TIDMBHGG TIDMBHGU
BH Global Limited
Interim Report and Unaudited Financial Statements 2020
LEI: 549300BIIO4DTKEMXV14
(Classified Regulated Information, under DTR 6 Annex 1 section 1.2)
30 June 2020
The Company has today, in accordance with DTR 6.3.5, released its Interim
Report and Unaudited Financial Statements for the period ended 30 June 2020.
The Report will shortly be available from the Company's website:
www.bhglobal.com.
CHAIRMAN'S STATEMENT
Dear Shareholder,
The half year to 30 June 2020 was a period of exceptional absolute and relative
performance for BH Global Limited (the "Company" or "BH Global"). Indeed, this
six-month period delivered the strongest performance since the Company was
launched in 2008. In the period the Net Asset Value ("NAV") per share of the
smaller US Dollar class appreciated by 14.72% and that of the much larger
Sterling class by 14.54%.
Driven by this strong NAV performance and a narrowing of the discount, the
share prices of the two classes appreciated by 19.7% (USD) and 21.6% (GBP). It
was altogether a highly satisfactory period for BH Global shareholders at a
time when there was huge volatility in world equity markets.
An altogether exceptional half year for NAV performance during a period of
financial market turbulence and one that demonstrates that, whilst BH Global is
a low volatility, structurally uncorrelated vehicle with assets spread over
multiple trading strategies, it can also deliver substantial performance with
tight risk controls in favourable conditions. Great credit must be given to the
Manager, Brevan Howard and the Manager's Report, which follows this Statement,
sets out the performance in more detail.
ASSETS
The Company continues to invest all of its assets, save for working cash
balances, in Brevan Howard Multi-Strategy Master Fund Limited ("BHMS"). BH
Global continues to be by far the largest investor in BHMS owning 81.9% of the
total capital of that fund. As at 30 June 2020 the Company's net assets were
$503 million and were significantly in excess of the $300 million threshold
that would trigger a wind-up resolution to be put to shareholders.
During the half year the Manager made some significant changes in the
allocation of the underlying funds. The percentage of BHMS invested in the
Brevan Howard Master Fund ("BHMF") was reduced from 43.5% to 25.4% and the
capital redeployed as is set out in the Manager's Report. The most significant
change was to increase the percentage allocated to the Single Manager Portfolio
where the allocation rose from 40.0% to 58.1% taking it back towards its
previous peak of over 60% in 2018. That allocation is spread across nine
different trading books or funds and returned 17.24% (gross of fees) for the
period.
DISCOUNT, SHARE BUY BACKS, POSSIBLE ISSUANCE OF SHARES FROM TREASURY
As at 30 June 2020 the Sterling class of shares traded at exactly their NAV per
share - with no discount nor premium and thus the discount of 5.78% as at 31
December 2019 had been eliminated through investors' purchases in the market.
No shares were bought back and indeed the last share buy backs undertaken were
in June 2018. However, during the worst of the equity market turmoil in March,
when investors were selling assets indiscriminately, the discount went through
a period of considerable volatility reaching a level in excess of 15% for a
short period. The Board considered carefully, and took advice from the
Company's brokers, as to whether the resumption of buy backs would be in the
best interests of shareholders but concluded that the developing NAV
performance would eventually be recognised by the market and the discount would
close of its own accord. That is indeed what occurred and a few weeks later the
shares traded at a modest premium for a period.
The Company holds 1.9 million shares in Treasury in aggregate across the
Sterling and US Dollar classes. As a premium began to develop, the Company,
with the assistance of the Manager who covered an important regulatory
requirement, put in place the systems that would permit shares to be issued
from Treasury. No such shares have yet been issued; but in the event that the
Company's shares trade again at a sustained material premium, the Board is
prepared to issue modest numbers of shares which will be NAV accretive to
existing shareholders and will assist liquidity. Should the potential for such
issuance materialise the Company will make an RNS announcement to the market.
ANNUAL GENERAL MEETING AND SHAREHOLDERS
Owing to travel restrictions resulting from the COVID-19 pandemic it would have
been almost impossible for any shareholder to attend the AGM in person.
However, I am pleased to report that over 60% of eligible votes were cast by
proxy and that eight out of the twelve resolutions were passed with a 100%
majority in favour. The resolution with the most votes against was still passed
with a majority of 96.5%. The Board and the Manager are very appreciative of
such a strong show of support from shareholders.
Both the Manager and I have regular contact with the Company's major
shareholders. In addition, J P Morgan Cazenove hosted a webinar jointly for BH
Global and BH Macro in May which was attended by over 100 shareholders and
interested parties. In that webinar the Manager reviewed performance and
discussed the outlook for trading.
MANAGER
Brevan Howard Capital Management LP continues as Manager of the Company
although a personnel change has recently taken place. After 12 years of service
at Brevan Howard, Magnus Olsson has decided on a personal career change and has
left Brevan Howard to pursue his own path. Magnus was Chair of the Manager's
Investment Committee (the "IC") which is responsible for asset allocation of
BHMS and thus, indirectly, of the Company's assets.
Magnus has regularly attended quarterly Board meetings and other meetings with
directors and with shareholders and has been responsible for the flow of
information to the Board and to shareholders.
Since I was appointed your Chairman in 2013 I have seen first-hand Magnus'
thoughtful professional skills and on behalf of the Board and shareholders I
wish to thank him for his constant diligent attention to BH Global's business
and to wish him very well in his future career.
Ryan Kennelly, who previously worked with Magnus and attended BH Global Board
meetings some time ago, has rejoined Brevan Howard and is stepping into Magnus'
role. The Board looks forward to working with Ryan and to continuing the
constructive and professional relationship in the same vein as that experienced
with Magnus.
THE BOARD AND GOVERNANCE
There have been no changes of directors since Andreas Tautscher joined the
Board in May 2019. The Board is compact. Its focus is on good stewardship of
the Company on behalf of the shareholders. As I announced in March, the Board
has appointed BoardAlpha to conduct an external appraisal of the operation of
the Board and its effectiveness. COVID-19 is making this task more difficult
and as matters are at the moment all Board and other meetings are being held
remotely. Such remote working looks as though it may continue for many months
yet and BoardAlpha will have to undertake their research, and develop their
report in less than ideal circumstances. Remotely attended Board meetings can
undertake the business of the Company satisfactorily. However, there is no
substitute for occasional physical meetings round a table where personal
interaction can flow more easily.
In recent months the Board has held an additional number of informal remote
meetings both to monitor developments in markets and also to have confirmation
from the Manager of the proper functioning of both the Manager's business and
also those key elements of the Company's business that are delegated to the
Manager. At all times the Board has felt reassured that the Company's business
was under fully effective control.
CONCLUSION
I signed out my Chairman's Statement for the Annual Report on 20 March which,
as it turned out, was close to the pinnacle of the turmoil thus far in listed
markets and the atmosphere had a distinct air of panic about it. In fact, March
proved to be a spectacular month for BH Global's NAV performance, resulting in
appreciation of the NAV per share of the GBP class of 12.36% as Brevan Howard's
traders read the future for market moves so very accurately. Since March
markets have developed a much more settled tone on the back of unprecedented
support from Governments and central banks. Meanwhile economies across the
world have reeled from the direct and indirect effects of the COVID-19 crisis
with quarterly declines in GDP that many, myself included, would have thought
to be impossible. Central banks in the developed world have reacted by cutting
interest rates towards zero and in some cases into negative territory. However,
the world looks as though it will have to live with COVID-19 for a very long
time to come and its effect on employment and on many millions of individual
lives is profound with massive impact on health and on social and economic
activity.
