Final Results

18 February 2009 BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC Annual results announcement for the year ended 31 December 2008 The Chairman, Peter Burnell, comments: Over the first half of the financial year ended 31 December 2008, whilst the broader global equity markets were turbulent, Latin American markets held their own, with the MSCI EM Latin America Index (total return in US Dollar terms) reaching an all-time high of 9,953.56 in May. Disappointingly, the second half of the year and especially the final quarter of 2008 were marked by a period of severe decline in the valuations of Latin American companies, in response to the devastating effect of the credit market crisis on global markets and resultant concerns over global economic growth. The rate of deterioration in previously outperforming countries particularly Brazil has been exceptional. Against this exceptionally difficult background, the Company's net asset value ("NAV") declined by 58.0% in US Dollar terms on a total return basis (41.9% in Sterling terms) compared to a decline in the benchmark of 51.3% (32.5% in Sterling terms). This underperformance is largely due to negative Brazilian stock selection and an underweight position in Mexico in the second half of the year, together with the introduction of gearing in August 2008. The share price declined by 60.5% in US Dollar terms (45.3% in Sterling terms). Since the year end, the Company's NAV has increased by 1.6% in Sterling terms and by 0.7% in US Dollar terms. The share price increased by 6.8% in Sterling terms and by 5.9% in US Dollar terms. Revenue return and dividends The Company generated a total loss per share for the year of 639.68 cents per share (2007: profit of 341.44 cents per share) of which 15.31 cents per share is the revenue return (2007: 12.47 cents per share). The Board declared a first interim of 2.50 cents per share which was paid on 26 September 2008 (2007: 2.50 cents per share). The Board is pleased to declare a second interim dividend of 9.50 cents per share which will be payable on 15 April 2009 to shareholders on the register as at 27 February 2009. This is the minimum dividend required to satisfy the requirements of section 842 ICTA 1988. This makes a total dividend of 12.0 cents per share for the year, representing an increase of 26.3% over the previous year. Discount control As part of their discount control policy, the Directors of the Company have the discretion to make semi-annual tender offers. Since the last tender offer in October 2006, the shares have typically traded at a relatively tight discount to their asset value and at times at a premium to NAV, thereby achieving the target of the discount control policy. The Board also has the authority to buy back shares into treasury and acquired 400,000 shares in August 2008. Over the year to 27 January 2009, the Company's share price discount to NAV (capital only) averaged 3 per cent and the liquidity of the shares, measured in terms of their daily turnover, was also relatively good. In every month over the same period, the discount has at times been at or below 2 per cent. However over recent months, notably in November and December, due in particular to the increased volatility of Latin American equity markets, the Company's discount has widened and in light of this, the Directors have resolved to implement a tender offer in March for 7.5 per cent of the shares in issue. The tender price will be 98 per cent of the cum income NAV calculated as at the close of business on 31 March 2009. The record date for shareholders for this tender offer is the close of business on 29 January 2009. The Directors do not intend to tender their shares. The circular containing details of the tender offer and the procedure for tendering shares will be sent to shareholders with the annual report. Gearing The Board's policy is to make tactical use of gearing when markets are deemed to be significantly over or undervalued. The Company has a committed loan facility for US$22.5 million together with an uncommitted facility for US$22.5 million providing an aggregate facility of US$45 million. The maximum gearing utilised during the year was just over 10% and at 31 December 2008, gearing amounted to approximately 5%. As mentioned previously, the use of gearing in the year has had a negative impact on performance. Company name At a General Meeting of the Company held on 22 April 2008, shareholders resolved to change the Company's name to BlackRock Latin American Investment Trust plc. The change of name was effected on 25 April 2008 following the merger in 2006 of Merrill Lynch Investment Managers with BlackRock and a full product rebrand. I am pleased to report that the Manager has borne all the costs associated with changing the Company's name and continues to invest in the BlackRock brand. Annual General Meeting The AGM will be held at 12 noon on Tuesday, 12 May 2009 at the offices of BlackRock at 33 King William Street, London EC4R 9AS. We hope that as many shareholders as possible will attend. Following the AGM there will be a presentation by Will Landers, the Portfolio Manager on the outlook for the year ahead, and an opportunity to meet with the Portfolio Manager and Directors over light refreshments. Outlook Global investor sentiment looks certain to remain volatile for much of the year ahead with signs of global economic recovery yet to emerge. Undemanding valuation levels in both Brazil and Mexico should prove supportive and any meaningful return of global investor appetite can be expected to trigger a strong reaction in equity prices. Commenting upon the outlook for the Company, Will Landers of BlackRock, the Investment Manager, notes: Overview The year 2008 has gone down in history as one of the most challenging