiated a position in airport operator GAP (Grupo Aeroportuario del Pacifico), on positive traffic and commercial revenue outlook. We also added to portfolio holdings in Argentina during the period under review, to take advantage of heightened market volatility and depressed equity valuations in anticipation of increased market participation related to index reclassification of the country to "emerging market" status, from "frontier market" by global index providers.

Since 30 June, events have subsequently moved on in Argentina, with the unexpected result of the Argentine primary elections held in early August, in which the opposition party showed a much larger lead (15 percentage points) over the governing coalition than had been expected making a change in administration more likely in the October election. The market reacted extremely negatively, with a weakening currency, a fall in bond prices and a record decline in the equity markets (48% in a single day). Our view has been that the elections in October would be a crucial test for the country and we had been cautiously optimistic about Macri's chances of a second term. This view was predicated on evidence that Macri had been making up ground in the polls versus the opposition, currency looked to have stabilised and inflation was starting to track downwards; in addition economic activity, while still mixed, appeared closer to stabilising.

While we had trimmed some of our positions on the back of market strength in May and June, we went into the primaries running a long position and were wrong footed by the results. On the back of our scenario analysis and our recent trip to Buenos Aires in July, we believe it is in the best interest of both sides to produce an orderly transition of power, should that be validated in the presidential elections. We expect that presidential candidate Alberto Fernandez is likely to make a move towards the centre post his election as we progress into the first round on 27 October 2019. Our investment process is designed to take macro positions in the portfolio and these don't always work out in our favour in the short term. We remain confident in our approach which has contributed positively to our performance over time. Given volatility is a constant feature of these markets, risk management is an important part of our portfolio construction. We strive to ensure that risks are deliberate, diversified and appropriately scaled to help protect the portfolio from any one holding from having an outsized impact on the portfolio's returns. Our positioning in Argentina was no exception and the portfolio is behaving well within its risk and tracking error guidelines.

Most recently, we initiated positions in Chilean utility, Enel Chile, due to stock price underperformance despite a strong outcome in recent project auctions, a trend which we believe will continue, as well as in Colombian energy name, Ecopetrol, and in Panamanian airline, Copa Holdings. The Company ended the period being overweight to Brazil, Mexico and Argentina, while being underweight Chile, Peru, and Colombia. We maintain an off-benchmark position in Panama. At the sector level, we are overweight in the domestic consumer and real estate sectors, while being underweight in utilities and financials.

OUTLOOK
Brazil remains our largest overweight given the increasing prospects for positive structural economic reforms. Expectations for gradual improvement in economic activity, monetary easing and advancements in social security reform, remain focal points for our conviction. Following the recent significant market falls in the Mexican stock market which were driven by concerns over escalating trade tensions with the US and worrying outlook revisions to the country's sovereign debt, we have maintained a cautious outlook on Mexican equities as the economy slows and domestic policy uncertainty continues to lead to subdued business confidence. In Peru, we are underweight as we see negative newsflow as President Vizcarra's approval rates continue to deteriorate. We also remain underweight on Colombia as we see the latest relaxation of the fiscal rule casting a shadow on the country's commitment to fiscal stability. In contrast, we have recently begun reducing our underweight position in Chilean equities due to increasingly attractive valuations. Finally, Argentina continues to experience significant volatility, with the recent dramatic sell off following the unexpected primary election results in August 2019 driving valuations further down.

ED KUCZMA and SAM VECHT
BlackRock Investment Management (UK) Limited

17 September 2019

PORTFOLIO

GEOGRAPHIC AND SECTOR ALLOCATIONS AS AT 30 JUNE 2019

GEOGRAPHIC WEIGHTING (GROSS MARKET EXPOSURE) VS MSCI EM LATIN AMERICA INDEX


% of net assets
MSCI EM
Latin America Index
Brazil71.662.2
Mexico25.120.7
Argentina7.42.9
Chile3.37.5
Colombia2.23.4
Panama1.20.0
Peru0.03.3

Sources: BlackRock and MSCI.

SECTOR ALLOCATION (GROSS MARKET EXPOSURE) VS MSCI EM LATIN AMERICA INDEX


% of net assets
MSCI EM
Latin America Index
Financials35.534.8
Materials15.314.0
Energy13.710.7
Consumer Staples13.914.8
Industrials10.46.1
Utilities8.15.6
Communication Services5.96.1
Real Estate4.11.4
Consumer Discretionary2.34.8
Information Technology1.60.7
Health Care0.01.0

Sources: BlackRock and MSCI.

TEN LARGEST INVESTMENTS AS AT 30 JUNE 2019

Itaú Unibanco - 10.1% (2018: 9.0%) is Brazil's largest private sector bank. Having suffered no major setbacks during the recessionary period from 2015 to mid-2017, we believe Brazil's private banks are well capitalised and ready to benefit from the on-going economic recovery.