The Manager's Report reminds us that financial assets are expensive by many
standard metrics. Nevertheless, it is to be hoped that trading opportunities
will occur and that growth in NAV per share will continue over time. Meanwhile
risk control in these very uncertain times remains critical and the Manager has
consistently demonstrated tight risk control in historic periods of market
turmoil and I have every confidence will do so in the future. Thus, the aim of
both Manager and Board will be for BH Global to continue to deliver as a
portfolio diversifier in a highly uncertain world for risk assets. However, as
a closed-end fund, some volatility of the discount to or premium over NAV at
which the Company's shares trade should be expected. Indeed, as I sign out this
Statement, a modest discount has once again developed. The Board will continue
to monitor the position and be ready to take appropriate action should it
consider that to be in the long-term interests of shareholders.
Yours sincerely,
Sir Michael Bunbury
Chairman
19 August 2020
GLOSSARY OF ACRONYMS
BHAHMF Brevan Howard AH Master Fund Limited
BHALMF Brevan Howard Alpha Strategies Master Fund
Limited
BHASMF Brevan Howard AS Macro Master Fund Limited
BHCM or the Manager Brevan Howard Capital Management LP
BHDGST BH-DG Systematic Trading Master Fund Limited
BHFGMF Brevan Howard FG Macro Master Fund Limited
BHG,BH Global or the Company BH Global Limited
BHGVMF Brevan Howard Global Volatility Master Fund
Limited
BHMBMF Brevan Howard MB Macro Master Fund Limited
BHMF Brevan Howard Master Fund Limited
BHMS or the Master Fund Brevan Howard Multi-Strategy Master Fund Limited
SMP* Single Manager Portfolio
* Prior to 1 January 2019, the Single Manager Portfolio ("SMP") was described
as the Direct Investment Portfolio ("DIP").
UNAUDITED SUPPLEMENTAL FINANCIAL STATEMENTS
In order to provide shareholders with further information regarding the net
asset value of each class of shares, coupled with greater transparency as to
the income, gains and expenses incurred and the changes in net assets of the
two classes, the results have been presented in the tables below. These tables
show the allocation of all transactions in the currency of the respective share
class.
It should be noted that these tables have not been subject to review by KPMG
Channel Islands Limited whose report can be found below in the Independent
Review Report to BH Global.
UNAUDITED SUPPLEMENTAL STATEMENT OF ASSETS AND LIABILITIES
As at 30 June 2020
US Dollar Sterling Company
shares shares total
US$'000 GBP'000 US$'000
Assets
Investment in BHMS 49,615 379,543 518,598
Other debtors 32 33 73
Cash and bank balances denominated in US Dollars 96 - 96
Cash and bank balances denominated in Sterling - 832 1,028
Total assets 49,743 380,408 519,795
Liabilities
Management fees payable 32 263 357
Performance fees payable 1,614 11,618 15,971
Accrued expenses and other liabilities 25 119 172
Administration fees payable 3 20 27
Total liabilities 1,674 12,020 16,527
Net assets 48,069 368,388 503,268
Number of shares in issue 2,542,136 19,967,808 -
Net asset value per share US$18.91 GBP18.45 -
UNAUDITED SUPPLEMENTAL STATEMENT OF OPERATIONS
For the period from 1 January 2020 to 30 June 2020
US Dollar Sterling Company
shares shares total
US$'000 GBP'000 US$'000
Interest income 65 485 681
Expenses (130) (974) (1,367)
Total net investment loss allocated from BHMS (65) (489) (686)
Company income
Interest income - - -
Total Company income - - -
Company expenses
Management fees 200 1,587 2,215
Performance fees 1,614 11,621 16,367
Other expenses 28 199 281
Directors' fees and expenses 21 149 210
Administration fees 8 58 82
Foreign exchange (gains)/losses* 58 (43) 30,041
Total Company expenses 1,929 13,571 49,196
Net investment loss (1,994) (14,060) (49,882)
Net realised and unrealised gains/(losses) on
investments allocated from BHMS
Net realised gain on investments 2,482 18,813 26,368
Net unrealised gain on investments 5,991 44,568 62,577
Net realised and unrealised foreign exchange loss
- on hedging - (2,791) (3,545)
Net realised and unrealised gains on investments 8,473 60,590 85,400
allocated from BHMS
Net increase in net assets resulting from 6,479 46,530 35,518
operations
*The Company total for foreign exchange (gains)/losses also contains the
results of translating the Sterling class into US Dollars, which was
US$30,037,178 for the period ended 30 June 2020. The Unaudited Statement of
Financial Position was translated at the 30 June 2020 rate of 1.2356. The
Unaudited Statement of Operations was translated at the average rate of 1.2697.
The trades carried out in the various underlying portfolios have structures of
varying complexity and inherent leverage. This can result in situations where,
at an individual trade level, interest income or expense is offset by losses or
gains on other investments to achieve a net return. However, accounting
conventions require that all these elements are disclosed gross which can
result in separate reporting of what would otherwise be off-setting interest
income and expenses, realised gains and losses or unrealised gains and losses.
UNAUDITED SUPPLEMENTAL STATEMENT OF CHANGES IN NET ASSETS
For the period from 1 January 2020 to 30 June 2020
US Dollar Sterling Company
shares shares total
US$'000 GBP'000 US$'000
Net increase in net assets resulting from operations
Net investment loss (1,994) (14,060) (49,882)
Net realised gain on investments allocated from BHMS 2,482 18,813 26,368
Net unrealised gain on investments allocated from 5,991 44,568 62,577
BHMS
Net realised and unrealised foreign exchange loss - (2,791) (3,545)
allocated from BHMS
6,479 46,530 35,518
Share capital transactions
Net share conversions (2,333) 1,845 -
(2,333) 1,845 -
Net increase in net assets 4,146 48,375 35,518
Net assets at the beginning of the period 43,923 320,013 467,750
Net assets at the end of the period 48,069 368,388 503,268
MANAGER'S REPORT
Brevan Howard Capital Management LP ("BHCM" or the "Manager") is the manager of
BH Global Limited ("BHG" or the "Company"). BHG invests all its assets (net of
short-term working capital) in Brevan Howard Multi-Strategy Master Fund Limited
("BHMS") a company also managed by BHCM.
Performance Summary
The NAV per share of the USD shares appreciated by 14.72% during the first half
of 2020, while the NAV per share of the GBP shares appreciated by 14.54%.
