Final Results

BlackRock Latin American Investment Trust plc Annual Report 31 December 2011 Financial Highlights 31 December 31 December Change Attributable to ordinary shareholders 2011 2010 % Assets Net assets (US$'000) 391,550 524,501 -25.3 Net asset value per ordinary share - debt at fair value (US$ cents) 893.11 1,196.42 -25.3 - with income reinvested -23.7 Ordinary share price (mid-market) (US$ cents)(1) 836.88 1,200.07 -30.3 - with income reinvested -28.7 Ordinary share price (mid-market) (pence) 538.50 766.50 -29.7 - with income reinvested -28.1 For the For the year ended year ended 31 December 31 December Change 2011 2010 % Revenue Net revenue after taxation (US$'000) 15,517 12,544 +23.7 Revenue return per ordinary share - debt at fair value (US$ cents) 35.39 28.62 +23.7 First interim dividend per ordinary share (US$ cents) 5.00 5.00 - Second interim dividend per ordinary share (US$ cents) 25.00 19.00 +31.6 1. Based on an exchange rate of 1.5541 (2010: 1.5657). Chairman's Statement for the year ended 31 December 2011 Overview Following two years of excellent returns the year under review has produced a disappointing result. The year was a challenging one for Latin American equity markets and the aftershocks of the 2008 global financial crisis together with the region's own concerns combined to push share prices sharply lower. Latin American equity markets weakened as investors began to de-risk and the Company's benchmark, the MSCI EM Latin America Index ended the year down a disappointing 19.1% in US Dollar terms (18.5% in Sterling terms). Performance The Company's net asset value ("NAV") with debt at fair value fell by 23.7% in US Dollar terms (23.1% in Sterling terms) compared to a decrease in the benchmark of 19.1% (18.5% in Sterling terms). The share price decreased by 28.7% in US Dollar terms (28.1% in Sterling terms). (All percentages calculated with income reinvested.) The Company's underperformance against the benchmark was due principally to country allocation and the impact of gearing. Further details of the factors affecting performance are given in the Investment Manager's Report. Contribution to total return for the year ended 31 December 2011 Benchmark return -19.1% Dividend reinvestment 1.5% Management fees -0.9% Taxation -0.3% Other operating costs - charged to revenue -0.1% Other operating costs - charged to capital -0.2% Financing costs -0.6% Gearing -3.7% Stock selection -2.8% Asset allocation -1.2% Fair value adjustment 3.7% Net asset value total return (1) -23.7% Increase in discount -5.0% Share price total return -28.7% (1) Debt at fair value. Source: BlackRock. Calculated using the Factset daily transactions-based methodology. Factset is not of audit quality, but is considered useful management information. No performance fee was charged during the year. Since 31 December 2011, the Company's NAV has increased by 13.3% in Sterling terms and by 14.7% in US Dollar terms. The share price has increased by 12.6% in Sterling terms and by 14.1% in US Dollar terms. Investment strategy and mandate The Company's investment objective was set at the launch of the Company in 1990 and has remained largely unchanged since that time. The Company's distributable income has increased significantly in recent years, due partly to the income generated from investing the proceeds of the convertible bond issue and the increased yield on Latin American equities. We have therefore expanded the Company's objective to encompass total return to reflect this. Revenue return and dividends The revenue return for the year (including debt at fair value) was 35.39 cents per share (2010: 28.62 cents per share). The Board declared a first interim dividend of 5.00 cents per share which was paid on 23 September 2011 (2010: 5.00 cents per share). The Board is pleased to declare a second interim dividend of 25.00 cents per share (2010: 19.00 cents per share) which will be payable on 20 April 2012 to shareholders on the register as at 16 March 2012. This makes a total dividend of 30.00 cents per share (2010: 24.00 cents per share) for the year, representing an increase of 25% over the previous year. Convertible bonds On 15 September 2009 the Company issued US$80 million in nominal amount of 3.5% unsecured convertible bonds 2015. During the year and up to the date of this report, the Company has issued 2,227 ordinary shares following the conversion of US$20,000 convertible bonds. As at the date of this report the Company had 43,841,312 ordinary shares and US$79,948,000 convertible bonds in issue. Bondholders will have further opportunities to subscribe for ordinary shares to which the convertible bonds relate at any time up to 14 September 2012 inclusive, at a price of US$8.98 per share. Bondholders should note that the conversion price will then increase, and between 15 September 2012 and 1 September 2015 bonds will be convertible at a price of US$9.83 per share. At the date of this report the Company's NAV with debt at fair value was US$10.24 and the share price was US$9.55 compared with the current exercise price of US$8.98 per share. Discount control As part of their discount control policy, the Directors have the discretion to make semi-annual tender offers. The Directors announced on 6 July 2011 that given the favourable background at the time, the Board had concluded that it was not in the interests of shareholders as a whole to implement a semi-annual tender offer in September 2011 at a discount to NAV. Since the last tender offer in March 2009 the Company's shares have typically traded at a tight discount to their asset value and at times at a premium to NAV. However over recent months, the Company's discount has at times widened and in the light of this widening, the Directors have resolved to implement a tender offer in March for up to 5 per cent of the shares in issue. The tender price will be 98 per cent of the cum-income diluted NAV calculated as at the close of business on 30 March 2012. The record date for shareholders for this tender offer was the close of business on 12 January 2012. The Directors do not intend to tender their shares. A circular containing details of the tender offer and the procedure for tendering shares was sent to shareholders on 20 February 2012. The Board closely monitors the share price, trading volume and prevailing discount/premium and has resolved, subject to market conditions, to take such steps as are necessary from time to time to protect the share rating. Gearing The maximum net gearing utilised during the year was 16.3% (net gearing is defined as redeemable shares, loans, overdrafts and the convertible bond at par value less cash and fixed interest stocks as a percentage of net assets). The Company has an overdraft facility which may be used for investment purposes and to cover short term timing differences Annual General Meeting The AGM will be held at 12:00 noon on Tuesday, 15 May 2012 at the new offices of BlackRock at 12 Throgmorton Avenue, London EC2N 2DL. 