Petrobrás - 9.1% (2018: 8.9%) is Brazil's vertically integrated oil company. Since 2016, management has been successful in instituting a transparent pricing policy for gasoline diesel, initiating a divestiture program of non-core assets, and reducing the company's leverage.

Banco Bradesco - 5.9% (2018: 9.2%) is Brazil's second largest private sector bank. Having suffered no major setbacks during the recessionary period from 2015 to mid-2017, we believe Brazil's private banks are well capitalised and ready to benefit from the on-going economic recovery.

Vale - 5.0% (2018: 8.7%) is the world's largest and lowest cost producer of iron ore and is positioned to benefit from a tight iron ore market and growth in demand from Chinese steel makers.

FEMSA - 4.4% (2018: 3.6%) is the Mexican holding company that provides an investment vehicle to Mexico's domestic retail market via its controlling interest in Coca-Cola's largest independent bottler, Coca-Cola FEMSA, with operations throughout Latin America. It operates Mexico's fastest growing retailing chain, Oxxo, which has over 10,000 convenience stores throughout Mexico and also has a 12% stake in global brewer Heineken.

Grupo Financiero Banorte - 3.8% (2018: 3.1%) is Mexico's leading domestically-owned bank. Mexico has one of the lowest credit penetration rates in the region, offering Banorte a significant growth driver.

Banco do Brasil - 3.7% (2018: 2.2%) is Latin America's largest bank by assets. We expect the company to benefit from the on-going economic recovery in Brazil supported by consumer loan growth and controlled expenses.

B3 - 3.2% (2018: 3.0%) is one of the world's largest financial market infrastructure providers by market value. The services it offers range from exchange trading, clearing and other post-trade services to registration of over-the-counter (OTC) transactions and of vehicle and real estate loans.

Rumo Logística Operadora Multimodal - 3.2% (2018: 2.3%) is composed of four rail concessions in Brazil, totalling 12 thousand km of rail tracks, around 1 thousand locomotives and 27 thousand railcars, through which the company transports agricultural commodities and industrial products.

América Movil - 2.9% (2018: 4.8%) is Latin America's largest telecommunications provider. The company has been benefitting from a more benign regulatory and competitive environment since 2017 - we expect this to continue.

All percentages reflect the value of the holding as a percentage of total investments. Percentages in brackets represent the value of the holding at 31 December 2018. Together, the ten largest investments represents 51.3% of the total investments (ten largest investments as at 31 December 2018: 56.2%).

PORTFOLIO AS AT 30 JUNE 2019

Market value
US$'000
% of
investments
Brazil
Itaú Unibanco - ADR32,134 10.1
Petrobrás - ADR16,537 }
}
9.1
Petrobrás - preference shares - ADR12,499
Banco Bradesco - ADR18,917 5.9
Vale - ADS15,864 5.0
Banco do Brasil11,818 3.7
B310,345 3.2
Rumo Logística Operadora Multimodal10,185 3.2
OI SA7,877 2.5
CBD7,099 2.2
AmBev - ADR6,744 2.1
Gerdau - preference shares3,703 }
}
2.0
Gerdau - ADR2,529
Energisa6,006 1.9
Companhia Energetica de Minas Gerais - preference shares4,068 }
}
1.6
Companhia Energetica de Minas Gerais - ADR1,178
Cyrela Brazil Realty5,051 1.6
Linx4,641 1.5
Iochpe-Maxion4,616 1.4
BB Seguridade Participações4,464 1.4
Localiza Rent a Car4,310 1.4
Suzano Papel e Celulose3,857 1.2
Lojas Americanas3,585 1.1
Azul - ADR3,062 1.0
Arezzo Industria e Comércio2,913 0.9
Neoenergia1,899 0.6
B2W CIA Digital364 0.1
Klabin 7.25% 15/06/20 convertible bond220 }
}
0.1
Klabin 2.5% 15/06/22 convertible bond118
Klabin warrants 15/06/20-
------------- -------------
206,603 64.8
------------- -------------
Mexico
FEMSA - ADR13,932 4.4
Grupo Financiero Banorte12,001 3.8
América Movil - ADR9,161 2.9
Cemex SAB - ADR7,062 2.2
Walmart de México y Centroamérica4,401 1.4
Grupo Aeroportuario del Pacifico - ADS3,044 }
}
1.3
Grupo Aeroportuario del Pacifico1,028
Fibra Uno Administracion3,953 1.2
Arca Continental3,932 1.2
Banco del Bajío3,655 1.1
Kimberly Clark de México2,785 0.9
Grupo Cementos de Chihuahua2,730 0.9
Corporación Inmobiliaria Vesta2,533 0.8
Grupo Bimbo1,413 0.4
------------- -------------
71,630 22.5
------------- -------------
Argentina
Banco Macro - ADR8,312 2.6
YPF - ADR6,226 2.0
Ternium - ADR4,136 1.3
Pampa Energía - ADR2,583 0.8
------------- -------------
21,257 6.7
------------- -------------
Chile
Antofagasta5,499 1.7
Enel Chile3,934 1.2
------------- -------------
9,433 2.9
------------- -------------
Colombia
Ecopetrol - ADR6,251 2.0
------------- -------------
6,251 2.0
------------- -------------
Panama
Copa Holdings3,413 1.1
------------- -------------
3,413 1.1
------------- -------------
Total Investments318,587 100.0
======== ========