The month-by-month NAV performance of the USD and GBP currency classes of BHG
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 -0.06 -1.56 -0.58 -0.67 3.06 -3.31 -1.73
2016 0.82 1.03 -0.83 -0.66 0.28 1.71 0.13 0.10 -0.23 0.47 3.62 0.82 7.42
2017 0.22 0.92 -0.99 -0.10 0.26 0.19 3.21 0.21 -0.44 -0.85 -0.02 0.03 2.59
2018 3.08 -0.89 -1.35 0.72 5.46 -1.12 0.30 -0.09 -0.29 0.22 -0.01 0.52 6.55
2019 0.17 -0.81 1.63 -1.15 3.79 3.06 -1.20 2.27 -2.10 0.57 -1.24 1.28 6.25
2020 -1.18 4.14 12.40 0.13 -0.66 -0.29 14.72
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 -0.03 -1.44 -0.64 -0.79 3.02 -3.16 -1.32
2016 0.91 1.08 -1.04 -0.65 0.24 1.46 0.13 -0.14 -0.34 0.59 3.28 0.96 6.60
2017 0.16 0.87 -1.15 -0.04 0.10 -0.21 3.12 0.24 -0.43 -0.75 -0.02 -0.11 1.75
2018 3.09 -0.99 -1.42 0.71 5.43 -1.21 0.20 -0.21 -0.38 0.06 -0.13 0.37 5.43
2019 0.04 -0.99 1.59 -1.36 3.88 2.85 -1.35 2.19 -2.16 0.38 -1.29 1.12 4.79
2020 -1.32 4.19 12.36 0.04 -0.61 -0.29 14.54
Source: BHG NAV and NAV per Share data is provided by BHG's administrator,
Northern Trust International Fund Administration Services (Guernsey) Limited
("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).
Data as at 30 June 2020.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS
Underlying Allocation Review
The Investment Committee ("IC") of the Manager made the decision to increase
its allocation to the SMP and reduce its allocation to BHMF. The SMP added
exposure to a senior trader focusing on emerging market trading and a
systematic macro strategy. The IC was of the view that these return sources
improved the diversification of the portfolio as a whole.
The allocations to BHDGST, BHASMF and BHMBMF remained relatively stable. The
allocations to BHFGMF and BHGVMF increased due to their relative
outperformance.
The IC continues to take advantage of the flexibility within BHMS's mandate in
order to seek high risk-adjusted returns and keep a healthy diversification
across strategies, asset classes and traders.
Performance Review
During the first half of 2020, the NAV per share of BH Global's USD and GBP
classes appreciated by 14.72% and 14.54% respectively.
BH Global's performance in the first quarter and the first half of the year
represent the largest quarterly and half yearly NAV gains in the Company's
history, with the NAV per share of the USD class gaining 15.67% and 14.72%
respectively. This compared favourably to the HFRI Macro Total Index, which was
down -1.62% and -0.59% over the respective periods. The period was
characterised by significant moves in price and volatility across most asset
classes. In the first quarter BHMS generated the majority of its returns in
interest rate trading across directional, volatility and relative value trading
strategies in a range of different markets. Towards the end of the first
quarter and during the second quarter BHMS made money predominantly from credit
markets but also, equities and commodities. BHMS also saw a modest loss in the
second quarter as a result of the performance of rates and difficult FX
markets.
With regard to the returns of the underlying fund allocations, all of the
underlying funds and the SMP contributed positively to performance over the
first half of 2020. BHMF was the main positive contributor on the back of solid
gains within interest rates trading. The SMP and BHGV also contributed notable
gains to the overall performance.
Looking across the trading areas, the majority of gains arose in interest rate
trading where directional trading of US interest rates was the main driver.
Specifically, from long positions in US rates particularly during the first
quarter. Additional modest gains came from EUR, GBP, and JPY and other interest
rate markets.
Trading in commodities generated additional gains mainly through energy markets
where tactical positioning long and short generated gains. Long exposure in
precious metals also produced returns.
FX trading was a detractor over the first half of 2020. A number of reversals
across markets produced a difficult trading environment throughout the first
half of the year. Gains were made in CAD and other select currencies but these
were outweighed by losses in EUR, GBP and Latin American currencies.
In credit, long exposure to selected credits across both emerging and developed
markets generated gains.
Trading in equities generated gains through tactical positioning long and
short. US markets produced the largest contribution.
The SMP was a positive contributor to BHMS's performance and is the area of the
portfolio whereby the Manager's IC has the ability to allocate directly to
trading books and funds which are managed by an individual portfolio manager.
At the end of the first half of 2020, the SMP had exposure to nine trading
books and funds. The profits were broadly generated in the same trading areas
as described for BHMS overall. However, the SMP contributed nearly all of the
gains in credit and the majority of the gains in commodities, illustrating the
diversification benefits it brings to BHMS.
Attribution Tables
In measuring the attribution of the underlying portfolios, the Manager employs
a number of metrics including the two set out in the tables below.
All positions, regardless of which trading book holds them, are allocated to an
asset class and the attribution per asset class is summarised in the first
table below. The second table summarises the attribution, but by reference to
the overall strategy classification of each trading book. It should be noted
that, as the second table indicates, there are some strategy groups which at 30
June 2020 had been allocated no trading books.
Quarterly and semi-annual contribution (%) to the performance of BHG USD Shares
(net of fees and expenses) by asset class*
Rates FX Equity Commodity Credit Discount Total
Management
Q1 2020 12.56 -0.14 1.68 0.54 1.01 0.00 15.67
Q2 2020 -0.34 -2.23 -0.34 0.72 1.39 0.00 -0.82
YTD 2020 12.18 -2.36 1.33 1.27 2.41 0.00 14.72
*Data as at 30 June 2020
Quarterly figures are calculated by BHCM based on performance data for each
period provided by BHG's administrator, Northern Trust. Figures rounded to two
decimal places.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS
Methodology and Definition of Contribution to Performance:
Attribution by asset class is produced at the instrument level, with
adjustments made based on risk estimates.
The above asset classes are categorised as follows:
"Rates": interest rates markets
"FX": FX forwards and options
"Equity": equity markets including indices and other derivatives
"Commodity": commodity futures and options
"Credit": corporate and asset-backed indices, bonds and CDS
"Discount Management": buyback activity for discount management purposes
Quarterly and semi-annual contribution (%) to the performance of BHG USD Shares
(net of fees and expenses) by strategy group*
Macro Systematic Rates FX Equity Credit EMG Commodity Discount TOTAL
Management
Q1 2020 14.8 -0.06 2.46 0.10 0.00 0.00 -1.49 -0.07 0.00 15.67
Q2 2020 -0.23 -0.77 -0.01 -0.03 0.00 0.00 0.23 0.00 0.00 -0.82
YTD 14.53 -0.83 2.45 0.06 0.00 0.00 -1.27 -0.08 0.00 14.72
2020
*Data as at 30 June 2020
Quarterly figures are calculated by BHCM based on performance data for each
period provided by BHG's administrator, Northern Trust. Figures rounded to two
decimal places.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS
Methodology and Definition of Contribution to Performance:
Strategy Group Attribution is approximate and has been derived by allocating
each underlying trader book 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 BHMS, the majority
of risk in this category is in rates)
"Systematic": rules-based futures trading
"Rates": developed interest rates markets
"FX": global FX forwards and options
"Equity": global equity markets including indices and other derivatives
"Credit": corporate and asset-backed indices, bonds and CDS
"EMG": global emerging markets
"Commodity": liquid commodity futures and options
"Discount Management": buyback activity for discount management purposes
Commentary and Outlook
The Coronavirus (COVID-19) pandemic has caused unprecedented economic
devastation and equally unprecedented fiscal and monetary policy responses. The
key question for investors is whether the policy responses are enough to
mitigate the economic damage.
Since the recession started in February, the US economy is estimated to have
contracted by as much as in the first year of the Great Depression and by more
than in the Great Financial Crisis. In response, Congress quickly delivered
over $2tr of economic relief, while the Federal Reserve cut rates to nearly
zero, restarted quantitative easing, and rolled out a wide variety of ambitious
lending programs; measures that provided a safety net for stocks and credit.