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 Will and the Directors. Outlook The next twelve months are likely to remain challenging. However, we remain confident about the prospects for Latin America, particularly in Brazil, where the combination of positive earnings growth and attractive valuations continues to look encouraging for the region. Peter Burnell Chairman 7 March 2012 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 Chapter 4 of Part 24 of the Corporation Tax Act 2010. 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 Chapter 4 of Part 24 of the Corporation Tax Act 2010 are not breached and the results are reported to the Board at each meeting. The Company must also comply with the provisions of the Companies Act 2006 and, as its shares are admitted to the Official List, the UKLA Listing Rules, the Disclosure and Transparency Rules and the Prospectus Rules. A breach of the Companies Act 2006 could result in the Company and/or the Directors being fined or the subject of criminal proceedings. Breach of the UKLA Listing Rules could result in the Company's shares being suspended from listing, which in turn would breach the requirements of Chapter 4 of Part 24 of the Corporation Tax Act 2010. The Board relies on the services of its professional advisers and its corporate Company Secretary, BlackRock Investment Management (UK) Limited to ensure compliance with all relevant regulations. The Company Secretary has stringent compliance procedures in place and monitors regulatory developments and changes. 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, depends on the effective operation of these systems. These have been regularly tested and monitored and an internal controls 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, Bank of New York Mellon (International) Limited ("BNYM") and the Investment Manager also produce quarterly and annual reports respectively, which are reported on 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, unquoted investments, if any, 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. Liquidity risk - Investments in the Company's portfolio are subject to liquidity risk, particularly from any unquoted investments. The Company may also invest in smaller capitalisation companies or in the securities markets of developing countries which are not as large as the more established securities markets and have substantially less trading volume, which may result in a lack of liquidity and higher price volatility. Financial risk - The Company's investment activities expose it to a variety of financial risks which include foreign currency risk and interest rate risk. Further details are disclosed in note 19 on pages 45 to 51 of the annual report, together with a summary of the policies for managing these risks. 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. The investment management fees for the year were US$4,144,000 (2010: US$4,388,000). The performance fee payable for the year was US$ nil (2010: US$2,907,000). At the end of the year an amount of US$910,000 (2010: US$4,159,000) was outstanding in respect of investment management and performance fees. The Board consists of six 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. The Chairman receives an annual fee of £39,000, the Chairman of the Audit and Management Engagement Committee receives an annual fee of £ 30,000 and each other Director receives an annual fee of £26,000. With effect from 1 January 2012 the annual remuneration of the Chairman was increased to £ 41,000, the Chairman of the Audit and Management Engagement Committee/Senior Independent Director to £31,500 and the other Directors to £27,500. All members of the Board hold ordinary shares in the Company. Peter Burnell holds 3,000 ordinary shares and 100 convertible bonds, Antonio Monteiro de Castro holds 47,000 ordinary shares and 100 convertible bonds, The Earl St Aldwyn holds 1,470 ordinary shares and 100 convertible bonds, Laurence Whitehead holds 8,967 ordinary shares and 100 convertible bonds, Desmond O'Conor holds 12,032 ordinary shares and no convertible bonds and Mahrukh Doctor holds 574 ordinary shares and no convertible bonds. Statement of Directors' responsibilities In accordance with Disclosure and Transparency Rule 4.1.12, the Directors also confirm to the best of their knowledge and belief that: - the financial statements, prepared in accordance with UK Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), give a true and fair view of the assets, liabilities, financial position and net return of the Company; and - the annual report includes a fair review 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 it faces. For and on behalf of the Board of Directors Peter Burnell 7 March 2012 Investment Manager's Report Overview Latin American growth slowed somewhat in 2011 to a projected rate of around 4.3%. Growth slowed throughout the region, impacted by China's efforts to slow its economy and the worsening effects of the debt crisis in Europe. Brazil, the region's largest economy, was in a cooling off mode during the first half of the year as inflation was above the Central Bank's goals; this was followed by a tightening cycle until July. However, in August the Central Bank surprised the market with an interest rate cut, as it saw inflation beginning to show signs of converging to its goal by the end of 2012, along with concerns regarding the extent of the global slowdown. Overall, the region continues to weather global issues better than most, and is forecast to post growth of around 4% again in 2012. Most economies in the region continued to benefit from strong domestic performance, loan growth spurred by domestic demand and well capitalised banking systems and immunity from fixed income market issues given a low need to issue bonds abroad (and strong appetite when done). However, the equity market in 2011 was characterised by risk aversion that accompanied the escalation of the Eurozone debt crisis and the volatility of the latter part of the year. As the crisis in international markets intensified, exports slackened, raw material prices fell - but remained at historically high levels - and domestic demand slowed, some in the latter part of the year. Meanwhile, regional growth expectations were pared back as uncertainty mounted over the outlook for the global economy, and more particularly whether a sustainable solution could be found in Europe. Major Latin American stock indices and currencies declined over the year as investors shunned risky assets and exporters as macroeconomic conditions worsened. The fourth quarter and the year in general, were defined by significant volatility, with performance and trading patterns being dominated and driven by the European debt crisis. If and when that situation stabilises, we would expect the Latin American region to outperform global equity markets strongly given the superiority of its fundamentals relative to the