All investments are in equity shares unless otherwise stated.

† Unlisted securities.

The total number of investments held at 30 June 2019 was 52 (31 December 2018: 56). At 30 June 2019, the Company did not hold any equity interests comprising more than 3% of any company's share capital (31 December 2018: nil).

GOVERNANCE

INTERIM MANAGEMENT REPORT AND RESPONSIBILITY STATEMENT

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

PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks faced by the Company can be divided into various areas as follows:

• Counterparty;

• Investment performance;

• Income/dividend;

• Legal and regulatory compliance;

• Operational;

• Market;

• Financial; and

• Marketing.

The Board reported on the principal risks and uncertainties faced by the Company in the Annual Report and Financial Statements for the year ended 31 December 2018. A detailed explanation can be found on pages 11 to 15 of the Annual Report and Financial Statements which are available on the website at blackrock.co.uk/brla.

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

GOING CONCERN
The Directors 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 finance costs, transaction costs and taxation) for the year ended 31 December 2018 were approximately 1.0% of average net assets.

RELATED PARTY DISCLOSURE AND TRANSACTIONS WITH THE INVESTMENT MANAGER
BlackRock Fund Managers Limited (BFM) was appointed as the Company's AIFM (Alternative Investment Fund Manager) with effect from 2 July 2014. BFM has (with the Company's consent) delegated certain portfolio and risk management services, and other ancillary services, to BlackRock Investment Management (UK) Limited (BIM (UK)). Both BFM and BIM (UK) are regarded as related parties under the Listing Rules. Details of the fees payable are set out in note 10.

The related party transactions with the Directors are set out in note 11.

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

The Directors confirm to the best of their knowledge and belief that:

• the condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with applicable UK Accounting Standards and the Accounting Standards Board's Statement 'Half Yearly Financial Reports'; and

• the Interim Management Report, together with the Chairman's Statement and the Investment Manager's Report, include a fair review of the information required by 4.2.7R and 4.2.8R of the Financial Conduct Authority's (FCA) Disclosure Guidance and Transparency Rules.

The half yearly financial report has not been audited or reviewed by the Company's Auditor.

The half yearly financial report was approved by the Board on 17 September 2019 and the above responsibility statement was signed on its behalf by the Chairman.

CAROLAN DOBSON
For and on behalf of the Board

17 September 2019

FINANCIAL STATEMENTS

INCOME STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2019






Notes
Revenue US$'000Capital US$'000Total US$'000
Six months ended 30.06.19
(unaudited)
Six months ended 30.06.18
(unaudited)
Year ended
31.12.18
(audited)
Six months ended 30.06.19
(unaudited)
Six months ended 30.06.18
(unaudited)
Year ended
31.12.18
(audited)
Six months ended 30.06.19
(unaudited)
Six months ended 30.06.18
(unaudited)
Year ended
31.12.18
(audited)
Gains/(losses) on investments held at fair value through profit or loss- - - 37,056 (40,535)(18,800)37,056 (40,535) (18,800)
(Losses)/gains on foreign exchange- - - (336)84 103 (336)84 103
Income from investments held at fair value through profit or loss2 4,256 4,099 8,017 - - - 4,256 4,099 8,017
Other income2 1 - 1 - - - 1 - 1
------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Total income4,257 4,099 8,018 36,720 (40,451)(18,697)40,977 (36,352)(10,679)
------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Expenses
Investment management fee3 (272)(270)(523)(816)(810)(1,568)(1,088)(1,080)(2,091)
Other operating expenses4 (407)(301)(688)(7)(22)(56)(414)(323)(744)
------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Total operating expenses(679)(571)(1,211)(823)(832)(1,624)(1,502)(1,403)(2,835)
------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Net profit/(loss) on ordinary activities before finance costs and taxation3,578 3,528 6,807 35,897 (41,283)(20,321)39,475 (37,755)(13,514)
Finance costs(97)(78)(167)(291)(235)(503)(388)(313)(670)
------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Net profit/(loss) on ordinary activities before taxation3,481 3,450 6,640 35,606 (41,518)(20,824)39,087 (38,068)(14,184)
Taxation(370)(428)(693)- - - (370)(428)(693)
------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Net profit/(loss) on ordinary activities after taxation3,111 3,022 5,947 35,606 (41,518)(20,824)38,717 (38,496)(14,877)
------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Earnings/(loss) per ordinary share (US cents)7 7.92 7.68 15.13 90.70 (105.52)(52.98)98.62 (97.84)(37.85)
======== ======== ======== ======== ======== ======== ======== ======== ========

