Half-yearly Report

BlackRock Frontiers Investment Trust plc Half Yearly Financial Report for the period from 15 October (date of incorporation) to 31 March 2011 Investment Objective The Company's investment objective is to achieve long term capital growth from investment in companies operating in Frontier Markets (defined as any country which is not in either the Emerging Markets Index or the Developed Markets Index) or whose stocks are listed on the stock markets of such countries. Summary Investment Policy The Company will seek to maximise total return and will invest globally in the securities of companies domiciled or listed in, or exercising the predominant part of their economic activity in, Frontier Markets. Investment may also be made in the securities of companies domiciled or listed in, or exercising the predominant part of their economic activity in, more developed markets with significant business operations in Frontier Markets. Performance Record Financial Highlights 31 March 2011 US Dollar Net assets (`000s) 142,441 Net asset value per share 150.31c Share price 145.08c Sterling Net assets (`000s) 88,855 Net asset value per share 93.76p Share price 90.50p Discount to net asset value 3.5% Performance for the period since launch to 31 March 2011 US dollar Net asset value per share -1.6% MSCI Frontier Markets Index -3.8% Share price -7.0% Sterling* Net asset value per share -4.3% MSCI Frontier Markets Index -6.4% Share price -9.5% * Based on an exchange rate of 0.6238. Chairman's Statement For the period from 15 October (date of incorporation) to 31 March 2011 Overview For the period since launch on 17 December 2010, the Company's net asset value ("NAV") fell by 1.6%, compared with a fall of 3.8% in the MSCI Frontier Markets Index (on a total return, US dollar basis). During the same period, the share price fell by 7% on a US dollar basis (9.5% on a sterling basis). Since inception, performance across Frontier Markets has shown remarkable divergence. Romania was the best performing market, up 40%, driven by positive economic reforms. Asian markets such as Bangladesh were the worst performing, falling 26% over the same period. Despite this challenging backdrop, the Company was well-positioned relative to the index across geographies to navigate the volatility. The relative outperformance of the Company's NAV was driven by our overweight positions in Romania, Saudi Arabia and Ukraine which have underpriced growth prospects. The Company benefitted from underweight positions in Argentina, Bangladesh and Kuwait. We have no exposure to Bangladesh and Vietnam, given our concerns on rich valuations and deteriorating macro fundamentals respectively. We believe markets will continue to differentiate between the crisis stricken North African region and countries that are geographically proximate yet economically and politically distinct. Interestingly, both Saudi Arabia and Qatar have recovered strongly and are now showing a positive return in 2011. We remain cautious on the outlook for those markets where a regime change has taken place or is likely to take place. However, we see ample opportunities in several markets that offer equity valuations at significant discounts to both emerging and developed markets despite a far superior corporate earnings growth profile and a better macroeconomic backdrop. We strongly believe that the company is well-positioned to benefit from these attractive valuations over the medium term. Since the period end, the Company's NAV has increased by 1.7% and the share price has risen by 8.8% (both on a total return US dollar basis). Directors The Board were pleased to welcome Sarmad Zok to the Board in February 2011. Mr Zok is Chairman and Chief Executive Officer of Kingdom Hotel Investments (KHI) (a Dubai based company) and a Director of Kingdom Holding Company (KHC) with responsibility for KHC's global hotel portfolio. He will also serve as a member of the Company's Audit and Management Engagement Committee. Dividends The Company generated net income per share of 1.69 cents during the period which provides a sound basis for the Company's first annual dividend, which is expected to be announced with the publication of the Company's annual results for the period ended 30 September 2011. Outlook Despite significant volatility in many Frontier Markets over the period since launch, the sector represents an attractive opportunity for investors within the broader emerging markets universe. We anticipate that the combination of countries with fast growth, good demographics and low debt/GDP ratios should prove to be highly appealing. Following a period of significant underperformance for the sector in 2010, we believe your Company is well placed to benefit from attractive stock valuations and increased capital allocation towards the asset class during 2011. Audley Twiston-Davies 12 May 2011 Interim Management Report and Responsibility Statement The Chairman's Statement and the Investment Manager's Report give details of the important events which have occurred during the period and their impact on the financial statements. Principal risks and uncertainties A detailed explanation of the