developed world (as was the case in 2008/2009). For the most part, country risk premium as measured by EMBI spreads widened during 2011, following the path of similarly rated countries - most countries in the region are investment-grade rated and saw a modest widening of their spreads - overall, Latin America was less affected than Emerging Asia and Emerging Europe. Currencies also depreciated against the US Dollar in most countries given strong outflows and concerns over deteriorating balance of payments accounts due to falling commodity prices. Interestingly, policies adopted in late 2010 and early 2011 to contain the appreciation of local currencies, such as direct intervention in the currency markets by several central banks and the 2% IOF tax on new foreign investments in the Brazilian equity market, began to be reversed in late 2011 to help reduce the pace of depreciation of such currencies. MSCI Foreign Country risk Index exchange (EMBI) bps FX/ bps bps bps/YOY Region/indices change USD change change change Argentina -42.6 4.30 -8.1 925 +418 Brazil -24.9 1.87 -12.4 225 +36 Chile -22.1 519.55 -11.0 172 +57 Colombia -7.1 1938.5 -1.6 191 +19 Mexico -13.5 13.94 -12.9 222 +49 Peru -23.9 2.70 -3.9 216 +50 World -7.6 GEMs -20.4 425 +141 Latin America -21.9 250 +13 Emerging Asia -19.1 271 +96 EMEA -22.6 440 +209 Sources: MSCI, Bloomberg and BlackRock. 2011 Portfolio Review The Company posted a 23.7% depreciation in its net asset value (debt at fair value) ("NAV") during 2011 while the MSCI EM Latin America Index saw its value decrease by 19.1%. (All percentages calculated with income reinvested.) The underperformance stemmed primarily from country allocation as opposed to stock selection, with the gearing from the convertible bonds issued in 2009 being the largest individual detractor from the overall performance for the year. Stock selection contributed in a small way to the underperformance over the year; Mexico and Brazil were the largest negative contributors but stock selection in Chile helped to offset some of the underperformance. As mentioned previously, country allocation was the primary detractor from performance. Weighing on performance for the year was an off-benchmark position in Colombia via Pacific Rubiales Energy, an underweight position in Colombia, an off-benchmark position in Argentina via Ternium, and an overweight position in Brazil. This was somewhat offset by our overweight position in Panama via Copa Airlines and an underweight position in Chile. Individual names weighing on performance included Mexican retail name Grupo Elektra, oil & gas name Pacific Rubiales Energy, Brazilian consumer name Brasil Foods and Brazilian homebuilder PDG Realty. Grupo Elektra is a name we do not own due to corporate governance concerns. We do not feel that management is concerned with minority shareholders. Brasil Foods is Brazil's largest producer of chicken and processed meat products. It has been a very defensive name and has done well as markets underperformed. We chose not to own the stock on the grounds of its expensive valuation and regulatory concerns regarding antitrust issues. The largest individual contributor to performance was the underweight position in Petrobrás. Other positive contributions to performance came from beverage names Ambev and Femsa, both of which performed as expected in a difficult and volatile market environment. Our underweight position in Brazilian steel also contributed positively to performance for the year. We maintained a geared position throughout the year via the convertible bonds issued in 2009. Net gearing decreased from 11.8% at the beginning of the year to 9.4% at the end of the year. We estimate that the gearing accounted for approximately half of the year's underperformance. 2012 Outlook and positioning We enter 2012 with a portfolio that continues to be positioned with a large overweight in Brazil and underweights in almost every other country in the region. The Company enters 2012 with a net gearing position of 9.4%. Brazil's underperformance during 2011 was not enough to cause us to lose faith in our overweight position. We continue to favour the more domestically oriented sectors such as banks, retailers and homebuilders while we maintain our underweight position in materials. We remain positive on Brazilian equities for 2012 based on strong fundamentals, attractive valuations and a robust domestic economy driven by the continued growth in its middle class. Inflation has peaked and will be moving back towards the Central Bank's estimated target as we progress through 2012. Brazil is currently being impacted by the interest rate tightening that took place last year, however, given lower interest rates and the removal of previous macro-prudential measures designed to slow the economy down, we expect Brazil to recover in 2012. Mexico, though underweight, could provide a positive surprise this year with a Presidential election in summer 2012 bringing the potential for much awaited reforms on the fiscal and energy policy fronts. Obviously an impending Presidential election is a very fluid situation. For the time being, we are monitoring developments in Mexico closely, but are retaining an underweight position in the region given its close correlation with the United States and the ongoing security concerns. However, we continue to look for stocks that may benefit from these reforms in Mexico. Chile remains a market that offers one of the more stable top down stories, but where unattractive valuations mean that we have retained an underweight position. Recent underperformance in late 2011 was not enough to cause us to increase our weighting in the market. There has been a material shift in the equity allocation of the pension funds in Chile in the second half of 2011, as volatility and uncertainty drove pension fund clients to have higher fixed income allocations in their portfolios. This could potentially present a short term opportunity as the investor risk aversion dissipates and clients begin shifting back to higher equity allocations in their portfolios. The big risk for Chile in 2012 is copper, given our expectation of lower average commodity prices this year - the price set in the federal budget is above US$3 per pound for the first time in history, leaving less room for error in the forecast. On the political front, President Piñiera saw his popularity plummet in 2011 despite strong GDP and employment figures, with continued pressure for the government to increase spending in education. Elsewhere in the region, we have become more comfortable with the political situation in Peru as President Humala has surprised the market positively so far by giving continuity to the successful economic policies of the previous administration. Peru is a market that has a strong domestic economy as well as heavy exposure to the mining industry. While we like the domestic side of the equation in Peru, the sector is significantly under-represented