BH Global Limited
Interim Report and Unaudited Financial Statements 2015
30 June 2015
Chairman’s Statement
Dear Shareholder,
The six months to 30 June 2015
unfolded as a continuum of the relatively challenging trading
conditions for macro orientated hedge funds as, for the sixth year
in succession, interest rates in developed markets remained close
to their all-time lows. The year had started strongly in January
but the subsequent five months proved more challenging and at the
six month stage on 30 June 2015 the
Net Asset Value (“NAV”) per share of the US Dollar class had
appreciated by 1.50% and that of the larger Sterling class by
1.83%.
With effect from 1 September 2014
the Company has invested almost all of its assets, save for working
cash balances, in Brevan Howard Multi-Strategy Master Fund Limited
(“BHMS” or “Fund”). BHMS is an open-ended fund with assets at
30 June 2015 of US$3.115 billion. As at 30
June 2015, BH Global’s investment in BHMS amounted to
US$680 million, being approximately
21.8% of the total Fund.
The Manager’s Report sets out the detail of the Company’s
performance for the six months and also the underlying allocation
through BHMS to the various underlying investments. Since
31 December 2014 the shape of BH
Global’s underlying investments has changed significantly, with the
number of funds being reduced from six to four at 30 June 2015 and the Direct Investment Portfolio
(“DIP”), being assets allocated directly to a small number of
senior traders, has grown from 23.6% to 26.9% over the same period.
As I wrote in March, the DIP represents a significant
differentiator for BH Global and the Manager has advised that the
DIP is expected to continue to represent a material allocation of
BHMS’s assets and indeed that allocation may yet grow further.
Share price performance and Discount
Control
The Company once again performed its role as a risk controlled
diversifier in the construction of portfolios. Since early in 2014,
the Company has undertaken an active buyback policy designed to
reduce volatility and to control the discount to NAV at which the
two classes of shares trade. On 16 April
2015 the Company announced a partial capital return to
shareholders and at the same time announced that “the Company will
continue to keep under active review its buyback policy with the
intention of further narrowing the level of discount to NAV at
which the two classes of shares trade in the market”. That policy
has been actively implemented and during the six months the Company
bought back 41,030 US Dollar shares at a cost of US$525,657 and 875,525 Sterling shares at a cost
of £11,401,609 (excluding broker commissions).
As at 30 June 2015 the shares were
trading at discounts of 4.1% for the US dollar class and 4.6% for
the Sterling class respectively. This narrowing of the discounts on
the two classes is the product of a number of factors including the
structural improvements made to the Company over the past year and
has resulted in share price total return in excess of 5% for each
class in the six month period.
Since 30 June the discounts have widened on the back of weaker
NAV performance. However, I can confirm on behalf of the Board that
the policy announced on 16 April remains unchanged and that the
Board intends to continue to strive to narrow the discounts at
which the two classes of shares trade.
Dialogue with the Manager
The Board maintains an active dialogue with the Company’s
Manager both at formal quarterly Board meetings and regularly in
between. We are always striving to ensure that aims and objectives
are aligned with those of the Shareholders. To that end,
Shareholders will recall the restructuring and simplification of
the management fees that became effective on 1 September 2014 and which included the
discontinuation of the 0.5% over-riding fee which had been charged
since the Company’s inception.
Communication with Shareholders
In conjunction with BH Macro Limited, a conference was held for
professional shareholders and investors in London in April. This was very well attended
and presentations were made by a number of senior Brevan Howard
professionals, including Magnus
Olsson, the portfolio manager of BHMS. I set the scene on
behalf of the Board and reminded the conference of the important
role of the independent Boards of directors in representing
shareholders’ interests.
Outlook
The events of recent days have reminded investors of the
vulnerability of equity markets to changes of expectations,
especially where those markets have in part been buoyed up by
speculators using borrowed money. However, these events serve
to remind of the appropriateness within a portfolio of holding a
low volatility diversifier.
The amendment of Investment Policy took place on 1 September 2014, such that the Company became a
feeder fund for investment into BHMS. The Manager has indicated
that it expects more favourable trading opportunities as economies
diverge and interest rates rise in those countries where growth has
been strong. Both Manager and Board hope that such conditions will
bring stronger returns for Shareholders than has been the case in
the last two years. Meanwhile the Board will ensure that it
continues to represent and further Shareholders’ interests.
Yours sincerely,
Sir Michael
Bunbury
Chairman
26 August 2015
Manager’s Report
Brevan Howard Capital Management LP (“BHCM”) is the Manager of
the Company. BH Global Limited (“BHG” or the “Company”) invests all
its assets (net of short-term working capital) in Brevan Howard
Multi-Strategy Master Fund Limited (“BHMS” or the “Fund”) a company
also managed by BHCM. The Company maintained a residual holding in
Brevan Howard Global Opportunities Master Fund Limited (“BHGO”)
until July 2015, as BHGO went through
the process of an orderly liquidation.
Performance Summary
The NAV of the USD shares appreciated by 1.50% in the first half
of 2015 and the NAV of GBP shares appreciated by 1.83% in the first
half of 2015.
The month-by-month NAV performance of each currency class of the
Company since it commenced operations in 2008 is set out below:
| USD |
Jan |
Feb |
Mar |
Apr |
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Nov |
Dec |
YTD |
| 2008 |
|
|
|
|
|
1.16* |
0.10 |
0.05 |
(3.89) |
1.13 |
2.74 |
0.38 |
1.55 |
| 2009 |
3.35 |
1.86 |
1.16 |
1.06 |
2.79 |
(0.21) |
1.07 |
0.27 |
1.49 |
0.54 |
0.11 |
0.04 |
14.31 |
| 2010 |
0.32 |
(0.85) |
(0.35) |
0.53 |
(0.06) |
0.60 |
(0.79) |
0.80 |
1.23 |
0.39 |
(0.21) |
(0.06) |
1.54 |
| 2011 |
0.09 |
0.42 |
0.34 |
1.20 |
0.19 |
(0.56) |
1.61 |
3.51 |
(1.29) |
(0.14) |
0.19 |
(0.88) |
4.69 |
| 2012 |
1.22 |
1.02 |
(0.54) |
(0.10) |
(0.65) |
(1.53) |
1.46 |
0.70 |
1.47 |
(0.72) |
0.81 |
1.26 |
4.44 |
| 2013 |
1.33 |
0.49 |
0.33 |
1.60 |
(0.62) |
(1.95) |
(0.14) |
(0.86) |
0.09 |
(0.13) |
0.95 |
0.75 |
1.79 |
| 2014 |
(0.98) |
(0.04) |
(0.26) |
(0.45) |
0.90 |
0.70 |
0.60 |
0.05 |
1.56 |
(0.75) |
0.71 |
0.44 |
2.49 |
| 2015 |
3.37 |
(0.41) |
0.35 |
(1.28) |
1.03 |
(1.49) |
|
|
|
|
|
|
1.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| GBP |
Jan |
Feb |
Mar |
Apr |
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Nov |
Dec |
YTD |
| 2008 |
|
|
|
|
|
1.40* |
0.33 |
0.40 |
(4.17) |
1.25 |
3.27 |
0.41 |
2.76 |
| 2009 |
3.52 |
1.94 |
1.03 |
0.68 |
2.85 |
(0.28) |
1.05 |
0.31 |
1.51 |
0.58 |
0.12 |
0.08 |
14.15 |
| 2010 |
0.35 |
(0.93) |
(0.32) |
0.58 |
(0.04) |
0.62 |
(0.81) |
0.84 |
1.17 |
0.37 |
(0.20) |
(0.03) |
1.61 |
| 2011 |
0.10 |
0.41 |
0.38 |
1.13 |
0.04 |
(0.59) |
1.69 |
3.67 |
(1.41) |
(0.15) |
0.21 |
(0.84) |
4.65 |
| 2012 |
1.23 |
1.05 |
(0.51) |
(0.08) |
(0.62) |
(1.51) |
1.50 |
0.70 |
1.44 |
(0.72) |
0.72 |
1.31 |
4.55 |
| 2013 |
1.36 |
0.56 |
0.36 |
1.63 |
(0.48) |
(1.91) |
(0.11) |
(0.84) |
0.14 |
(0.11) |
0.97 |
0.77 |
2.32 |
| 2014 |
(0.97) |
(0.14) |
(0.33) |
(0.30) |
0.56 |
0.48 |
0.42 |
0.03 |
1.85 |
(0.76) |
0.78 |
0.48 |
2.09 |
| 2015 |
3.48 |
(0.34) |
0.33 |
(1.26) |
1.18 |
(1.50) |
|
|
|
|
|
|
1.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| EUR |
Jan |
Feb |
Mar |
Apr |
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Nov |
Dec |
YTD |
| 2008 |
|
|
|
|
|
1.28* |
0.25 |
0.29 |
(4.34) |
1.15 |
3.01 |
0.44 |
1.93 |
| 2009 |
3.57 |
1.94 |
1.13 |
1.05 |
2.54 |
(0.21) |
1.11 |
0.27 |
1.50 |
0.50 |
0.08 |
0.08 |
14.36 |
| 2010 |
0.37 |
(0.90) |
(0.35) |
0.58 |
(0.02) |
0.69 |
(0.81) |
0.86 |
1.06 |
0.36 |
(0.14) |
0.04 |
1.73 |
| 2011 |
0.06 |
0.43 |
0.35 |
1.30 |
0.27 |
(0.63) |
1.78 |
3.77 |
(1.44) |
(0.14) |
0.19 |
(0.91) |
5.04 |
| 2012 |
1.21 |
1.01 |
(0.56) |
(0.12) |
(0.61) |
(1.45) |
1.45 |
0.63 |
1.40 |
(0.76) |
0.98 |
1.13 |
4.35 |
| 2013 |
1.25 |
0.58 |
0.27 |
1.49 |
(0.64) |
(1.91) |
(0.15) |
(0.89) |
0.06 |
(0.14) |
0.93 |
0.67 |
1.47 |
| 2014 |
(0.94) |
(0.21) |
(0.47) |
(0.51) |
0.45 |
0.22 |
0.28 |
Closed
August 2014 |
|
|
(1.19) |
Source: BHMS NAV data is provided by the administrator of BHMS,
International Fund Services (Ireland) Limited. BHG NAV and NAV per Share
data is provided by BHG’s administrator, Northern Trust. BHG NAV
per Share % Monthly Change calculations are made by BHCM.