risks relating to the Company was set out on pages 5 to 16 of the Company's prospectus dated 29 November 2010. This document is available on the Company's website http://www.blackrock.co.uk/brfi. The principal risks faced by the Company can be divided into various areas as follows: - Performance; - Market; - Regulatory; - Operational; and - Financial. In the view of the Board, there have not been any changes to the fundamental nature of these risks since the publication of the Company's prospectus dated 29 November 2010, and these principal risks and uncertainties are equally applicable to the remaining six months of the financial year as they were to the period under review. Related party transactions The Investment Manager is regarded as a related party and details of the management fees payable are set out in note 4. The related party transactions with the Directors are set out in note 8. Directors' responsibility statement The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Interim Management Report and Financial Statements. The Directors confirm to the best of their knowledge that: - the condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with the International Accounting Standard 34 "Interim Financial Reporting"; and - the Interim Management Report, together with the Chairman's Statement and Investment Manager's Report, include a fair review of the information required by 4.2.7R and 4.2.8R of the FSA's Disclosure and Transparency Rules. The half yearly financial report was approved by the Board on 12 May 2011 and the above responsibility statement was signed on its behalf by the Chairman. Audley Twiston-Davies By order of the Board 12 May 2011 Investment Manager's Report Markets Since inception the NAV of the Company has fallen by 1.6%, outperforming the MSCI Frontier Markets Index which has fallen by 3.8% (on a US dollar total return basis). Performance across regions was mixed. Eastern European and Commonwealth of Independent States markets have been the strongest performers while the Asian markets have performed poorly. Romania was the strongest performing market, up 40%, as recent economic data show that actions taken by the government in the wake of the IMF loan package agreed in early 2009 have had a sufficient effect and the country is on track to meet all targets. In addition, the government continues to implement plans to turn around and privatise state companies and equity markets have risen in anticipation of this. Ukraine also performed strongly, up 31%, as the new government continued to impress with their commitment to tackling decade-old issues and the resurgence of the country's industrial and agricultural sectors. Bangladesh was the worst performing market, down 26%, as the market fell from very overvalued levels. A steep market drop in January triggered a riot outside the exchange building by local investors and the exchange was suspended. Since then, despite some rallies, the market has continued to fall. We remain concerned about the high levels of margin lending and believe that the market remains overvalued at current levels. The portfolio continues to have no exposure to this market. Argentina was another market that performed poorly falling 10% as investors became concerned that Christina de Kirchner may win presidential elections scheduled for October/November 2011 reducing the likelihood of structural economic reform. The Middle East and North African markets saw turbulent performance as protests took place across a number of different countries causing varying degrees of disruption and stock markets across the region were initially marked down indiscriminately. For the more stable countries in the region this sell off provided a good buying opportunity. We remain of the view that there is a huge difference between countries that face challenges from inflation and have little money to spend, such as Egypt and Tunisia, and countries such as Saudi Arabia and Qatar that have governments with vast reserves at their disposal with which to address their populations' concerns. At the end of March the difference in performance was marked with the Saudi Market actually rising 1% over the period in contrast to Tunisia which fell 12%. Performance The portfolio was positioned well across geographies. Overweight positions in Romania, Saudi Arabia and Ukraine together with underweight positions in Argentina, Bangladesh and Kuwait contributed strongly to performance. Stocks which have outperformed over the period included BRD Group (a Romanian bank), which rallied on reporting results above expectations and macro-economic improvements in Romania. Kazmunaigas (a Kazakhstan energy company), performed well on the back of higher oil prices and presidential elections in Kazakhstan which passed smoothly ensuring continued stability in the country. Qatar Electricity and Water (a Qatar utility stock), rose as investor sentiment towards Qatar improved post the announcement that Qatar will host the 2022 FIFA World Cup and the Qatar government reaffirmed their $125bn development spending plans. Detractors from performance included Omani construction stock, Galfar Engineering and Construction, which