News Column

BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC - Half-yearly Report

August 19, 2014

BlackRock Latin American Investment Trust plc Half Yearly Financial Results Announcement For Period Ended 30 June 2014 Performance Record Financial Highlights Attributable to ordinary shareholders As at As at 30 June 31 December 2014 2013 Change (unaudited) (audited) % US dollar Net assets (US$'000) 338,019 315,345 +7.2 Net asset value per ordinary share 858.58c 800.99c +7.2 - with income reinvested +9.3 Ordinary share price (mid-market)† 776.34c 719.25c +7.9 - with income reinvested +10.4 ------- ------- ------ Sterling Net assets (£'000)† 197,672 190,391 +3.8 Net asset value per ordinary share† 502.09p 483.60p +3.8 - with income reinvested +5.8 Ordinary share price (mid-market)† 454.00p 434.25p +4.5 - with income reinvested +6.9 ======= ======= ===== For For the the six six months months ended ended 30 30 June June 2014 2013 Change (unaudited) (unaudited) % Revenue Net revenue after taxation (US$'000) 6,254 5,638 +10.9 Revenue return per ordinary share 15.89c 13.95c +13.9 ------ ------ ------ Dividend Interim dividend per ordinary share 15.00c 15.00c - ====== ====== ====== Source: BlackRock. † Based on an exchange rate of 1.7100 at 30 June 2014 (31 December 2013: 1.6563). Chairman's statement for the six months ended 30 June 2014 Overview and Performance In a period when most global equity markets failed to generate attractive returns, it is encouraging that Latin American equities managed to make reasonable progress during the first half of the year. After an uncertain start, when concerns about regional growth and the outlook for China had unsettled sentiment, the mood improved significantly in March. This shift stemmed largely from opinion polls which suggested that the prospect of political change following the presidential election in October had increased. Against this background, the MSCI EM Latin America Index ended the period up by 7.4% in US dollar terms (4.0% in sterling terms). By comparison the Company's net asset value ("NAV") returned 9.3% in US dollar terms (5.8% in sterling terms) outperforming the Index by 1.9% (1.8% in sterling terms) and the share price returned 10.4% in US dollar terms (6.9% in sterling terms). (All percentages calculated with income reinvested.) Since 30 June 2014, the Company's NAV has increased by 6.5% in sterling terms and by 4.2% in US dollar terms. The share price has increased by 2.9% in sterling terms and by 0.6% in US dollar terms (all percentages calculated with income reinvested). Earnings and dividends The revenue return per share for the period amounted to 15.89 cents (2013: 13.95 cents) and has benefited from an increase in both dividend and option premium income. The Board is pleased to declare an interim dividend of 15.00 cents per share (2013: 15.00 cents per share), which will be paid on 3 October 2014 to shareholders on the register as at 5 September 2014 (ex-dividend date is 3 September 2014). Discount control On 23 August 2013 the Board introduced a new discount control policy which in their view is better suited to the longer term interests of the Company and its shareholders. If the bi-annual continuation vote is approved by shareholders on each occasion, and if (i) the Company has underperformed the benchmark index on a US dollar total return basis by more than 1% per annum over the previous two financial years and (ii) if the discount to the cum income NAV has on average exceeded 5% over the same two year period, with effect from the Annual General Meeting to take place in April 2016, the Board will implement a tender offer for 24.99% of the ordinary shares in issue (excluding treasury shares) and the tender price will be the cum income NAV (less 2% to cover the costs of the tender offer). The Directors continue to monitor the discount at which the ordinary shares trade to their prevailing NAV and in the six months to 30 June 2014 the cum income discount of the ordinary shares has averaged 9.8% and ranged from 6.6% to 12.6%. Alternative Investment Fund Managers' Directive BlackRock Fund Managers Limited ("BFM") was authorised as an Alternative Investment Fund Manager ("AIFM") by the Financial Conduct Authority ("FCA") on 1 May 2014 and was appointed by the Board as the Company's AIFM under a new Investment Management Agreement on 2 July 2014. The management and performance fees remain unchanged. The new agreement enables the Board to continue to act independently of the AIFM and provides the appropriate balance between the Board's control over the Company, its investment policies and compliance with regulatory obligations. The Board has also appointed BNY Mellon Trust & Depositary (UK) Limited (the "Depositary") to act as the Company's Depositary (as required by the AIFMD) on the terms and conditions of a depositary agreement between the Company, BFM and the Depositary. Facilitating retail investments The Company currently conducts its affairs so that its shares can be recommended by independent financial advisers to retail investors in accordance with the FCA rules in relation to non-mainstream investment products and intends to do so for the foreseeable future. The shares are excluded from the FCA's restrictions which apply to non-mainstream products because they are shares in an investment trust. Outlook It is too early to tell whether the rising tide of optimism about the prospect of political and fiscal reform in Brazil, the largest country in the region and where we have the greatest exposure, is well founded or whether the forthcoming election in October will result in more of the same. Even if the electorate vote for change, expectations about the speed at which real reform can be effected may be overly optimistic, as proved to be the case in Mexico. Whoever assumes the presidency in October will have the difficult task of addressing the structure and level of existing energy subsidies and welfare payments, tackling the pressing need for infrastructure investment and creating a sustainable financial position for the government. Notwithstanding the challenges ahead in Brazil, your Manager remains optimistic about the longer term potential for the region, particularly as - despite the recent modest upturn - emerging markets, including those in Latin America, have been out of favour in recent