in the stock market. In Colombia, we continue to find valuations expensive, and we would look for some improvement in minority shareholder protection in order to view Colombian equities more positively. Latin America does not have any liquidity or debt issues to deal with. That coupled with strong domestic economies, attractive equity valuations and superior fundamentals should allow the region to be a top performer once markets stabilise and the focus returns to fundamentals. Given the underperformance versus global markets in 2011, we feel this makes for an attractive entry point into Latin America. Will Landers BlackRock Investment Management (UK) Limited 7 March 2012 Ten Largest Equity Investments 31 December 2011 Set out below is a brief description by the Investment Manager of the Company's ten largest equity investments. Itaú Unibanco - 8.9% (2010: 10.8%) Brazil's largest private sector bank has maintained superior profitability levels while participating in the overall growth in the Brazilian financial system. The bank continues to benefit from Brazil's growing demand for credit, especially from individuals and small and medium sized enterprises. Vale - 8.9% (2010: 12.1%) the world's largest producer of iron ore, with operations in several other commodities, including nickel, copper and alumina, among others. The company is the lowest cash cost producer of iron ore and is positioned to benefit from a tight iron ore market and continued growth in demand from Chinese steel makers. Petrobrás - 7.7% (2010: 8.8%) Brazil's vertically integrated oil company. The company continues to invest heavily in increasing its production, utilising free cash flow to guarantee future production growth. Recent new oil finds in the pre-salt region could transform the company (and Brazil) into one of the world's major oil producers. América Móvil - 6.9% (2010: 7.7%) Latin America's leading provider of wireless telecommunications services. In addition, it holds a 60% stake in Telmex, Mexico's leading wireline provider, and 100% of Telmex International and its significant backbone network throughout Latin America. Banco Bradesco - 6.1% (2010: 5.4%) Brazil's second largest private sector bank. The company is in an advantageous position to benefit from the strong demand for credit in Brazil. Bradesco has one of the largest branch networks in the country, allowing it to participate fully in Brazil's growing middle class and its overall financial services needs. AmBev- 4.2% (2010: 4.0%) 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 consumer staples producer, while maintaining a strong focus on cost containment, a perennial AmBev management strength. The company is showing good growth in Brazil and in many other countries in the region while maintaining operating cost discipline throughout its operations. Formento Economico Mexicano ("Femsa") 3.5% (2010: 2.5%) a Mexican holding company controlling Coca-Cola's largest independent bottler - Coca-Cola Femsa with operations throughout Latin America; Mexico's fastest growing retailing chain - Oxxo with over 6,300 convenience stores throughout Mexico; and a 20% economic interest in global brewer Heineken. OGX - 2.7% (2010: 2.3%) Brazil's largest private sector oil & gas company in terms of offshore exploratory acreage. The company is moving ahead with its exploratory campaign, with production expected to begin in early 2012. Grupo Televisa - 2.5% (2010: 2.0%) 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, and is in the process of acquiring 50% in Iusacell, Mexico's third largest provider of wireless telecommunications. CCR - 2.3% (2010: 1.6%) Brazil's leading toll road operator, the company has invested in other concession projects such as subways and is the leading shareholder in Brazil's leading electronic payment company for tolls and parking lots. Recently, CCR received shareholder approval to participate in upcoming airport concession auctions in Brazil, acquiring a participation in four airports throughout Latin America. 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 2010. Sector and Geographical Allocations 2011 2010 Brazil Mexico Chile Peru Other Colombia Argentina Total(1) Total(1) % % % % % % % % % Energy 12.1 - - - - 1.2 - 13.3 13.2 Consumer discretionary 5.6 4.5 - - - - - 10.1 11.5 Consumer staples 6.1 3.5 - - - - - 9.6 9.4 Financials 21.3 0.9 1.7 0.9 - - - 24.8 23.9 Health 0.8 0.7 - - - - - 1.5 1.9 Industrials 5.7 - - - 1.0 - - 6.7 7.5 Information technology 0.8 - - - - - - 0.8 0.6 Materials 10.2 0.7 - 1.0 - - - 11.9 17.4 Telecommunications - 6.9 1.0 - 0.5 - - 8.4 9.0 Utilities 6.0 - 1.8 - - - - 7.8 3.3 Fixed income 2.6 2.5 - - - - - 5.1 2.3 ----------------------------------------------------------------- Total investments 71.2 19.7 4.5 1.9 1.5 1.2 - 100.0 - ----------------------------------------------------------------- 2010 totals 71.5 16.7 3.4 4.4 1.4 1.6 1.0 - 100.0 ----------------------------------------------------------------- (1) Expressed as a percentage of investments. Source: BlackRock. Geographical weighting vs MSCI EM Latin America Index Country Company MSCI EM Latin America Index Brazil 71.2 65.0 Mexico 19.7 20.3 Chile 4.5 7.7 Peru 1.9 2.8 Other 1.5 0.0 Columbia 1.2 4.2 Source: BlackRock. Investments 31 December 2011 Market value % of Country of operation US$'000 investments Brazil Itaú Unibanco 40,692 8.9 Vale 40,451 8.9 Petrobrás 34,961 7.7 Banco Bradesco 27,989 6.1 AmBev 18,932 4.2 OGX 12,371 2.7 Brazil (Fed Rep of) 6% 17/01/17 11,700 2.6 CCR 10,510 2.3 BM&F Bovespa 9,185 2.0 Banco do Brasil 8,879 1.9 Lojas Renner } Lojas Renner warrants* } 8,357 1.8 PDG Realty 5,694 1.2 BR Malls 5,343 1.2 Queiroz Galvao Participacoes 4,815 1.1 Localiza Rent a Car 4,612 1.0 Natura Cosméticos } Natura Cosméticos warrants* } 4,530 1.0 Iochpe-Maxion 4,370 1.0 Cielo 4,129 0.9 Multiplus 3,973 0.9 Redecard 3,912 0.9 Totvs 3,566 0.8 Klabin 3,534 0.8 BR Properties 3,342 0.7 Hypermarcas } Hypermarcas warrants* } 3,296 0.7 Tractebel Energia 3,211 0.7 Copel Paranaense de Energia 3,144 0.7 Cyrela Brazil Realty } Cyrela Brazil Realty warrants* } 3,061 0.7 Cetip 2,858 0.6 Cemig 2,846 0.6 CTEEP 2,806 0.6 Magazine Luiza 2,601 0.6 Aes Tiete } Aes Tiete warrants* } 2,571 0.6 T4F Entretenimento 2,455 0.5 Autometal 2,354 0.5 LPS Brasil 2,244 0.5 Energias do Brasil 2,209 0.5 Ultrapar 2,145 0.5 Rossi Residencial } Rossi Residencial warrants* } 2,145 0.5 HRT 1,963 0.4 Profarma Distribuidora 1,671 0.4 DASA 1,661 0.4 Lupatech 903 0.2 Even 899 0.2 Metalfrio Solutions 707 0.2 ------- ----- 323,597 71.2 ------- ----- Mexico América Móvil 31,459 6.9 Femsa 16,022 3.5 Grupo Televisa 11,572 2.5 Walmart de México 9,016 2.0 United Mexican States 6.625% 03/03/15 5,675 1.3 Petroleos Mexicanos 4.875% 15/03/15 5,319 1.2 Genomma Lab Internacional 3,373 0.7 Grupo Mexico 3,140 0.7 Grupo Financiero Banorte 2,422 0.5 Compartamos 1,706 0.4 ------- ----- 89,704 19.7 ------- ----- Chile Banco Santander-Chile 7,790 1.7 E-Cl 5,275 1.2 Empresa Nacional de