fell on the back of an increase in minimum wage which will affect margins going forward. Panamanian Copa Airlines also performed poorly as investors became concerned that the company would see lower margins as it struggled to fully pass on the cost of rising oil prices. Since the period end, we have added to Copa which has recovered and has increased in value by 22% at the time of writing. We continue to hold Galfar as we believe top line growth should offset margin declines. Outlook It is our view that Frontier Markets offer the most attractive opportunity within the broader emerging market universe. The combination of countries with fast growth, good demographics and low debt/GDP ratios should prove to be highly supportive. We note that equity valuations in the portfolio are low compared to both emerging markets and developed markets despite the far higher corporate earnings growth prospects. Following a period of significant under performance, we would not be surprised to see increased capital allocation towards the asset class during 2011. The Company has a significant overweight position in Nigeria where valuations look extremely compelling. By the end of March the Nigerian banking sector had been effectively recapitalised. A bad bank has been set up, AMCON, which will buy non-performing loans from banks allowing them to redirect their balance sheets towards productive lending. Banking penetration in Nigeria is among the lowest level in the world with bank loans to GDP standing at only 34%. Given the strong GDP growth forecast, which is expected to remain above 6% for the next 5 years, we are very positive on the Nigerian banking sector which is trading on under 10x forward earnings multiples with dividend yields above 5%. In Ukraine, we continue to be impressed by the new government's approach to tackling decade-old issues and the resurgence of the country's industrial and agricultural sectors. Meanwhile, Kazakhstan is emerging from a four year financial crisis and the companies in the materials and energy sectors are being boosted by record commodity prices. We will remain overweight both of these countries. We continue to watch the Middle East very closely. Our expectation is that Saudi Arabia, UAE and Qatar, given their wealth, will not be significantly impacted by the challenges facing other countries in the region. Despite having benefited from the rally seen over the last month, we continue to believe that valuations are extremely compelling. That said, should our relatively benign political view change, we will act in shareholders' interests and reduce the Company's exposure. We remain cautious on the outlook for those markets where a regime change has taken place or is likely to take place, such as Bahrain, Syria and Tunisia. We will use our ability to short where appropriate to generate returns. The portfolio will remain underweight in Kuwait, where valuations are expensive and growth prospects are less compelling and Bangladesh, where despite the significant market correction, stocks still look expensive. In contrast, we continue to look to add positions in South East Asia and sub-Saharan Africa. Overall, we believe that the outlook for Frontier Markets as an asset class is robust and we see significant upside for the holdings in the portfolio. Sam Vecht BlackRock Investment Management (UK) Limited 12 May 2011 Ten Largest Investments* 31 March 2011 Zenith Bank (Nigeria; Financials; 4.6%; www.zenithbank.com) is Nigeria's second largest bank with 350 branches in Nigeria accounting for over 10% of the country's banking assets. Zenith offers a full range of retail and corporate banking services and has subsidiaries in Ghana, The Gambia and Sierra Leone. Hrvatski Telecom (Croatia; Telecommunications; 4.4%; www.t.ht.hr) is the leading telecommunication operator in Croatia providing voice and data services through a range of wireless, fixed and broadband technologies. Copa Holdings (Panama; Industrials; 4.0%; www.copaair.com) is a leading Latin American provider of passenger and cargo services operating from its hub in Panama City, Panama. Copa currently offers 144 daily scheduled flights to 45 destinations in 24 countries in North, Central and South America and the Caribbean. Qatar Electricity and Water (Qatar; Utilities; 3.8%; www.qewc.com) manages power generation and water desalination plants across Qatar. It started production in 1999 from a single plant and has grown to operate 10 plants. The company continues to expand capacity which will reach 5,249MW this year, an increase of 18% from 2010 levels. Kazmunaigas Exploration Production (Kazakhstan; Energy; 3.7%; www.kmgep.kz) is the second largest Kazakh oil producing company with a proved oil reserve of 1,707m barrels which gives the company an estimated reserve life of 26 years. Qatar Navigation (Qatar; Industrials; 3.3%; www.qatarnav.com) operates in Qatar's transport, shipping and logistics sectors. The company's key businesses include offshore oil and gas support services, port services, marine transport and industrial equipment. Qatar Navigation also owns 25% of Qatar Gas Transport, the largest LNG vessel owner in the world. Saudi