years so that valuations remain undemanding and markets should react favourably if good news emerges. Peter Burnell Chairman 19 August 2014 Interim management report and responsibility statement The Chairman's Statement and the Investment Manager's Report give details of the events which have occurred during the period and their impact on the financial statements. Principal risks and uncertainties The principal risks faced by the Company can be divided into various areas as follows: Performance; Income; Market (including Political Risk); Liquidity; Financial; Operational; and Regulatory. The Board reported on the principal risks and uncertainties faced by the Company in the Annual Report and Financial Statements for the year ended 31 December 2013. A detailed explanation can be found on page 9 of the Annual Report and Financial Statements which are available on the website maintained by BlackRock Investment Management (UK) Limited at blackrock.co.uk/brla. In the view of the Board, there have not been any changes to the fundamental nature of these risks since the previous report and these principal risks and uncertainties are equally applicable to the remaining six months of the financial year as they were to the six months under review. Going concern The Directors are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future and is financially sound. For this reason they continue to adopt the going concern basis in preparing the financial statements. The Company has a portfolio of investments which are considered to be readily realisable and is able to meet all of its liabilities from its assets and income generated from these assets. Related party disclosure and transactions with the Investment Manager BlackRock Investment Management (UK) Limited ("BIM (UK)") is the investment manager and is regarded as a related party under the Listing Rules. Details of the management fees payable are set out in note 3 and note 9. BlackRock Fund Managers Limited ("BFM") was appointed as the Company's AIFM with effect from 2 July 2014. BIM (UK) continues to act as the Company's Investment Manager under a delegation agrement with BFM. The related party transactions with the Directors are set out in note 10. Directors' responsibility statement The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Interim Management Report and Financial Statements. The Directors confirm to the best of their knowledge and belief that: - the condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with the Accounting Standards Board's Statement 'Half Yearly Financial Reports'; and - the interim management report, together with the Chairman's Statement and the Investment Manager's Report, include a fair review of the information required by 4.2.7R and 4.2.8R of the FCA's Disclosure and Transparency Rules. The half yearly financial report has not been audited or reviewed by the Company's Auditor. The half yearly financial report was approved by the Board on 19 August 2014 and the above responsibility statement was signed on its behalf by the Chairman. Peter Burnell For and on behalf of the Board 19 August 2014 Investment manager's report Market Overview During the first six months of 2014, the Company provided a US Dollar NAV return of 9.3% (10.4% in share price terms), (which was equivalent to 5.8% and 6.9% respectively in sterling terms). This compares favourably with the MSCI EM Latin America Index which returned 7.4% (4.0% in sterling terms). (All figures with income reinvested.) During the period the Company's performance benefited from strong stock selection in Mexico, a lower than index exposure to Chile and a higher than index exposure to Brazil. The largest individual contributors to performance included Brazil's Kroton Educacional and BB Seguridade. The portfolio benefited from not owning Mexico's AmÉrica MÓvil which was a relatively weak performer. Some of these positive factors were offset by our holdings in Peru and not holding enough stocks in Colombia, which performed well in this period. The largest individual detractors from performance included not holding Brazil's Cielo, our exposure to mining giant Vale and to Peru's Grana y Montero. The early part of 2014 saw a continuation of the correction in Latin America equity markets that started in November 2013. In January the market was negatively impacted by the devaluation in Argentina, fiscal concerns in Brazil and lower commodity prices. Markets then moved sideways through mid-March when Latin American equities started advancing as currency performance improved and better than expected GDP numbers for 2013 were reported from Brazil and Colombia. In addition, an increase in the opinion polls for the opposition in Brazil's Presidential elections in October boosted sentiment. In the latter part of the period, Latin American markets were mixed. During April, performance was closely linked to the strong performance of financials in most countries and by political news flow in Brazil. During May, Latin America underperformed due largely to weak iron ore prices and disappointing first quarter earnings data. The region's stock markets rebounded in June despite divergent macro-economic performance: Brazil, Chile and Peru disappointed whilst Colombia and Mexico surprised on the upside. Six months to 30 June 2014 performance figures Local MSCI currency Local country (vs.USD) indices % % % Regions/indices change change change Argentina 24.3 -19.8 17.3 (Merval) Brazil 7.8 6.7 10.1 (Ibovespa) Chile -1.6 -5.0 -1.5 (IGPA) Colombia 10.7 2.8 10.7 (IGBC) Mexico 0.9 0.5 0.6 (IPC) Peru 12.1 -0.1 5.7 (IGBVL) MSCI Latin America 5.3 CRB Index 8.8 MSCI Emerging Asia 5.6 Oil (WTI) 7.1 MSCI Emerging Markets 4.8 Gold 10.1 MSCI World 5.0 Copper -4.5 S&P 500 6.1 Corn 0.5 MSCI Europe 3.4 Soybeans 5.7 Sources: MSCI, Bloomberg, UBS and BlackRock (all figures are in US dollar terms and on a capital only basis). During the first half of 2014, Brazil's equity market was ranked among the best performers in Latin America. Following a challenging start to the year as a result of fiscal concerns, Brazil's market reacted positively to better than expected GDP data for 2013 and political news flow. The Central Bank stopped hiking interest rates in April when it had reached 11%. Interest rates appear to be on hold for now but inflation continues to push higher, mostly due to