Other developed market economies suffered similar downturns and deployed a
broadly similar policy toolkit. The standout exception is China, which has been
more conservative in deploying its fiscal and monetary ammunition.
Looking forward, these efforts may prove insufficient to get the global economy
back to normal any time soon. COVID-19 continues to spread widely and is
causing renewed economic dislocations. Many businesses face solvency risks that
are not addressed by borrowing; a debt overhang cannot be cured by more
borrowing no matter how cheap it may be. Improved financial conditions are
narrowly focused on a handful of large companies and benefiting stakeholders
who need relatively little economic assistance.
The result is that financial assets are expensive by many standard metrics. So
long as a V-shaped recovery in risky assets fails to create a V-shaped recovery
in economic activity, this tension is a recipe for increased volatility. In the
past, a gap like this between ebullient market pricing and sobering
fundamentals has sometimes presaged abrupt non-linear adjustments. However,
since interest rates are constrained by the zero lower bound and credit spreads
have been explicitly underwritten by major central banks, volatility will have
to show up in other asset classes.
The US Dollar may become the ultimate barometer of success or failure. The
November presidential election is a potential catalyst. Joe Biden recently
declared that "it's way past time to put an end to the era of shareholder
capitalism." If the Democrats sweep the White House and Congress, the outlook
for US Dollar assets will come under increased scrutiny.
Brevan Howard wishes to thank shareholders once again for their continued
support.
Brevan Howard Capital Management, LP,
acting by its sole general partner,
Brevan Howard Capital Management Limited
19 August 2020
STATEMENT OF PRINCIPAL AND EMERGING RISKS AND UNCERTAINTIES
The Board is responsible for the Company's system of internal controls and for
reviewing its effectiveness. The Board is satisfied, by using the risk
management procedures and internal controls set out in the Company's risk
matrix and by monitoring the Company's investment objective and policy that it
has carried out a robust assessment of the risks and uncertainties facing the
Company.
Emerging risks
In order to recognise any new risks that may impact the Company and to ensure
that appropriate controls are in place to manage those risks, the Audit
Committee undertakes regular reviews of the Company's Risk Matrix.
· COVID-19: Since the start of January 2020, the outbreak of COVID-19,
which is a rapidly evolving situation, has adversely impacted global commercial
activities. The rapid development and fluidity of this situation precludes any
prediction as its ultimate impact, which may have a continued adverse impact on
economic and market conditions and trigger a period of global economic
slowdown. The Directors do not believe there is any financial impact to the
Financial Statements as at 30 June 2020. The Manager is monitoring developments
relating to COVID-19 and is coordinating its operational response based on
existing business continuity plans and on guidance from global health
organisations, relevant governments, and general pandemic response best
practices. From an operational perspective, the Company uses a number of
service providers. These providers have established, documented and regularly
tested Business Resiliency Policies in place, to cover various possible
scenarios whereby staff cannot be present at the designated office and conduct
business as usual. Since the COVID-19 pandemic outbreak, service providers have
successfully deployed these alternative working policies to ensure continued
business service.
· Brexit Risk: The UK left the EU on 31 January 2020 and entered into a
transition period ending on
31 December 2020. During this period the UK's arrangements with the EU remain
unchanged. However, in view of the short time frame to negotiate the future
relationship with the EU there remains a risk of a "cliff-edge Brexit".
Principal risks
The principal risks and uncertainties which have been identified and the steps
which are taken by the Board to mitigate them are as follows:
· Investment Risks: The Company is exposed to the risk that its portfolio
fails to perform in line with the Company's objectives if it is inappropriately
invested or markets move adversely. The Board reviews reports from the Manager,
which has discretion over portfolio allocation, at each quarterly Board
meeting, paying particular attention to this allocation and to the performance
and volatility of underlying investments;
· Financial Market Risks: The financial risks faced by the Company include
market and credit risk. These risks and the controls in place to mitigate them
are reviewed at each quarterly Board meeting;
· Liquidity Risks: While the Company retains sufficient working capital to
ensure that it can meet its normal running costs, this is a relatively modest
amount. It is therefore dependent on its continued access to funding from third
parties and the timely receipt of the proceeds from redemption requests made to
BHMS for all other purposes. The Board, in conjunction with the Manager and the
Administrator, monitors the liquidity needs of the Company and takes such
action as is appropriate;
· Operational Risks: The Company is exposed to the risks arising from any
failure of systems and controls in the operations of the Manager or the
Administrator. The Board receives reports annually from each of the Manager and
Administrator on their respective internal controls;
· Accounting, Legal and Regulatory Risks: The Company is exposed to risk if
it fails to comply with the regulations of the UK Listing Authority, Guernsey
Financial Services Commission, or if it fails to maintain accurate accounting
records. The accounting records prepared by the Administrator are reviewed by
the Manager. The Administrator provides the Board with regular reports on
changes in regulations and accounting requirements; and
· Manager Continuity: The Company is exposed to the risk that the Manager
will no longer have an appetite to run a multi-strategy mandate for the
Company. Steps to mitigate that risk include regular dialogue with the Manager,
regular review of the economic arrangements and contractual protections. The
Manager is monitoring developments relating to COVID-19 and is coordinating its
operational response based on existing business continuity plans and on
guidance from global health organisations, relevant governments, and general
pandemic response best practices.
The Board seeks to mitigate and manage these risks through continual review,
policy-setting and enforcement of contractual obligations and will update the
risk assessment matrix to reflect any changes to the control environment.
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 view 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.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information include on the Company's website, and for
the preparation and dissemination of financial statements. Legislation in
Guernsey governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Signed on behalf of the Board by:
Sir Michael Bunbury
Chairman
Sally-Ann Farnon
Director
19 August 2020
INDEPENT REVIEW REPORT TO BH GLOBAL LIMITED
Conclusion
We have been engaged by BH Global Limited (the "Company") to review the Interim
Unaudited Financial Statements in the half-yearly financial report for the six
months ended 30 June 2020 of the Company 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.
Based on our review, nothing has come to our attention that causes us to
believe that the financial statements for the period ended 30 June 2020 do not
give a true and fair view of the financial position of the Company as at 30
June 2020 and of its financial performance and its cash flows for the six month
period then ended in conformity with U.S generally accepted accounting
principles and the Disclosure Guidance and Transparency Rules ("the DTR") of
the UK's Financial Conduct Authority ("the UK FCA").
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. We
read the other information contained in the half-yearly financial report and
consider whether it contains any apparent misstatements or material
inconsistencies with the information in the unaudited financial statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
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 DTR of the UK FCA.
The Financial Statements included in this half-yearly financial report have
been prepared in conformity with U.S generally accepted accounting principles.
Our responsibility
Our responsibility is to express to the Company a conclusion on the Interim
Unaudited Financial Statements included in the half-yearly financial report
based on our review.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our
engagement letter to assist the Company in meeting the requirements of the DTR
of 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.