Telecomunicaciones 4,805 1.0 Empresa Nacional de Electricidad 2,743 0.6 ------- ----- 20,613 4.5 ------- ----- Peru Minas Buenaventura 4,596 1.0 Credicorp 4,048 0.9 ------- ----- 8,644 1.9 ------- ----- Colombia Pacific Rubiales Energy 5,693 1.2 ------- ----- 5,693 1.2 ------- ----- Panama Copa Airlines 4,397 1.0 ------- ----- 4,397 1.0 ------- ----- Pan Regional NII 2,130 0.5 ------- ----- 2,130 0.5 ------- ----- Total investments 454,778 100.0 ------- ----- * Outperformance warrants held are linked to 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. The total number of investments held (excluding outperformance warrants) at 31 December 2011 was 63 (31 December 2010: 62). All investments are in equity shares unless otherwise stated. Income Statement for the year ended 31 December 2011 Revenue Revenue Capital Capital Total Total 2011 2010 2011 2010 2011 2010 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 - - (159,796) 95,606 (159,796) 95,606 Change in value of convertible bonds held at fair value through profit or loss - - 27,990 (9,587) 27,990 (9,587) Exchange losses - - (1,337) (347) (1,337) (347) Income from investments held at fair value through profit or loss 3 19,961 16,823 - - 19,961 16,823 Other income 3 6 1 - - 6 1 Investment management and performance fees 4 (1,036) (1,097) (3,108) (6,198) (4,144) (7,295) Operating expenses 5 (824) (1,119) (863) (743) (1,687) (1,862) ------ ------- ------- ------ ------ ------ Net return/ (loss) before finance costs and taxation 18,107 14,608 (137,114) 78,731 (119,007) 93,339 Finance costs (696) (697) (2,088) (2,091) (2,784) (2,788) ------ ------- ------- ------ ------ ------. Net return/ (loss) on ordinary activities before taxation 17,411 13,911 (139,202) 76,640 (121,791) 90,551 Taxation on ordinary activities (1,894) (1,367) 1,285 (454) (609) (1,821) ------ ------- ------- ------ ------ ------ Return/ (loss) on ordinary activities after taxation 15,517 12,544 (137,917) 76,186 (122,400) 88,730 ====== ====== ======= ====== ======= ====== Return/ (loss) per ordinary share - basic (US$ cents) 7 35.39 28.62 (314.58) 173.79 (279.19) 202.41 ====== ====== ====== ====== ====== ====== Return/ (loss) per ordinary share - diluted (US$ cents) 7 30.39 24.72 (311.64) 165.44 (281.25) 190.16 ====== ====== ====== ====== ====== ====== 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 AIC. The Company had no recognised gains or losses other than those disclosed in the Income Statement. All items in the statement derive from continuing operations and no operations were acquired or discontinued during the year. All income is attributable to the equity holders of BlackRock Latin American Investment Trust plc. Reconciliation of Movements in Shareholders' Funds for the year ended 31 December 2011 Called-up Share Capital Non share premium redemption distributable Capital Revenue capital account reserve reserve reserves reserve Total Note US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 For the year ended 31 December 2011 At 31 December 2010 4,384 11,687 4,602 4,356 481,637 17,835 524,501 (Loss)/ return for the year - - - - (137,917) 15,517 (122,400) Share issue costs - (66) - - - - (66) Write back of prior year tender costs - - - - 16 - 16 Shares issued on conversion of convertible bonds - 20 - - - - 20 Dividends paid (1) 6 - - - - - (10,521) (10,521) ----- ------ ----- ----- ------- ------ ------- At 31 December 2011 4,384 11,641 4,602 4,356 343,736 22,831 391,550 ----- ------ ----- ----- ------- ------ ------- For the year ended 31 December 2010 At 31 December 2009 4,739 11,655 4,247 4,356 405,451 12,962 443,410 Return for the year - - - - 76,186 12,544 88,730 Shares issued on conversion of convertible bonds - 32 - - - - 32 Shares cancelled from treasury (355) - 355 - - - - Dividends paid (2) 6 - - - - - (7,671) (7,671) ----- ------ ----- ----- ------- ------ ------- At 31 December 2010 4,384 11,687 4,602 4,356 481,637 17,835 524,501 ----- ------ ----- ----- ------- ------ ------- 1. Second interim dividend paid in respect of the year ended 31 December 2010 of 19.00 cents per share declared on 17 February 2011 and paid on 13 April 2011 and the first interim dividend for the year ended 31 December 2011 of 5.00 cents per share declared on 9 August 2011 and paid on 23 September 2011. 2. Second interim dividend paid in respect of the year ended 31 December 2009 of 12.50 cents per share declared on 17 February 2010 and paid on 14 April 2010 and the first interim dividend for the year ended 31 December 2010 of 5.00 cents per share declared on 3 August 2010 and paid on 24 September 2010. Balance Sheet as at 31 December 2011 2011 2010 Notes US$'000 US$'000 Fixed assets Investments held at fair value through profit or loss 454,778 641,050 ------- ------- Current assets Debtors 3,481 3,960 Cash at bank and in hand 20,185 5 ------- ------- 23,666 3,965 ------- ------- Creditors - amounts falling due within one year Bank overdrafts - (232) Other creditors (2,925) (8,303) ------- ------- (2,925) (8,535) ------- ------- Net current assets/(liabilities) 20,741 (4,570) ------- ------- Total assets less current liabilities 475,519 636,480 Creditors - amounts falling due after more than one year Convertible bonds held at fair value through profit or loss (83,945) (111,955) Non-equity redeemable shares (24) (24) ------- ------- (83,969) (111,979) ------- ------- Net assets 391,550 524,501 ======= ======= Capital and reserves Called-up share capital 8 4,384 4,384 Share premium account 9 11,641 11,687 Capital redemption reserve 9 4,602 4,602 Non distributable reserve 9 4,356 4,356 Capital reserves 9 343,736 481,637 Revenue reserve 22,831 17,835 ------- -------- Total equity shareholders' funds 391,550 524,501 ======= ======== Net asset value per ordinary share (US$ cents) - debt at fair value 7 893.11 1,196.42 ======= ======== Cash Flow Statement for year ended 31 December 2011 2011 2010 Note US$'000 US$'000 Net cash inflow from operating activities 5 11,185 9,344 Servicing of finance Finance costs (2,818) (3,002) Taxation paid (1,105) (863) ------- ------- Capital expenditure and financial investment Purchase of investments (210,981) (362,368) Proceeds from sale of investments 236,991 359,952 Capital expenses (898) (685) ------- ------- Net cash inflow/(outflow) from capital expenditure and financial investment 25,112 (3,101) ------- ------- Equity dividends paid (10,521) (7,671) ------- ------- Net cash inflow/(outflow) before financing 21,853 (5,293) ------- ------- Financing Issue expenses paid (104) - ------- ------- Net cash outflow from financing (104) - ------- ------- Increase/(decrease) in cash in the year 21,749 (5,293) ======= ======= Notes to the Financial Statements 1. Principal activity The principal activity of the Company is that of an investment trust company within the meaning of section 1158 of the Corporation Tax Act 2010. 