The total column of this statement represents the Company's profit and loss account. 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 net profit/(loss) on ordinary activities for the period disclosed above represents the Company's total comprehensive income.

STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2019


Called up
share capital
US$'000
Share
premium
account
US$'000
Capital
redemption
reserve
US$'000
Non-
distributable
reserve
US$'000

Capital
reserves
US$'000

Revenue
reserves
US$'000


Total
US$'000
For the six months ended 30 June 2019 (unaudited)
At 31 December 20184,144 11,719 4,843 4,356 217,063 13,120 255,245
Total comprehensive income:
Net profit for the period- - - - 35,606 3,111 38,717
Transaction with owners, recorded directly to equity:
Dividends paid(a)- - - - - (6,553)(6,553)
------------- ------------- ------------- ------------- ------------- ------------- -------------
At 30 June 20194,144 11,719 4,843 4,356 252,669 9,678 287,409
------------- ------------- ------------- ------------- ------------- ------------- -------------
For the six months ended 30 June 2018 (unaudited)
At 31 December 20174,144 11,719 4,843 4,356 240,131 14,397 279,590
Total comprehensive income:
Net (loss)/profit for the period- - - - (41,518)3,022 (38,496)
Transaction with owners, recorded directly to equity:
Ordinary shares purchased into treasury- - - - (655)- (655)
Share purchase costs- - - - (3)- (3)
Dividends paid(b)- - - - - (2,756)(2,756)
------------- ------------- ------------- ------------- ------------- ------------- -------------
At 30 June 20184,144 11,719 4,843 4,356 197,955 14,663 237,680
------------- ------------- ------------- ------------- ------------- ------------- -------------
For the year ended 31 December 2018 (audited)
At 31 December 20174,144 11,719 4,843 4,356 240,131 14,397 279,590
Total comprehensive income:
Net (loss)/profit for the year- - - - (20,824)5,947 (14,877)
Transaction with owners, recorded directly to equity:
Ordinary shares purchased into treasury- - - - (654)- (654)
Share purchase costs- - - - (5)- (5)
Dividends paid(c)- - - - (1,585)(7,224)(8,809)
------------- ------------- ------------- ------------- ------------- ------------- -------------
At 31 December 20184,144 11,719 4,843 4,356 217,063 13,120 255,245
======== ======== ======== ======== ======== ======== ========

(a) Third interim dividend of 8.13 cents per share for the year ended 31 December 2018, declared on 2 January 2019 and paid on 8 February 2019; first interim dividend of 8.56 cents per share for the year ending 31 December 2019, declared on 1 April 2019 and paid on 17 May 2019.

(b) Final dividend of 7.00 cents per share for the year ended 31 December 2017, declared on 13 March 2018 and paid on 6 June 2018.

(c) Final dividend of 7.00 cents per share for the year ended 31 December 2017, declared on 13 March 2018 and paid on 6 June 2018; first interim dividend of 7.57 cents per share for the year ended 31 December 2018, declared on 3 July 2018 and paid on 23 August 2018; second interim dividend of 7.85 cents per share for the year ended 31 December 2018, declared on 2 October 2018 and paid on 9 November 2018.

The transaction costs relating to the acquisition and disposal of investments amounted to US$194,000 and US$188,000 respectively for the six months ended 30 June 2019 (six months ended 30 June 2018: US$124,000 and US$89,000; year ended 31 December 2018: US$161,000 and US$141,000). All transaction costs have been included within the capital reserves.

The share premium account, capital redemption reserve and the non-distributable reserve are not distributable profits under the Companies Act 2006. In accordance with the Company's Articles of Association, net capital reserves may be distributed by way of the repurchase by the Company of its ordinary shares and for payment as dividends.