Barry Ryan
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants, Guernsey
19 August 2020
UNAUDITED STATEMENT OF ASSETS AND LIABILITIES
As at 30 June 2020
30.06.2020 31.12.2019 30.06.19
(Unaudited) (Audited) (Unaudited)
US$'000 US$'000 US$'000
Assets
Investment in 518,598 464,269 460,068
BHMS
Amount due from BHMS - 8,746 -
Other debtors 73 16 20
Cash and bank balances denominated in US Dollars 96 167 190
Cash and bank balances denominated in 1,028 1,004 3,243
Sterling
Total assets 519,795 474,202 463,521
Liabilities
Management fees payable (note 4) 357 775 368
Performance fees payable (note 4) 15,971 5,478 6,571
Accrued expenses and other liabilities 172 119 126
Directors' fees and expenses payable - - 99
Administration fees payable (note 4) 27 80 52
Total liabilities 16,527 6,452 7,216
Net assets 503,268 467,750 456,305
Number of shares in issue (note 6)
US Dollar shares 2,542,136 2,664,844 2,641,472
Sterling shares 19,967,808 19,868,275 19,886,259
Net asset value per share (notes 8 and
11)
US Dollar shares US$18.91 US$16.48 US$16.56
Sterling shares GBP18.45 GBP16.11 GBP16.30
See accompanying notes to the Interim Unaudited Financial Statements.
Signed on behalf of the Board by:
Sir Michael Bunbury
Chairman
Sally-Ann Farnon
Director
19 August 2020
UNAUDITED STATEMENT OF OPERATIONS
For the period from 1 January 2020 to 30 June 2020
01.01.20 01.01.19 01.01.19
to 30.06.20 to to 30.06.19
31.12.19
(Unaudited) (Audited) (Unaudited)
US$'000 US$'000 US$'000
Net investment losses allocated from BHMS
Interest income 681 1,187 658
Expenses (1,367) (1,998) (1,016)
Net investment losses allocated from BHMS (686) (811) (358)
Company income
Interest income - 1 1
Foreign exchange gains - 16,125 -
Total Company income - 16,126 1
Company expenses
Management fees (note 4) 2,215 4,431 2,188
Performance fees (note 4) 16,367 5,313 6,667
Other expenses 281 555 291
Directors' fees and expenses 210 424 218
Administration fees (note 4) 82 155 78
Foreign exchange losses 30,041 - 710
Total Company expenses 49,196 10,878 10,152
Net investment (losses)/gains (49,882) 4,437 (10,509)
Net realised and unrealised gains on
investments allocated from BHMS
Net realised gain on investments 26,368 26,927 4,441
Net unrealised gain on 62,577 12,768 35,656
investments
Net realised and unrealised foreign exchange
loss
- on hedging (3,545) (6,729) (3,630)
Net realised and unrealised gains on 85,400 32,966 36,467
investments allocated from BHMS
Net increase in net assets resulting from 35,518 37,403 25,958
operations
See accompanying notes to the Interim Unaudited Financial Statements.
UNAUDITED STATEMENT OF CHANGES IN NET ASSETS
For the period from 1 January 2020 to 30 June 2020
01.01.20 01.01.19 01.01.19
to 30.06.20 to to 30.06.19
31.12.19
(Unaudited) (Audited) (Unaudited)
US$'000 US$'000 US$'000
Net increase in net assets resulting from operations
Net investment (loss)/gain (49,882) 4,437 (10,509)
Net realised gain on investments allocated from BHMS 26,368 26,927 4,441
Net unrealised gain on investments allocated from BHMS 62,577 12,768 35,656
Net realised and unrealised foreign exchange loss (3,545) (6,729) (3,630)
allocated from BHMS
35,518 37,403 25,958
Share capital transactions
Purchase of own shares (note 6)
US Dollar shares - - -
Sterling shares - - -
- - -
Net increase in net assets 35,518 37,403 25,958
Net assets at the beginning of the period/year 467,750 430,347 430,347
Net assets at the end of the period/year 503,268 467,750 456,305
See accompanying notes to the Interim Unaudited Financial Statements.
UNAUDITED STATEMENT OF CASH FLOWS
For the period from 1 January 2020 to 30 June 2020
01.01.20 01.01.19 01.01.19
to 30.06.20 to to 30.06.19
31.12.19
(Unaudited) (Audited) (Unaudited)
US$'000 US$'000 US$'000
Cash flows from operating activities
Net increase in net assets resulting from 35,518 37,403 25,958
operations
Adjustments to reconcile net increase in
net assets
resulting from operations to net cash provided by
operating activities:
Net investment loss allocated from 686 811 358
BHMS
Net realised gain on investments allocated (26,368) (26,927) (4,441)
from BHMS
Net unrealised gain on investments allocated from (62,577) (12,768) (35,656)
BHMS
Net realised and unrealised foreign
exchange loss
allocated from BHMS 3,545 6,729 3,630
Proceeds from sale of investment in BHMS 8,846 2,976 2,776
Foreign exchange loss/(gain) 30,041 (16,125) 710
(Increase)/decrease in other debtors (58) 34 30
(Decrease)/increase in management fees (418) 388 (19)
payable
Increase in performance fees payable 10,493 12 1,105
Increase in accrued expenses and 53 23 30
other liabilities
Increase in Directors' fees payable - - 99
(Decrease)/increase in administration fees (53) 42 13
payable
Net cash used in operating activities (292) (7,402) (5,407)
Change in cash (292) (7,402) (5,407)
Cash, beginning of the period/year 1,171 8,738 8,738
Effect of exchange rate fluctuations 245 (165) 102
Cash, end of the period/year 1,124 1,171 3,433
Cash, end of the period/year
Cash and bank balances denominated in US 96 167 190
Dollars
Cash and bank balances denominated in 1,028 1,004 3,243
Sterling1
1,124 1,171 3,433
1 Cash and bank balances in Sterling 832 758 2,548
(GBP'000)
See accompanying notes to the Interim Unaudited Financial Statements.
NOTES TO THE INTERIM UNAUDITED FINANCIAL STATEMENTS
For the period from 1 January 2020 to 30 June 2020
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 has a Premium Listing on the London Stock Exchange.
The Company can offer multiple classes of ordinary shares, which differ in
terms of currency of issue with ordinary shares denominated in US Dollar and
Sterling currently being in issue.
2. Organisation
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" or the "Master
Fund").
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 Interim Unaudited 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 in funds at 30 June 2020 and the percentage that
BHMS's investment represented of the underlying fund's Net Asset Value ("NAV")
are as follows:
Brevan Howard FG Macro Master Fund Limited 7.81%
Brevan Howard Master Fund Limited 4.15%
Brevan Howard AH Master Fund Limited 1.77%
Brevan Howard AS Macro Master Fund Limited 5.12%
Brevan Howard MB Macro Master Fund Limited 3.58%
Brevan Howard Global Volatility Master Fund Limited 8.67%
Brevan Howard Alpha Strategies Master Fund Limited 1.93%
BH-DG Systematic Trading Master Fund Limited 5.48%
These percentages are the direct investments excluding any indirect investments
as a result of BHMS investing in BHMF, which has investments in other Brevan
Howard funds. 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 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.
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
Accounting Standards Codification ("ASC") 946.
Going concern
After making enquiries and given the nature of the Company and its investment,
the Directors are satisfied that it is appropriate to continue to adopt the
going concern basis in preparing these Interim Unaudited Financial Statements
and, after due consideration, the Directors consider that the Company is able
to continue for the foreseeable future and at least twelve months from the date
of this report. In reaching this conclusion the Board is mindful of the nature
of the assets that underlie its investment in BHMS, including BHMS's liquidity
and has concluded that moderate adverse investment performance will not have a
material impact on the Company's ability to meet its liabilities as they fall
due.
The Board is responsible for the Company's system of internal controls and for
reviewing its effectiveness. The Board is satisfied, by using the risk
management procedures and internal controls set out in the Company's risk
matrix and by monitoring the Company's investment objective and policy that it
has carried out a robust assessment of the risks and uncertainties facing the
Company.