years for investors across all asset classes. While the year started with many question marks concerning the US and whether or not it was in a recession, no one had truly anticipated what turned out to be the proverbial "perfect storm". This resulted in the disappearance of most US independent investment banks as we know them, several large financial failures culminating with the bankruptcy of Lehman Brothers, government intervention in financial institutions across the world, a freefall in commodity prices, rapidly rising unemployment rates in most developed nations, a collapse in economic activity across the globe in the fourth quarter, and many other events that led to double digit negative returns across a significant number of asset classes. Latin American markets weathered the storm well in the first half of the year. The MSCI Latin America Index peaked on 19 May, following back-to-back upgrades to investment grade in Brazil, with an 18.1% year-to-date return at that time (in the same period the S&P500 returned 2.9%). The theory of Latin America being able to decouple from the rest of the world given its better growth prospects and healthy financial system seemed intact at the time. Unfortunately, from their peak to the year-end, Latin American markets posted a 61.0% fall, bringing the full year figure to 51.3% (compared with -38.5% and -40.9% respectively, for the S&P500 during the same period). During the second half of the year, Latin America's equity market performance was closely linked with the performance of the US market (the S&P500 reached its year low on 20 November and Latin American Markets on 21 November) - volatility reached all-time highs (not only from day to day, but also intraday volatility), and investors' risk appetite diminished significantly. 2008 had the inverse performance of 2007 - outperforming countries in 2007 such as Brazil and Peru were the underperformers in 2008, currencies for the most part devalued against the US Dollar, and country risk premiums widened, mostly towards the end of the year. While economic activity was clearly still decoupled, markets certainly were not, given the globalisation of equity markets across all geographies and the strong influence of foreign investors in many domestic markets. MSCI Foreign Country risk Index exchange (EMBI) % change FX/ % % YTD Region/indices US$ US$ change BPS change Argentina -55.3 3.45 +9.6 1,695 +1,284 Brazil -57.6 2.31 +30.0 416 +194 Chile -37.3 638.50 +28.2 343 +192 Colombia -27.7 2,248.58 +11.5 497 +302 Mexico -44.0 13.67 +25.5 361 +210 Peru -42.4 3.13 +4.6 494 +315 GEMs -54.5 671 +431 Latin America -51.3 745 +470 Emerging Asia -54.1 675 +204 EMEA -56.7 683 +492 Sources: BlackRock, MSCI/Bank of America Merrill Lynch research, Bloomberg. Brazil was among the worst performing markets in Latin America during 2008, finishing the year down 57.6% in US Dollar terms (-44.9% in Reals plus the 30.0% devaluation of the Real during the year). Despite the upgrade to investment grade in May, much earlier than most market participants had expected, the Brazilian equity market suffered from the combination of reduced investor risk appetite and significant participation of material stocks in the Ibovespa Index. As investor risk appetite fell continuously during the second half of 2008 coupled with the need to raise funds, given a significant reduction in liquidity (especially for geared investors such as hedge funds), Brazil was a strong source of cash given that it had been an outperforming market for the past five years. Brazil is a market which is still dominated by foreign flows, and from time to time was the largest equity market in the MSCI Global Emerging Markets Index, providing ample liquidity for investors who were forced to raise cash levels. In addition, with the collapse in commodity prices, from steel to oil to expectations regarding iron ore prices in 2009, the Brazilian equity market was once again a focus of investor selling. This sell off spilled into domestic stocks such as banks and retailers, despite the fact that the Brazilian economy is a lot less exposed to the commodity sector than its equity market. Mexico proved to be a slightly more resilient market. Despite its close economic links with the US, the Mexican equity market was among the better performing emerging equity markets, posting a 44.0% loss for 2008. The market was helped by the fact that the Bolsa Index does not have significant exposure to material stocks and is dominated by telecommunications and consumer stocks, sectors seen as defensive and favoured by most investors during the global sell off. Mexican consumers proved to be resilient through the first nine months of the year, although signs of slowing down became abundantly evident during the fourth quarter of the year. Chile can be seen as the inverse of Brazil - commodities play an important role in the government accounts and economic activity overall, but are not significant in the Chilean stock market, with no copper or other mineral producers listed locally. Chile performed better than Latin America overall, in line with the performance of the Mexican market. Domestic pension funds continue to be highly influential in the local market, although regulation has been loosened to allow pension funds to invest more offshore. The Peruvian market which was a top performer in 2007, suffered in 2008, due to its high composition of material stocks - a sector shunned by most investors during the second half of the year. The Colombian market was among the best performing given, among other things, low international investor participation due to capital controls (lifted during 2008), helping Colombian shares remain somewhat immune from forced selling by international investors. Argentina and Venezuela continued to be less relevant given unfriendly governmental policies, capital controls, and falling liquidity - Venezuela is no longer part of the MSCI Latin America Index and Argentina finished the year with a weighting of less than 70 basis points. 