BALANCE SHEET AS AT 30 JUNE 2019



Notes
30 June 2019
US$'000
(unaudited)
30 June 2018
US$'000
(unaudited)
31 December 2018
US$'000
(audited)
Fixed assets
Investments held at fair value through profit or loss318,587 259,545 278,124
------------- ------------- -------------
Current assets
Debtors1,135 989 3,680
Cash and cash equivalents128 153 137
------------- ------------- -------------
1,263 1,142 3,817
------------- ------------- -------------
Creditors - amounts falling due within one year
Bank overdraft(24,664)(19,924)(25,593)
Other creditors(7,515)(2,821)(841)
------------- ------------- -------------
(32,179)(22,745)(26,434)
------------- ------------- -------------
Net current liabilities(30,916)(21,603)(22,617)
------------- ------------- -------------
Total assets less current liabilities287,671 237,942 255,507
------------- ------------- -------------
Creditors - amounts falling due after more than one year
Non current tax liability6 (238)(238)(238)
Non-equity redeemable shares6 (24)(24)(24)
------------- ------------- -------------
(262)(262)(262)
------------- ------------- -------------
Net assets287,409 237,680 255,245
======== ======== ========
Capital and reserves
Called up share capital8 4,144 4,144 4,144
Share premium account11,719 11,719 11,719
Capital redemption reserve4,843 4,843 4,843
Non-distributable reserve4,356 4,356 4,356
Capital reserves252,669 197,955 217,063
Revenue reserves9,678 14,663 13,120
------------- ------------- -------------
Total shareholders' funds7 287,409 237,680 255,245
======== ======== ========
Net asset value per ordinary share (US cents)7 732.07 605.41 650.15
======== ======== ========

STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 JUNE 2019

Six months ended
30 June 2019
US$'000
(unaudited)
Six months ended
30 June 2018
US$'000
(unaudited)
Year ended
31 December 2018
US$'000
(audited)
Operating activities
Net profit/(loss) on ordinary activities before taxation39,087 (38,068)(14,184)
Add back finance costs388 313 670
(Gains)/losses on investments held at fair value through profit or loss(37,056)40,535 18,800
Losses/(gains) on foreign exchange336 (84)(103)
Sales of investments held at fair value through profit or loss130,661 89,289 129,248
Purchases of investments held at fair value through profit or loss(126,293)(85,741)(124,526)
Decrease/(increase) in debtors1,240 669 (151)
Increase/(decrease) in other creditors204 1,069 (800)
Taxation on investment income(370)(428)(693)
------------- ------------- -------------
Net cash generated from operating activities8,197 7,554 8,261
------------- ------------- -------------
Financing activities
Interest paid(388)(313)(670)
Share purchase costs paid- (3)(5)
Ordinary shares purchased into treasury- (655)(654)
Dividends paid(6,553)(2,756)(8,809)
------------- ------------- -------------
Net cash used in financing activities(6,941)(3,727)(10,138)
------------- ------------- -------------
Increase/(decrease) in cash and cash equivalents1,256 3,827 (1,877)
Cash and cash equivalents at the start of the period(25,456)(23,682)(23,682)
Effect of foreign exchange rate changes(336)84 103
------------- ------------- -------------
Cash and cash equivalents at the end of the period(24,536)(19,771)(25,456)
Comprised of:------------- ------------- -------------
Cash at bank128 153 137
Bank overdraft(24,664)(19,924)(25,593)
------------- ------------- -------------
(24,536)(19,771)(25,456)
======== ======== ========

NOTES TO THE FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

1. PRINCIPAL ACTIVITY AND BASIS OF PREPARATION
The principal activity of the Company is that of an investment trust company within the meaning of section 1158 of the Corporation Tax Act 2010.

The Company presents its results and positions under FRS 102, 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (FRS 102), which forms part of revised Generally Accepted Accounting Practice (New UK GAAP) issued by the Financial Reporting Council (FRC) in 2013 and updated in March 2018.

The condensed set of financial statements has been prepared on a going concern basis in accordance with FRS 102 and FRS 104, 'Interim Financial Reporting' issued by the FRC in March 2015 and the revised Statement of Recommended Practice - 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (SORP) issued by the Association of Investment Companies (AIC) in November 2014 and updated in February 2018.

The accounting policies applied for the condensed set of financial statements are as set out in the Company's Annual Report and Financial Statements for the year ended 31 December 2018.

2. INCOME

Six months ended
30 June 2019
US$'000
(unaudited)
Six months ended
30 June 2018
US$'000
(unaudited)
Year ended
31 December 2018
US$'000
(audited)
Investment income:
Overseas dividends3,911 3,013 6,640
Overseas REIT distributions127 69 154
Overseas special dividends41 618 787
UK dividends172 189 220
Fixed interest income17 186 202
Amortisation of fixed interest investments(12)24 14
------------- ------------- -------------
4,256 4,099 8,017
------------- ------------- -------------
Other income:
Deposit interest1 - 1
------------- ------------- -------------
Total income4,257 4,099 8,018
======== ======== ========

There were no special dividends recognised in capital (six months ended 30 June 2018: US$nil; year ended 31 December 2018: US$234,000).