Since the start of January 2020, the outbreak of COVID-19, which is a rapidly
evolving situation, has adversely impacted global commercial activities. The
rapid development and fluidity of this situation precludes any prediction as
its ultimate impact, which may have a continued adverse impact on economic and
market conditions and trigger a period of global economic slowdown. The
Directors do not believe there is any financial impact to the Financial
Statements as at 30 June 2020. The Manager is monitoring developments relating
to COVID-19 and is coordinating its operational response based on existing
business continuity plans and on guidance from global health organisations,
relevant governments, and general pandemic response best practices. From an
operational perspective, the Company uses a number of service providers. These
providers have established, documented and regularly tested Business Resiliency
Policies in place, to cover various possible scenarios whereby staff cannot be
present at the designated office and conduct business as usual. Since the
COVID-19 pandemic outbreak, service providers have deployed these alternative
working policies to ensure continued business service.
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 as the
Company's proportionate share of BHMS's net assets which approximates fair
value. At 30 June 2020, the Company's US Dollar and Sterling capital account
represents 7.83% and 74.03% (31 December 2019: 7.78% and 74.91%; 30 June 2019:
7.22% and 67.73%) 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.
Fair value measurement
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.
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 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 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 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.
Foreign exchange
Investment securities and other assets and liabilities of the Sterling share
class are translated into US Dollars, the Company's reporting currency, using
exchange rates at the reporting date. Transactions reported in the Unaudited
Statement of Operations are translated into US Dollar amounts at the date of
such transactions. Assets and liabilities denominated in foreign currencies are
translated into US Dollars at the exchange rate at reporting date. The share
capital and other capital reserve accounts are translated at the historic rate
ruling at the date of the transaction. Exchange differences arising on
translation are included in the Unaudited Statement of Operations. This foreign
exchange adjustment has no effect on the value of net assets allocated to the
individual share classes.
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 and in the Financial Highlights
in note 11.
Allocation of results of BHMS
Net realised and unrealised gains/losses of BHMS are allocated to the Company's
share classes based upon the percentage ownership of the equivalent 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 any relevant 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 fee
The Company has entered into a management agreement with the Manager to manage
the Company's investment portfolio.
With effect from 3 October 2016, the Manager does not charge the Company a
management fee in respect of any performance related increase in the NAV of
each class of shares of the Company. The management fee is calculated on the
basis of the lower of the NAV of the relevant share class and the Base NAV, as
defined in the Amended and Restated Management Agreement dated 4 July 2017, of
that share class (adjusted for certain changes in shares in issue).
With effect from 1 April 2017 the management fee was reduced from 2% to 1% per
annum.
The Company may repurchase or redeem shares of either class in each calendar
year, including pursuant to the class closure and annual partial capital return
provisions contained in the Company's articles of incorporation (the
"Articles"), in respect of the 2017 calendar year and all subsequent years, up
to an aggregate number equal to 5% of the shares of that class in issue as at
31 December in the prior calendar year (the "Annual Buy Back Allowance")
without making any payment to the Manager.
In the event that, in any calendar year, the aggregate number of shares
repurchased or redeemed by the Company exceeds the Annual Buy Back Allowance
for that class, the Company will be required to pay the Manager an amount equal
to 2% of the repurchase price of any share that is repurchased or redeemed by
the Company in excess of the Annual Buy Back Allowance, including pursuant to
the class closure and annual partial capital return provisions contained in the
Articles.
The Board has agreed with the Manager that if, on the last business day in
March, June, September or December of any year, the net asset value of the
Company were to be below US$300 million (on the basis of the prevailing US
Dollar/Sterling exchange rate), the Board would convene a general meeting of
the Company's shareholders at which a special resolution proposing the
liquidation of the Company would be put forward. Were the resolution to be
passed, the Company would be liquidated and an amount equal to 2% of the
Company's net asset value (subject to a deduction in respect of any amount of
the Annual Buy Back Allowance for the relevant calendar year that remains
unused) would be paid to the Manager in addition to any other fees due to the
Manager up to the date of termination of the management agreement.
In respect of 2020, the Annual Buy Back Allowance for the Company's Sterling
share class was 993,413 Sterling shares (2019: 990,378 Sterling shares) and for
the US Dollar share class was 133,242 US Dollar shares (2019: 137,035 US Dollar
shares). In addition, the Manager agreed that 40% of the Company's unused 2019
Annual Buyback Allowance being 396,151 Sterling shares and 54,814 US Dollar
shares could be rolled forward for use in 2020, such that the Company can
repurchase 1,389,564 Sterling shares and 188,056 US Dollar shares and without
payment to the Manager in 2020.
Between 1 January 2020 and 30 June 2020, the Company did not repurchase any
Sterling or US Dollar shares (between 1 January 2019 and 31 December 2019: nil
Sterling shares and: nil US Dollar shares, between 1 January 2019 and 30 June
2019: nil Sterling shares and: nil US Dollar shares).
During the period ended 30 June 2020 and throughout 2019, US$ nil was charged
by the Manager due to the Annual Buy Back Allowance being exceeded.
There are no fees charged by the Manager at the level of BHMS on the G Class
into which the Company is invested. There are also no fees charged by the
Manager in relation to BHMS's investment into underlying funds managed by the
Manager.
In respect of the period ended 30 June 2020, the Manager charged the Company a
total of US$2,215,479 (31 December 2019: US$4,430,767, 30 June 2019:
US$2,187,474) under the terms of the management agreement. At 30 June 2020,
US$356,860 (31 December 2019: US$774,931, 30 June 2019: US$367,556) of the fee
remained outstanding.
Performance fee
The Manager is entitled to an annual performance fee for each share class
accrued monthly in arrears. The performance fee is equal to 20% of the
appreciation in the NAV per share (adjusted for any increase or decrease 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
performance fee Base NAV per share of that class multiplied by the number of
shares of such class at the end of the relevant period.
The performance fee Base NAV per share is the greater of (a) the NAV per share
of the relevant class as at 31 December 2016 and (b) the highest NAV per share
of the relevant class of shares achieved as at the final BHMS NAV calculation
date as at the end of any calculation period after the calculation period
ending on 31 December 2016.
The Manager is not entitled to any performance fee in respect of any increase
in NAV (whether in respect of a class of shares as a whole or on a per share
basis) arising to the remaining shares of the relevant class from any
repurchase, redemption or cancellation of any share, provided that any
performance fee due to the Manager shall not be reduced below zero.
Any accrued performance fee in respect of shares which are converted into
another share class 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 conversion. 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 second Friday of
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 5 business days of the publication of the
final NAV of each class of Shares as at 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 2020, US$16,366,579 (31 December 2019:
US$5,313,517, 30 June 2019: US$6,667,446) was charged as performance fees of
which, US$15,971,194 (31 December 2019: US$5,477,699, 30 June 2019:
US$6,571,200) remained accrued at period end. The total performance fee charged
during the period includes fees crystallised upon conversion and upon buyback
of shares at points when the NAV per share of the shares exceeded their
performance fee Base NAV per share (being GBP16.11 (Sterling shares) and US$16.48
(US Dollar shares)).
Of the total crystallised performance fee charged for the period, US$130,314
(31 December 2019: US$32,174, 30 June 2019: US$9,482) related to share
conversions and US$nil (31 December 2019: US$nil, 30 June 2019: US$nil) related
to the buyback of shares.