BHG NAV data is unaudited and net of all investment management
fees and all other fees and expenses payable by BHG. NAV
performance is provided for information purposes only. Shares in
BHG do not necessarily trade at a price equal to the prevailing NAV
per Share.
*
Performance is calculated from a base NAV per Share of 10 in each
currency. The opening NAV in May 2008
was 9.9 (after deduction of the IPO costs borne by BHG).
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS
Allocations and Investment
Performance
The investment exposures of BHG as at 30
June 2015 were as follows:
|
| Investment |
Allocation as at 30
June 2015 |
|
(% NAV) |
| Brevan Howard Master Fund Limited
(“BHMF”) |
44.7% |
| Brevan Howard Asia Master Fund
Limited (“BHA”) |
10.7% |
| DW Catalyst Offshore Fund, Ltd.
(“DWC”)* |
10.2% |
| Brevan Howard Systematic Trading
Master Fund Limited (“BHST”) |
8.7% |
| Direct Investment Portfolio
(“DIP”) |
26.9% |
| Cash and Other |
(1.2%) |
Source: BHCM; figures rounded to one decimal place. Data may
differ from those published for BHMS, as BHG may hold cash for
short-term working capital purposes or obtain financing under a
note purchase agreement.
*DW Catalyst Offshore Fund, Ltd invests indirectly into DW
Catalyst Master Fund, Ltd. DW Catalyst Offshore Fund, Ltd also has
the ability to make other investments. Prior 1 January 2015, DW Catalyst Master Fund, Ltd was
named Brevan Howard Credit Catalysts Master Fund Limited.
Performance Review
The USD share class posted a gain of 1.50% in the first half of
2015. The majority of gains were generated in the first quarter of
2015, as detailed below.
The NAV of the USD share class appreciated by 3.31% (net of fees
and expenses) in the first quarter of 2015. All of the underlying
allocations were positive for the first quarter with BHMF, BHST and
the DIP being the main contributors. The gains made by
discretionary trading arose from FX trading, in particular long
exposure to the USD against a basket of other currencies including
EUR and JPY. Additional gains were generated in equity index and
credit trading. Some of these gains were offset by losses in USD
interest rates trading. Systematic trading had a strong first
quarter driven by long exposures to the USD against a large number
of other currencies, as well as long exposure to global bond
markets and equity indices.
In the second quarter of 2015, the NAV per USD share class
depreciated by -1.75% (net of fees and expenses). Discretionary FX
trading in BHMF and the DIP was one of the main detractors. Short
exposures to currencies including EUR and JPY against the USD
generated further losses. Additional losses arose from long
exposures to equity indices in Asia and Europe.
BHST had a difficult period, with most asset classes generating
losses over the second quarter of 2015. The losses were driven by
sharp reversals in the USD against a number of currencies, as well
as in selected bond markets in the earlier part of the second
quarter. In addition, a sharp sell-off in equity markets and
irregular market conditions in FX and fixed income towards the end
of the second quarter also contributed to losses.
The losses in discretionary and systematic trading were partly
offset by gains in discretionary interest rates trading, where
trading in Europe generated most
of the gains. Other interest rate markets, including Korea,
generated additional gains. Credit trading including corporate
long/short and agency mortgages generated small additional gains in
the second quarter.
A summary of the contribution to NAV performance broken down by
trading strategy and share buybacks is detailed below:
Quarterly and semi-annual contribution
(%) to the performance of BHG USD Shares (net of fees and expenses)
by strategy group
|
Macro |
Rates |
FX |
EMG |
Equity |
Commodity |
Credit |
Systematic |
Share
buyback |
TOTAL |
| Q1 2015 |
1.97 |
0.36 |
0.08 |
(0.12) |
0.02 |
0.0 |
0.32 |
0.68 |
0.01 |
3.31 |
| Q2 2015 |
(1.24) |
0.06 |
0.04 |
(0.05) |
0.00 |
0.0 |
0.10 |
(0.69) |
0.04 |
(1.75) |
| 2015 YTD |
0.71 |
0.42 |
0.12 |
(0.18) |
0.01 |
0.0 |
0.42 |
(0.02) |
0.05 |
1.50 |
Quarterly and semi-annual figures are calculated by BHCM as at
30 June 2015, based on performance
data for each period provided by the BHG’s administrator, Northern
Trust. Figures rounded to two decimal places.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS
Methodology and Definition of Monthly
Contribution to Performance:
Attribution is approximate and has been derived by allocating
each underlying trader book in each Underlying Fund to a single
category. In cases where a trader book has activity in more than
one category, the most relevant category has been selected.
The above strategies are categorised as follows:
“Macro”: multi-asset global markets, mainly directional
(for BHG, the majority of risk in this category is in rates)
“Rates”: developed interest
rates markets
“FX”: global FX forwards and
options
“EMG”: global emerging
markets
“Equity”: global equity markets
including indices and other derivatives
“Commodity”: liquid commodity
futures and options
“Credit”: corporate and
asset-backed indices, bonds and CDS
“Systematic”: rules-based
futures trading
“Share buyback”: buyback
activity for discount management purposes
Allocation Review
During the first half of 2015, no material allocation changes
were made to the portfolio of BHG.
The IC further increased the Fund’s exposure to the DIP from
23.6% on 31 December 2014 to 26.9% as
at the end of June 2015. The IC
believe that increasing the Fund’s exposure to DIP (which provides
direct exposure to the trading of underlying traders of Brevan
Howard’s global investment managers) will continue to benefit the
return profile of the Fund.
Other allocation changes during the reporting period included
small allocation increases to BHA and BHST of 2% and 1%
respectively and reduced allocations to BHMF and DWC of 1% and 3%
respectively.
Commentary and Outlook
In the US, the Federal Reserve (“Fed”) spent the first half of
the year preparing the markets for the start of monetary policy
normalisation by the end of the year. The two sides of the dual
mandate for full employment and price stability have been sending
mixed messages. On the one hand, the labour market is close to full
employment, with the unemployment rate in the middle of the year at
5.3% and broader measures of labour market slack showing even
faster improvement, along with tentative signs of stronger wage
gains. On the other hand, inflation trends have been subdued owing
to the sharp drop in oil and import prices. Given these
cross-currents, the Manager expects the Fed to raise rates off
their emergency low but remove accommodation only gradually.
Although the policy divergence compared with the rest of the world
will be small in magnitude, the commencement of policy
normalisation in the US will potentially open up another round of
currency adjustments.
Incremental progress on growth and inflation in the Eurozone in
the first half of the year were overshadowed by the deepening
crisis in Greece. With the acute
phase of the crisis passing and negotiations begun for reforms and
another bailout, attention will return to the overall macro
outlook. Despite some progress, the economic fundamentals are
daunting with huge amounts of slack in most countries and very low
inflation everywhere. The ECB will complete its ambitious asset
purchase program in September 2016
and the likelihood is that there will be justification to do more.
Countries around the Eurozone periphery will likely continue to
struggle with currency appreciation and sluggish growth, making
them candidates for further nontraditional policy actions like
further rate cuts into negative territory.
Japan presents interesting
opportunities for investors. The economy is also sending mixed
signals, with choppy growth and too-low inflation. However, the
Bank of Japan is firmly committed
to reflation and the government is backing a broad range of efforts
to boost the stock market. The same is true in China, but the outcome has been more volatile.
Chinese stocks soared and then suffered stunning setbacks. On the
surface, Chinese growth looks fine but there are doubts about
whether the official data are accurately tracking underlying
developments. More broadly, emerging markets are a mixed bag,
ranging from deepening problems in Brazil to more promising structural
developments in India. Economies
geared to Chinese growth and commodities more broadly are poised to
suffer through lacklustre global growth and the trend appreciation
in the US Dollar. But countries that can separate themselves from
those developments have brighter potential.
Brevan Howard Capital Management, LP,
acting by its sole general partner,
Brevan Howard Capital Management Limited
26 August 2015
Statement of Directors’ Responsibility
in Respect of the Interim Unaudited Financial Statements
We confirm to the best of our knowledge that:
· these Interim Unaudited
Financial Statements have been prepared in conformity with United
States Generally Accepted Accounting Principles and give a true and
fair view of the assets, liabilities, financial position and profit
or loss; and
· these Interim Unaudited
Financial Statements include information detailed in the Chairman’s
Statement, the Manager’s Report and the notes to the Interim
Unaudited Financial Statements, which provides a fair review of the
information required by:-
(a) DTR 4.2.7R of the Disclosure and
Transparency Rules, being an indication of important events that
have occurred during the first six months of the financial year and
their impact on these Interim Unaudited Financial Statements; and a
description of the principal risks and uncertainties for the
remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and
Transparency Rules, being related party transactions that have
taken place in the first six months of the current financial year
and that have materially affected the financial position or
performance of the Company during that period; and any changes in
the related party transactions described in the last Annual Audited
Financial Statements that could materially affect the financial
position or performance of the Company.
Signed on behalf of the Board by:
Sir Michael Bunbury
Chairman
John Hallam
Director
26 August 2015
Independent Review Report to BH Global
Limited
We have been engaged by the Company to review the Interim
Unaudited Financial Statements included in the Interim Report for
the six month period to 30 June 2015
which comprises the Unaudited Statement of Assets and Liabilities,
the Unaudited Statement of Operations, the Unaudited Statement of
Changes in Net Assets, the Unaudited Statement of Cash Flows and
the related explanatory notes. We have read the other information
contained in the Interim Report and considered whether it contains
any apparent misstatements or material inconsistencies with the
information in the Interim Unaudited Financial Statements.
This Report is made solely to the Company in accordance with the
terms of our engagement letter dated 9 June
2015 to assist the Company in meeting the requirements of
the Disclosure and Transparency Rules (“the DTR”) of the UK’s
Financial Conduct Authority (“the UK FCA”). Our review has been
undertaken so that we might state to the Company those matters we
are required to state to it in this Report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company for our
review work, for this Report, or for the conclusions we have
reached.
Directors’ responsibilities
The Interim Report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for
preparing the Interim Report in accordance with the DTR of the UK
FCA.
As disclosed in note 3, the Annual Audited Financial Statements
of the Company are prepared in conformity with United States
Generally Accepted Accounting Principles and applicable law.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the Interim Report and Unaudited Financial Statements included in
the Interim 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 UK. 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 Interim Unaudited Financial
Statements included in the Interim Report for the six month period
to 30 June 2015 do not give a true
and fair view of the financial position of the Company as at
30 June 2015 and of its financial
performance and its cash flows for the six month period then ended,
in conformity with United States Generally Accepted Accounting
Principles and the DTR of the UK FCA.