Dividends and interest received in cash during the period amounted to US$5,643,000 and US$18,000 (six months ended 30 June 2018: US$4,978,000 and US$192,000; year ended 31 December 2018: US$7,827,000 and US$209,000) respectively.

3. INVESTMENT MANAGEMENT FEE

Six months ended
30 June 2019
(unaudited)
Six months ended
30 June 2018
(unaudited)
Year ended
31 December 2018
(audited)
Revenue
US$'000
Capital
US$'000
Total
US$'000
Revenue
US$'000
Capital
US$'000
Total
US$'000
Revenue
US$'000
Capital
US$'000
Total
US$'000
Investment management fee272 816 1,088 270 810 1,080 523 1,568 2,091

The investment management fee has been calculated at 0.80% per annum on the Net Asset Value (NAV). The fee is allocated 25% to the revenue column and 75% to the capital column of the income statement.

4. OTHER OPERATING EXPENSES

Six months ended
30 June 2019
US$'000
(unaudited)
Six months ended
30 June 2018
US$'000
(unaudited)
Year ended
31 December 2018
US$'000
(audited)
Taken to revenue:
Custody fee29 32 59
Depositary fees*14 17 31
Auditors' remuneration:
Audit fees18 21 40
Registrar's fees20 11 34
Directors' emoluments123 81 254
Marketing fees55 57 112
Postage and printing fees25 15 34
AIC fees11 10 20
Brokers' fees32 28 65
Employer NI contributions15 10 21
FCA fees5 5 11
Other administration costs60 14 7
------------- ------------- -------------
407 301 688
======== ======== ========
Taken to capital:
Custody transaction charges7 22 56
------------- ------------- -------------
414 323 744
======== ======== ========

* All expenses other than depositary fees are paid in Sterling and are therefore subject to exchange rate fluctuations.

5. DIVIDENDS
On 30 May 2018, shareholders approved a resolution to amend the Company's dividend policy to pay regular quarterly dividends equivalent to 1.25% of the Company's US Dollar NAV on the last working day of December, March, June and September each year, with the dividends being paid in February, May, August and November each year, respectively.

The Company's cum-income US Dollar NAV at 31 March 2019 was 684.69 US cents per share, and the Directors declared a first quarterly interim dividend of 8.56 cents per share. The dividend was paid on 17 May 2019 to holders of ordinary shares on the register at the close of business on 12 April 2019.

In accordance with FRS102 Section 32 'Events After the End of the Reporting Period', the final dividend payable on ordinary shares is recognised as a liability when approved by shareholders. Interim dividends are recognised only when paid.

Dividends on equity shares paid during the period were:

Six months ended
30 June 2019
US$'000
(unaudited)
Six months ended
30 June 2018
US$'000
(unaudited)
Year ended
31 December 2018
US$'000
(audited)
2017 Final dividend of 7.00 cents- 2,756 2,756
2018 First interim dividend of 7.57 cents- - 2,972
2018 Second interim dividend of 7.85 cents- - 3,081
2018 Third interim dividend of 8.13 cents3,192 - -
2019 First interim dividend of 8.56 cents3,361 - -
------------- ------------- -------------
6,553 2,756 8,809
======== ======== ========

6. CREDITORS - AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

As at
30 June 2019
US$'000
(unaudited)
As at
30 June 2018
US$'000
(unaudited)
As at
31 December 2018
US$'000
(audited)
Non current tax liability238 238 238
Non-equity redeemable shares24 24 24
------------- ------------- -------------
262 262 262
======== ======== ========

At 30 June 2019 the Company had net surplus management expenses of US$nil (30 June 2018: US$273,000; 31 December 2018: US$nil) and a non-trade loan relationship deficit of US$nil (30 June 2018: US$254,000; 31 December 2018: US$305,000). A deferred tax asset was not recognised in the period ended 30 June 2018 or in the year ended 31 December 2018 as it was unlikely that there would be sufficient future taxable profits to utilise these expenses.

Non equity redeemable shares
The redeemable shares of £1 each carry the right to receive a fixed dividend at the rate of 0.1% per annum on the nominal amount thereof. They are capable of being redeemed by the Company at any time and confer no rights to receive notice of, attend or vote at general meetings except where the rights of holders are to be varied or abrogated. On a winding up, the capital paid up on such shares ranks pari passu with, and in proportion to, any amounts of capital paid to the holders of ordinary shares, but does not confer any further right to participate in the surplus assets of the Company.