2. Accounting policies (a) 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 asset investments and convertible bonds in accordance with the Companies Act 2006, UK Generally Accepted Accounting Practice ("UK GAAP") and with the Statement of Recommended Practice 'Financial Statements of investment trust companies and venture capital trusts' ("SORP"), revised in January 2009. The principal accounting policies adopted by the Company are set out below. The policies have been applied consistently throughout the year and are consistent with those applied in the preceding year. 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 of the Company. The US Dollar is the functional currency because it is the currency most related to the primary economic environment in which the Company operates. All values are rounded to the nearest thousand dollars (US$'000) except where otherwise indicated. (b) Presentation of the Income Statement In order to reflect better the activities of an investment trust company and in accordance with guidance issued by the Association of Investment Companies, supplementary information which analyses the Income Statement between items of a revenue and a capital nature has been presented alongside the Income Statement. In accordance with the Company's status as a UK investment company under section 833 of the Companies Act 2006, net capital returns may not be distributed by way of dividend. (c) Segmental reporting The Directors are of the opinion that the Company is engaged in a single segment of business being investment business. (d) Income Dividends receivable on equity shares are treated as revenue for the year on an ex-dividend basis. Where no ex-dividend date is available, dividends receivable on or before the year end are treated as revenue for the year. Provisions are made for dividends not expected to be received. Fixed returns on non equity securities are recognised on a time apportionment basis. Special dividends are treated as a capital receipt or a revenue receipt depending on the facts or circumstances of each particular case. Interest income is accounted for on an accruals basis. Dividends are accounted for in accordance with Financial Reporting Standard 16 'Current Taxation' (FRS 16) on the basis of income actually receivable, without adjustment for the tax credit attaching to the dividends. Dividends from overseas companies continue to be shown gross of withholding tax. Where the Company has elected to receive its dividends in the form of additional shares rather than in cash, the amount of the cash dividend foregone is recognised as income. Any excess in the value of the shares received over the amount of the cash dividend foregone is recognised in capital reserve. (e) Expenses All expenses are accounted for on an accruals basis. Expenses have been charged wholly to the revenue column of the Income Statement, except as follows: - expenses which are incidental to the acquisition or disposal of investments are included within the cost of the investments or deducted from the disposal proceeds of investment and are thus charged to the capital column of the Income Statement. Details of transaction costs on purchases and sales of investments are disclosed in note 11 on page 42 of the annual report; - the investment management fee has been allocated 75% to the capital column and 25% to the revenue column of the Income Statement in line with the Board's expected long term split of returns, in the form of capital gains and income respectively, from the investment portfolio; - performance fees have been allocated wholly to the capital column of the Income Statement, as the performance fee has been predominantly generated through capital returns of the investment portfolio. (f) Finance costs Finance costs are accounted for on an accruals basis. Finance costs are allocated, insofar as they relate to the financing of the Company's investments, 75% to the capital column and 25% to the revenue column of the Income Statement, in line with the Board's expected long term split of returns, in the form of capital gains and income respectively, from the investment portfolio. (g) Taxation The tax effect of different items of expenditure is allocated between capital and revenue on the marginal basis using the Company's effective rate of corporation taxation for the accounting period. Deferred tax is recognised in respect of all temporary differences at the balance sheet date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the balance sheet date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the temporary differences can be deducted. (h) Investments held at fair value through profit or loss The Company's investments are classified as held at fair value through profit or loss in accordance with FRS 26 - 'Financial Instruments: Recognition and Measurement' and are managed and evaluated on a fair value basis in accordance with its investment strategy. All investments are designated upon initial recognition as held at fair value through profit or loss. These sales of assets are recognised at the trade date of the disposal. Proceeds will be measured at fair value which will be regarded as the proceeds of sale less any transaction costs. The fair value of the financial instruments is based on their quoted bid price at the balance sheet date on the exchange on which the investment is quoted, without deduction for the estimated future selling costs. Changes in the value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Income Statement as "gains or losses on investments held at fair value through profit or loss". Also included within this heading are transaction costs in relation to the purchase or sale of investments. In order to improve the disclosure of how companies measure the fair value of their financial investments, the disclosure requirements in FRS 29 have been extended to include a fair value hierarchy. The fair value hierarchy consists of the following three levels: Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability Level 3 - inputs for the asset or liability that are not based on observable market data Unquoted investments are valued by the Directors at fair value using International Private Equity and Venture Capital Valuation Guidelines. This policy applies to unquoted fixed asset investments held by the Company. (i) Dividends payable Under FRS 21 final dividends should not be accrued in the financial statements unless they have been approved by shareholders before the balance sheet date. Dividends payable to equity shareholders are recognised in the Reconciliation of Movement in Shareholders' Funds when they have been approved by shareholders and become a liability of the Company. Interim dividends are only recognised in the financial statements in the period in which they are paid. (j) Foreign currency translation All transactions in foreign currencies are translated into US Dollars at the rate of exchange ruling on the dates of such transactions. Foreign currency monetary assets and liabilities at the balance sheet date are translated into US Dollars at the