2008 Portfolio Review The Company posted a 58.0% decline in its net asset value during 2008, underperforming by 670 basis points its reference benchmark, the MSCI EM Latin America Free Index, which declined 51.3%. The underperformance stemmed mostly from two sources - negative stock selection attribution during the second half of the year and the premature deployment of gearing in late August 2008. Starting with the latter, following a 25% pullback in markets from mid-May to mid-August, we began to introduce gearing to the portfolio, reaching just over 10% by mid-September. Clearly, it would have been better to wait another two months before introducing gearing to the portfolio, and during one of the large up days in markets following positive news regarding the potential for US government intervention in financial markets, we used the positive move in markets to reduce the gearing to the current level of approximately 5%. We estimate that gearing accounted for approximately one eighth of the year's underperformance. Brazil was the largest contributor to the year's underperformance. We maintained an overweight position in Brazil throughout the year, utilising most of the funds from gearing in the Brazilian market. We started 2008 with just over 500 basis points overweight in the country, adding to the weighting as Brazil underperformed during the second half of the year and ending 2008 at close to a 14% overweight (equivalent to 75% of net assets). As a result, negative Brazilian stock selection attribution, along with negative allocation (including the increased overweight position due to the use of gearing), accounted for approximately half of the year's underperformance compared with the benchmark index. At the stock level, while we reduced materials exposure during mid-2008, taking profits in some of our steel investments, maintaining a large overweight in steel maker Usiminas was the largest underperforming position, while the (at times forced) underweight position in oil giant Petrobras was the largest contributor to performance. Our underweight position in Mexico accounted for almost one third of the underperformance compared with the benchmark during 2008. Despite its close ties to the US and higher valuation than Brazil, Mexico proved to be a much more defensive market in falling global markets, and our underweight position during the year proved to be a negative to relative performance. We started the year at an approximately 200 basis points underweight, finishing the year at approximately 500 basis points underweight (approximately 20% of net assets). At the stock level, being underweight media giant Grupo Televisa was the largest detractor to performance, whilst being underweight, global cement producer Cemex proved to be a strong contributor to relative performance. None of the other markets had a significant impact on overall relative performance. A late year off-benchmark investment in Antofagasta, the UK listed Chilean copper producer, produced significantly positive attribution, while our investment in off-benchmark Luxembourg registered Ternium, a pan-Latin American steel producer, ranked among the top ten detractors from performance. Non benchmark holdings represented 13.8% of the portfolio at the year end and averaged 15.9% in the year. 2009 Outlook and Positioning We enter 2009 feeling confident that Latin American economies are in the best position we have witnessed in decades to deal with the "perfect storm" that we lived through in 2008 and that undoubtedly will continue in some form in 2009 (and perhaps beyond). Strong fiscal and monetary discipline left countries like Brazil, Mexico, Chile, Colombia and Peru, among others, with much reduced financing needs to tap international capital markets; the region's strong reserve bases will undoubtedly help nations deal with falling current accounts from slower trade and Foreign Direct Investment ("FDI"); discipline on the fiscal front also reduces pressures from slower growth across the region; and last, but certainly not least, strict monetary policies have brought inflation under control and helped reduce the impact of foreign exchange volatility on inflation rates. Given our positive views regarding Latin America vis-à-vis other regions of the world (developed or emerging), we enter 2009 positioned to benefit from a rebound in Latin American markets, especially the Brazilian stock market. Valuations have fallen to levels which we believe price in the global recession being experienced. Given superior fundamentals combined with lower relative valuations, we expect Latin America to be an outperformer once global markets return to trading based on company fundamentals and less on risk reduction and forced selling/deleveraging. We begin the year with net gearing of around 5%, most of which is deployed in the Brazilian market. Brazil represents our largest absolute and relative position entering 2009, with approximately 75% of net assets invested in the country for an approximate 14% overweight compared with the benchmark index. Within our Brazilian portfolio, financial services account for the largest position, with almost 20% of net assets invested - both Banco Bradesco and Unibanco feature among our top ten positions as we expect Brazilian banks to maintain strong asset quality while growing loan books in the 10%-15% range during the year. Our second largest sector overweight in Brazil is in consumer staples, with beverage giant AmBev representing our largest position. We continue to have overweight