services pressure related to the 2014 FIFA World Cup. Mexico's economy has been weaker than expected this year, mostly due to increased taxes as a result of last year's fiscal reforms. While an economic recovery has been slow to build, we are starting to see early signs that a recovery is underway. Government spending has been increasing and the Central Bank surprised the market with a 50 basis point cut in interest rates in an attempt to stimulate growth. In the Andean region, Peru posted the strongest returns, followed by Colombia. Chile was the laggard and has been negatively impacted by concerns over President Bachelet's fiscal package, disappointing economic growth data and weak copper prices. Peru and Colombia continue to post the strongest economic growth in the Andean region. Performance and activity We maintained over 61% of the Company's portfolio in Brazil. Our exposure was tilted away from metals and mining, especially Vale, as well as credit card acquirers and utilities. Our preferred sectors included banks and insurance, education and fuel distribution. These are all areas that we believe should not be materially affected by the forthcoming Presidential elections. During the period we rotated some exposure out of ItaÚ Unibanco into Banco Bradesco. We moved PetrobrÁs to a neutral position as we believe that the company would be the largest beneficiary of a change in administration. We also purchased a position in Banco do Brasil to increase our exposure to the companies that could benefit from a potential opposition victory in October. We maintained an underweight position in credit card acquirer Cielo given concerns over the competitive landscape in Brazil's credit card acquiring sector. Vale was moved to an underweight position during the first half given the fall in iron ore prices and weak demand from China. Within the education sector we took profits in Kroton Educacional ahead of the 3 July shareholder meeting where the merger with Anhanguera was approved, making Kroton Educacional the largest publicly traded education company in the world. We maintained an overweight position in the company due to our expectation of continued growth in the sector for many years to come. In Mexico, our weighting remained at a little over 28% of the Company's portfolio. We added to our holding in Wal-Mart de Mexico as an early play on the expected recovery of the Mexican consumer. During the period we added a holding in beverage company Arca, the second largest Coca-Cola bottler in Latin America, Alsea, a franchisee for several global restaurant brands and Kimberly-Clark de Mexico, as a way to play a recovery in the consumer sector. We also added to the holding in Mexico's largest publicly traded REIT, Fibra Uno. During the period we sold our holding in Banco Santander Mexico due to low loan growth and in toll road operator Pinfra, due to strong stock performance. We maintained an overweight position in Televisa, one of the better performing stocks in Mexico during the period. We also continue to favour Cemex, the global cement company with significant operations in the US, Mexico, Spain and at least 15 other countries, which is a play on a recovery in both the US and Mexico. Elsewhere in the region we sold our position in Panama's Copa Holdings due to concerns over the company's cash position in Venezuela. We added to Peru via the leading bank Credicorp and reintroduced to the portfolio gold producer Buenaventura, later in the period. We also purchased a position in Argentina's oil company YPF, due to its attractive valuation and what we believe is reduced risk for the sector given changes in the regulatory framework in Argentina. This is our first investment in Argentina for several years. The Company has continued to write covered call options against a selected number of equity and ADR positions to enhance income. Over the period under review, volatility has remained relatively low in markets therefore the opportunities to generate income through option writing have also been correspondingly low. As at 30 June 2014 the Company have 41 open options with a market value (a liability) of US$1,040,000. One of the benefits of the Company's closed-end stature is its ability to invest in smaller and lesser liquid companies in the region, including those not in the official benchmark. At the period end, investments in small and mid-size companies with less than US$10 billion in market capitalisation accounted for over 31% of gross investments, with 12.5% of these investments representing non-benchmark stocks. In our view this enhanced flexibility is an important and helpful differentiator for the Company compared with its open ended competitors. Gross gearing decreased from 3.3% at the start of the period to 2.0% as at 30 June 2014. Outlook We enter the second half of 2014 with above index exposure to Brazil and Peru, and to a lesser extent, in Mexico, and underweight positions in Chile and Colombia. Our overweight in Brazil stems from the market’s positive reaction to the growing prospects of a potential opposition win in the October presidential elections. We will continue to follow the campaign closely, which has recently been impacted by the recent tragic death of one of the main candidates, Eduardo Campos. As electioneering kicks into high gear in the second half of August, we will make adjustments as necessary. We find the Brazil story to be a very binary situation. If the opposition is able to mount a strong enough campaign to win the election in October, we still see significant upside to the Brazilian market from current levels. Regardless of the outcome, however, we expect 2015 to be challenging for Brazil. What will matter for Brazilian equities is the nature of the future roadmap the eventual winner presents to the market on victory and how comfortable the market is with that roadmap for the next four years; a similar scenario to the one we witnessed in Mexico last year. Overall market valuations in Mexican equities continue to look challenging especially given the disappointing economic performance in the first half of the year. Despite the challenging valuations, we have started to add to Mexico on the expectation of better economic performance during the second half of 2014. The gradual improvement in economic growth in Mexico as a result of the 2013 