Lee C Clark
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants
Glategny Court
Glategny Esplanade
St Peter Port
Guernsey
GY1 1WR
26 August 2015
Unaudited Statement of Assets and Liabilities
As at 30 June 2015
|
30.06.15 |
31.12.14 |
30.06.14 |
|
(Unaudited) |
(Audited) |
(Unaudited) |
|
US$’000 |
US$’000 |
US$’000 |
| Assets |
|
|
|
| Investment in BHMS |
680,003 |
673,396 |
– |
| Investment in BHGO |
188 |
197 |
984,163 |
| Amounts due from BHGO |
– |
– |
3,479 |
| Other debtors |
97 |
86 |
123 |
| Cash and bank balances
denominated in US Dollars |
4,682 |
3,276 |
3,555 |
| Cash and bank balances
denominated in Euro |
– |
– |
139 |
| Cash and bank balances
denominated in Sterling |
10,591 |
5,739 |
9,734 |
| Total assets |
695,561 |
682,694 |
1,001,193 |
|
|
|
|
| Liabilities |
|
|
|
| Cash and bank balances
denominated in Euro |
– |
1 |
– |
| Loan notes payable (notes 3 and
10) |
19,301 |
6,668 |
32,938 |
| Redemptions in respect of
buybacks payable |
640 |
1,584 |
1,354 |
| Management fees payable (note
4) |
1,109 |
1,145 |
397 |
| Performance fees payable (note
4) |
1,737 |
– |
– |
| Accrued expenses and other
liabilities |
451 |
234 |
599 |
| Directors’ fees and expenses
payable |
113 |
112 |
124 |
| Administration fees payable (note
4) |
65 |
43 |
59 |
| Total liabilities |
23,416 |
9,787 |
35,471 |
|
|
|
|
| Net assets |
672,145 |
672,907 |
965,722 |
|
|
|
|
| Number of shares in issue
(note 6) |
|
|
|
| US Dollar shares |
5,096,470 |
6,994,093 |
6,867,652 |
| Euro shares |
– |
– |
12,456,014 |
| Sterling shares |
27,624,277 |
27,313,033 |
28,877,578 |
|
|
|
|
| Net asset value per share
(notes 8 and 11) |
|
|
|
| US Dollar shares |
US$13.65 |
US$13.44 |
US$13.10 |
| Euro shares |
– |
– |
€13.00 |
| Sterling shares |
£13.87 |
£13.62 |
£13.25 |
See accompanying notes to the Interim
Unaudited Financial Statements.
Signed on behalf of the Board by:
Sir Michael Bunbury
Chairman
John Hallam
Director
26 August 2015
Unaudited Statement of Operations
For the period from 1 January 2015 to
30 June 2015
|
01.01.15 |
01.01.14 |
01.01.14 |
|
to
30.06.15 |
to
31.12.14 |
to
30.06.14 |
|
(Unaudited) |
(Audited) |
(Unaudited) |
|
US$’000 |
US$’000 |
US$’000 |
| Net investment gain allocated
from BHMS |
|
|
|
| Interest |
5,492 |
2,620 |
– |
| Expenses |
(574) |
(230) |
– |
| Net investment gain allocated
from BHMS |
4,918 |
2,390 |
– |
|
|
|
|
| Net investment loss allocated
from BHGO |
|
|
|
| Interest |
– |
3 |
5 |
| Expenses |
(10) |
(202) |
(106) |
| Net investment loss allocated
from BHGO |
(10) |
(199) |
(101) |
|
|
|
|
| Company income |
|
|
|
| Foreign exchange gains (note
3) |
6,664 |
– |
20,346 |
| Total Company income |
6,664 |
– |
20,346 |
|
|
|
|
| Company expenses |
|
|
|
| Management fees (note 4) |
6,699 |
7,809 |
2,443 |
| Performance fees (note 4) |
1,692 |
– |
– |
| Other expenses |
819 |
2,317 |
1,158 |
| Directors’ fees and expenses |
220 |
587 |
257 |
| Administration fees (note 4) |
128 |
315 |
176 |
| Foreign exchange losses (note
3) |
– |
46,164 |
– |
| Total Company
expenses |
9,558 |
57,192 |
4,034 |
|
|
|
|
| Net investment
gain/(loss) |
2,014 |
(55,001) |
16,211 |
|
|
|
|
| Net realised and unrealised
gains on investments allocated from BHMS |
|
|
|
| Net realised gain on
investments |
60,738 |
22,743 |
– |
| Net unrealised loss on
investments |
(45,586) |
(5,048) |
– |
| Net realised and unrealised
foreign exchange gain |
|
|
– |
| – on hedging |
622 |
603 |
– |
| Net realised and unrealised
gains on investments allocated from BHMS |
15,774 |
18,298 |
– |
|
|
|
|
| Net realised and unrealised
losses on investments allocated from BHGO |
|
|
|
| Net realised (loss)/gain on
investments |
– |
(10,760) |
13,858 |
| Net unrealised loss on
investments |
– |
– |
(4,715) |
| Net realised and unrealised
foreign exchange gain/(loss) |
|
|
|
| – on hedging |
– |
530 |
651 |
| – on capital (note 3) |
(1) |
4,171 |
(19,847) |
| Net realised and unrealised
losses on investments allocated from BHGO |
(1) |
(6,059) |
(10,053) |
|
|
|
|
| Net increase/(decrease) in net
assets resulting from operations |
17,787 |
(42,762) |
6,158 |
See accompanying notes to the Interim
Unaudited Financial Statements.
Unaudited Statement of Changes in Net Assets
For the period from 1 January 2015 to
30 June 2015
|
01.01.15 |
01.01.14 |
01.01.14 |
|
to
30.06.15 |
to
31.12.14 |
to
30.06.14 |
|
(Unaudited) |
(Audited) |
(Unaudited) |
|
US$’000 |
US$’000 |
US$’000 |
| Net increase/(decrease) in net
assets resulting from operations |
|
|
|
| Net investment gain/(loss) |
2,014 |
(55,001) |
16,211 |
| Net realised gain on investments
allocated from BHGO and BHMS |
60,738 |
11,983 |
13,858 |
| Net unrealised loss on
investments allocated from BHGO and BHMS |
(45,586) |
(5,048) |
(4,715) |
| Net realised and unrealised
foreign exchange gain/(loss) allocated from BHGO and BHMS |
621 |
5,304 |
(19,196) |
|
17,787 |
(42,762) |
6,158 |
|
|
|
|
| Share capital
transactions |
|
|
|
| Purchase of own shares (note
6) |
|
|
|
| US Dollar shares |
(527) |
(18,021) |
(11,669) |
| Sterling shares |
(17,630) |
(65,529) |
(42,241) |
|
(18,157) |
(83,550) |
(53,910) |
|
|
|
|
| Repayment of Offer
Costs |
|
|
|
| US Dollar shares |
(6) |
(47) |
– |
| Euro shares |
– |
(6,031) |
– |
| Sterling shares |
(386) |
(400) |
– |
|
(392) |
(6,478) |
– |
|
|
|
|
| Redemption of Euro share
class |
– |
(207,777) |
– |
|
|
|
|
| Net decrease in net
assets |
(762) |
(340,567) |
(47,752) |
| Net assets at the beginning of
the period/year |
672,907 |
1,013,474 |
1,013,474 |
| Net assets at the end of the
period/year |
672,145 |
672,907 |
965,722 |
See accompanying notes to the Interim
Unaudited Financial Statements.
Unaudited Statement of Cash Flows
For the period from 1 January 2015 to
30 June 2015
|
01.01.15 |
01.01.14 |
01.01.14 |
|
to
30.06.15 |
to
31.12.14 |
to
30.06.14 |
|
(Unaudited) |
(Audited) |
(Unaudited) |
|
US$’000 |
US$’000 |
US$’000 |
| Cash flows from operating
activities |
|
|
|
| Net increase/(decrease) in net
assets resulting from operations |
17,787 |
(42,762) |
6,158 |
| Adjustments to reconcile net
increase/(decrease) in net assets resulting from operations to net
cash provided by operating activities: |
|
|
|
| Net investment (gain)/loss
allocated from BHGO and BHMS |
(4,908) |
(2,191) |
101 |
| Net realised gain on investments
allocated from BHGO and BHMS |
(60,738) |
(11,983) |
(13,858) |
| Net unrealised loss on
investments allocated from BHGO and BHMS |
45,586 |
5,048 |
4,715 |
| Net realised and unrealised
foreign exchange (gain)/loss allocated from BHGO and BHMS |
(621) |
(5,304) |
19,196 |
| Purchase of investment in BHGO
and BHMS |
– |
(26,212) |
– |
| Proceeds from sale of investment
in BHGO and BHMS |
21,227 |
331,205 |
33,674 |
| Interest expense on short term
loan |
185 |
241 |
100 |
| Foreign exchange
(gains)/losses |
(6,664) |
46,164 |
(20,346) |
| (Increase)/decrease in other
debtors |
(11) |
31 |
(6) |
| (Decrease)/increase in management
fees payable |
(36) |
697 |
(51) |
| Increase in performance fees
payable |
1,737 |
– |
– |
| Increase in accrued expenses and
other liabilities |
27 |
58 |
327 |
| Increase/(decrease) in Directors’
fees payable |
1 |
(21) |
(9) |
| Increase/(decrease) in
administration fees payable |
22 |
(17) |
(1) |
| Net cash provided by operating
activities |
13,594 |
294,954 |
30,000 |
|
|
|
|
| Cash flows from financing
activities |
|
|
|
| Purchase of own shares |
(19,101) |
(81,967) |
(52,555) |
| Proceeds of borrowings from short
term loan |
12,175 |
48,849 |
32,938 |
| Repayment of borrowings from
short term loan |
– |
(41,363) |
– |
| Interest earned/(paid) on short
term loan |
5 |
(236) |
– |
| Repayment of Offer Costs |
(392) |
(6,478) |
– |
| Redemption of euro share
class |
– |
(207,777) |
– |
| Net cash used in financing
activities |
(7,313) |
(288,972) |
(19,617) |
|
|
|
|
| Change in cash |
6,281 |
5,982 |
10,383 |
| Cash, beginning of the
period/year |
9,014 |
3,045 |
3,045 |
| Effect of exchange rate
fluctuations |
(22) |
(13) |
– |
| Cash, end of the
period/year |
15,273 |
9,014 |
13,428 |
|
|
|
|
| Cash, end of the
period/year |
|
|
|
| Cash and bank balances
denominated in US Dollars |
4,682 |
3,276 |
3,555 |
| Cash and bank balances
denominated in Euro1 |
– |
(1) |
139 |
| Cash and bank balances
denominated in Sterling2 |
10,591 |
5,739 |
9,734 |
|
15,273 |
9,014 |
13,428 |
| 1Cash and bank
balances denominated in Sterling |
– |
(1) |
102 |
| 2Cash and bank
balances denominated in Euro |
6,734 |
3,687 |
5,693 |
|
|
|
|
| Supplemental disclosure of
non-cash financing activities: |
|
|
|
| In specie divestment in BHGO
(note 12) |
– |
666,408 |
– |
| In specie investment in BHMS
(note 12) |
– |
(666,408) |
– |
See accompanying notes to the Interim
Unaudited Financial Statements.