7. EARNINGS AND NET ASSET VALUE PER ORDINARY SHARE
Revenue and capital earnings per ordinary share and net asset value per ordinary share are shown below and have been calculated using the following:

Six months ended
30 June 2019
(unaudited)
Six months ended
30 June 2018
(unaudited)
Year ended
31 December 2018
(audited)
Net revenue profit attributable to ordinary shareholders (US$'000)3,111 3,022 5,947
Net capital profit/(loss) attributable to ordinary shareholders (US$'000)35,606 (41,518)(20,824)
--------------- --------------- ---------------
Total profit/(loss) attributable to ordinary shareholders (US$'000)38,717 (38,496)(14,877)
--------------- --------------- ---------------
Equity shareholders' funds (US$'000)287,409 237,680 255,245
--------------- --------------- ---------------
Earnings per share
The weighted average number of ordinary shares in issue during the period on which the earnings per ordinary share was calculated, was:39,259,620 39,345,117 39,302,016
--------------- --------------- ---------------
The actual number of ordinary shares in issue at the end of each period on which the net asset value per ordinary share was calculated, was:39,259,620 39,259,620 39,259,620
--------------- --------------- ---------------
The number of ordinary shares in issue, including treasury shares at the period/year end was:41,441,282 41,441,282 41,441,282
--------------- --------------- ---------------
Calculated on weighted average number of ordinary shares:
Revenue profit (US cents)7.92 7.68 15.13
Capital profit/(loss) (US cents)90.70 (105.52)(52.98)
--------------- --------------- ---------------
Total profit/(loss) (US cents)98.62 (97.84)(37.85)
========= ========= =========

As at
30 June 2019
(unaudited)
As at
30 June 2018
(unaudited)
As at
31 December 2018
(audited)
Net asset value per ordinary share (US cents)732.07 605.41 650.15
--------------- --------------- ---------------
Ordinary share price (mid-market) (US cents)*659.26 514.90 557.20
========= ========= =========

* The Company's share price is quoted in Sterling and the above represents the US Dollar equivalent based on exchange rates of $1.2727 to £1 (30 June 2018: $1.3203; 31 December 2018: $1.2736).

8. SHARE CAPITAL

Ordinary
shares
number
Treasury
shares
number
Total
Shares
number
Nominal
value
US$'000
Allotted, called up and fully paid share capital comprised:
Ordinary shares of 10 cents each:
At 31 December 2018 and 30 June 201939,259,620 2,181,662 41,441,282 4,144

During the period to 30 June 2019, no ordinary shares were purchased and transferred to treasury (six months ended 30 June 2018: 110,000 ordinary shares at a total cost of US$658,000; year ended 31 December 2018: 110,000 ordinary shares at a total cost of US$659,000).

No treasury shares were cancelled during the period (six months ended 30 June 2018: nil; year ended 31 December 2018: nil) or for the period from 30 June 2019 to the date of this report.

9. VALUATION OF FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are either carried in the Balance Sheet at their fair value (investments) or at an amount which is a reasonable approximation of fair value (due from brokers, dividends and interest receivable, due to brokers, accruals, cash and cash equivalents and overdrafts). Section 11 of FRS 102 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 in the Financial Statements on page 65 of the Annual Report and Financial Statements for the year ended 31 December 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 prices 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 using observable inputs
This category includes instruments valued using quoted prices for similar instruments in markets that are considered less active, or other valuation techniques where significant inputs are directly or indirectly observable from market data.

Level 3 - Valuation techniques using significant unobservable inputs
This category includes all instruments where the valuation technique includes inputs not based on observable market data and the unobservable inputs could have a significant impact on the instrument's valuation.

This category also includes instruments that are valued based on quoted prices for similar instruments where significant entity determined adjustments or assumptions are required to reflect differences between the instruments and instruments for which there is no active market. The Investment Manager considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement.

Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability. The determination of what constitutes 'observable' inputs requires significant judgement by the Investment Manager.

The table below is an analysis of the Company's financial instruments measured at fair value at the balance sheet date.

Financial assets at fair value through profit or loss at 30 June 2019 (unaudited)Level 1
US$'000
Level 2
US$'000
Level 3
US$'000
Total
US$'000
Equity investments318,249 - - 318,249
Fixed interest investments- 338 - 338
--------------- --------------- --------------- ---------------
Total318,249 338 - 318,587
========= ========= ========= =========

Financial assets at fair value through profit or loss at 30 June 2018 (unaudited)Level 1
US$'000
Level 2
US$'000
Level 3
US$'000
Total
US$'000
Equity investments259,101 - - 259,101
Fixed interest investments- 423 21 444
--------------- --------------- --------------- ---------------
Total259,101 423 21 259,545
========= ========= ========= =========

Financial assets at fair value through profit or loss at 31 December 2018 (audited)Level 1
US$'000
Level 2
US$'000
Level 3
US$'000
Total
US$'000
Equity investments277,783 - - 277,783
Fixed interest investments- 341 - 341
--------------- --------------- --------------- ---------------
Total277,783 341 - 278,124
========= ========= ========= =========