In establishing the parameters for the execution of buybacks, account is taken
of the impact of any performance fees that would become payable so as to ensure
that such buy backs are still accretive to net asset value.
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.
Were the Management Agreement to be terminated by the Company, the management
fee would revert to 2% of the prevailing net asset value in respect of the
notice period, or in respect of any payment in lieu of notice.
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
GBP115,000 per annum. In addition to the NAV based fee the Administrator is also
entitled to an annual fee of GBP6,000 (2019: GBP6,000) 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 2020, US$81,565 (31 December 2019: US$154,816,
30 June 2019: US$77,639) was earned by the Administrator as administration
fees. At 30 June 2020, US$27,327 (31 December 2019: US$80,429, 30 June 2019:
US$51,521) of the fee remained outstanding.
5. Directors' fees
The Company's Articles limit the fees payable to Directors in aggregate to GBP
500,000 per annum.
During the Board meeting of the 31 March 2020 and after careful consideration,
all fees payable to the Directors, other than the Chairman, were increased by
6% to the nearest GBP100, effective 1 April 2020.
During the period the Chairman was entitled to a fee of GBP150,000 per annum.
Sally-Ann Farnon, as Chairman of the Audit Committee, and Graham Harrison as
Senior Independent Director were entitled to fees of GBP53,000 (increased by GBP
3,000) and GBP45,600 (increased by GBP2,600) per annum respectively. Julia Chapman
as Chairman of the Management Engagement Committee was entitled to a fee of GBP
45,600 (increased by GBP2,600) per annum. Andreas Tautscher was entitled to a fee
of GBP42,400 (increased by GBP2,400) per annum.
6. Share Capital
Issued and authorised share capital
The Company's Articles permit the issuance of an unlimited number of ordinary
shares with no par value which may be divided into at least two classes
denominated in US Dollars and Sterling. The treasury shares have arisen as a
result of the discount management programme as described in note 9.
US Dollar shares Sterling
shares
Number of ordinary shares
In issue at 1 January 2020 2,664,844 19,868,275
Share conversions (122,708) 99,533
Purchase of own shares into Treasury - -
In issue at 30 June 2020 2,542,136 19,967,808
Number of treasury shares
In issue at 1 January 2020 267,443 1,667,180
In issue at 30 June 2020 267,443 1,667,180
Total shares in issue 2,809,579 21,634,988
Percentage of class held as Treasury 9.52% 7.71%
Shares
Company
Total
Share capital account US$'000 GBP'000 US$'000
At 1 January 2020 - 165,544 374,988
Share conversions (2,333) 1,845 -
Transfer from realised investment 2,333 - 2,333
reserve
At 30 June 2020 - 167,389 377,321
US Dollar shares Sterling
shares
Number of ordinary shares
In issue at 1 January 2019 2,740,700 19,807,562
Share conversions (75,856) 60,713
In issue at 31 December 2019 2,664,844 19,868,275
Number of treasury shares
In issue at 1 January 2019 267,443 1,667,180
In issue at 31 December 2019 267,443 1,667,180
Total shares in issue 2,932,287 21,535,455
Percentage of class held as Treasury 9.12% 7.74%
Shares
Company
Total
Share capital account US$'000 GBP'000 US$'000
At 1 January 2019 - 164,596 373,793
Share conversions (1,195) 948 -
Transfer from realised 1,195 - 1,195
investment reserve
At 31 December 2019 - 165,544 374,988
US Dollar shares Sterling
shares
Number of Ordinary Shares
In issue at 1 January 2019 2,740,700 19,807,562
Share conversions (99,228) 78,697
In issue at 30 June 2019 2,641,472 19,886,259
Number of Treasury Shares
In issue at 1 January 2019 267,443 1,667,180
In issue at 30 June 2019 267,443 1,667,180
Total shares in issue 2,908,915 21,553,439
Percentage of class held as Treasury 9.19% 7.74%
Shares
Company
Total
Share capital account US$'000 GBP'000 US$'000
At 1 January 2019 - 164,596 373,793
Share conversions (1,577) 1,233 -
Transfer from realised 1,577 - 1,577
investment reserve
At 30 June 2019 - 165,829 375,370
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
the Master Fund as calculated by BHMS 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 ordinary shares
The Directors have been granted authority to purchase in the market up to
401,205 US Dollar shares, and 2,976,784 Sterling shares respectively and they
intend to seek annual renewal of this authority from shareholders which was
last granted at the 2020 Annual General Meeting ("AGM") on 26 June 2020. 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 redemption of a class of shares in
certain circumstances.
Further issue of shares
As approved by the shareholders at the AGM held on 26 June 2020, the Directors
have the power to issue further shares on a non-pre-emptive basis for cash in
respect of 267,648 US Dollar shares, and 1,985,847 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 has 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.
The Company operates in such a manner that its shares are not categorised as
non-mainstream pooled investments. This may mean that the Company pays
dividends in respect of any income that it receives or is deemed to receive for
UK tax purposes so that it would qualify as an investment trust if it were UK
tax-resident.
However, the Company will first apply any such income in payment of its
management 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.
Share conversion scheme
The Company has implemented a Share Conversion Scheme which 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 on the last
business day of every month. Each conversion will be based on the NAV (note 8)
of the share classes to be converted.
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 a tax expense in the 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 Guernsey, the Cayman
Islands and foreign jurisdictions where the Company makes significant
investments. The Company has no examinations by tax authorities in progress.
The Board received advice in respect of the Company's tax positions and is
advised 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.
International tax reporting
For the 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 Common Reporting Standard ("CRS") is a global standard for the automatic
exchange of financial account information developed by the Organisation for
Economic Co-operation and Development ("OECD"), which has been adopted by
Guernsey and which came into effect on 1 January 2016.
The Board has taken the necessary action 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, 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, 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.
In the event a class closure resolution is passed, Shareholders in a class have
the following options available to them:
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); or
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.
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 are and will be funded by partial redemptions
of the Company's investment in BHMS.
During the period to 30 June 2020, the Company recorded an average discount to
NAV of 3.45% and 5.87% for US Dollar shares and Sterling shares respectively
(year to 31 December 2019: 2.82% and 3.74% for US Dollar shares, and Sterling
shares respectively and period to 30 June 2019: 4.71% and 4.14% for US Dollar
shares, and Sterling shares respectively).
10. Note Purchase Agreement
The Company is party to a Note Purchase Agreement with JP Morgan Chase Bank,
pursuant to which the Company may obtain financing, of up to US$2 million (31
December 2019: US$2 million, 30 June 2019: US$2 million) and GBP15 million (31
December 2019: GBP15 million, 30 June 2019: GBP15 million), if required, to finance
(inter alia) share buybacks pending receipt of the proceeds of redemption from
its underlying investments. As at 30 June 2020,
31 December 2019, and 30 June 2019 there were no amounts outstanding under the
Note Purchase Agreement, neither was any interest payable.
11. Financial Highlights
The following tables include selected data for a single ordinary share of each
of the ordinary share classes in issue at the period end and other performance
information derived from the Financial Statements.
The per share amounts and ratios which are shown reflect the income and
expenses of the Company for each class of ordinary share.