Notes to the Interim Unaudited Financial Statements
For the period from 1 January 2015 to
30 June 2015
1. The Company
BH Global Limited (the “Company”) is a limited liability
closed-ended investment company incorporated in Guernsey on
25 February 2008 for an unlimited period, with registration
number 48555.
The Company was admitted to a Primary Listing on the Official
List of the London Stock Exchange on 29 May
2008. As a result of changes to the UK Listing Regime, the
Company’s Primary Listing became a Premium Listing with effect from
6 April 2010.
As of 20 October 2008 the Company
obtained a Secondary Listing on the Bermuda Stock Exchange and with
effect from 11 November 2008, the US
Dollar shares of the Company were admitted to a Secondary Listing
on NASDAQ Dubai.
The Company offers multiple classes of ordinary shares, which
differ in terms of currency of issue. To date, ordinary shares have
been issued in US Dollar, Euro and Sterling.
On 27 February 2014 the
Shareholders of the Euro Share Class voted in favour of the Class
Closure Resolution and closure of the Euro Share Class which was
completed in August 2014, as
discussed in note 9.
2. Organisation
Prior to 1 September 2014, the
Company’s investment objective was to seek to generate consistent
long-term capital appreciation through an investment policy of
investing all of its assets (net of those expenses of the initial
public offering borne by the Company and funds required for its
short-term working capital requirements) in Brevan Howard Global
Opportunities Master Fund Limited (“BHGO”). The Company maintained
a residual holding in BHGO until July
2015, as BHGO went through the process of an orderly
liquidation. The assets held by BHGO at 30
June 2015 consisted solely of cash and deposits held with
broker. For additional information refer to note 13.
On 28 August 2014 the Shareholders
voted in favour of changing the investment policy and effective
1 September 2014, the Company’s
investment objective is to seek to generate consistent long-term
capital appreciation through an investment policy of investing all
of its assets (net of funds required for its short-term working
capital requirements) in Brevan Howard Multi-Strategy Master Fund
Limited (“BHMS”).
The Company is organised as a feeder fund and invests
substantially all of its investable assets in the ordinary US
Dollar and Sterling denominated Class G shares issued by BHMS, and,
as such, the Company is directly and materially affected by the
performance and actions of BHMS.
As such the Financial Statements of the Company should be read
in conjunction with the Interim Unaudited Financial Statements of
BHMS, which can be found on the Company’s website,
www.bhglobal.com.
BHMS is an open-ended investment company incorporated with
limited liability in the Cayman
Islands on 21 January
2008.
BHMS’s underlying investments as at 30
June 2015 and the percentage BHMS’s investment represented
of the underlying fund’s NAV are as follows:
| Brevan Howard Master Fund
Limited |
6.25% |
| Brevan Howard Asia Master Fund
Limited |
12.86% |
| DW Catalyst Offshore Fund,
Ltd. |
11.85% |
| Brevan Howard Systematic Trading
Master Fund Limited |
60.21% |
BHMS’s allocation between these vehicles is disclosed in the
Manager’s Report.
BHMS has flexibility to invest in a wide range of instruments
including, but not limited to, debt securities and obligations
(which may be below investment grade), bank loans, listed and
unlisted equities, other collective investment schemes or vehicles
(which may be open-ended or closed-ended, listed or unlisted,
regulated or unregulated and may employ leverage (each an
“Investment Fund”)), currencies, commodities, futures, options,
warrants, swaps and other derivative instruments. Derivative
instruments may be exchange traded or OTC. BHMS may engage in short
sales. BHMS may retain amounts in cash or cash equivalents
(including money market funds) pending reinvestment, for use as
collateral or if this is considered appropriate to the investment
objective.
Subject to the investment restrictions and investment approach
disclosed in any prospectus for BHMS that may be published from
time to time and subsequent BHMS directors’ resolutions, BHMS
employs an investment process which empowers the Manager to
allocate assets to both Investment Funds and directly to the
investment managers of BHMS from time to time on an opportunistic
basis.
At the date of these Interim Unaudited Financial Statements,
there were two other feeder funds in operation in addition to the
Company that invest all of their assets (net of working capital) in
BHMS.
Off-balance sheet, market and credit risks of BHMS’s investments
and activities are discussed in the notes to the Interim Unaudited
Financial Statements of BHMS. The Company’s investment in BHMS
exposes it to various types of risk, which are associated with the
financial instruments and markets in which the Brevan Howard
underlying funds invest. Market risk represents the potential loss
in value of financial instruments caused by movements in market
factors including, but not limited to, market liquidity, investor
sentiment and foreign exchange rates.
The Manager
Brevan Howard Capital Management LP (the “Manager”) is the
manager of the Company. The Manager is a Jersey limited
partnership, the sole general partner of which is Brevan Howard
Capital Management Limited, a Jersey limited company (the “General
Partner”). The General Partner is regulated in the conduct of fund
services business by the Jersey Financial Services Commission
pursuant to the Financial Services (Jersey) Law, 1998 and the
Orders made thereunder and is the Alternative Investment Fund
Manager (“AIFM”) of the Company for the purposes of the European
Union Alternative Investment Fund Manager Directive (“AIFMD”).
The Manager also manages BHMS, BHGO and the Brevan Howard
underlying funds.
3. Significant accounting policies
The Annual Audited Financial Statements, which give a true and
fair view, are prepared in conformity with United States Generally
Accepted Accounting Principles and comply with the Companies
(Guernsey) Law, 2008. The Interim Unaudited Financial Statements
have been prepared following the same accounting policies and
methods of computation as the most recent Annual Audited Financial
Statements. The functional and reporting currency of the Company is
US Dollars.
The Company is an Investment Entity which has applied the
provisions of ASC 946-10-50.
Going concern
Having reassessed the principal risks, the Directors considered
it appropriate to adopt the going concern basis of accounting in
preparing the interim financial information.
The following are significant accounting policies adopted by the
Company:
Valuation of investments
The Company records its investment in the Class G shares of BHMS
at fair value. Fair value is determined as the Company’s
proportionate share of BHMS’s net assets. At 30 June 2015, the Company’s US Dollar, and
Sterling capital account represents 2.09%, and 18.46% respectively
of BHMS’s capital. The net asset value of BHMS is used as a measure
of fair value as this is the price at which the Company may redeem
its investment. The Company maintained a residual holding in BHGO
until July 2015, as BHGO went through
the process of an orderly liquidation. The net assets held by BHGO
only included cash and deposits held with broker. For additional
information refer to note 13.
Fair value measurement
Accounting Standards Codification (“ASC”) Topic 820 defines fair
value as the price that the Company would receive upon selling a
security in an orderly transaction to an independent buyer in the
principal or most advantageous market of the security.
ASC 820 establishes a three-level hierarchy to maximise the use
of observable market data and minimise the use of unobservable
inputs and to establish classification of fair value measurements
for disclosure purposes. Inputs refer broadly to the assumptions
that market participants would use in pricing the asset or
liability, including assumptions about risk, for example, the risk
inherent in a particular valuation technique used to measure fair
value including such a pricing model and/or the risk inherent in
the inputs to the valuation technique. Inputs may be observable or
unobservable.
Observable inputs are inputs that reflect the assumptions market
participants would use in pricing the asset or liability based on
market data obtained from sources independent of the reporting
entity.
Unobservable inputs are inputs that reflect the reporting
entity’s own assumptions about the assumptions market participants
would use in pricing the asset or liability developed based on the
best information available in the circumstances.
Level 1 – Valuations based on unadjusted quoted prices in active
markets for identical assets or liabilities that the Company has
the ability to access. Valuation adjustments and block discounts
are not applied to Level 1 securities. Since valuations are based
on quoted prices that are readily and regularly available in an
active market, valuation of these securities does not entail a
significant degree of judgement.
Level 2 – Valuations based on quoted prices in markets that are
not active or for which all significant inputs are observable,
either directly or indirectly.
Level 3 – Valuations based on inputs that are unobservable and
significant to the overall fair value measurement.
Inputs are used in applying the various valuation techniques and
broadly refer to the assumptions that market participants use to
make valuation decisions, including assumptions about risk. Inputs
may include price information, volatility statistics, specific and
broad credit data, liquidity statistics, and other factors.
A financial instrument’s level within the fair value hierarchy
is based on the lowest level of any input that is significant to
the fair value measurement. However, the determination of what
constitutes “observable” requires significant judgement by the
Company’s Directors (the “Board”). After consultation with the
Administrator and Manager, the Board considers observable data to
be that market data which 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 categorisation of a financial instrument within the
hierarchy is based upon the pricing transparency of the instrument
and does not necessarily correspond to the Board’s perceived risk
of that instrument.
Fair value is a market-based measure considered from the
perspective of a market participant rather than an entity-specific
measure. Therefore, even when market assumptions are not readily
available, the Board’s own assumptions are set to reflect those
that market participants would use in pricing the asset or
liability at the measurement date.
The Board uses prices and inputs that are current as of the
measurement date, including periods of market dislocation. In
periods of market dislocation, the observability of prices and
inputs may be reduced for many securities. This condition could
cause a security to be reclassified to a lower level within the
fair value hierarchy.
The valuation and classification of securities held by BHMS is
discussed in the notes to its Interim Unaudited Financial
Statements which are available on the Company’s website,
www.bhglobal.com.
Income and expenses
The Company records monthly its proportionate share of BHMS’s
and BHGO’s income, expenses and realised and unrealised gains and
losses. In addition, the Company accrues its own income and
expenses.
Use of estimates
The preparation of Interim Unaudited Financial Statements in
conformity with United States Generally Accepted Accounting
Principles requires the Board to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
those Interim Unaudited Financial Statements and the reported
amounts of increases and decreases in net assets from operations
during the reporting period. Actual results could differ from those
estimates.