reforms leaves us positive on the eventual impact on the economy. In the Andean region, we prefer Peru over Chile and Colombia. Uncertainties around the proposed fiscal reforms in Chile keep the country as our largest underweight position. In addition, changes in Chile's pension fund regulations have given the local pension funds the flexibility to invest outside of Chile, which has taken some of the premium away from domestically listed shares. Our low exposure to Colombia reflects corporate governance concerns. We would need to see improvements in minority shareholder protection and more attractive valuations before considering making further investments in Colombia. Peru remains our favoured Andean market for the second half of 2014. Most of our position is through Credicorp, the leading bank in Peru. We believe the banking sector is one of the best ways to participate in the strong growth in Peru. Will Landers BlackRock Investment Management (UK) Limited 19 August 2014 Geographical and sector analysis as at 30 June 2014 GEOGRAPHICAL WEIGHTING VS MSCI EM LATIN AMERICA INDEX Company MSCI EM Latin America Index % % Brazil 61.6 57.3 Mexico 28.2 27.0 Peru 6.1 2.3 Chile 2.0 8.0 Colombia 1.6 5.4 Argentina 0.5 - Sources: BlackRock and MSCI. SECTOR ALLOCATION Company MSCI EM Latin America Index % % Financials 31.6 28.1 Consumer staples 20.3 17.8 Consumer discretionary 13.8 7.0 Materials 11.5 15.6 Energy 11.3 10.3 Industrials 7.8 6.2 Telecommunications 2.2 6.5 Utilities 1.5 5.6 Health care - 0.7 Information technology - 2.2 Sources: BlackRock and MSCI. Ten largest investments as at 30 June 2014 ItaÚ Unibanco - 8.2% (2013: 7.7%) is Brazil's largest private sector bank. The bank continues to benefit from improvements in asset quality, resilient employment, lower competition from public sector banks and a strong management team. PetrobrÁs - 6.9% (2013: 4.7%) is Brazil's vertically integrated oil company. The company continues to invest heavily to increase its production, utilising free cash flow to meet its capital expenditure needs. AmBev - 4.8% (2013: 3.0%) is Brazil's leading beverage company with operations throughout the Americas. The company is well positioned to continue to benefit from its defensive position as the region's largest staples producer, while maintaining a strong focus on its operating cost discipline throughout its operations, a perennial AmBev management strength. Banco Bradesco - 4.6% (2013: 4.4%) is Brazil's second largest private sector bank. Bradesco has one of the largest branch networks in the country, allowing it to fully participate in Brazil's growing middle class and its overall financial services needs. BB Seguridade ParticipaÇÕes - 4.5% (2013: 3.7%) is the insurance division of Banco do Brasil and has the exclusive rights to sell insurance products throughout the entire Banco do Brasil branch network, which is one of the largest in Brazil. Kroton Educacional - 4.3% (2013: 3.3%) is Brazil's leading provider of adult college education. Shareholders recently approved the merger with Anhanguera creating the largest publicly traded education company in the world. Vale - 4.2% (2013: 8.2%) is the world's largest producer of iron ore, with operations in several other commodities, including nickel, copper and alumina. The company is the lowest cash cost producer of iron ore. Grupo Televisa - 4.1% (2013: 4.0%) is Mexico's leading television broadcasting operator and leading provider of satellite and cable television (giving the company leadership in high speed internet access). Televisa is also a significant shareholder and main content provider to UnivisiÓn, the leading Spanish-language broadcaster in the United States. Credicorp - 3.6% (2013: 2.8%) is Peru's leading financial institution. They offer a full range of financial services including commercial banking, corporate finance, brokerage and asset management. They should continue to benefit from being the leader in one of the fastest growing economies in the region. BRF - 3.5% (2013: 1.9%) is Brazil's largest food producer, with leadership positions in poultry, pork, beef and processed meats. The company is well positioned to benefit from its leadership in the domestic processed foods market as well as in the export market for both in natura as well as processed products. All percentages reflect the value of the holding as a percentage of total investments. Percentages in brackets represent the value of the holding at 31 December 2013. Together, the ten largest investments represents 48.6% of total investments (ten largest investments at 31 December 2013: 46.9%). Investments 30 June 2014 Market % value of Country of operation US$'000 investments Brazil ItaÚ Unibanco 28,453 } 8.2 ItaÚ Unibanco call option 19/07/14 15 (15) ItaÚ Unibanco call option 19/07/14 15.45 (13) PetrobrÁs 24,004 } 6.9 PetrobrÁs call option 11/07/14 16 (1) PetrobrÁs call option 19/07/14 16 (4) PetrobrÁs call option 25/07/14 16.5 (6) AmBev 16,521 4.8 Banco Bradesco 15,846 } 4.6 Banco Bradesco call option 19/07/14 16 (2) BB Seguridade ParticipaÇÓes 15,944 } 4.5 BB Seguridade ParticipaÇÓes OTC 02/07/14 call option @ 28.81 (206) BB Seguridade ParticipaÇÓes OTC 10/07/14 call option @ 28.713 (217) Kroton Educacional 14,758 } 4.3 Kroton Educacional OTC 02/07/14 call option @ 56.24 (76) Kroton Educacional OTC 10/07/14 call option @ 57.9375 (58) Kroton Educacional OTC 31/07/14 call option @ 61.2415 (71) Vale 14,591 4.2 BRF 12,155 } 3.5 BRF call option 19/07/14 25 (2) BRF call option 16/08/14 25 (14) CCR 7,958 } 2.3 CCR OTC 01/07/14 call option @ 17.9724 (3) CCR OTC 31/07/14 call option @ 18.9281 (9) CBD 6,980 } 2.0 CBD OTC 31/07/14 call option @ 110.618 (3) Cosan 6,853 } 2.0 Cosan OTC 31/07/14 call option @ 41.4509 (6) Ultrapar ParticipaÇÓes 6,531 } 1.9 Ultrapar ParticipaÇÓes OTC 01/07/14 call option @ 54.68 - Banco do Brasil 5,345 } 1.5 Banco do Brasil OTC 10/07/14 call option @ 24.5568 (10) Banco do Brasil OTC 31/07/14 call option @ 26.9195 (10) Klabin 2,361 } 1.3 Klabin 8% 08/01/19 convertible bond 1,985 Hypermarcas 3,337 } 1.2 Hypermarcas 3% fixed rate debenture 15/10/15 549 Hypermarcas 11.3% 15/10/18 convertible bond 326 Hypermarcas OTC 10/07/14 call option @ 18.564 (13) Hypermarcas OTC 31/07/14 call option @ 19.1764 (11) Arezzo Industria e Comercio 1,546 } 1.1 Arezzo Industria e Comercio warrants* 2,148 Localiza Rent a Car 1,240 } 