01.01.20 01.01.20
to 30.06.20 to 30.06.20
US Dollar Sterling shares
shares
US$ GBP
Per share operating performance
Net asset value at beginning of the period 16.48 16.11
Income from investment operations
Net investment loss1 (excluding net realised and
unrealised gains and losses on investments (0.79) (0.70)
allocated from BHMS)
Net realised and unrealised gain on 3.34 3.03
investment
Other capital items2 (0.12) 0.01
Total return 2.43 2.34
Net asset value, end of the period 18.91 18.45
Total return before performance fees 18.46% 18.16%
Performance (3.74%) (3.62%)
fees
Total return after performance fees 14.72% 14.54%
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 ended 1 January 2020 to 30 June 2020. An individual shareholder's
return may vary from these returns based on their timing of purchases and sales
of Shares.
01.01.20 01.01.20
to 30.06.20 to 30.06.20
US Dollar Sterling
shares shares
US$'000 GBP'000
Supplemental
data
Net asset value, end of the period 48,069 368,388
Average net asset value for the period 47,761 353,694
01.01.20 01.01.20
to 30.06.20 to 30.06.20
US Dollar Sterling
shares shares
Ratio to average net
assets
Operating
expense
Company expenses3 0.54% 0.56%
Master Fund expenses4 0.27% 0.28%
Performance fees 3.38% 3.28%
Total operating expense 4.19% 4.12%
Net investment loss1 (4.17%) (3.98%)
01.01.19 01.01.19
to 31.12.19 to 31.12.19
US Dollar Sterling
shares shares
US$ GBP
Per share operating performance
Net asset value at beginning of the year 15.51 15.37
Income from investment operations
Net investment loss1 (excluding net realised and
unrealised gains and losses on investments (0.45) (0.41)
allocated from BHMS)
Net realised and unrealised gain on 1.43 1.15
investment
Other capital (0.01) -
items2
Total return 0.97 0.74
Net asset value, end of 16.48 16.11
the year
Total return before performance fees 7.81% 5.99%
Performance fees (1.56%) (1.20%)
Total return after performance fees 6.25% 4.79%
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 2019. An individual shareholder's return may vary
from these returns based on the timing of their purchases and sales of Shares.
01.01.19 01.01.19
to 31.12.19 to 31.12.19
US Dollar Sterling
shares shares
US$'000 GBP'000
Supplemental
data
Net asset value, end of 43,923 320,013
the year
Average net asset value for the year 43,014 314,928
01.01.19 01.01.19
to 31.12.19 to 31.12.19
US Dollar Sterling
shares shares
Ratio to average net
assets
Operating
expense
Company expenses3 1.21% 1.25%
Master Fund expenses4 0.45% 0.45%
Performance fees 1.50% 1.16%
3.16% 2.86%
Net investment loss1 (2.84%) (2.60%)
01.01.19 01.01.19
to 30.06.19 to 30.06.19
US Dollar Sterling
shares shares
US$ GBP
Per share operating performance
Net asset value at beginning of the period 15.51 15.37
Income from investment operations
Net investment gain1 (excluding net realised and
unrealised gains and losses on investments (0.36) (0.34)
allocated from BHMS)
Net realised and unrealised gain on 1.42 1.27
investment
Other capital (0.01) -
items2
Total return 1.05 0.93
Net asset value, end of the period 16.56 16.30
01.01.19 01.01.19
to 30.06.19 to 30.06.19
US Dollar Sterling
shares shares
Total return before performance fees 8.45% 7.55%
Performance fees (1.68%) (1.51%)
Total return after performance fees 6.77% 6.04%
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 ended 1 January 2019 to 30 June 2019. An individual shareholder's
return may vary from these returns based on their timing of purchases and sales
of Shares.
01.01.19 01.01.19
to 30.06.19 to 30.06.19
US Dollar Sterling
shares shares
US$'000 GBP'000
Supplemental
data
Net asset value, end of the period 43,754 324,142
Average net asset value for the period 42,880 308,904
01.01.19 01.01.19
to 30.06.19 to 30.06.19
US Dollar Sterling
shares shares
Ratio to average net
assets
Operating
expense
Company expenses3 0.61% 0.63%
Master Fund expenses4 0.23% 0.23%
Performance fees 1.64% 1.49%
2.48% 2.35%
Net investment loss1 (2.27%) (2.21%)
1 The net investment loss figure shown above does not include net
realised and unrealised gains and losses on investments allocated from BHMS.
2 Included in other capital items are the discounts and premiums on
conversions between share classes during the period/year, share buybacks and
partial capital returns, as compared to the NAV per share at the beginning of
the period/year.
3 Company expenses are as disclosed in the Interim Unaudited
Statement of Operations, excluding performance fees and foreign exchange gains
and losses on aggregation.
4 Master Fund expenses are the allocated operating expenses of BHMS.
12. Related Party Transactions
As at 30 June 2020, the Company had five non-executive Directors, all of whom
are independent of the Manager.
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 2020:
US Dollar Sterling
Shares Shares
Sir Michael Bunbury - 14,200
Graham Harrison - 1,500
Sally-Ann Farnon - 1,700
Julia Chapman - 1,081
Andreas Tautscher - 600
13. Foreign Exchange
The following foreign exchange rates were used to translate the Sterling share
class into US Dollars, being the Company's reporting currency.
01.01.20 01.01.19 01.01.19
to 30.06.20 to 31.12.19 to 30.06.19
Period/year 1.2356 1.3244 1.2728
end rate
Average rate for the 1.2697 1.2794 1.2936
period/year
14. Subsequent Events
Management has evaluated subsequent events up to 19 August 2020, which is the
date that the Financial Statements were available to be issued.
No subsequent events have occurred.
HISTORICAL PERFORMANCE SUMMARY
As at 30 June 2020
30.06.2020* 31.12.19 31.12.18 31.12.17
(Unaudited) (Audited) (Audited) (Audited)
US$'000 US$'000 US$'000 US$'000
Net increase/(decrease) in net
assets
resulting from operations 35,518 37,403 2,187 41,032
Total assets 519,795 474,202 436,335 443,707
Total liabilities (16,527) (6,452) (5,988) (1,416)
Net assets 503,268 467,750 430,347 442,291
Number of shares in issue
US Dollar shares 2,542,136 2,664,844 2,740,700 3,004,442
Sterling shares 19,967,808 19,868,275 19,807,562 20,346,871
Net asset value per share
US Dollar shares US$18.91 US$16.48 US$15.51 US$14.56
Sterling GBP18.45 GBP16.11 GBP15.37 GBP14.58
shares
* Covers the period from 1 January 2020 to 30 June 2020.
MANAGEMENT AND ADMINISTRATION
Directors
Sir Michael Bunbury (Chairman)
Julia Chapman
Sally-Ann ("Susie") Farnon
Graham Harrison (Senior Independent Director)
Andreas Tautscher
(All Directors are non-executive and 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 1WR
Registrar and CREST Service Provider
Computershare Investor Services
1st Floor
Tudor House
Le Bordage
Guernsey
GY1 1DB
Legal Advisors (Guernsey Law)
Carey Olsen
Carey House
Les Banques
St. Peter Port
Guernsey
GY1 4BZ
Legal Advisors (UK Law)
Hogan Lovells International LLP
Atlantic House
Holborn Viaduct
London EC1A 2FG
Corporate Brokers
JPMorgan Cazenove
25 Bank Street
Canary Wharf
London
E14 5JP
Investec Bank Plc
30 Gresham Street
London
EC2V 7QP
For the latest information
www.bhglobal.com
END
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