Share issue expenses
Share issue expenses of US$10,552,146 were borne by the Company and were
charged against the Share capital account at launch.
In accordance with the Placing Agreement dated 28 April 2008, the Manager paid the costs and
expenses of, and incidental to, the Offer (including all costs
related to the establishment of the Company) (the “Offer Costs”)
which were in excess of 1% of the gross proceeds of the Offer. The
Offer Costs paid by the Manager amounted to US$26,559,274.
Pursuant to the terms of the Management Agreement, the Company
was required to repay to the Manager a fraction of these Offer
Costs for every US Dollar by which repurchases, redemptions or
cancellations of the Company’s shares reduced the current US Dollar
NAV of the Company below its NAV at the time of the Company’s
listing, being US$1,044,631,308.
The amount of these Offer Costs repaid was 2.55 cents for every US Dollar by which the
Company’s NAV was reduced, being the figure obtained by dividing
the Offer Costs by the NAV of the Company at the time of its
listing.
During the period ended 30 June
2015, US$391,626 (31 December 2014: US$6,478,122, 30 June
2014: US$Nil) was repayable to the Manager as Offer Costs.
At 30 June 2015, US$Nil (31 December 2014: US$105,003, 30 June
2014: US$Nil) of the Offer Cost reclaim remained
outstanding.
In addition, the Management Agreement required the Company to
pay the Manager an amount equal to all or part of the Offer Costs
in the following circumstances: (i) payment was required in full if
the Company was wound up on or before 29 May 2015, or (ii) in
part if shares are redeemed as a result of a Class Closure
Resolution passed on or before 29 May
2015 (with the percentage of the Offer Costs that were
repayable being equal to the percentage that the number of shares
redeemed represented of the total number of the Company’s shares in
issue).
Any repurchases, redemptions or cancellations were priced to
take into account any fractional Offer Cost repayments and
therefore ensured that continuing shareholders were not
prejudiced.
These provisions expired on 29 May
2015.
In respect of the Euro Class closure, the Articles of the
Company required that (i) the Company deducted from the
NAV per share payable on redemption of the Euro Class shares a
fractional amount of the costs of the Euro Class Closure Meeting
and (ii) the amount payable to the Manager in partial reimbursement
of the Offer Costs which are attributable to the shares that were
redeemed. This meant that the redemption price received by
redeeming Euro Class shareholders was 97.12% of the 31 July 2014 NAV per share on redemption.
Foreign exchange
For the purposes of an aggregated Interim Unaudited Statement of
Assets and Liabilities, investment securities and other assets and
liabilities denominated in foreign currencies are translated into
US Dollars using exchange rates at the reporting date. Share
capital denominated in foreign currencies is translated into US
Dollars using exchange rates on the date of issue. The resulting
presentational foreign exchange gains or losses are included in the
Interim Unaudited Statement of Operations.
Transactions denominated in foreign currencies are translated
into US Dollars using exchange rates at the date of such
transactions.
All currency gains and losses are included in the Interim
Unaudited Statement of Operations.
Cash and bank balances
Cash and bank balances comprise cash on hand and demand
deposits.
Treasury shares
Where the Company purchases its own share capital, the
consideration paid, which includes any directly attributable costs,
is recognised as a deduction from equity shareholders’ funds
through the Share capital account. When such shares are
subsequently sold or reissued to the market, any consideration
received, net of any directly attributable incremental transaction
costs, is recognised as an increase in equity shareholders’ funds
through the Share capital account. Where the Company cancels
treasury shares, no further adjustment is required to the share
capital account of the Company at the time of cancellation. Shares
held in Treasury are excluded from calculations when determining
NAV per share as detailed in note 8 or in the Financial Highlights
in note 11.
Allocation of results of BHGO and
BHMS
Net realised and unrealised gains/losses of BHGO and BHMS are
allocated to the Company’s share classes based upon the percentage
ownership of the equivalent BHGO and BHMS class.
Loan notes payable
Loans are classified in the Interim Unaudited Statement of
Assets and Liabilities as Loan notes payable and are accounted for
at amortised cost using the effective interest method.
Under a Note Purchase Agreement (note 10), the Company is
obliged to pay back the total outstanding amount and all fees and
expenses, reimbursements and indemnities by the stated maturity
date, unless the Note is previously terminated. Interest shall
accrue daily on each Note at the applicable rate. The Company’s
obligations under the Agreement are secured by charges over a
portion of its shares in BHMS. The purpose of the Note Purchase
Agreement is to permit the Company to draw funds to finance the
acquisition of the Company’s own shares and for other working
capital purposes.
4. Management, Performance, and
Administration agreements
Management and Performance fees
The Company has entered into a management agreement with the
Manager to manage the Company’s investment portfolio. Prior to
1 September 2014, the Manager
received a management fee of 1/12 of 0.50% (or a pro rata
proportion thereof) per month of the NAV of each share class
(before deduction of that month’s management fee) as at the last
business day in each month, payable monthly in arrears.
As a result of the change in investment policy, the Company’s
Management Agreement was amended to provide for the management fee
and performance fee to be paid to the Manager as follows. Effective
1 September 2014, the Manager
receives a management fee of 1/12 of 2% (or a pro rata proportion
thereof) per month of the NAV of each share class (before deduction
of that month’s management fee and before making any deduction for
any accrued performance fee) calculated as at the last business day
in each month and payable monthly in arrears.
BHGO itself was not subject to management fees, however BHGO’s
investments were subject to management fees and operational
services fees ranging in aggregate from 1% to 2.5% per annum; in
addition to performance fees in certain of the underlying
investments.
There are no fees charged by the Manager at the level of BHMS or
any of its underlying funds.
During the period ended 30 June
2015, US$6,699,493
(31 December 2014: US$7,808,551, 30 June
2014: US$2,442,508) was
charged by the Manager as management fees to the Company. At
30 June 2015, US$1,109,255 (31 December
2014: US$1,145,005,
30 June 2014: US$397,047) of the fee remained outstanding.
Effective 1 September 2014, the
Manager is also entitled to a semi annual performance fee for each
share class, accrued in arrears on a monthly basis. The performance
fee is equal to 20% of the appreciation in the NAV per share
(adjusted for any increases or decreases in NAV arising from issues
(including the sale or re issue of Shares held in treasury),
repurchases or redemptions of Shares and calculated before
deduction of the performance fee in respect of the relevant period)
which is above the base NAV per share of that class. The base NAV
per share is the greater of the NAV per share of the relevant class
at 1 September 2014 and the highest
NAV per share achieved as at the end of any previous calculation
period. However, for the purposes of calculating the performance
fee payable to the Manager following reinvestment of the Company
into BHMS, the base NAV per share of the Company’s Sterling and US
Dollar shares as at 1 September 2014
were set at £13.69 and $13.56
respectively to take into account the extent to which any of the
Company’s underlying investments were performing below existing
high water marks immediately prior to their contribution to
BHMS.
Any accrued performance fee in respect of Shares which are
repurchased, redeemed or cancelled prior to the date on which the
performance fee would otherwise have become payable in respect of
those Shares will crystallise and become payable on the date of
such repurchase, redemption or cancellation. The performance fee is
accrued on an on-going basis and is reflected in the Company’s
published NAV.
On the business day preceding the last business day of each
period in respect of which a performance fee is payable, the
Company shall pay an estimated performance fee to the Manager in
respect of that period. The estimated fee shall be the performance
fee payable to the Manager in respect of that period as estimated
by the Company’s administrator on the basis of the estimated NAV of
each class of Shares as at the close of business on the tenth
business day in June and December in each year. The difference
between the estimated fee paid in respect of any period and the
actual performance fee payable in respect of that period shall be
paid to the Manager within 15 business days of the end of the
period, provided that if the difference is a negative amount then
it shall be repaid by the Manager to the Company at such time.
During the period ended 30 June
2015, US$1,691,891
(31 December 2014: US$Nil,
30 June 2014: US$Nil) was charged as
performance fees of which, US$1,737,444 (31 December
2014: US$Nil, 30 June 2014:
US$Nil) remained payable at period end.
The Management Agreement can be terminated by either the Company
or the Manager on the giving of 12 months’ written notice to the
other party, or alternatively the Company may terminate the
Management Agreement on 90 days’ notice by payment to the Manager
of an amount equal to the aggregate of the Management Fee during
such twelve month period. The Company may terminate the management
agreement forthwith by notice in the event of specified acts of
default by the Manager without payment of compensation.
The Company is also entitled to terminate the management
agreement without payment of compensation if a resolution is passed
to wind up the Company in accordance with its discount control
mechanism or if the net asset value of BHMS is more than 25 per
cent lower than the average net asset value of BHMS over the
previous twelve month period.
Prior to 1 September 2014, the
management agreement could be terminated by either party on not
less than 24 months’ notice without payment of compensation,
although the Company would have been required to reimburse the
Offer Costs if termination were to have occurred before
29 May 2015. The Company could have
terminated the management agreement forthwith by notice in the
event of specified acts of default by the Manager without payment
of compensation.
The Company was also entitled to terminate the management
agreement without payment of compensation if a resolution was
passed to wind up the Company in accordance with its discount
control mechanism or if the net asset value of BHGO was more than
25 per cent lower than the average net asset value of BHGO over the
previous twelve month period, although the Company would have been
required to reimburse the Offer Costs if termination in those
circumstances were to have occurred before 29 May 2015.
In addition, the Company could have terminated the management
agreement on less than 24 months’ notice without cause, but the
Company would have had to pay compensation to the Manager
equivalent to the aggregate management fees that would otherwise
directly or indirectly have been paid by the Company during the 24
months following notice of termination. The Company would also have
been required to reimburse the Offer Costs if termination in those
circumstances were to have occurred before 29 May 2015.
Administration fee
The Company has appointed Northern Trust International Fund
Administration Services (Guernsey) Limited as Administrator and
Corporate Secretary. The Administrator is paid fees based on the
NAV of the Company, payable monthly in arrears. The fee is at a
rate of 0.03% of the first US$1
billion of net assets of the Company and then 0.01% per
annum thereafter, subject to a minimum fee of £115,000 per annum.
In addition to the NAV based fee the Administrator is also entitled
to an annual fee of £36,000 for certain additional administration
services. The Administrator is entitled to be reimbursed
out-of-pocket expenses incurred in the course of carrying out its
duties as Administrator.