0.9 Localiza Rent a Car warrants* 1,984 BR Properties 3,019 } 0.9 BR Properties OTC 31/07/14 call option @ 13.8544 (4) Ser Educacional 2,783 } 0.8 Ser Educacional OTC 31/07/14 call option @ 24.6904 (16) TAESA 2,516 0.7 Marcopolo 2,092 0.6 Minerva 2,003 0.6 Mills 1,941 0.6 Raia Drogasil 1,655 0.5 Iguatemi Empresa 1,565 0.5 Even Constructora E Incorporadora 1,300 0.4 Fibria Celulose 777 } 0.3 Fibria Celulose warrants* 437 Autometal 1,171 0.3 Lojas Renner 739 } 0.2 Lojas Renner OTC 31/07/14 call option @ 71.356 (10) Lupatech 6.5% 15/04/18 convertible bond 46 - ------- ----- 212,679 61.6 ------- ----- Mexico Grupo Televisa 14,283 } 4.1 Grupo Televisa call option 19/07/14 35 (9) Grupo Televisa OTC 24/07/14 call option @ 34.5 (75) Cemex SAB 11,262 } 3.2 Cemex SAB call option 19/07/14 13 (33) Cemex SAB OTC 11/08/14 call option @ 13.5 (23) Wal-Mart de Mexico 9,752 } 2.8 Wal-Mart de Mexico OTC 09/07/14 call option @ 32.6932 (32) Wal-Mart de Mexico OTC 31/07/14 call option @ 35.598 (8) Femsa 9,365 2.7 AmÉrica MÓvil 7,787 } 2.3 AmÉrica MÓvil call option 19/07/14 21 (7) Alfa 7,181 } 2.1 Alfa OTC 09/07/14 call option @ 37.4332 - Alfa OTC 31/07/14 call option @ 38.0916 (2) Grupo Financiero Banorte 6,437 } 1.9 Grupo Financiero Banorte OTC 31/07/14 call option @ 96.492 (5) Fibra Uno 5,507 1.6 TF Administradora Industrial 3,964 1.1 Corporacion Inmobiliaria Vesta 3,774 } 1.1 Corporacion Inmobiliaria Vesta OTC31/07/14 call option @ 27.4889 (6) Bolsa Mexicana de Valores 3,390 1.0 Concentradora Fibra Hotelera 3,026 0.9 Infraestructura Energetica 2,774 0.8 Kimberly-Clark de Mexico 2,525 0.7 Grupo Sansborns 1,547 0.4 Alsea 1,320 0.4 Arca Continental 1,250 0.4 Alpek 1,108 0.3 Grupo Aeroportuario del Pacifico 1,006 } 0.3 Grupo Aeroportuario del Pacifico OTC 31/07/14 call option @ 87.0978 (2) Compartamos 480 0.1 ------- ----- 97,536 28.2 ------- ----- Peru Credicorp 12,309 } 3.6 Credicorp call option 19/07/14 160 (7) Credicorp call option 16/08/14 160 (24) Southern Copper 4,100 } 1.2 Southern Copper call option 19/07/14 30 (15) Grana y Montero 3,472 1.0 Minas Buenaventura 1,004 0.3 ------- ----- 20,839 6.1 ------- ----- Chile S.A.C.I. Falabella 6,090 1.8 Banco Santander-Chile 722 0.2 ------- ----- 6,812 2.0 ------- ----- Colombia Grupo Nutresa 3,587 1.0 Cemex Latam 2,104 0.6 ------- ----- 5,691 1.6 ------- ----- Argentina YPF 1,798 } 0.5 YPF call option 19/07/14 35 (12) ------- ----- 1,786 0.5 ------- ----- Total Investments 345,343 100.0 ======= ===== *Outperformance warrants held are linked to the underlying listed securities which have available quoted prices, however, the warrants are not listed in their own right. The valuation of outperformance warrants has been derived from the quoted prices of underlying securities. All investments are in equity shares unless otherwise stated. The total number of equity investments held at 30 June 2014 was 58 (31 December 2013: 59). Outperformance warrants, together with the underlying listed security, are considered as a single line of investment. The negative valuations of US$1,040,000 (31 December 2013: US$281,000) in respect of options held represent the notional cost of repurchasing the contracts at market prices as at 30 June 2014. Income statement for the six months ended 30 June 2014 Revenue Capital Total US$'000 US$'000 US$'000 Six Six Six Six Six Six months months Year months months Year months months Year ended ended ended ended ended ended ended ended ended Notes 30.06.14 30.06.13 31.12.13 30.06.14 30.06.13 31.12.13 30.06.14 30.06.13 31.12.13 (unaudited)(unaudited) (audited)(unaudited) (unaudited) (audited)(unaudited) (unaudited) (audited) Gains/ (losses) on investments held at fair value through profit or loss - - - 23,868 (57,207) (54,496) 23,868 (57,207) (54,496) Change in the value of convertible bonds held at fair value through profit or loss - - - - (3,200) - - (3,200) - Exchange losses - - - (653) (302) (1,380) (653) (302) (1,380) Income from investments held at fair value through profit or loss 2 6,561 6,384 11,175 - - - 6,561 6,384 11,175 Other income 2 1,796 1,304 2,362 - - - 1,796 1,304 2,362 Investment management and performance fees 3 (343) (406) (759) (1,028) (1,217) (2,276) (1,371) (1,623) (3,035) Operating expenses 4 (620) (397) (1,015) (33) (75) (83) (653) (472) (1,098) ----- ----- ----- ------ ------ ------ ------ ------ ------ Net return/ (loss) before finance costs and taxation 7,394 6,885 11,763 22,154 (62,001) (58,235) 29,548 (55,116) (46,472) Finance costs (16) (280) (427) (48) (842) (1,280) (64) (1,122) (1,707) ----- ----- ----- ------ ------ ------ ------ ------ ------ Net return/ (loss) on ordinary activities before taxation 7,378 6,605 11,336 22,106 (62,843) (59,515) 29,484 (56,238) (48,179) Taxation on ordinary activities (1,124) (967) (1,431) 219 464 632 (905) (503) (799) ----- ----- ----- ------ ------ ------ ------ ------ ------ Net return/ (loss) on ordinary activities after taxation 6,254 5,638 9,905 22,325 (62,379) (58,883) 28,579 (56,741) (48,978) ----- ----- ----- ------ ------ ------ ------ ------ ------ Return/ (loss) per ordinary share - basic and diluted (US$ cents) 8 15.89 13.95 24.83 56.70 (154.31) (147.61) 72.59 (140.36) (122.78) ===== ===== ===== ===== ====== ====== ===== ====== ====== The total column of this statement represents the Income Statement of the Company. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies ("AIC"). The Company had no recognised gains and losses other than those disclosed in the Income Statement. All items in the above statement derive from continuing operations and no operations were acquired or discontinued during the period. All income is attributable to the equity holders of BlackRock Latin American Investment Trust plc. There is no material difference between the net return/ (loss) on ordinary activities before taxation and the net return/(loss) for the financial period stated above and the historical cost equivalents. Reconciliation of movements in shareholders' funds for the six months ended 30 June 2014 Called up Share Capital Non- share premium redemption distributable Captial Revenue capital account reserve reserve reserves reserve Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 For the six months ended 30 June 2014 (unaudited) At 31 December 2013 4,144 11,719 4,843 4,356 275,683 14,600 315,345 Return for the period - - - - 22,325 6,254 28,579 