exchange rates ruling at that date. Exchange differences arising on the revaluation of investments held as fixed assets are taken to capital reserves. Exchange differences arising on the translation of foreign currency assets and liabilities are taken to capital reserves. (k) Convertible bonds On 15 September 2009, the Company issued US$80 million worth of 3.5% unsecured convertible bonds ("bonds") redeemable at par on 15 September 2015. The bonds have been accounted for in accordance with FRS 26 - 'Financial Instruments: Recognition and Measurement', and held at fair value on the Company's Balance Sheet. On initial recognition, fair value was deemed to be the issue proceeds received of US$80 million, and issue costs of US$1.1 million which had been debited to the Income Statement and allocated 25% to the revenue column and 75% to the capital column in line with the Board's policy on allocation of finance costs as set out in note 2(f). Subsequent to initial recognition, the bonds have been fair valued by reference to their traded market price movements arising from an increase or decrease in this price and are credited or debited to the capital column of the Income Statement subject to a minimum floor price. In the event that the fair value of the bonds falls below the nominal value of the bonds, the fair value adjustment will not decrease the bond valuation below this nominal value. This is due to the requirement that the convertible bonds will be redeemed at their nominal value if they are not converted into equity shares prior to 15 September 2015. Interest costs arising on the bonds are allocated 25% to the revenue column and 75% to the capital column of the Income Statement in line with the Board's policy on finance costs. The bonds may be converted at any time before 15 September 2012 into ordinary shares at a price of US$8.98 per share, and thereafter at a price of US$9.83 per share from 15 September 2012 but on or before the tenth business day (inclusive) prior to 15 September 2015. The value of any bonds converted will be debited to long term liabilities. The nominal value of ordinary shares issued on the conversion of bonds will be credited to share capital and the balance representing the excess of conversion proceeds over the nominal value of the ordinary shares will be credited to the share premium account. If the bonds have not been converted into ordinary shares before the tenth business day (inclusive) prior to 15 September 2015, they will be redeemed at their nominal value. Any valuation differences between the carrying value of the debt and the nominal value at this time will be debited or credited to the capital column of the Income Statement. (l) Cash and cash equivalents Cash comprises cash in hand and on demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value. (m) Capital redemption reserve The nominal value of ordinary shares repurchased for cancellation is transferred out of share capital and into the capital redemption reserve. The full costs of ordinary shares repurchased and held in treasury are charged to capital reserves. Where treasury shares are subsequently reissued, any surplus is taken to the share premium account. (n) Capital reserves The following transactions are accounted for in capital reserves: - gains and losses on the disposal of fixed asset investments; - realised exchange differences of a capital nature; - cost of professional advice, including irrecoverable VAT, relating to the capital structure of the Company; - other capital charges and credits charged or credited to this reserve in accordance with the above policies; - cost of purchases of own ordinary shares and warrants; - increases and decreases in the valuation of investments held at the year end and the change in fair value of the convertible bond; and - unrealised exchange differences of a capital nature. (o) Going concern The Company's Articles of Association require that an Ordinary Resolution be put to the Company's shareholders to approve the continuation of the Company. The last resolution was put to shareholders at the 2010 AGM and the next such resolution will be put to shareholders at the forthcoming AGM in 2012. 3. Income 2011 2010 US$'000 US$'000 Investment income: Overseas dividends 19,675 14,735 Interest income 286 2,088 ------ ------ 19,961 16,823 Other income: Deposit interest 6 1 ------ ------ 19,967 16,824 ====== ====== 4. Investment management and performance fees 2011 2011 2011 2010 2010 2010 Revenue Capital Total Revenue Capital Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Investment management fee 1,036 3,108 4,144 1,097 3,291 4,388 Performance fee - - - - 2,907 2,907 ----- ----- ----- ----- ----- ----- 1,036 3,108 4,144 1,097 6,198 7,295 ===== ===== ===== ===== ===== ===== The terms of the investment management agreement with BlackRock provide for the Manager to receive an annual management fee of 0.85% of net asset value (excluding any adjustments to reflect the fair value of the convertible bonds ("the bonds")). The value of any investment in BlackRock managed funds is excluded when calculating the management fee. In addition, BlackRock is entitled to a performance fee equal to 10.0% of any outperformance of the NAV per share (on a US Dollar total return basis, excluding any adjustments to reflect the fair value of the bonds) over the MSCI EM Latin America Index (on a US Dollar total return basis) plus a hurdle of 1.0%. The amount of performance fee payable in any one year will be capped at 1.0% of NAV. However, any performance fee will only be paid to the extent that the cumulative performance since 1 July 2007 is ahead of the MSCI EM Latin America Index (on a US Dollar total return basis). Performance fees have been allocated wholly to the capital column of the Income Statement as the performance has been predominantly generated through capital returns from the investment portfolio. As at 31 December 2011, there was no performance fee payable to the Investment Manager (2010: US$2,907,000). In order to compensate the Investment Manager for managing the additional capital from the bonds, the Company has agreed to pay a management fee of 0.34% per annum to the Investment Manager in respect of the principal amount of the bonds outstanding at any time. The total fee payable to the Investment Manager in any 12 month period will be limited to 4.99% of NAV, however, as the Investment Manager is only entitled to a basic fee of 0.85% of NAV, a performance fee capped at 1.0% of NAV and the fee payable in respect of the bonds, as described above, the amount payable to the Investment Manager by the Company in respect of fees in any 12 month period is expected to be substantially lower than 4.99% of NAV and, in any event, the incremental fee payable in respect of the bonds will not exceed US$272,000 per annum. The net asset value and share price performance with income reinvested which have been disclosed in the financial highlights include fair value adjustments in respect of the convertible bonds. These fair value adjustments have been excluded from the net asset value used to determine any performance fee payable. In addition, adjustment for amortised issue costs and performance fee accruals has been made to the net asset value used in the performance computation. After making these adjustments and including the impact of the reinvestment of dividends paid in the period, the cum-income, total return NAV used to calculate the performance fee amounted to 1,014.84 cents, resulting in an underperformance of 8.1% against the benchmark index prior to applying the 1% hurdle. 