During the period ended 30 June
2015, US$127,755 (31 December 2014: US$314,716, 30 June
2014: US$176,357) was earned
by the Administrator as administration fees. At 30 June 2015, US$65,388 (31 December
2014: US$43,159, 30 June
2014: US$59,113) of the fee remained
outstanding.
5. Directors’ fees
The Chairman is entitled to a fee of £150,000 per annum.
John Hallam, as Chairman of the
Audit Committee, and Nicholas Moss,
as Chairman of the Management Engagement Committee, are entitled to
a fee of £36,000 per annum. All other Directors receive £33,000 per
annum. The Directors are also entitled to be reimbursed for
expenses properly incurred in the performance of their duties as
Directors.
6. Share capital
Issued and authorised share
capital
The Company was incorporated with the authority to issue an
unlimited number of ordinary shares with no par value which may be
divided into at least two classes denominated in US Dollars and
Sterling. The treasury shares have arisen as a result of the
discount management programme as described in note 9.
For the period from 1 January 2015 to 30 June
2015
|
|
US Dollar
shares |
Sterling
shares |
| Number of ordinary
shares |
|
|
|
| In issue at 1 January
2015 |
|
6,994,093 |
27,313,033 |
| Share conversions |
|
(1,856,593) |
1,186,769 |
| Purchase of own shares into
Treasury |
|
(41,030) |
(875,525) |
| In issue at 30 June
2015 |
|
5,096,470 |
27,624,277 |
|
|
|
|
| Number of treasury
shares |
|
|
|
| In issue at 1 January
2015 |
|
570,806 |
2,535,319 |
| Shares purchased and held in
Treasury during the period: |
|
|
|
| – On market purchases |
|
41,030 |
875,525 |
| Shares cancelled |
|
(150,000) |
(700,000) |
| In issue at 30 June
2015 |
|
461,836 |
2,710,844 |
| Percentage of class |
|
8.31% |
8.94% |
|
|
|
|
|
|
|
Company
Total |
|
US$’000 |
£’000 |
US$’000 |
| Share capital account |
|
|
|
| At 1 January 2015 |
20,575 |
259,998 |
528,816 |
| Share conversions |
(25,674) |
16,655 |
– |
| Purchase of own shares into
Treasury |
(527) |
(11,422) |
(18,157) |
| Repayment of offer costs |
(6) |
(253) |
(392) |
| Transfer from realised investment
reserve |
5,632 |
– |
5,632 |
| At 30 June 2015 |
– |
264,978 |
515,899 |
|
|
|
|
| For the year 1 January 2014 to
31 December 2014 |
|
|
|
|
|
|
|
|
US Dollar
shares |
Euro
shares |
Sterling
shares |
| Number of ordinary
shares |
|
|
|
| In issue at 1 January
2014 |
11,447,780 |
8,987,596 |
31,727,417 |
| Share conversions |
(2,926,987) |
3,468,418 |
(1,149,243) |
| Purchase of own shares into
Treasury |
(1,526,700) |
– |
(3,265,141) |
| Redemption of Euro class |
– |
(12,456,014) |
– |
| In issue at 31 December
2014 |
6,994,093 |
– |
27,313,033 |
|
|
|
|
| Number of treasury
shares |
|
|
|
| In issue at 1 January
2014 |
1,209,106 |
197,180 |
2,770,178 |
| Shares purchased and held in
treasury during the year: |
|
|
|
| – On market purchases |
1,526,700 |
– |
3,265,141 |
| Shares cancelled |
(2,165,000) |
(197,180) |
(3,500,000) |
| In issue at 31 December
2014 |
570,806 |
– |
2,535,319 |
| Percentage of class |
7.55% |
0.00% |
8.49% |
|
|
|
|
Company
Total |
|
US$’000 |
€’000 |
£’000 |
US$’000 |
| Share capital account |
|
|
|
|
| At 1 January 2014 |
76,833 |
98,647 |
314,987 |
832,528 |
| Share conversions |
(38,190) |
45,909 |
(15,527) |
– |
| Purchase of own shares into
Treasury |
(18,021) |
– |
(39,219) |
(83,550) |
| Repayment of offer costs |
(47) |
(4,574) |
(243) |
(6,478) |
| Redemption of Euro Class |
– |
(139,982) |
– |
(183,131) |
| Foreign exchange loss on Euro
Class closure |
– |
– |
– |
(30,553) |
| At 31 December 2014 |
20,575 |
– |
259,998 |
528,816 |
|
|
|
|
|
| For the period
from 1 January 2014 to 30 June 2014 |
|
|
|
|
|
|
|
|
|
|
US Dollar
shares |
Euro
shares |
Sterling
shares |
| Number of ordinary
shares |
|
|
|
|
| In issue at 1 January
2014 |
|
11,447,780 |
8,987,596 |
31,727,417 |
| Share conversions |
|
(3,584,462) |
3,468,418 |
(752,116) |
| Purchase of own shares into
Treasury |
|
(995,666) |
– |
(2,097,723) |
| In issue at 30 June
2014 |
|
6,867,652 |
12,456,014 |
28,877,578 |
|
|
|
|
|
| Number of treasury
shares |
|
|
|
|
| In issue at 1 January
2014 |
|
1,209,106 |
197,180 |
2,770,178 |
| Shares purchased and
held in treasury during the period: |
|
|
|
|
| – On market purchases |
|
995,666 |
– |
2,097,723 |
| Shares cancelled |
|
(1,475,000) |
– |
(2,150,000) |
| In issue at 30 June
2014 |
|
729,772 |
197,180 |
2,717,901 |
| Percentage of class |
|
9.61% |
1.56% |
8.60% |
|
|
|
|
|
|
|
|
|
Company
Total |
|
US$’000 |
€’000 |
£’000 |
US$’000 |
| Share capital account |
|
|
|
|
| At 1 January 2014 |
76,833 |
98,647 |
314,987 |
832,528 |
| Share conversions |
(46,909) |
45,909 |
(10,204) |
– |
| Purchase of own shares into
Treasury |
(11,669) |
– |
(25,122) |
(53,910) |
| At 30 June 2014 |
18,255 |
144,556 |
279,661 |
778,618 |
|
|
|
|
|
|
Share classes
In respect of each class of shares a separate class account has
been established in the books of the Company. An amount equal to
the aggregate proceeds of issue of each share class has been
credited to the relevant class account. Any increase or decrease in
the NAVs of each of the share classes in either Master Fund as
calculated by BHMS or BHGO are allocated to the relevant class
account in the Company. Each class account is allocated those
costs, pre-paid expenses, losses, dividends, profits, gains and
income which the Directors determine in their sole discretion
relate to a particular class.
Voting rights
Ordinary shares carry the right to vote at general meetings of
the Company and to receive any dividends, attributable to the
ordinary shares as a class, declared by the Company and, in a
winding-up will be entitled to receive, by way of capital, any
surplus assets of the Company attributable to the ordinary shares
as a class in proportion to their holdings remaining after
settlement of any outstanding liabilities of the Company.
As prescribed in the Company’s Articles, the different classes
of ordinary shares have different values attributable to their
votes. The attributed values have been calculated on the basis of
the Weighted Voting Calculation (as described in the Articles)
which takes into account the prevailing exchange rates on the date
of initial issue of ordinary shares. Currently, on a vote, a single
US Dollar ordinary share has one vote and a single Sterling
ordinary share has 1.97950 votes.
Treasury shares do not have any voting rights.
Repurchase of shares
The Directors have been granted authority to purchase in the
market up to 811,701 US Dollar
shares, and 4,183,520 Sterling shares respectively and they intend
to seek annual renewal of this authority from shareholders which
was last granted on 29 June 2015. The
Directors may, at their discretion, utilise this share repurchase
authority to address any imbalance between the supply of and demand
for shares.
Under the Company’s Articles, the Directors are required to
convene a shareholders’ meeting to consider the repurchase of a
class of shares in certain circumstances. See note 9 for further
details.
Further issue of shares
As approved by the shareholders at the Annual General Meeting
held on 29 June 2015 (the “AGM”), the
Directors have the power to issue further shares on a non
pre-emptive basis for cash in respect of 541,495 US Dollar shares, and 2,790,874 Sterling
shares respectively.
This power expires on the date falling fifteen months after the
date of the AGM or the conclusion of the next Annual General
Meeting of the Company, whichever is the earlier.
Distributions
BHMS and BHGO have not previously paid dividends to its
investors. Therefore, the Directors of the Company do not expect to
declare any dividends. This does not prevent the Directors of the
Company from declaring a dividend at any time in the future if the
Directors consider payment of a dividend to be appropriate in the
circumstances. If the Directors declare a dividend, such dividend
will be paid on a per class basis.
As announced on 15 January 2014,
the Company intends to be operated in such a manner that its shares
are not categorised as non-mainstream pooled investments. This may
require the Company to pay dividends in respect of any income that
it receives or would, for UK tax purposes, be deemed to have
received so that it would qualify as an investment trust if it were
UK tax-resident.
Further, the Company will first apply any such income in payment
of its management fees and performance fees.
Treasury shares are not entitled to distributions.
Annual redemption offer
Each calendar year the Directors may, in their absolute
discretion, determine that the Company should make an offer to
redeem such number of shares of the Company in issue as they may
determine provided that the maximum amount distributed does not
exceed 100% of the increase in the NAV of the Company in the prior
calendar year.
The Directors shall, in their absolute discretion, determine the
particular class or classes of shares in respect of which an Annual
Redemption Offer will be made, the timetable for that Annual
Redemption Offer and the price at which the shares of each relevant
class will be redeemed.
Whether a return of capital is made in any particular year and,
if so, the amount of the return, may depend, among other things, on
prevailing market conditions, the ability of the Company to
liquidate its investments to fund the capital return, the success
of prior capital returns and applicable legal, regulatory and tax
considerations. Details of the 2015 redemption offer are set out in
note 13.
Share conversion scheme
The Company has implemented a Share Conversion Scheme. The
scheme provides shareholders with the ability to convert some or
all of their ordinary shares in the Company of one class into
ordinary shares of the other class. From 31 October 2008
shareholders at the discretion of the Board have been able to
convert ordinary shares on the last business day of every month.
Each conversion will be based on NAV (note 8) of the share classes
to be converted.
The Company announced on 13 December
2013, that in light of the Class Closure Resolution process,
the Share Conversion Scheme would be suspended following the
December 2013 conversion date. After
the completion of the Class Closure Resolution process, the Share
Conversion Scheme was reinstated for the March 2014 conversion date for the US Dollar and
Sterling Shares.