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




Level 3 financial assets at fair value through profit or loss
Six months ended
30 June 2019
US$'000
(unaudited)
Six months ended
30 June 2018
US$'000
(unaudited)
Year ended
31 December 2018
US$'000
(audited)
Opening fair value- 1,339 1,339
Fixed interest converted to equity and transferred to Level 1- (1,471)(1,471)
Total gains/(losses) included in (losses)/gains on investments in the Income Statement:
- assets disposed during the period- 180 132
- assets held at the end of the period- (27)-
--------------- --------------- ---------------
Closing balance- 21 -
========= ========= =========

The Company held no Level 3 securities as at 30 June 2019 (30 June 2018: one; 31 December 2018: nil).

The Level 3 investment held at 30 June 2018 relates to the Hypera Pharma 11.3% 15/10/18 convertible bond.

For exchange listed equity investments the quoted price is the bid price.

The unquoted fixed asset investment, as shown in Level 3, was valued based on the directors' best estimate based on latest information in line with the principles of the International Private and Venture Capital Valuation Guidelines.

10. TRANSACTIONS WITH THE AIFM AND THE INVESTMENT MANAGER
BlackRock Fund Managers Limited (BFM) provides management and administration services to the Company under a contract which is terminable on six months' notice. BFM has (with the Company's consent) delegated certain portfolio and risk management services, and other ancillary services, to BlackRock Investment Management (UK) Limited (BIM (UK)). Further details of the investment management contract are disclosed in the Directors' Report in the Annual Report and Financial Statements 31 December 2018 on pages 32 to 33.

The investment management fee is levied quarterly, based on 0.80% per annum of the net asset value on the last day of each month.

The investment management fee payable for the six months ended 30 June 2019 amounted to US$1,088,000 (six months ended 30 June 2018: US$1,080,000; year ended 31 December 2018: US$2,091,000). At the period end, an amount of US$563,000 was outstanding in respect of investment management fees (30 June 2018: US$1,087,000; 31 December 2018: US$520,000).

In addition to the above services BIM (UK) has provided the Company with marketing services. The total fees paid or payable for these services for the period ended 30 June 2019 amounted to US$55,000 excluding VAT (six months ended 30 June 2018: US$57,000; year ended 31 December 2018: US$112,000). Marketing fees of US$169,000 were outstanding at 30 June 2019 (30 June 2018: US$169,000; 31 December 2018: US$114,000).

11. RELATED PARTY DISCLOSURE
The Board consists of five non-executive Directors, all of whom are considered to be independent by the Board. None of the Directors has a service contract with the Company. With effect from 1 January 2019, the remuneration of the Chairman was increased from £46,000 to £47,000, the remuneration of the Chairman of the Audit Committee was increased from £35,000 to £36,000 and for the other Directors the remuneration was increased from £31,000 to £32,000. With effect from 31 March 2019 the Senior Independent Director remuneration increased to £34,000.

At the period end and as at the date of this report members of the Board held ordinary shares in the Company as set out below:

As at
17 September 2019
Ordinary shares
As at
30 June 2019
Ordinary shares
Carolan Dobson (Chairman)4,792 4,792
Craig Cleland5,000 n/a
Mahrukh Doctor686 686
Nigel Webber5,000 5,000
Laurence Whitehead15,203 15,203

12. CONTINGENT LIABILITIES
There were no contingent liabilities at 30 June 2019, 30 June 2018 or 31 December 2018.

13. PUBLICATION OF NON STATUTORY ACCOUNTS
The financial information contained in this half yearly financial report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the six months ended 30 June 2019 and 30 June 2018 has not been audited or reviewed by the Company's auditors.

The information for the year ended 31 December 2018 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies. The report of the auditor in those financial statements contained no qualification or statement under sections 498(2) or (3) of the Companies Act 2006.

14. ANNUAL RESULTS
The Board expects to announce the annual results for the year ending 31 December 2019 in March 2020. Copies of the results announcement can be obtained from the Secretary on 020 7743 3000. The Annual Report and Financial Statements should be available by mid-March 2020, with the Annual General Meeting being held in May 2020.

For further information, please contact:
Melissa Gallagher, Managing Director, BlackRock Investment Management (UK) Limited
Tel: 020 7743 3000

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

17 September 2019

12 Throgmorton Avenue
London EC2N 2DL

END

The Half Yearly Financial Report will also be available on the BlackRock Investment Management website at http://www.blackrock.co.uk/brla. Neither the contents of the Manager's website nor the contents of any website accessible from hyperlinks on the Manager's website (or any other website) is incorporated into, or forms part of, this announcement.


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