Arabian Amiantit (Saudi Arabia, Industrials, 3.1%; http:// www.amiantit.com/) is the largest local manufacturer of water pipes in Saudi, servicing both municipal and industrial projects. Amiantit's current order backlog as of March 2011 stands at SAR4.0bn compared to SAR3.6bn a year ago. Air Arabia (UAE, Transportation, 3.0%; www.airarabia.com) is the largest low-cost airline operator in the MENA region. The company operates 20 Airbus A320 aircraft and flies to 48 destinations based out of Sharjah, UAE. MHP (Ukraine; Consumer Staples; 3.0%; www.mhp.com.ua) is Ukraine's largest poultry producer accounting for more than 40% of chicken commercially produced in the country. MHP is vertically intregrated producing its own grain. Halyk Savings Bank (Kazakhstan, Financials; 3.0%; www.halykbank.kz) is the largest bank in Kazakhstan offering a full range of retail and corporate banking services. *By gross market exposure. Country allocation (%) Relative to MSCI Frontier Markets Index 31 March 2011 Ukraine 8.9 Saudi Arabia 8.2 Kazakhstan 5.5 Nigeria 5.4 Iraq 4.6 Romania 4.2 Panama 4.0 Jordan 2.2 Croatia 1.6 Qatar 1.2 UAE (1.0) Lebanon (2.0) Sri Lanka (2.0) Vietnam (2.3) Argentina (2.8) Other (4.8) Bangladesh (4.9) Kuwait (26.0) Source: BlackRock, 31 March 2011. Weightings as of date shown and do not necessarily represent current or future portfolio holdings. Country allocation (%) Absolute Weights Qatar 13.0 Nigeria 12.3 Ukraine 9.9 Kazakhstan 8.7 Saudi Arabia 8.2 UAE 7.5 Romania 5.2 Kuwait 4.8 Iraq 4.6 Croatia 4.4 Panama 4.0 Jordan 3.1 Slovenia 2.2 Argentina 2.0 Other 10.1 Source: BlackRock, 31 March 2011. Weightings as of date shown and do not necessarily represent current or future portfolio holdings. Sector allocation (%) Relative to MSCI Frontier Markets Index 31 March 2011 Industrials 13.2 Energy 7.4 Consumer Staples 7.0 Consumer Discretionary 3.9 Materials 3.0 Utilities 2.5 Healthcare 0.3 IT (0.1) Telecom (10.9) Financials (26.3) Absolute Weights Financials 25.8 Industrials 21.4 Energy 15.4 Consumer Staples 10.5 Telecom 8.8 Materials 6.9 Consumer Discretionary 4.6 Utilities 3.8 Healthcare 2.8 Source: BlackRock, 31 March 2011. Weightings as of date shown and do not necessarily represent current or future portfolio holdings. *By gross market exposure. Investments as at 31 March 2011 Principal Market % of country Exposure value** gross Company of operation Sector $'000 $'000 exposure* Equity portfolio Hrvatski Telecom Croatia Telecommunications 6,201 6,201 4.4 Copa Holdings Panama Industrials 5,633 5,633 4.0 Kazmunaigas Exploration Production Kazakhstan Energy 5,266 5,266 3.7 MHP Ukraine Consumer Staples 4,254 4,254 3.0 Halyk Savings Bank Kazakhstan Financials 4,217 4,217 3.0 DNO International Iraq Energy 3,873 3,873 2.7 JKX Oil & Gas Ukraine Energy 3,353 3,353 2.4 Central European Consumer Media Romania Discretionary 3,141 3,141 2.2 Dragon-Ukrainian Properties Ukraine Financials 2,999 2,999 2.1 Shikun & Binui Pan Africa Industrials 2,948 2,948 2.1 YPF SA Argentina Energy 2,859 2,859 2.0 Orascom Telecom Algeria Telecommunications 2,851 2,851 2.0 Eurasian Natural Resources Kazakhstan Materials 2,826 2,826 2.0 Gulf Keystone Petroleum Iraq Energy 2,660 2,660 1.9 Firestone Diamonds Botswana Materials 2,561 2,561 1.8 Hill International Pan Middle East Industrials 1,162 1,162 0.8 Kentz Corporation Qatar Industrials 123 123 0.1 ------ ------ ---- Equity Investments 56,927 56,927 40.2 ------ ------ ---- P-Note Portfolio Saudi Arabian Amiantit P-Note 03/09/12 Saudi Arabia Industrials 4,481 4,481 3.1 Al Mouwasat Medical Serv P-Note 09/10/12 Saudi Arabia Health Care 3,939 3,939 2.8 Abdullah Al Othaim Mrkts P-Note 05/09/11 Saudi Arabia Consumer Staples 3,302 3,302 2.3 ------ ------ --- P-Notes 11,722 11,722 8.2 ------ ------ --- CFD Portfolio Zenith Bank Nigeria Financials 6,561 (256) 4.6 Qatar Electricty and Water Qatar Utilities 5,457 444 3.8 Qatar Navigation Qatar Industrials 4,676 (247) 3.3 Air Arabia United Arab Emirates Industrials 4,261 (274) 3.0 Dana Gas United Arab Emirates Energy 3,763 (454) 2.7 First Bank of Nigeria Nigeria Financials 3,583 (138) 2.5 Commercial Bank of Qatar Qatar Financials 3,578 (445) 2.5 Ecobank Transnational Nigeria Financials 3,403 (4) 2.4 Kernel Holdings Ukraine Consumer Staples 3,402 266 2.4 National Mobile Telecommunications Kuwait Telecommunications 3,364 (225) 2.4 Kuwait Foods Consumer (Americana) Kuwait discretionary 3,362 (214) 2.4 Nova Kreditna Banka Maribor Slovenia Financials 3,058 177 2.2 Industries Qatar Qatar Industrials 2,985 68 2.1 Jordan Phosphate Mines Jordan Materials 2,565 (595) 1.8 Arab Technical Con United Arab Emirates Industrials 2,495 (476) 1.8 Guiness Nigeria Nigeria Consumer Staples 2,262 (179) 1.6 SIF 2 Moldova Romania Financials 2,231 463 1.6 BRD Groupe - Societe Generale Romania Financials 2,010 498 1.4 Unilever Nigeria Nigeria Consumer Staples 1,718 (215) 1.2 Doha Bank Qatar Financials 1,646 32 1.2 Galfar Engineering and Contract Oman Industrials 1,626 (589) 1.1 Lucky Cement Pakistan Materials 1,488 (8) 1.0 Arab Bank Jordan Financials 1,356 (111) 1.0 Bank Muscat Oman Financials 1,198 (174) 0.8 MCB Bank Pakistan Financials 665 (4) 0.5 Arab Potash Jordan Materials 