7. Taxation
Overview
The Company is exempt from taxation in Guernsey under the Income
Tax (Exempt Bodies) (Guernsey) Ordinance 1989. Accordingly, no
provision for Guernsey income taxes is included in these Financial
Statements.
Uncertain tax positions
The Company recognises the tax benefits of uncertain tax
positions only where the position is more-likely-than-not
(i.e. greater than 50-percent) to be sustained assuming
examination by a tax authority based on the technical merits of the
position. In evaluating whether a tax position has met the
recognition threshold, the Company must presume that the position
will be examined by the appropriate taxing authority that has full
knowledge of all relevant information. A tax position that meets
the more-likely-than-not recognition threshold is measured to
determine the amount of benefit to recognise in the Company’s
Financial Statements. Income tax and related interest and penalties
would be recognised by the Company as tax expense in the Interim
Unaudited Statement of Operations if the tax positions were deemed
to not meet the more-likely-than-not threshold.
The Company analyses all open tax years for all major tax
jurisdictions. Open tax years are those that are open for
examination by taxing authorities, as defined by the Statute of
Limitations in each jurisdiction.
The Company identifies its major tax jurisdictions as the
Cayman Islands and foreign
jurisdictions where the Company makes significant investments. The
Company has no examinations by tax authorities in progress.
The Board has analysed the Company’s tax positions, and has
concluded that no liability for unrecognised tax benefits should be
recorded related to uncertain tax positions. Further, the Board is
not aware of any tax positions for which it is reasonably possible
that the total amounts of unrecognised tax benefits will
significantly change in the next twelve months.
Foreign Account Tax Compliance Act
For purposes of the US Foreign Account Tax Compliance Act, the
Company registered with the US Internal Revenue Services (“IRS”) as
a Guernsey reporting Foreign Financial Institution (“FFI”),
received a Global Intermediary Identification Number
(U2S6ID.99999.SL.831), and can be found on the IRS FFI list.
The Company is subject to Guernsey regulations and guidance
based on reciprocal information sharing inter-governmental
agreements which Guernsey has entered into with the United Kingdom and the United States of America. The Board will
take the necessary actions to ensure that the Company is compliant
with Guernsey regulations and guidance in this regard.
8. Publication and calculation of net
asset value
The NAV of the Company is equal to the value of its total assets
less its total liabilities. The NAV per share of each class will be
calculated by dividing the NAV of the relevant share class by the
number of shares of the relevant class in issue on that day.
The Company publishes the NAV per share for each class of shares
as calculated by the Administrator based in part on information
provided by BHMS and BHGO, monthly in arrears, as at each month
end.
The Company also publishes an estimate of the NAV per share for
each class of shares as calculated by the Administrator based in
part on information provided by BHMS and BHGO, weekly in
arrears.
9. Discount management programme
The Company’s discount management programme includes the ability
to make market purchases of shares and the obligation to propose
class closure resolutions if, in any fixed discount management
period (1 January to 31 December each year), the average daily
closing market price of the relevant class of shares during such
period is 10% or more below the average NAV per share of the
relevant class taken over the 12 monthly NAV Determination Dates
(generally the last business day of each month) in that fixed
discount management period, as described more fully in the
Company’s principal documents, which are available from the
Administrator on request.
During the period to 30 June 2015
the Company recorded an average discount to NAV of 7.04% and 7.21%
for US Dollar shares and Sterling shares respectively (year to
31 December 2014: 9.52%, and 9.70%
for US dollar shares, and Sterling shares respectively and period
to 30 June 2014: 9.60%, and 9.31% for
US dollar shares, and Sterling shares respectively).
Due to the discounts of each share class exceeding the 10%
threshold in 2013, the Company convened a meeting of the
shareholders of each class to vote on the Class Closure
Resolutions. The resolution in respect of the Euro class was passed
whereas those for the Sterling and Dollar classes were not.
Following the Class Closure Resolution vote, the Company under
the Articles of Incorporation was required to make the following
Class Closure Options available to the shareholders of the Euro
class:
a) to redeem all or some of their
shares at NAV per share less the costs and expenses of the Class
Closure vote and other outstanding costs and expenses of the
Company, attributable to the relevant class (including any
redemption fees and repayment of Offer Costs as described in note 3
to the Financial Statements);
b) subject to
certain limitations, to convert all or some of their shares into
shares of another class; or
c) subject to
the class continuing and remaining viable, to remain in the
class.
A notice of election for these Class Closure Options was sent to
shareholders of the Euro class on 12 March
2014 requiring a response by 25 April
2014.
Further to the decision to close the Company’s Euro share class
and the additional notice sent to holders of Euro shares on
13 May 2014, a total of 12,456,014 Euro shares were elected to be
redeemed; 249,178 Euro shares were
elected to be converted into Sterling shares and 57,867 Euro shares were elected to be converted
into US dollar shares.
The remaining 388,017 Euro shares
in respect of which an election was not received were converted
into Sterling shares.
The Euro shares elected for redemption were redeemed following
the announcement of the Euro redemption price as at 31 July 2014 on 22 August
2014, with payment of the redemption proceeds on
2 September 2014.
Euro shares that were elected to be converted into shares of
another class on or before 25 April
2014 were converted with effect from 27 May 2014.
Euro shares that were elected to be converted into shares of
another class after 25 April 2014 or
in respect of which no election was received were converted with
effect from 30 June 2014.
The Annual Redemption Offer described in note 6 which enables a
partial return of capital is also part of the discount management
programme.
The discount management measures will be funded by partial
redemptions of the Company’s investment in BHMS.
10. Note Purchase Agreement
The Company is party to a Note Purchase Agreement with JP Morgan
Chase Bank dated 17 August 2012,
amended and restated on 1 September
2014, pursuant to which the Company may obtain financing of
up to US$11 million and £39 million,
if required inter alia, to finance share buybacks pending receipt
of the proceeds of redemption from its underlying investments. As
at 30 June 2015, an amount equivalent
to US$19,300,800 (31 December 2014: US$6,668,149, 30 June
2014: US$32,937,900) was used
under the Note Purchase Agreement, with US$194,672 (31 December
2014: US$4,812, 30 June 2014: US$99,065) of loan interest payable at the period
end.
11. Financial Highlights
The following tables include selected data for a single ordinary
share of each of the ordinary share classes in issue at the period
end and other performance information derived from the Interim
Unaudited Financial Statements.
The per share amounts and ratios which are shown reflect the
income and expenses of the Company for each class of ordinary
share.
|
01.01.15 |
01.01.15 |
|
to
30.06.15 |
to
30.06.15 |
|
US Dollar
shares |
Sterling
shares |
|
US$ |
£ |
| Per share operating
performance |
|
|
| Net asset value at beginning
of the period |
13.44 |
13.62 |
|
|
|
| Income from investment
operations |
|
|
| Net investment loss* |
(0.11) |
(0.10) |
| Net realised and unrealised gain
on investment |
0.46 |
0.32 |
| Other capital items** |
(0.14) |
0.03 |
| Total return |
0.21 |
0.25 |
|
|
|
| Net asset value, end of the
period |
13.65 |
13.87 |
|
|
|
| Total return before
performance fees |
1.74% |
2.10% |
| Performance fees |
(0.24%) |
(0.27%) |
|
|
|
| Total return after performance
fees |
1.50% |
1.83% |
Total return reflects the net return for an investment made at
the beginning of the period and is calculated as the change in the
NAV per ordinary share during the period from 1 January 2015 to 30 June
2015. The figures contained herein and below for the period
ended 30 June 2015 are not
annualised.
|
01.01.15 |
01.01.15 |
|
to
30.06.15 |
to
30.06.15 |
|
US Dollar
shares |
Sterling
shares |
|
US$’000 |
£’000 |
| Supplemental data |
|
|
| Net asset value, end of the
period |
69,550 |
383,135 |
| Average net asset value for
the period |
80,641 |
386,547 |
|
|
01.01.15 |
01.01.15 |
|
|
to
30.06.15 |
to
30.06.15 |
|
|
US Dollar
shares |
Sterling
shares |
| Ratio to average net
assets |
|
|
|
| Operating expense |
|
|
|
| Company expenses*** |
|
1.19% |
1.17% |
| Master Fund expenses**** |
|
0.08% |
0.09% |
| Performance fees |
|
0.20% |
0.26% |
|
|
1.47% |
1.52% |
|
|
|
|
| Net investment loss* |
|
(0.68%) |
(0.70%) |
|
|
|
|
|
01.01.14 |
01.01.14 |
01.01.14 |
|
to
31.12.14 |
to
31.12.14^ |
to
31.12.14 |
|
US Dollar
shares |
Euro
shares |
Sterling
shares |
|
US$ |
€ |
£ |
| Per share operating
performance |
|
|
|
| Net asset value at beginning
of the year |
13.12 |
13.19 |
13.34 |
|
|
|
|
| Income from investment
operations |
|
|
|
| Net investment loss* |
(0.16) |
(0.07) |
(0.15) |
| Net realised and unrealised
gain/(loss) on investment |
0.17 |
(0.11) |
0.29 |
| Other capital items** |
0.31 |
(0.35) |
0.14 |
|
|
|
|
| Total return |
0.32 |
(0.53) |
0.28 |
|
|
|
|
| Redemption of Euro Share
Class |
– |
12.66 |
– |
|
|
|
|
| Net asset value, end of the
year |
13.44 |
– |
13.62 |
|
|
|
|
| Total return |
2.49% |
(4.02%) |
2.09% |
^
Returns of the Euro Share Class have been calculated up to the date
of the final redemption.