Dividends paid(1) - - - - - (5,905) (5,905) ----- ------ ----- ----- ------- ------ ------- At 30 June 2014 4,144 11,719 4,843 4,356 298,008 14,949 338,019 ----- ------ ----- ----- ------- ------ ------- For the six months ended 30 June 2013 (unaudited) At 31 December 2012 4,384 11,641 4,602 4,356 353,772 20,958 399,713 (Loss)/return for the period - - - - (62,379) 5,638 (56,741) Share buy backs - - - - (19,206) - (19,206) Cancellation of treasury shares (227) - 227 - - - - Dividends paid(2) - - - - - (10,358) (10,358) ----- ------ ----- ----- ------- ------ ------- At 30 June 2013 4,157 11,641 4,829 4,356 272,187 16,238 313,408 ----- ------ ----- ----- ------- ------ ------- For the year ended 31 December 2013 (audited) At 31 December 2012 4,384 11,641 4,602 4,356 353,772 20,958 399,713 (Loss)/return for the year - - - - (58,883) 9,905 (48,978) Share buy backs - - - - (19,206) - (19,206) Cancellation of treasury shares (241) - 241 - - - - Conversion of bond 1 78 - - - - 79 Dividends paid(3) - - - - - (16,263) (16,263) ----- ------ ----- ----- ------- ------ ------- At 31 December 2013 4,144 11,719 4,843 4,356 275,683 14,600 315,345 ===== ====== ===== ===== ======= ====== ======= 1. Final dividend in respect of the year ended 31 December 2013 of 15.00 cents per share declared on 25 February 2014 and paid on 2 May 2014. 2. Second interim dividend in respect of the year ended 31 December 2012 of 25.00 cents per share declared on 27 February 2013 and paid on 26 April 2013. 3. Second interim dividend paid in respect of the year ended 31 December 2012 of 25.00 cents per share declared on 27 February 2013 and paid on 26 April 2013 and interim dividend for the year ended 31 December 2013 of 15.00 cents per share declared on 23 August 2013 and paid on 4 October 2013. During the period the Company incurred purchase transaction costs of US$162,000 (six months ended 30 June 2013: US$183,000; year ended 31 December 2013: US$484,000) and sales transaction costs of US$357,000 (six months ended 30 June 2013: US$291,000; year ended 31 December 2013: US$578,000). All transaction costs have been included within the capital column of the Income Statement. Balance sheet as at 30 June 2014 30 30 31 June June December 2014 2013 2013 US$'000 US$'000 US$'000 Notes (unaudited) (unaudited) (audited) Fixed assets Investments held at fair value through profit or loss 346,383 359,899 325,703 ------- ------- ------- Current assets Debtors 7,062 5,238 2,472 Cash at bank and in hand 2,097 23,059 1,963 ------- ------- ------- 9,159 28,297 4,435 ------- ------- ------- Creditors - amounts falling due within one year Bank overdraft (6,993) - (10,377) Deferred taxation (280) - (298) Corporation Tax (475) - - Derivative instruments - written call options (1,040) (248) (281) Other creditors and accruals (8,711) (7,316) (3,813) ------- ------- ------- (17,499) (7,564) (14,769) ------- ------- ------- Net current (liabilities)/assets (8,340) 20,733 (10,334) ------- ------- ------- Total assets less current liabilities 338,043 380,632 315,369 Creditors - amounts falling due after more than one year Convertible bonds held at fair value through profit or loss 6 - (67,200) - Non-equity redeemable shares 6 (24) (24) (24) ------- ------- ------- (24) (67,224) (24) ------- ------- ------- Net assets 338,019 313,408 315,345 ======= ======= ======= Capital and reserves Called up share capital 7 4,144 4,157 4,144 Share premium account 11,719 11,641 11,719 Capital redemption reserve 4,843 4,829 4,843 Non-distributable reserve 4,356 4,356 4,356 Capital reserves 298,008 272,187 275,683 Revenue reserve 14,949 16,238 14,600 ------- ------- ------- Total shareholders' funds 338,019 313,408 315,345 ======= ======= ======= Net asset value per ordinary share (US$ cents) - basic and diluted (30 June 2013: debt at fair value) 8 858.58 796.23 800.99 ======= ======= ======= Cash flow statement for the six months ended 30 June 2014 Six Six months months Year ended ended ended 30 30 31 June June December 2014 2013 2013 US$'000 US$'000 US$'000 (unaudited) (unaudited) (audited) Net cash inflow from operating activities 8,293 6,338 11,043 Servicing of finance Finance costs (64) (1,122) (2,379) Taxation paid (447) (500) (758) ------ ------- ------- Capital expenditure and financial investment Purchase of investments (87,364) (121,638) (263,202) Proceeds from sale of investments 89,038 164,180 341,875 Capital expenses (33) (95) (61) ------ ------- ------- Net cash inflow from capital expenditure and financial investment 1,641 42,447 78,612 ------ ------- ------- Equity dividends paid (5,905) (10,358) (16,263) ------ ------- ------- Net cash inflow before financing 3,518 36,805 70,255 ------ ------- ------- Financing Repurchase of convertible bonds - - (63,921) Share buy backs - (19,147) (19,071) ------ ------- ------- Net cash outflow from financing - (19,147) (82,992) ------ ------- ------- Increase/(decrease) in cash in the period 3,518 17,658 (12,737) ====== ======= ======= Reconciliation of net return before finance costs and taxation to net cash flow from operating activities for the six months ended 30 June 2014 Six Six months months Year ended ended ended 30 30 31 June June December 2014 2013 2013 US$'000 US$'000 US$'000 (unaudited) (unaudited) (audited) Net return/(loss) before finance costs and taxation 29,548 (55,116) (46,472) (Gains)/losses on investments held at fair value through profit or loss (23,868) 57,207 54,496 Fair value adjustment for the convertible bonds - 3,200 - Exchange losses of a capital nature 653 302 1,380 Non-operating expenses of a capital nature 33 75 83 Decrease in accrued income 672 669 1,178 Decrease in other debtors - - 7 Increase in creditors 1,255 1 371 ----- ----- ------ Net cash inflow from operating activities 8,293 6,338 11,043 ===== ===== ====== Notes to the financial statements for the six months ended 30 June 2014 1. Principal activity and basis of preparation The Company conducts its business so as to qualify as an investment trust company within the meaning of sections 1158-1165 of the Corporation Tax Act 2010. The half yearly financial statements have been prepared on the same basis as the accounting policies set out in the Company's financial statements as at 31 December 2013, and in accordance with UK Generally Accepted Accounting Practice ("UK GAAP") and with the Statement of Recommended Practice "Financial Statements of Investment Companies" ("SORP") revised in January 2009. Under FRS26 "Financial instruments: Measurements" the Company has designated its assets and liabilities as being measured as "fair value through profit or loss". The fair value of fixed asset investments is deemed to be the bid market value at the close of business on the balance sheet date. The taxation charge has been calculated by applying an estimate of the annual effective tax rate to any profit for the period. 