449 (7) 0.3 ------- ------ ----- 73,162 (2,667) 51.6 ------- ------ ----- Total Investments 141,811 65,982 100.0 ------- ------ ----- Cash held to back CFDs 75,829 - ------- ------- ----- Total 141,811 141,811 100.0 ======= ======= ===== * % based on the gross exposure which is the non current asset investments at fair value plus the fair value of the underlying securities within the CFDs. ** Market value is measured as: - Listed and AIM quoted investments are valued at bid prices where available, otherwise at published price quotations. - CFDs are valued at the difference between the settlement price and the value of the underlying shares in the contract (unrealised gains/(losses)). Statement of Comprehensive Income for the period 15 October 2010* to 31 March 2011 Revenue Capital Total US$'000 US$'000 US$'000 Notes (unaudited) (unaudited) (unaudited) Gains on investments held at fair value through profit or loss - 867 867 Net capital losses from contracts for difference - (3,160) (3,160) Income from investments held at fair value through profit or loss 3 778 - 778 Net income from contracts for difference 3 1,635 - 1,635 Other Income 3 2 - 2 ----- ------ ------ Total revenue 2,415 (2,293) 122 ------ ------ ------ Expenses Investment management and performance fees 4 (90) (710) (800) Other expenses 5 (152) - (152) ------ ------ ------ Total operating expenses (242) (710) (952) ------- ------ ------ Net profit/(loss) before finance costs and taxation 2,173 (3,003) (830) Finance costs - - - ------ ------ ------ Net profit/(loss) on ordinary activities before taxation 2,173 (3,003) (830) Taxation (572) 191 (381) ------ ------ ------ Net profit/(loss) for the period 1,601 (2,812) (1,211) ====== ====== ====== Earnings per ordinary share (cents) 7 1.69 (2.97) (1.28) ====== ====== ====== The total column of this statement represents the Company's Statement of Comprehensive Income, prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. 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 BlackRock Frontiers Investment Trust plc. There are no minority interests. *Date of incorporation. Statement of Changes in Equity For the period 15 October 2010* to 31 March 2011 Ordinary Share Share premium Capital Revenue capital account reserve reserve Total US$'000 US$'000 US$'000 US$'000 US$'000 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) for the period 15 October 2010 to 31 March 2011 (unaudited) Opening balance - - - - - Shares issued 948 145,636 - - 146,584 Share issue costs - (2,932) - - (2,932) Net (loss)/profit for the period - - (2,812) 1,601 (1,211) ------- ------- -------- ------ ------ At 31 March 2011 948 142,704 (2,812) 1,601 142,441 ======= ======= ======= ====== ======= During the period the Company incurred purchase transaction costs of US$172,000, and sales transaction costs of US$11,000. All transaction costs have been included within the capital reserve. * Date of incorporation Statement of Financial Position as at 31 March 2011 31 March 2011 US$'000 Notes (unaudited) Non current assets Investments designated as held at fair value through profit or loss 68,649 ------- Current assets Other receivables 1,588 Cash and cash equivalents: Cash held to back contracts for difference 75,829 Other cash and cash equivalents 5,088 ------- 82,505 Current liabilities Other payables (6,027) Amounts due in respect of contracts for difference (2,667) ------- (8,694) ------- Net current assets 73,811 ------- Total assets less current liabilities 142,460 Non current liabilities Preference shares of £1.00 each (one quarter paid) (19) ------- Net assets 142,441 ======= Equity attributable to equity holders Ordinary share capital 6 948 Share premium account 142,704 Capital reserves (2,812) Revenue reserve 1,601 ------- Total equity 142,441 ------- Net asset value per ordinary share (cents) 7 150.31 ======= Cash Flow Statement For the period 15 October 2010* to 31 March 2011 For the period 15 October 2010 to 31 March 2011 US$'000 (unaudited) Net cash outflow from operating activities before financing activities (64,218) ------- Financing activities Proceeds from share issue 146,584 Share issue costs paid (1,257) ------- Net cash inflow from financing activities 145,327 ------ Increase in cash and cash equivalents 81,109 Effect of foreign exchange rate changes (192) ------ Change in cash and cash equivalents 80,917 Cash and cash equivalents at start of period - ------- Cash and cash equivalents at end of period 80,917 ------- Comprised of: Cash at bank 80,917 ------- Reconciliation of net income before taxation to Net Cash Flow from Operating Activities For the period 15 October 2010 to 31 March 2011 US$'000 (unaudited) Loss before taxation (830) Add losses on investments held at fair value through profit or loss including transaction costs 2,293 Increase in other receivables (1,588) Increase in other payables 1,027 Increase in amounts due to brokers 3,036 Movements in investments held at fair value through profit or loss (68,083) Taxation on investment income (73) ------- Net cash outflow from operating activities (64,218) ======= *Date of incorporation. Notes to the Financial Statements 1. Principal activities The principal activity of the Company is that of an investment trust company within the meaning of section 1158 of the Corporation Tax Act 2010. the Company was incorporated on 15 October 2010, and this is the first half yearly report. The Company's shares were listed on the London Stock Exchange on 17 December 2010. 