positions in other consumer related sectors such as healthcare, real estate and airlines, have an overweight position in steels (somewhat consumer related as well as a majority of sales are to domestic producers of consumer products). We have a small overweight position in mining, a slight underweight position in oil and gas, with pulp and paper, telecommunications and utilities representing underweight sectors. We expect that the expanded Brazilian middle class will prove resilient in a slowing global economy, offsetting some of the economic slowdown caused by lower commodity prices and lower export demand. The Brazilian Central Bank will most likely be in an easing cycle for most of 2009, further helping to keep the domestic economy moving in the right direction. Mexico represents our second largest absolute position at close to 20% of assets, representing an almost 5% underweight versus the benchmark. Relative valuations have not come down as much as in Brazil and we expect that Mexico will undergo negative economic growth during 2009 due to the recession in the US. As a result, we have underweight positions in construction materials, wireline telecommunications, industrials, media, mining and retailers, with consumer staples (via beverage giant Femsa), wireless telecommunications (via America Movil), financials (via Banorte) and homebuilders (via Homex) represent the only overweight sectors (and for that matter the only four stocks in Mexico we have overweight positions). Chile and Peru remain underweighted markets, with approximately 4% and 3% of net assets invested respectively in each country. Chile will most likely have its weakest economic activity in close to a decade during 2009 - given the market's strong exposure to domestic focused companies, we expect the Chilean market to be an underperformer during 2009. While Peru should remain among the best performing economies in the region in 2009, a combination of low liquidity and few investable stocks limits our ability to increase exposure to the market. Other markets offer few investable opportunities, and we hold a few off-benchmark positions outside the top four markets. In summary, while we were disappointed with the recoupling of global equity markets during the historic market meltdown of 2008, especially given the continuation of some level of decoupling at the economic level, we expect that 2009 will represent a year of returning to market fundamentals, which should benefit Latin American equities. We are positioned to benefit from more constructive markets, and expect Latin America once again to be one of the outperforming global markets once fundamentals return as the main driver for market performance. Ten Largest Investments Petrobrás - 13.0% (2007: 14.3%) is Brazil's vertically integrated oil company. The company continues to invest heavily on increasing its production, utilising free cash flow to guarantee future production growth. Recent oil finds in the pre-salt region could transform the company (and Brazil) into one of the world's major oil producers. CVRD - 11.6% (2007: 13.4%) is the world's largest producer of iron ore, with operations in several other commodities, including nickel, copper and alumina, among others. Vale is the lowest cash cost producer of iron ore and has a strong balance sheet following its equity offering in mid-2008. América Móvil - 9.1% (2007: 9.1%) is Latin America's leading provider of wireless communications. We expect the company to continue to post strong double digit subscriber growth in 2009 whilst improving overall operating margins, given economies of scale from its large existing subscriber base and the monetisation of its 3G network. Banco Bradesco - 6.9% (2007: 6.7%) is Brazil's largest private sector bank and is in an advantageous position to benefit from the strong demand for credit in Brazil. The country's growing middle class continues to demand more financial products, and the Bradesco's leading branch network positions the bank to offer such products. Unibanco - 6.5% (2007: 3.3%) is Brazil's third largest private sector bank which is in the process of merging with Banco Itaú to surpass Banco Bradesco as the combined leading private sector bank in the country. Usiminas - 4.3% (2007: 3.9%) is Brazil's largest steel producer which is well positioned to weather the slowdown in global demand given its integrated, low cost operations. The company has a robust balance sheet and is a strong free cash flow generator. AmBev Cia de Bebidas - 3.8% (2007: 2.5%) is Brazil's leading beverages 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 cost containment, a perennial AmBev management strength. Femsa - 3.7% (2007: 1.3%) is Mexico's leading beverages company. The company has three main subsidiaries - Cerveza (Mexico's second largest beer producer), Coke Femsa (Coca-Cola's leading bottler in Latin America), and Oxxo (Mexico's leading convenience stores chain). Oxxo has been the main driver for growth recently, while the beverages divisions continue to act as defensive staples producers. Banco Itaú - 3.0% (2007: 1.5%) is Brazil's second largest private sector bank. The bank is in the process of merging with Unibanco to surpass Banco Bradesco as the country's largest private sector bank. Itaú has maintained superior profitability levels while participating in the overall growth in the Brazilian financial system and the combined entity should be able to generate significant gains from synergies. Walmart de México - 2.2% (2007: 1.4%) is Mexico's leading retailer. The company is well positioned to benefit from weakened competition as it continues to expand its retail network utilising its own free cash flow generation. WalMex has zero debt and, given its size, significant advantage with suppliers. All percentages