2. Income Six Six months months Year ended ended ended 30 30 31 June June December 2014 2013 2013 US$'000 US$'000 US$'000 (unaudited) (unaudited) (audited) Income from investments: Overseas dividends 6,326 5,495 10,096 Outperformance warrants 204 574 644 Interest income 31 315 435 ----- ----- ------ 6,561 6,384 11,175 ----- ----- ------ Other income: Traded option premiums 1,790 1,303 2,359 Deposit interest 6 1 3 ----- ----- ------ 1,796 1,304 2,362 ----- ----- ------ Total 8,357 7,688 13,537 ===== ===== ====== During the period, the Company received premiums totalling US$1,983,000 (six months ended 30 June 2013: US$1,471,000; year ended 31 December 2013: US$2,532,000) for writing covered call options for the purposes of revenue generation, of which US$1,790,000 (six months ended 30 June 2013: US$1,303,000; year ended 31 December 2013: US$2,359,000) was taken to income. All derivative transactions were based on constituent stocks in MSCI EM Latin America Index. At 30 June 2014, there were 41 open options positions with an associated liability of US$1,040,000; (six months ended 30 June 2013: 11 open options positions and associated liability of US$248,000; year ended 31 December 2013: 17 open options positions and associated liability of US$281,000). The Company also participated in outperformance warrants contracts in 3 securities during the period (six months ended 30 June 2013: 6 securities; 31 December 2013: 8 securities) which generated income of US$204,000 (six months ended 30 June 2013: US$574,000; year ended 31 December 2013: US$644,000). 3. Investment management and performance fees BlackRock receives an annual management fee of 0.85% per annum of the NAV plus a performance fee equal to 10% of any outperformance of the NAV per share against the benchmark, the MSCI EM Latin America Index (in US dollar terms on a total return basis) plus a hurdle of 1%. The performance fee is capped at 1% of NAV. No performance fee was payable in respect of the six months ended 30 June 2014, six months ended 30 June 2013 or the year ended 31 December 2013. The total fee currently payable to BlackRock in any twelve month period is limited to 4.99% of the NAV. However, as BlackRock is only entitled to a basic fee of 0.85% of the NAV and the performance fee is capped at 1.0% of the NAV, the amount paid to BlackRock by the Company in respect of fees in any twelve month period is expected to be substantially lower than 4.99% of the NAV. Six months Six months Year ended ended ended 30 June 2014 30 June 2013 31 December 2013 (unaudited) (unaudited) (audited) Revenue Capital Total Revenue Capital Total Revenue Capital Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Investment management fee 343 1,028 1,371 406 1,217 1,623 759 2,276 3,035 4. Operating expenses Six Six months months Year ended ended ended 30 30 31 June June December 2014 2013 2013 US$'000 US$'000 US$'000 (unaudited) (unaudited) (audited) Custody fee 55 63 121 Directors' emoluments - fees for services to the Company* 169 130 363 Marketing fees 127 - 38 Other administration costs 269 204 493 --- --- ----- 620 397 1,015 --- --- ----- Transaction charge - capital 33 75 83 --- --- ----- 653 472 1,098 === === ===== *Directors' fees are paid in Sterling and are therefore subject to exchange rate fluctuations.5. Dividends The Board has declared an interim dividend of 15.00 cents (2013: 15.00 cents) payable on 3 October 2014 to shareholders on the register as at 5 September 2014. The total cost of this dividend, based on 39,369,620 ordinary shares in issue at 19 August 2014 is US$5,905,000 (30 June 2013: 39,361,585 shares and total cost of US$5,905,000). 6. Creditors - amounts falling due after more than one year Six Six months months Year ended ended ended 30 30 31 June June December 2014 2013 2013 US$'000 US$'000 US$'000 (unaudited) (unaudited) (audited) Convertible bonds at par - 64,000 - -- ------ -- Fair value adjustment in respect of the convertible bonds - 3,200 - -- ------ -- - 67,200 - -- ------ -- Non equity redeemable shares 24 24 24 -- ------ -- 24 67,224 24 == ====== == Non equity redeemable shares The redeemable shares of £1 each carry the right to receive a fixed dividend at the rate of 0.1% per annum on the nominal amount thereof. They are capable of being redeemed by the Company at any time and confer no rights to receive notice of, attend or vote at general meetings except where the rights of holders are to be varied or abrogated. On a winding up, the capital paid up on such shares ranks pari passu with, and in proportion to, any amounts of capital paid to the holders of ordinary shares, but does not confer any further right to participate in the surplus assets of the Company. 7. Called up share capital Ordinary Treasury Total Nominal shares shares shares value number number number US$'000 Allotted, called up and fully paid share capital comprised: Ordinary shares of 10 cents each ---------- --------- ---------- ----- At 31 December 2013 39,369,620 2,071,662 41,441,282 4,144 ---------- --------- ---------- ----- At 30 June 2014 39,369,620 2,071,662 41,441,282 4,144 ========== ========= ========== ===== There was no change in share capital in the period. 