Total return reflects the net return for an investment made at
the beginning of the year and is calculated as the change in the
NAV per ordinary share during the year ended 31 December 2014.
|
01.01.14 |
01.01.14 |
01.01.14 |
|
to
31.12.14 |
to
31.12.14^^ |
to
31.12.14 |
|
US Dollar
shares |
Euro
shares |
Sterling
shares |
|
US$’000 |
€’000 |
£’000 |
| Supplemental data |
|
|
|
| Net asset value, end of the
year |
94,033 |
– |
372,016 |
| Average net asset value for
the year |
95,752 |
168,194 |
381,539 |
^^ The average Euro
Share Class net asset value for the period is calculated based on
published NAVs from the start of the period up to 31 July 2014.
|
01.01.14 |
01.01.14 |
01.01.14 |
|
to
31.12.14 |
to
31.12.14^^^ |
to
31.12.14 |
|
US Dollar
shares |
Euro
shares |
Sterling
shares |
| Ratio to average net
assets |
|
|
|
| Operating expense |
|
|
|
| Company expenses*** |
1.45% |
0.70% |
1.39% |
| Master Fund expenses**** |
0.05% |
0.03% |
0.05% |
|
1.50% |
0.73% |
1.44% |
|
|
|
|
| Net investment loss* |
(1.17%) |
(0.49%) |
(1.06%) |
|
|
|
|
|
^^^
Ratios of the Euro Share Class have been annualised. |
|
|
|
|
|
|
|
|
01.01.14 |
01.01.14 |
01.01.14 |
|
to
30.06.14 |
to
30.06.14 |
to
30.06.14 |
|
US Dollar
shares |
Euro
shares |
Sterling
shares |
|
US$ |
€ |
£ |
| Per share operating
performance |
|
|
|
| Net asset value at beginning
of the period |
13.12 |
13.19 |
13.34 |
|
|
|
|
| Income from investment
operations |
|
|
|
| Net investment loss* |
(0.07) |
(0.05) |
(0.06) |
| Net realised and unrealised loss
on investment |
(0.17) |
(0.15) |
(0.12) |
| Other capital items** |
0.22 |
0.01 |
0.09 |
| Total return |
(0.02) |
(0.19) |
(0.09) |
|
|
|
|
| Net asset value, end of the
period |
13.10 |
13.00 |
13.25 |
|
|
|
|
| Total return |
(0.14%) |
(1.46%) |
(0.70%) |
Total return reflects the net return for an investment made at
the beginning of the period and is calculated as the change in the
NAV per ordinary share during the period from 1 January 2014 to 30 June
2014. The figures contained herein and below for the period
ended 30 June 2014 are not
annualised.
|
01.01.14 |
01.01.14 |
01.01.14 |
|
to
30.06.14 |
to
30.06.14 |
to
30.06.14 |
|
US Dollar
shares |
Euro
shares |
Sterling
shares |
|
US$’000 |
€’000 |
£’000 |
| Supplemental data |
|
|
|
| Net asset value, end of the
period |
89,967 |
161,903 |
382,559 |
| Average net asset value for
the period |
101,017 |
169,167 |
388,712 |
|
|
|
|
|
01.01.14 |
01.01.14 |
01.01.14 |
|
to
30.06.14 |
to
30.06.14 |
to
30.06.14 |
|
US Dollar
shares |
Euro
shares |
Sterling
shares |
| Ratio to average net
assets |
|
|
|
| Operating expense |
|
|
|
| Company expenses*** |
0.44% |
0.38% |
0.41% |
| BHGO expenses**** |
0.01% |
0.01% |
0.01% |
|
0.45% |
0.39% |
0.42% |
|
|
|
|
| Net investment loss* |
(0.47%) |
(0.40%) |
(0.42%) |
* The net
investment loss figure shown above does not include net realised
and unrealised gains and losses on investments allocated from BHGO
and BHMS.
** Included in
other capital items are the discounts and premiums on conversions
between share classes during the period, share buybacks and partial
capital returns, as compared to the NAV per share at the beginning
of the period.
*** Company expenses are
as disclosed in the Interim Unaudited Statement of Operations,
excluding performance fees and foreign exchange losses on
aggregation.
**** Master Fund expenses are
the operating expenses of BHGO and BHMS.
12. Related Party Transactions
Parties are considered to be related if one party has the
ability to control the other party or exercise significant
influence over that party in making financial or operational
decisions.
On 1 September 2014, BHGO
transferred underlying portfolio funds of $75,305,070 and £355,935,974 to BHMS in exchange
for shares in that company. In addition, on 1 September 2014, the Company redeemed, in
specie, $77,334,645 of the US Dollar
shares and £354,713,853 of the Sterling shares it held in BHGO and
in return received Ordinary Shares of BHMS (a company managed by
the Manager).
The Directors are responsible for the determination of the
investment policy of the Company and have overall responsibility
for the Company’s activities.
The Company is managed by the Manager.
The Company and the Manager have entered into a Management
Agreement dated 21 June 2010, amended
and restated 18 July 2014, under
which the Manager has been given responsibility for the day-to-day
discretionary management of the Company’s assets (including
uninvested cash) in accordance with the Company’s investment
objective and policy, subject to the overall supervision of the
Directors and in accordance with the investment restrictions in the
Management Agreement and the Articles of Incorporation. Details of
the management and performance fees to which the Manager is
entitled are in note 4.
The Company has five non-executive Directors, all of whom are
now independent of the Manager. Talmai
Morgan was a non-executive Director of BH Macro Limited
until 25 June 2015. BH Macro Limited
is managed by the Company’s Manager, and is a feeder fund for
Brevan Howard Master Fund Limited into which BHMS invests.
Details of Directors’ fees to which the Directors are entitled
are disclosed in note 5.
The Directors had the following interests in the Company, held
either directly or beneficially at 30 June
2015:
|
US Dollar
Shares |
Sterling
Shares |
| Sir Michael Bunbury |
Nil |
4,000 |
| John Hallam |
5,000 |
Nil |
| Graham Harrison |
Nil |
1,500 |
| Talmai Morgan |
5,000 |
Nil |
| Nicholas Moss |
Nil |
839 |
13. Subsequent Events
Management have evaluated subsequent events up to 26 August 2015, which is the date that the
Interim Unaudited Financial Statements were available to be
issued.
Subsequent to the period end and up to the date of this report,
the Company purchased the following shares of the Company to be
held as treasury shares:
|
|
| Treasury shares |
Number of shares
purchased |
Cost
(US$) |
Cost
(in currency) |
| US Dollar shares |
26,473 |
343,499 |
$343,499 |
| Sterling shares |
278,917 |
5,682,635 |
£3,642,547 |
On 3 July 2015 the following
number of each class of shares were redeemed and cancelled pursuant
to the 2015 redemption offer:
135,544 US Dollar shares at a
redemption price of US$13.5749,
equalling a gross redemption of US$1,839,996.
529,868 Sterling Shares at a redemption price of £13.7770.
equalling a gross redemption of £7,299,991.
In addition to the above 650,000 Sterling Treasury shares were
also cancelled.
Following the purchase and cancellation of shares, the Company
has 4,934,453 US Dollar, and
26,815,492 Sterling ordinary shares in issue.
On 17 July 2015, the Company
realised its residual holding in BHGO, during its orderly
liquidation, for US$186,297.
No further subsequent events have occurred.
Historic Performance Summary
As at 30 June 2015
|
30.06.2015* |
31.12.14 |
31.12.13 |
31.12.12 |
31.12.11 |
|
(Unaudited) |
(Audited) |
(Audited) |
(Audited) |
(Audited) |
|
US$’000 |
US$’000 |
US$’000 |
US$’000 |
US$’000 |
| Net increase/(decrease) in net
assets resulting from operations |
17,787 |
(42,762) |
35,409 |
81,252 |
39,147 |
| Total assets |
695,561 |
682,694 |
1,014,286 |
1,038,961 |
1,000,993 |
| Total liabilities |
(23,416) |
(9,787) |
(812) |
(7,766) |
(628) |
| Net assets |
672,145 |
672,907 |
1,013,474 |
1,031,195 |
1,000,365 |
|
|
|
|
|
|
| Number of shares in
issue |
|
|
|
|
|
| US Dollar shares |
5,096,470 |
6,994,093 |
11,447,780 |
13,171,761 |
15,185,614 |
| Euro shares |
– |
– |
8,987,596 |
2,298,992 |
2,919,762 |
| Sterling shares |
27,624,277 |
27,313,033 |
31,727,417 |
39,018,709 |
39,910,912 |
|
|
|
|
|
|
| Net asset value per
share |
|
|
|
|
|
| US Dollar shares |
US$13.65 |
US$13.44 |
US$13.12 |
US$12.89 |
US$12.34 |
| Euro shares |
– |
– |
€13.19 |
€13.00 |
€12.46 |
| Sterling shares |
£13.87 |
£13.62 |
£13.34 |
£13.04 |
£12.47 |
*
Covers the period from 1 January 2015
to 30 June 2015.
Glossary of Acronyms
Detailed below are the underlying funds and their acronyms used
within this report:
| BHGO |
Brevan Howard Global
Opportunities Master Fund Limited |
| BHMS |
Brevan Howard Multi-Strategy
Master Fund Limited |
| BHMF |
Brevan Howard Master Fund
Limited |
| BHA |
Brevan Howard Asia Master Fund
Limited |
| BHST |
Brevan Howard Systematic Trading
Master Fund Limited |
| DWC |
DW Catalyst Offshore Fund,
Ltd. |
Notes
Management and Administration
Directors
Sir Michael Bunbury* (Chairman)
(appointed 1 January 2013)
John Hallam* (Senior Independent
Director)
(appointed 28 February
2008)
Graham Harrison*
(appointed 17 March 2010)
Talmai Morgan*
(appointed 25 February
2008)
Nicholas Moss*
(appointed 28 February
2008)
(All Directors are non-executive)
* These Directors are independent for the purpose of
LR15.2.12-A.
Registered Office
PO Box 255
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3QL
Manager
Brevan Howard Capital Management LP
6th Floor
37 Esplanade
St Helier
Jersey
JE2 3QA
Administrator and Corporate Secretary
Northern Trust International Fund
Administration Services (Guernsey) Limited
PO Box 255
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3QL
Independent Auditor
KPMG Channel Islands Limited
Glategny Court
Glategny Esplanade
St Peter Port
Guernsey
GY1 1 WR
Registrar and CREST Service Provider
Computershare Investor Services (Guernsey) Limited
3rd Floor
Natwest House
Le Truchot
St Peter Port
Guernsey
GY1 1WD
Legal Advisors (Guernsey Law)
Carey Olsen
Carey House
Les Banques
St. Peter Port
Guernsey
GY1 4BZ
Legal Advisors (UK Law)
Freshfields Bruckhaus Deringer
65 Fleet Street
London
EC4Y 1HS
Corporate Brokers
JPMorgan Cazenove
25 Bank Street
Canary Wharf
London
E14 5JP
Canaccord Genuity Limited
88 Wood Street
London
EC2V 7QR
For the latest information
www.bhglobal.com
The Interim Report and Unaudited Financial Statements of BH
Global Limited and the Interim Unaudited Financial Statements of
Brevan Howard Multi-Strategy Master Fund Limited will shortly be
available on the Company’s website www.bhglobal.com.