2. Accounting policies The principal accounting policies adopted by the Company are set out below. (a) Basis of preparation The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006. All of the Company's operations are of a continuing nature. The Company's financial statements are presented in US Dollars, which is the currency of the primary economic environment in which the Company operates. All values are rounded to the nearest thousand dollars ($'000) except when otherwise indicated. Insofar as the Statement of Recommended Practice ("SORP") for investment trust companies and venture capital trusts issued by the AIC, revised in January 2009, is compatible with IFRS, the financial statements have been prepared in accordance with guidance set out in the SORP. (b) Presentation of the Statement of Comprehensive Income In order to reflect better the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and a capital nature has been presented alongside the Statement of Comprehensive Income. In accordance with the Company's status as a UK investment company under section 833 of the Companies Act 2006 and section 1158 of the Corporation Tax Act 2010, net capital returns may not be distributed by way of dividend. (c) Segmental reporting The Directors are of the opinion that the Company is engaged in a single segment of business being investment business. (d) Income Dividends receivable on equity shares are recognised as revenue for the period on an ex-dividend basis. Where no ex-dividend date is available dividends receivable on or before the period end are treated as revenue. Provision is made for any dividends not expected to be received. Special dividends, if any, are treated as a capital receipt or a revenue receipt depending on the facts or circumstances of each particular case. The return on a debt security is recognised on a time apportionment basis so as to reflect the effective yield on the debt security. Interest income is accounted for on an accruals basis. (e) Expenses All expenses, including finance costs, are accounted for on an accruals basis. Expenses have been charged wholly to the revenue column of the Statement of Comprehensive Income except as follows: - expenses which are incidental to the acquisition of an investment are included within the cost of the investment. Details of transaction costs on the purchases and sales of investments are disclosed as a footnote to the Statement of Changes in Equity; - expenses are treated as capital where a connection with the maintenance or enhancement of the value of the investments can be demonstrated; - the investment management fees and finance costs of borrowing borne by the Company have been allocated 80% to the capital column and 20% to the revenue column of the Statement of Comprehensive Income in line with the Board's expectations of the long term split of returns, in the form of capital gains and income respectively, from the investment portfolio. - performance fees, have been allocated between 100% to the capital column of the Statement of Comprehensive Income as fees are generated in connection with enhancing the velue of the investment portoflio. (f) Taxation Deferred tax is recognised in respect of all temporary differences that have originated but not reversed at the financial reporting date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the financial reporting date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the temporary differences can be deducted. Deferred tax assets and liabilities are measured at the rates applicable to the legal jurisdictions in which they arise. (g) Investments held at fair value through profit or loss The Company's investments are classified as held at fair value through profit or loss in accordance with IAS 39 - Financial instruments: Recognition and Measurement and are managed and evaluated on a fair value basis in accordance with its investment strategy. All investments are initially recognised as held at fair value through profit or loss. Purchases of investments are recognised on a trade date basis. The sales of investments are recognised at the trade date of the disposal. Proceeds are measured at fair value, which is regarded as the proceeds of sale less any transaction costs. The fair value of financial instruments is based on their quoted bid price at the financial reporting date, without deduction for any estimated future selling costs. This policy applies to all current and non current asset investments held by the Company. Changes in the value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Statement of Comprehensive Income as "Gains or losses on investments held at fair value through profit or loss". Also included within this heading are transaction costs in relation to the purchase or sale of investments. Fair values for unquoted investments, or investments for which the market