reflect the value of the holding as a percentage of net assets. Percentages in brackets represent the value of the holding at 31 December 2007. Geographical weighting vs MSCI EM Latin America Index Total Total Brazil Chile Argentina Mexico Colombia Panama Peru Other 2008* 2007* Energy 14.3 - 1.0 - - - - - 15.3 17.8 Consumer discretionary 6.2 - - 2.6 - - - - 8.8 7.0 Consumer staples 4.9 0.6 - 5.9 - - - - 11.4 8.0 Financials 19.6 1.3 - 2.2 - - 2.0 - 25.1 19.6 Health 1.4 - - 0.5 - - - - 1.9 1.1 Industrials 3.5 - - - - 0.7 - - 4.2 10.1 Information technology 2.1 - - - - - - - 2.1 0.8 Materials 16.9 1.3 0.5 - - - 1.0 - 19.7 18.7 Telecommunications 2.4 - - 9.1 - - - - 11.5 10.1 Utilities 4.1 1.0 - - - - - - 5.1 4.6 Equity warrants - - - - - - - - - 2.5 ---- ---- ---- ---- ---- ---- ---- ---- ----- ----- Total investments 75.4 4.2 1.5 20.3 - 0.7 3.0 - 105.1 100.3 ---- ---- ---- ---- ---- ---- ---- ---- ----- ----- Net liabilities - - - - - - - (5.1) (5.1) (0.3) ----- ----- ----- ----- ----- ----- ----- ----- ------ ------ Total assets less liabilities 75.4 4.2 1.5 20.3 - 0.7 3.0 (5.1) 100.0 - ----- ----- ----- ----- ----- ----- ----- ----- ------ ------ 2007 Totals 71.6 4.3 3.5 19.8 0.7 0.4 - 0.3 - 100.0 ----- ----- ----- ----- ----- ----- ----- ----- ------ ------ Source: BlackRock * expressed as a percentage of net assets Investments 31 December 2008 Market % of value net Country of operation Holding US$'000 assets Brazil Petrobrás ADR 100,000 } Petrobrás PN 2,704,000 } 28,524 13.0 CVRD PNA 2,177,000 } CVRD ADR 303,000 } 25,496 11.6 Banco Bradesco 1,550,000 15,268 6.9 Unibanco 220,000 14,216 6.5 Usiminas PN 751,500 } Usiminas ON 80,000 } 9,388 4.3 Ambev Cia De Bebidas 192,000 8,479 3.8 Banco Itaú 575,000 6,664 3.0 NET 655,000 3,733 1.7 Redecard 275,000 3,031 1.4 Ogx Petróleo e Gás Participações 13,000 2,932 1.3 Cyrela Brazil Realty 739,000 2,858 1.3 Tele Norte Leste Participações 175,000 2,424 1.1 Hypermarcas 415,000 2,370 1.1 Porto Seguro 400,000 2,238 1.0 Cemig 124,000 2,233 1.0 CCR 201,000 2,037 0.9 TAM 225,000 1,847 0.8 CSN 135,000 1,728 0.8 Tractebel Energia 219,000 1,719 0.8 GVT Holding 160,000 1,708 0.8 DASA 174,000 1,677 0.8 BM&F Bovespa 610,000 1,572 0.7 Totvs 99,494 1,507 0.7 AMIL Participações 457,000 1,401 0.6 Saraiva Livreiros 199,000 1,342 0.6 Lupatech 135,000 1,308 0.6 Anhanguera Educacional 245,000 1,273 0.6 Copasa 160,000 1,269 0.6 Energias Do Brasil 129,000 1,250 0.6 Terna Participações 125,000 1,137 0.5 Lojas Renner 170,000 1,127 0.5 PDG Realty 229,000 1,095 0.5 Tempo Participações 994,000 1,066 0.5 WEG 200,000 1,055 0.5 Metalfrio Solutions 250,000 772 0.4 ALL 164,400 705 0.3 Satipel Industrial 435,100 700 0.3 MRV Engenharia e Participacoes 166,000 698 0.3 B2W 70,000 696 0.3 Equatorial Energia 160,000 688 0.3 Eletropaulo Metropolitana 61,000 667 0.3 Vivo Participações 50,800 634 0.3 Banco ABC Brasil 283,000 615 0.3 Bradespar 75,000 611 0.3 Banco Industrial e Commercial 452,500 567 0.3 Tele Celular Sul Participações 40,000 500 0.2 Rodobens 129,000 420 0.2 Agra 422,000 326 0.1 Profarma Distribuidora 117,000 253 0.1 ------- ----- 165,824 75.4 ------- ----- Mexico América Móvil 650,000 20,098 9.1 Femsa 270,000 8,108 3.7 Walmart de México 1,860,000 4,904 2.2 Grupo Financiero Banorte 2,680,000 4,799 2.2 Grupo Televisa 200,000 2,982 1.4 Desarrolladora Homex 115,000 2,619 1.2 Genomma 1,480,000 962 0.4 Alsea 223,800 100 0.1 ------- ----- 44,572 20.3 ------- ----- Chile Banco Santander-Chile 80,000 2,802 1.3 Antofagasta 455,900 2,789 1.3 Endessa 1,990,000 2,292 1.0 Cencosud 900,000 1,271 0.6 ------- ----- 9,154 4.2 ------- ----- Peru Credicorp 90,000 4,487 2.0 Minas Buenaventura 110,000 2,191 1.0 ------- ----- 6,678 3.0 ------- ----- Argentina Tenaris 100,000 2,095 1.0 Ternium 140,000 1,198 0.5 ------- ----- 3,293 1.5 ------- ----- Panama Copa Holdings 55,000 1,668 0.7 ------- ----- 1,668 0.7 ------- ----- Total investments 231,189 105.1 ------- ----- Net liabilities (11,125) (5.1) ------- ----- Net assets 220,064 100.0 ------- ----- The total number of investments held at 31 December 2008 was 66 (31 December 2007: 76). All investments are in equity shares unless otherwise stated. Principal risks The key risks faced by the Company are set out below. The Board regularly reviews and agrees policies for managing each risk, as summarised below. - Performance risk - The Board is responsible for deciding the investment strategy to fulfil the Company's objectives and monitoring the performance of the Investment Manager. An inappropriate strategy may lead to poor performance. To manage this risk the Investment Manager provides an explanation of significant stock selection decisions and the rationale for the composition of the investment portfolio. The Board monitors and maintains an adequate spread of investments in order to minimise the risks associated with particular countries or factors specific to particular sectors, based on the diversification requirements inherent in the Company's investment policy. - Income/dividend risk - The amount of dividends and future dividend growth will depend on the Company's underlying portfolio. Any change in the tax treatment of the dividends or interest received by the Company (including as a result of withholding taxes or exchange controls imposed by jurisdictions in which the Company invests) may reduce the level of dividends received by shareholders. The Board monitors this risk through the receipt of detailed income forecasts and considers the level of income at each meeting. - Regulatory risk - The Company operates as an investment trust in accordance with section 842 of ICTA. As such, the Company is exempt from capital gains tax on the profits realised from the sale of its investments. The Investment Manager monitors investment movements, the level and type of forecast income and