BH Global Limited Announces Interim Report and Unaudited Financial Statements 2014

Hamilton, Bermuda:  28 August, 2014 – BH Global Limited

Interim Report and Unaudited Financial Statements 2014

INTERIM REPORT AND UNAUDITED FINANCIAL STATEMENTS

30 June 2014

Chairman’s Statement

Dear Shareholder,

The six months to 30 June 2014 were not easy ones in which to make positive returns for many hedge fund managers, particularly for those pursuing a core macro strategy. The continuing influence on markets of the activities of the developed world’s central banks has resulted in a difficult trading environment and BH Global Limited (the “Company”) has not been immune. However, the diversification of the Company’s underlying portfolio with its exposure to strategies other than macro has, for this six month period, been of significant positive benefit. The Company publishes a monthly shareholder report which sets out in detail the performance of the various fund allocations and comments on the environment and the market outlook.

Included in this Interim Report is the Manager’s Report giving details of the contributions towards the Net Asset Value (“NAV”) performance over the six months. Overall as at 30 June 2014 the NAV per share of the US Dollar class, being the base currency on which your Board focuses, was effectively flat, having declined by a modest 0.14% to $13.10. Over the same period the share price of the USD class rose by 1.52% to end on 30 June at $12.00 narrowing the discount to NAV from 9.90% to 8.40%.

My last Chairman’s Statement was published on 26 March. Since that date the Company has published a number of announcements and circulars all of which are available on the Company’s website www.bhglobal.com. I would particularly draw attention to that of 4 April announcing the proposal to amend the Company’s Investment Policy, that of 5 June announcing both the consequences of the Board’s decision to close the Euro class and giving a further update on the proposal, and the Circular released on 18 July giving fuller details in relation to the amendment of Investment Policy and announcing the date of the Extraordinary General Meeting which took place on 28 August. The balance of this

Chairman’s Statement will concentrate on the various developments and will draw points out from the various announcements.

The Company is undergoing significant change. Once implemented, it is to be hoped that the Company will enter calmer waters and benefit from Brevan Howard’s long term track record of making money for investors.

Closure of the Euro Class

As announced on 5 June, the holders of 12,456,014 Euro class shares elected for their shares to be redeemed for cash. Following the announcement on 21 August that the Euro share class NAV per share as at 31 July was €13.03, the Company announced on 22 August that, after deducting the costs of closure of the class, which included the repayment to Brevan Howard of a proportion of its outstanding IPO costs as further described in the circular dated 12 March 2014 and in previous Annual Reports, redeeming Euro shareholders will receive €12.6591 per share (the “Redemption Price”), being approximately 97.12% of NAV.

Although the Company is responsible for the calculation of the Redemption Price, KPMG Channel Islands Limited, being the Company’s auditor, was engaged to check the mathematical accuracy and verify items in the calculation to source documentation.

Following the announcement of the Redemption Price for the Euro shares, the Euro class shareholders ceased to be shareholders and became creditors of the company. The Company expects to commence payment of the redemption proceeds in accordance with those former shareholders’ requests during the week commencing 1 September 2014.

Discount Control and NAV Enhancement

In discussions with shareholders over the last year it was clear that there was a desire that the Company should be active in its discount control. I reported on 5 February and again in my Chairman’s Statement in March that the Board would take appropriate steps to manage the discount. Consequently in the six months to 30 June, the Company bought back shares in the market for placing into treasury or for cancellation. 2,097,723 Sterling shares were bought back at an average discount to NAV of 9.0% at a cost of £25,121,881. For the US Dollar class the figures were 995,666 shares at an average discount of 9.3% and a cost of $11,669,404. These buy backs added approximately 8 pence per share (0.7%) and 17 cents per share (1.3%) to NAV per share respectively.

In the first instance the majority of these buy backs were funded by drawing on the Company’s borrowing facility, with repayment of the debt being satisfied from subsequent redemption of shares in Brevan Howard Global Opportunities Master Fund Limited. To ensure that the Company has sufficient capacity to continue with buy backs, the facility has been increased to $75 million, and the facility will continue to be available following implementation of the revised Investment Policy.

It remains your Board’s intention to continue to be active in managing the discount. That, though, cannot be a totally unqualified commitment and will be subject to periodic review in the light of market conditions.

The future shape and strategy of the Company

As of 31 July the US Dollar equivalent of the net assets of the Company’s three share classes was $942 million. The redemption of the Euro class and continuing buy backs have resulted in the US Dollar equivalent net assets reducing to approximately $725 million. The Sterling class will remain the larger of the two ongoing classes with assets of the Dollar equivalent of $638 million, with the balance of $87 million of assets being invested in the US Dollar class. Those two classes will be the only two classes of shares that will exist under the revised Investment Policy.

As was initially foreshadowed in the announcement of 4 April 2014, the Company entered discussions with Brevan Howard to amend the Company’s Investment Policy and become a feeder fund for investment in Brevan Howard Multi-Strategy Master Fund Limited (“BHMS”). The Board has spent a considerable amount of time considering this proposal and undertaking a due diligence process. We were satisfied that the proposal is in the interests of the ongoing shareholders and thus with the Manager’s support recommended that shareholders should approve the proposal at the EGM held earlier today. All of the resolutions were passed with the requisite majorities and thus the amendment will take effect from 1 September.

Full details are set out in the circular dated 18 July which is available on the Company’s website. The key points to note are:-

·          BHMS is an open-ended fund with assets of $4.029 billion at 31 July.

·          The investment composition of BHMS is decided by the same investment committee at the Manager as has been responsible for the investment composition of the Company’s underlying investments. In addition to investing in a largely similar mix of Brevan Howard funds as at present, BHMS allocates a proportion of its funds to individual traders’ strategies. As at 31 July that proportion amounted to approximately 19.9% of BHMS’s assets. As set out in the Manager’s letter of 18 July, Brevan Howard believes that the changes to the Investment Policy will strengthen the investment proposition.

·          When the change in Investment Policy is implemented, from 1 September the Manager will carry the netting risk on performance fees and from that date the fee burden on the Company will be a 2% management fee and 20% performance fee, the latter being subject to a high water mark.

The future

The Board hopes that the redemption of the Euro class, the ongoing buy backs and the changes that have been negotiated over the last six months will place the Company on a sound footing from 1 September. However, the key to the future will be the NAV per share performance which in its turn leads to satisfactory share price performance and delivers the needs of portfolio managers and shareholders in the construction of their portfolios. There is certainly a place in portfolio construction for a low volatility, low risk and relatively uncorrelated asset and the Manager aspires that a holding of shares in the Company should be that asset. The Board will continue close dialogue with the Manager and will regularly review the investment proposition and its delivery.

Investors in the Company are there for one over-riding reason – to benefit from the experience and expertise of Brevan Howard. It is on that experience and expertise that the Company rests and it is very much to be hoped that the future will deliver for shareholders and all concerned.

As always I welcome feedback from shareholders. I can be contacted through the Company’s Administrator whose details can be found on the inside back cover.

Yours sincerely,

Sir Michael Bunbury

Chairman

28 August 2014

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 BH Global Opportunities Master Fund Limited will shortly be available on the Company’s website www.bhglobal.com.