is inactive, are established by using various valuation techniques. These may include recent arm's length market transactions or the current fair value of another instrument which is substantially the same. Where no reliable fair value can be estimated for such instruments, they are carried at cost subject to any provision for impairment. The Company held no unquoted investments at 31 March 2011. (h) Derivatives Derivatives are held at fair value based on bid prices. Gains and losses on derivative transactions are recognised in the Statement of Comprehensive Income. They are recognised as capital and are shown in the capital column of the Statement of Comprehensive Income if they are of a capital nature and are recognised as revenue and shown in the revenue column of the Statement of Comprehensive Income if they are of a revenue nature. To the extent that any gains or losses are of a mixed revenue and capital nature, they are apportioned between revenue and capital accordingly. (i) Other receivables and payables Other receivables and other payables do not carry any interest and are short term in nature and are accordingly stated at their nominal value. (j) Dividends payable Under IFRS interim dividends are recognised when paid to shareholders. Final dividends, if any, are only recognised after they have been approved by shareholders. (k) Foreign currency translation Transactions involving foreign currencies are converted at the rate ruling at the date of the transaction. Foreign currency monetary assets and liabilities are translated into US dollars at the rate ruling on the financial reporting date. Foreign exchange differences arising on translation are recognised in the Statement of Comprehensive Income as a revenue or capital item depending on the income or expense to which they relate. (l) Cash and cash equivalents Cash comprises cash in hand and on demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value. (m) Bank borrowings Bank overdrafts are recorded as the proceeds received. Finance charges are accounted for on an accruals basis in the Statement of Comprehensive Income using the effective interest rate method and are added to the carrying amount of the instruments to the extent that they are not settled in the period in which they arise. 3. Income For the period 15 October 2010 to 31 March 2011 (unaudited) US$'000 Overseas dividends 778 ------ 778 Other income: Deposit interest 2 Income from contracts for difference 1,635 ------ Total 2,415 ====== 4. Investment management and performance fees For the period 15 October 2010 to 31 March 2011 (unaudited) Revenue Capital Total US$'000 US$'000 US$'000 Investment management fee 90 362 452 Performance fees - 348 348 ------ ------ ------ Total 90 710 800 ====== ====== ====== An investment management fee equivalent to 1.10 per cent. per annum of the Company's gross assets is payable to the Manager. In addition, the Manager is also entitled to receive a performance fee at a rate of 10 per cent. of any increase in the NAV at the end of a performance period over and above what would have been achieved had the cumulative NAV since launch increased in line with the MSCI Frontier Markets Index ("The Reference Index"). The performance fee payable in any year is capped at an amount equal to 2.5 per cent. or 1 per cent. of the gross assets if there is an increase or decrease in the NAV per share at the end of the relevant performance period respectively. Any capped excess outperformance for a performance period may be carried forward to the next two performance periods, subject to the then applicable annual cap. The performance fee is also subject to a high watermark such that any performance fee is only payable to the extent that the cumulative relative outperformance of the NAV is greater than what would have been achieved had the NAV increased in line with the Reference Index since the last date in relation to which a performance fee had previously been paid. For the period from launch to 31 March 2011, the Company's NAV had outperformed the MSCI Frontier Markets Index by 2.2% (2.4% prior to performance fee) and a performance fee of $348,000 had been accrued. As the outperformance had been generated predominantly through capital returns, the performance fee has been charged 100% to capital. The fee does not crystallise until 30 September 2011 but is accrued daily in the Company's NAV based on daily performance data, in line with best practice under the SORP. 5. Operating expenses For the period 15 October 2010 to 31 March 2011 (unaudited) US$'000 Custody fee 23 Directors' fees 33 Other administration costs 96 ------ 152 ====== Other administration costs include accrued audit fees of £17,000. In addition a fee of £30,000 was paid to the auditors in respect of work done in relation to the Company's launch and has been charged to the Statement of Changes in Equity. 