expenditure and the amount of proposed dividends to ensure that the provisions of section 842 of ICTA are not breached and the results are reported to the Board at each meeting. - Operational risk - In common with most other investment trust companies, the Company has no employees. The Company therefore relies upon the services provided by third parties and is dependent on the control systems of the Investment Manager and the Company's other service providers. The security, for example, of the Company's assets, dealing procedures, accounting records and maintenance of regulatory and legal requirements, depend on the effective operation of these systems. These have been regularly tested and monitored and an internal control report, which includes an assessment of risks together with procedures to mitigate such risks, is prepared by the Investment Manager and reviewed by the Audit Committee twice a year. The Custodian and the Investment Manager also produce annual SAS 70 reports which are reviewed by their respective reporting accountants and give assurance regarding the effective operation of controls. - Market risk - Market risk arises from volatility in the prices of the Company's investments. It represents the potential loss the Company might suffer through holding investments in the face of negative market movements. The Board considers asset allocation, stock selection and levels of gearing on a regular basis and has set investment restrictions and guidelines which are monitored and reported on by the Investment Manager. The Board monitors the implementation and results of the investment process with the Investment Manager. - Financial risks - The Company's investment activities expose it to a variety of financial risks that include foreign currency risk, sovereign risk and interest rate risk. Related party transactions The Investment Manager is regarded as a related party and details of the investment management fees payable are set out in note 4. Statement of Directors' responsibilities The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with applicable law and UK Accounting Standards (UK Generally Accepted Accounting Practice). The Directors are required to ensure that the financial statements give a true and fair view of the affairs of the Company as at the end of each financial year and of the profit or loss of the Company for that period. In preparing those financial statements, the Directors are required to: - select suitable accounting policies and then apply them consistently; - make judgements and estimates that are reasonable and prudent; - state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 1985. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities. Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that comply with that law and those regulations. The Directors confirm to the best of their knowledge that: - the financial statements, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and - the annual report includes a fair view of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that the Company faces. By order of the Board Peter Burnell - Chairman 18 February 2009 INCOME STATEMENT for the year ended 31 December 2008 Revenue Revenue Capital Capital Total Total 2008 2007 2008 2007 2008 2007 Notes US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 (Losses)/gains on investments held at fair value through profit or loss - - (309,886) 159,691 (309,886) 159,691 Exchange gains/ (losses) - - 72 (245) 72 (245) Income from investments held at fair value through profit or loss 3 12,006 10,887 - - 12,006 10,887 Other income 3 151 58 - - 151 58 Management and performance fees 4 (882) (999) (2,647) (2,998) (3,529) (3,997) Write-back of prior years' VAT 4 & 5 174 - - - 174 - Other operating expenses 5 (1,052) (1,395) (45) (34) (1,097) (1,429) ------ ----- ------- ------- ------- ------- Net return before finance costs and taxation 10,397 8,551 (312,506) 156,414 (302,109) 164,965 Finance costs 6 (149) (40) (448) (121) (597) (161) ------ ----- ------- ------- ------- ------- Net return on ordinary activities before taxation 10,248 8,511 (312,954) 156,293 (302,706) 164,804 Taxation (charges)/ credit (2,956) (2,554) 882 919 (2,074) (1,635) ------ ----- ------- ------- ------- ------- Net return on ordinary activities after taxation 7,292 5,957 (312,072) 157,212 (304,780) 163,169 ------ ----- ------- ------- ------- ------- Net return per ordinary share (cents) 15.31 12.47 (654.99) 328.97 (639.68) 341.44 ------ ----- ------- ------- ------- ------- The total column of this statement represents the Income Statement of the Company. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies ("AIC"). The Company had no recognised gains or losses other than those disclosed in the Income Statement and the Reconciliation of Movements in Shareholders' Funds. All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Called-up Share Capital Non Note share premium redemption distributable Capital Revenue capital account reserve reserve reserves reserve Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 For the year ended 31 December 2008 At 31 December 2007 4,779 11,655 4,207 4,356 500,777 7,507 533,281 Net return for the year - - - - (312,072) 7,292 (304,780) Shares repurchased and held in treasury - - - - (3,799) - (3,799) Share repurchase expense - - - - (98) - (98) Dividends paid (a) 7 - - - - - (4,540) (4,540) -------- --------- -------- -------- ----------- -------- ---------- At 31 December 2008 4,779 11,655 4,207 4,356 184,808 10,259 220,064 -------- --------- -------- -------- ----------- -------- ---------- For the year ended 31 December 2007 At 31 December 2006 4,779 11,655 4,207 4,356 343,358 5,851 374,206 Net return for the year - - - - 157,212 5,957 163,169 Shares repurchased costs written back - - - - 207 - 207 Dividends paid (b) 7 - - - - - (4,301) (4,301) -------- --------- -------- -------- ----------- -------- ---------- At 31 December 2007 4,779 11,655 4,207 4,356 500,777 7,507 533,281 -------- --------- -------- -------- ----------- -------- ---------- (a) Second interim dividend paid in respect of the year ended 31 December 2007 of 7.00 cents per share declared on 19 February 2008 and paid on 16 April 2008 and the first interim dividend for the year ended 31 December 2008 of 2.50 cents per share declared on 5 August 2008 and paid on 26 September 2008. (b) Second interim dividend paid in respect of the year ended 31 December 2006 of 6.50 cents per share declared on 15 February 2007 and paid on 27 March 2007 and the first interim dividend for the year ended 31 December 2007 of 2.50 cents per share declared on 7 August 2007 and paid on 28 September 2007. BALANCE SHEET as at 31 December 2008 2008 2007 Notes US$'000 US$'000 Fixed assets Investments held at fair value through profit or loss 231,189 534,759 ------- ------- Current assets Debtors 2,363 3,162 Cash 2,636 - ------- ------- 4,999 3,162 Creditors - amounts falling due within one year Bank loan (12,500) - Bank overdrafts - (1,891) Other creditors (3,600) (2,725) ------- ------- (16,100) (4,616) ------- ------- Net current liabilities (11,101) (1,454) ------- ------- Total assets less current liabilities 220,088 533,305 Provisions for liabilities and charges (24) (24) ------- ------- Net assets 220,064 533,281 ------- ------- Capital and reserves Called-up share capital 9 4,779 4,779 Share premium account 11,655 11,655 Capital redemption reserve 4,207 4,207 Non distributable reserve 4,356 4,356 Capital reserves 184,808 500,777 Revenue reserve 10,259 7,507 ------- ------- Total equity shareholders' funds 220,064 533,281 ------- ------- Net asset value per ordinary share (cents) 8 464.37 1,115.89 ------- ------- CASH FLOW STATEMENT for the year ended 31 December 2008 2008 2007 US$'000 US$'000 Net cash inflow from operating activities 7,178 5,114 Servicing of finance (284) (163) Tax paid (1,773) (1,311) Capital expenditure and financial investment Purchase of investments (267,423) (203,174) Proceeds from sale of investments 262,736 204,581 Capital expenses (42) (34) ----- ------ Net cash (outflow)/inflow from capital expenditure and financial investment (4,729) 1,373 ----- ------ Equity dividends paid (4,540) (4,301) ----- ------ Net cash (outflow)/inflow before financing (4,148) 712 ----- ------ Financing: Draw down of US Dollar loan 12,500 - Repurchase of ordinary shares (3,799) - Tender offer costs paid (98) (37) ----- ------ Net cash inflow/(outflow) from financing 8,603 (37) ----- ------ Increase in cash in the year 4,455 675 ----- ------ NOTES TO THE FINAL STATEMENTS 1. Principal activity The principal activity of the Company is that of an investment trust company within the meaning of section 842 of the Income and Corporation Taxes Act 1988. 2. Accounting policies The accounting polices used to prepare the Company's financial information have not changed significantly from those used for the year ended 31 December 2007. Basis of preparation The Company's financial statements have been prepared on a going concern basis and on the historical cost basis of accounting, modified to include the revaluation of fixed assets investments and in accordance with the Companies Act 1985, UK Generally Accepted Accounting Practice ("UK GAAP") and with the Statement of Recommended Practice `Financial Statements of Investment Trust Companies' ("SORP") revised in December 2005. All of the Company's operations are of a continuing nature. The Company's financial statements are presented in US Dollars, which is the functional and presentational currency and the primary economic environment in which the Company operates. All values are rounded to the nearest thousand dollars (US$'000) except where otherwise indicated. 3. Income 2008 2007 US$'000 US$'000 Investment income: Overseas listed dividends 11,943 10,696 Scrip dividends 63 191 ------ ------ 12,006 10,887 ------ ------ Other income: Deposit interest 41 58 Interest relating to prior years' VAT 110 - ------ ------ Total Income 12,157 10,945 ------ ------ 4. Investment Management fees 2008 2007 Revenue Capital Total Revenue Capital Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Investment management fees 882 2,647 3,529 999 2,998 3,997 Write-back of prior years' VAT relating to management fees (160) - (160) - - - --- ----- ----- --- ----- ----- Total 722 2,647 3,369 999 2,998 3,997 --- ----- ----- --- ----- ----- The Investment Manager is also entitled to a performance fee equal to 10% of any outperformance of the NAV per share against the benchmark (in US Dollar terms on a total return basis) plus a hurdle of 1%. The performance is capped at 1% of NAV. No performance fee has been accrued as at 31 December 2008 or for the corresponding year. 5. Other expenses 2008 2007 US$'000 US$'000 AIC subscriptions 32 36 Auditors' remuneration: - audit services 31 60 - non audit services 2 - Custody fee 426 418 Directors' and Officers' liability insurance 28 28 Directors' emoluments: - fees for services to the Company 239 307 Printing and postage 95 72 Professional fees 54 264 Registrar's fees 27 33 Other administrative costs 118 177 ----- ----- 1,052 1,395 ----- ----- Write-back of prior years' VAT relating to other operating expenses (14) - ----- ----- 1,038 1,395 ----- ----- The Company's total expense ratio, calculated as a percentage of average net assets and using expenses, excluding performance fees and finance costs, after relief for taxation was: 1.0% 0.8% ---- ---- Other expenses include VAT where applicable. Following the outcome of JPMorgan Claverhouse case, management fees are now exempt from VAT. The case had nofinancial impact on the Company as it already reclaims all of its VAT. Auditors' remuneration for non-audit services of $2,000 represents fees for reviewing performance fee calculations. Expenses of US$45,000 charged to the capital return column of the Income Statement relate to transaction costs charged by the custodian on the purchases and sales of investments (2007: US$34,000). 