8. Returns and net asset value per ordinary share 30 30 31 June June December 2014 2013 2013 (unaudited) (unaudited) (audited) Net revenue return attributable to ordinary shareholders (US$'000) 6,254 5,638 9,905 ------- ------- ------- Net capital return/(loss) attributable to ordinary shareholders (US$'000) 22,325 (62,379) (58,883) ------- ------- ------- Total return/(loss) attributable to ordinary shareholders (US$'000) 28,579 (56,741) (48,978) ------- ------- ------- Equity shareholders' funds (US$'000) 338,019 313,408 315,345 ------- ------- ------- The weighted average number of ordinary shares in issue during the period on which the basic and diluted return per ordinary share was calculated was: 39,369,620 40,426,030 39,891,106 ---------- ---------- ---------- The actual number of ordinary shares in issue at the end of each period on which the net asset value was calculated was: 39,369,620 39,361,585 39,369,620 ---------- ---------- ---------- Basic & diluted return per share** Revenue return per share 15.89 13.95 24.83 ------ ------ ------ Capital return/(loss) per share 56.70 (154.31) (147.61) ------ ------ ------ Total return/(loss) per share 72.59 (140.36) (122.78) ------ ------ ------ Net asset value per share (30 June 2013, debt at fair value) 858.58 796.23 800.99 ------ ------ ------ Ordinary share price (mid-market)* 776.34 705.27 719.25 ====== ====== ====== * The Company's share price is quoted in sterling and the above represents the US dollar equivalent. ** For the period ended 30 June 2014 there was no dilution. Net asset value per share - debt converted During the year ended 31 December 2013, the convertible bonds were either redeemed or converted into ordinary shares. At 31 December 2013, the Company did not have any dilutive securities in issue. However, for information purposes, the table below sets out the NAV per share at 30 June 2013 with debt converted at the conversion price of US$9.83 per share. 30 30 31 June June December 2014 2013 2013 (unaudited) (unaudited) (audited) Net asset value per share - debt converted Net assets with convertible bonds at fair value per balance sheet US$'000 n/a 313,408 n/a -------- ---------- -------- Add back convertible bonds at fair value US$'000 n/a 67,200 n/a Accrued interest on convertible bonds at balance sheet date US$'000 n/a 672 n/a -------- ---------- -------- Adjusted net assets following conversion of the convertible bonds (a) US$'000 n/a 381,280 n/a -------- ---------- -------- Number of ordinary shares for NAV n/a 39,361,585 n/a Number of ordinary shares arising on conversion of convertible bonds US$ nil (30 June 2013: US$64,000,000 @ US$8.98 and 31 December 2013: US$ nil) n/a 6,510,681 n/a -------- ---------- -------- Number of ordinary shares following conversion of convertible bonds (b) n/a 45,872,266 n/a -------- ---------- -------- Net asset value per share - debt converted (cents) (a/b) US$'000 n/a 831.18 n/a ======== ========== ======== 9. Transaction with the Investment Manager BlackRock Investment Management (UK) Limited ("BIM (UK)") provided management and administration services to the Company until 2 July 2014. Details of the fees payable in relation to these services are set out in note 3. BlackRock Fund Managers Limited ("BFM") was appointed as the Company's Alternative Investment Fund Manager ("AIFM") with effect from 2 July 2014. BIM (UK) continues to act as the Company's Investment Manager under a delegation agreement with BFM. The investment management fee for the six months ended 30 June 2014 amounted to US$1,371,000 (six months ended 30 June 2013: US$1,623,000; year ended 31 December 2013: US$3,035,000). No performance fee was payable for the six months ended 30 June 2014, six months ended 30 June 2013 or the year ended 31 December 2013. At the period end, a total amount of US$2,048,000 was outstanding in respect of these fees (six months ended 30 June 2013: US$1,623,000; year ended 31 December 2013: US$1,414,000). In addition to the above services, with effect from 1 November 2013, BlackRock has provided the Company with marketing services. The total fee paid or payable for these services ended 30 June 2014 amounted to US$127,000 excluding VAT (six months ended 30 June 2013: nil; 31 December 2013: US$38,000) of which US$165,000 (30 June 2013: nil; 31 December 2013: US$38,000) was outstanding at 30 June 2014. 10. Related party disclosure The Board consists of five non-executive Directors, all of whom are considered to be independent by the Board. None of the Directors has a service contract with the Company. With effect from 1 January 2014, the Chairman receives an annual fee of £43,500 (US$74,376), the Chairman of the Audit Committee/Senior Independent Director receives an annual fee of £33,000 (US$56,423) and each of the other Directors receives an annual fee of £29,000 (US$49,584). At the period end members of the Board held ordinary shares in the Company as set out below: 30 June 2014 Peter Burnell (Chairman) 3,000 Mahrukh Doctor 625 Antonio Monteiro de Castro 47,000 The Earl St Aldwyn 1,470 Laurence Whitehead 13,967 11. Contingent liabilities There were no contingent liabilities at 30 June 2014, 30 June 2013 or 31 December 2013. 12. Publication of non-statutory accounts The financial information contained in this half yearly report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the six months ended 30 June 2014 and 30 June 2013 has not been audited or reviewed. The information for the year ended 31 December 2013 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies, unless otherwise stated. The report of the Auditor on those financial statements contained no qualification or statement under sections 498(2) or (3) of the Companies Act 2006. 13. Annual results The Board expects to announce the annual results for the year ending 31 December 2014 as prepared under UK GAAP in mid February 2015. Copies of the results announcement can be obtained from the Secretary on 020 7743 3000. The annual report should be available by the beginning of March 2015, with the Annual General Meeting being held in April 2015. For further information, please contact: Simon White, Managing Director, Investment Trusts, BlackRock Investment Management (UK) Limited Tel: 020 7743 5284 Peter Burnell - Chairman Tel: 01434 632292 Emma Phillips, Media & Communication, BlackRock Investment Management (UK) Limited Tel: 020 7743 2922 Henrietta Guthrie, Lansons Communications Tel: 020 7294 3612 19 August 201412 Throgmorton AvenueLondon EC2N 2DL END The Half Yearly Financial Report will also be available on the BlackRock Investment Management website at http://www.blackrock.co.uk/content/groups/ uksite/documents/literature/blackrock-latin-american-investment-trust-plc- interim-report.pdf. Neither the contents of the Manager's website nor the contents of any website accessible from hyperlinks on the Manager's website (or any other website) is incorporated into, or forms part of, this announcement.




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