6. Share capital Total number of Nominal shares in value issue US$'000 Issued share capital comprised: Ordinary shares of 10 cents each ---------- ---------- Opening balance - - Shares issued 94,766,267 948 ---------- ---------- At 31 March 2011 94,766,267 948 ========== ========== 7. Earnings and net asset value per ordinary share 31 March 2011 (unaudited) Net revenue profit attributable to ordinary shareholders (US$'000) 1,601 Net capital loss attributable to ordinary shareholders (US$'000) (2,812) ------- Total earnings attributable to ordinary shareholders (US$'000) (1,211) ------- Total equity attribute to shareholders (US$'000) 142,441 ------- The weighted average number of ordinary shares in issue during the period, on which the earnings per ordinary share was calculated, was: 94,766,267 The actual number of ordinary shares in issue at the end of the period, on which the net asset value per ordinary share was calculated, was: 94,766,267 --------- Revenue earnings per share - (cents) 1.69 Capital earnings per share - (cents) (2.97) -------- Total earnings per share - (cents) (1.28) -------- Net asset value per share basic - (cents) 150.31 -------- Share price* 145.08 ======== * The Company's share price is quoted in sterling and the above represents the US dollar equivalent. Basic and diluted earnings per share and net asset value per share are the same as the Company does not have any dilutive securities. 8. Related party transactions The Board consists of four 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. The Chairman receives an annual fee of £28,000, the Chairman of the Audit and Management Engagement Committee receives an annual fee of £ 23,000 and each other Director receives an annual fee of £20,000. Three members of the Board hold ordinary shares in the Company. Audley Twiston-Davies holds 50,000 ordinary shares, Lynn Ruddick holds 15,000 ordinary shares and Nick Pitts-Tucker holds 75,000 ordinary shares. The Investment Manager, BlackRock Investment Management (UK) Limited, is also a related party. The investment management and performance fees payable for the period ended 31 March 2011 are set out in note 4. As at 31 March 2011 an amount of $452,000 was outstanding in respect of management fees. A further $348,000 had been accrued in respect of performance for the period from launch to 31 March 2011, but the final performance fee amount for the full year to 30 September 2011 will not crystallise and fall due for payment until the calculation date of 30 September 2011. 9. Publication of non statutory accounts The financial information contained in this half yearly report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the period 15 October 2010 to 31 March 2011 has not been audited. 10. Annual results The Board expects to announce the results for the period ending 30 September 2011, in November 2011. Copies of the annual results announcement can be obtained from the Company Secretary on 020 7743 3000. The annual report should be available by December 2011, with the Annual General Meeting being held in February 2012. 12 May 2011 33 King William Street London EC4R 9AS Independent Review Report to BlackRock Frontiers Investment Trust plc Introduction We have been engaged by the Company to review the condensed set of financial statements in the half yearly financial report for the period from incorporation on 15 October 2010 to 31 March 2011 which comprises the Statement of Comprehensive Income, Statement of Changes in Equity, Statement of Financial Position, Summarised Cash Flow Statement, Reconciliation of Net Return before Finance Costs and Taxation to Net Cash Flow from Operating Activities and the related notes 1 to 9. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the condensed set of financial statements. This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed. Directors' responsibilities The half yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half yearly financial report in accordance with the Listing Rules of the Financial Services Authority. As disclosed in note 2, the annual financial statements of the Company are prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted in the European Union and the Companies Act 2006. The condensed set of financial statements included in this half yearly financial report has been prepared in accordance with the Accounting Standards Board Statement "Half Yearly Financial Reports". Our responsibility Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half yearly financial report based on our review. Scope of review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) 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. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half yearly financial report for the period ended 31 March 2011 is not prepared, in all material respects, in accordance with the Accounting Standards Board Statement "Half Yearly Financial Reports" and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. Ernst & Young LLP London 12 May 2011 ENDS The Half Yearly Financial Report will also be available on the BlackRock Investment Management website at www.blackrock.co.uk/brfi. Neither the contents of the Manager's website nor the contents of any website accessible from hyperlinks on the Manager's website (or any other website) is incorporated into, or forms part of, this announcement.

Companies

Blackrock Frontiers Investment Trust (BRFI)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today