6. Finance costs 2008 2007 Revenue Capital Total Revenue Capital Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Bank loan 86 261 347 - - - Bank overdraft 63 187 250 40 121 161 --- --- --- -- --- --- Interest payable 149 448 597 40 121 161 --- --- --- -- --- --- 7. Dividends Dividends on Register Payment 2008 2007 ordinary shares date date US$'000 US$'000 2006 Second interim of 6.50 cents 2 March 2007 27 March 2007 - 3,106 2007 Interim of 2.50 cents 17 August 2007 28 September 2007 - 1,195 2007 Second interim of 7.00 cents 29 February 2008 16 April 2008 3,345 - 2008 Interim of 15 August 2008 26 September 2008 1,195 - 2.50 cents ----- ----- 4,540 4,301 ----- ----- The Directors propose to pay a second interim dividend in respect of the year ended 31 December 2008 of 9.50 cents per share on 15 April 2009, to all shareholders on the register as at 27 February 2009. The proposed second interim dividend has not been included as a liability in these financial statements as interim dividends are only recognised in the financial statements in the period in which they are paid. The dividends disclosed in the note below have been considered in view of the requirements of section 842 of the Income Taxes and Corporation Taxes Act 1988 and section 833 of the Companies Act 2006, and the amounts proposed meet the relevant requirements as set out in this legislation. 2008 2007 US$'000 US$'000 Dividend payable on equity shares: First interim paid 2.50 cents (2007: 2.50 cents) 1,195 1,195 Second interim payable 9.50 cents (2007: 7.00 cents) 4,502 3,345 ----- ----- 5,697 4,540 ----- ----- 8. Return and net asset value per ordinary share Revenue and capital returns per share are shown below and have been calculated using the following: 2008 2007 Net revenue return attributable to ordinary shareholders (US$'000) 7,292 5,957 Net capital return attributable to ordinary shareholders (US$'000) (312,072) 157,212 ------- ------- Total return (US$'000) (304,780) 163,169 ------- ------- Equity shareholders' funds (US$'000) 220,064 533,281 ------- ------- The weighted average number of ordinary shares in issue during the year, on which the return per ordinary share was calculated, was 47,645,490 47,789,753 ---------- ---------- The actual number of ordinary shares in issue at the end of each year, on which the net asset value was calculated, was 47,389,753 47,789,753 ---------- ---------- 2008 2007 Revenue Capital Total Revenue Capital Total cents cents cents cents cents cents Return per share Calculated on weighted average number of shares 15.31 (654.99) (639.68) 12.47 328.97 341.44 Calculated on actual number of shares 15.39 (658.52) (643.13) 12.47 328.97 341.44 ----- ------ ------ ----- ------ -------- Net asset value per share 464.37 1,115.89 ----- ------ ------ ----- ------ -------- 9. Called-up share capital Ordinary Treasury Total shares shares shares number number number (nominal) (nominal) (nominal) US$'000 Authorised share capital comprised: Ordinary shares of 10 cents each 110,000,000 - 110,000,000 11,000 Allotted, issued and fully paid: Shares in issue at 31 December 2007 47,789,753 - 47,789,753 4,779 Share purchased and held in treasury (400,000) 400,000 - - ---------- ------- ---------- ----- At 31 December 2008 47,389,753 400,000 47,789,753 4,779 ---------- ------- ---------- ----- During the year 400,000 ordinary shares were repurchased and held in treasury at a total cost of US$3,799,000 (2007: nil). The number of ordinary shares in issue at the year end was 47,789,753, of which 400,000 were held in treasury (2007: 47,789,753). 10. Publication of non statutory accounts The preliminary figures for the year ended 31 December 2008, which do not constitute statutory accounts, are an extract from the Company's draft accounts for the year. These accounts have not yet been delivered to the Registrar of Companies, nor have the auditors yet reported on them. The 2008 annual report and financial statements will be filed with the Registrar of Companies shortly. The comparative figures are extracts from the audited financial statements of BlackRock Latin American Investment Trust plc for the year ended 31 December 2007, which have been filed with the Registrar of Companies. Those accounts have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under either Section 237(2) or Section 237(3) of the Companies Act 1985. 11. Annual Report Copies of the annual report will be sent to members shortly and will be available from the registered office, c/o The Company Secretary, BlackRock Latin American Investment Trust plc, 33 King William Street, London EC4R 9AS. This report will also be available on the BlackRock Investment Management website at www.blackrock.co.uk/its. 12. Annual General Meeting The Annual General Meeting of the Company will be held at 33 King William Street, London EC4R 9AS on Tuesday, 12 May 2009 at 12 noon. For further information, please contact: Peter Burnell - Chairman Tel: 01434 632292 Jonathan Ruck Keene, Managing Director, Investment Companies, BlackRock Investment Management (UK) Limited Tel: 020 7743 2178 Emma Phillips, Media & Communication, BlackRock Investment Management (UK) Limited Tel: 020 7743 2922 William Clutterbuck, The Maitland Consultancy Tel: 020 7379 5151 18 February 2009 33 King William Street London EC4R 9AS

Companies

BlackRock Latin American Inv Trust (BRLA)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today