5. Operating expenses 2011 2010 US$'000 US$'000 (a) Other operating expenses AIC subscriptions 62 30 Auditors' remuneration - audit services 47 46 Custody fee 98 267 Directors' and Officers' liability insurance 18 17 Directors' emoluments - fees for services to the Company 285 267 Printing and postage 37 48 Professional fees - 117 Registrar's fees 50 51 Other administrative costs 227 276 --- ----- 824 1,119 === ===== The Company's total expense ratio, calculated as a percentage of average net assets and using expenses, excluding performance fees and finance costs, after taxation was: 1.3% 1.4% The Company's total expense ratio, calculated as a percentage of average net assets and using expenses, excluding performance fees and finance costs, before taxation was: 1.0% 1.2% ==== ==== There were no fees payable in the year in respect of non-audit services (2010: nil). The underlying audit fee is invoiced in Sterling and is therefore susceptible to exchange rate fluctuations. The fee has not changed materially from year to year. 2011 2010 US$'000 US$'000 (b) Reconciliation of net return before finance costs and taxation to net cash flow from operating activities Net (loss)/return before finance costs and taxation (119,007) 93,339 Losses/(gains) on investments held at fair value through profit or loss 159,796 (95,606) Fair value adjustment for the convertible bonds (27,990) 9,587 Exchange losses of a capital nature 1,337 347 Non-operating expenses of a capital nature 863 743 Increase in accrued income (456) (954) Increase in other debtors (5) - (Decrease)/increase in creditors (3,353) 1,888 ------ ------ Net cash inflow from operating activities 11,185 9,344 ====== ====== Expenses of US$863,000 (2010: US$743,000) charged to the capital column of the Income Statement relate to transaction costs charged by the custodian on the purchases and sales of investments and charges on Brazilian foreign exchange transactions. 6. Dividends 2011 2010 Dividend on ordinary shares Register date Payment date US$'000 US$'000 2009 Second interim of 12.50 cents 5 March 2010 14 April 2010 - 5,479 2010 First interim of 5.00 cents 13 August 2010 24 September 2010 - 2,192 2010 Second interim of 19.00 cents 4 March 2011 13 April 2011 8,329 - 2011 First interim of 5.00 cents 19 August 2011 23 September 2011 2,192 - ------ ----- 10,521 7,671 ====== ===== The Directors propose to pay a second interim dividend in respect of the year ended 31 December 2011 of 25.00 cents per share (2010:19.00 cents per share) on 20 April 2012 to shareholders on the Company's register as at 16 March 2012. The proposed second interim dividend has not been included as a liability in these financial statements as interim dividends are only recognised in the financial statements in the period in which they are paid. The dividends disclosed in the note below have been considered in view of the requirements of section 1158 of the Corporation Tax Act 2010 and section 833 of the Companies Act 2006, and the amounts proposed meet the relevant requirements as set out in this legislation. 2011 2010 US$'000 US$'000 Dividend payable on equity shares: First interim paid 5.00 cents (2010: 5.00 cents) 2,192 2,192 Second interim payable 25.00 cents (2010: 19.00 cents) 10,960 8,329 ------ ------ 13,152 10,521 ====== ====== 7. Return and net asset value per ordinary share Revenue and capital returns per share are shown below and have been calculated using the following: 2011 2010 Net revenue return attributable to ordinary shareholders (US$'000) 15,517 12,544 Net capital (loss)/return attributable to ordinary shareholders (US$'000) (137,917) 76,186 ------- ------- Total (loss)/return (US$'000) (122,400) 88,730 ======= ======= Equity shareholders' funds (US$'000) 391,550 524,501 ------- ------- Net revenue return on which the diluted return per share has been calculated 16,029 13,040 Net capital return on which the diluted return per share has been calculated (164,373) 87,261 ------- ------- The weighted average number of ordinary shares in issue during the year on which the undiluted return per ordinary share was calculated was: 43,840,769 43,836,049 ---------- ---------- The weighted average number of ordinary shares in issue during the year on which the diluted return per ordinary share was calculated was: 52,744,207 52,744,207 ---------- ---------- The actual number of ordinary shares in issue at the end of each year on which the net asset value with debt at fair value was calculated was: 43,841,312 43,839,085 ========== ========== The notional number of ordinary shares in issue at the end of each year on which the net asset value with debt converted was calculated was: 52,744,207 52,744,207 ========== ========== 2011 2010 Revenue Capital Total Revenue Capital Total cents cents cents cents cents cents Return per share - basic Calculated on the weighted average number of shares 35.39 (314.58) (279.19) 28.62 173.79 202.41 Calculated on the actual number of shares 35.39 (314.58) (279.19) 28.62 173.79 202.41 Return per share - diluted Calculated on the weighted average number of shares 30.39 (311.64) (281.25) 24.72(1) 165.44(1) 190.16(1) ------ ------ ------ ------ ------ ------ Net asset value per share - debt at fair value 893.11 1,196.42 ====== ====== ====== ====== ====== ======== (1) The basis of calculating the diluted returns has been revised and comparative information restated. Total earnings for the period are tested for dilution. Once dilution has been determined individual revenue and capital earnings are adjusted. Bond finance costs for the period, net of tax, are reversed together with the fair value adjustment on the convertible bonds. Net asset value per share - debt converted In accordance with the Company's understanding of the current methodology adopted by the AIC, convertible bond instruments are deemed to be in 'the money' if the capital only (debt at par) net asset value ("NAV") exceeds the conversion price of US$8.98 per share (2010: US$8.98 per share). In such circumstances a net asset value is produced and disclosed assuming the convertible debt is fully converted. At 31 December 2011 the capital only (debt at par) NAV was US$8.73 per share and thus the convertible bonds are not in 'the money'. There is no dilutive effect on the NAV per share. However, for information purposes the table below sets out the NAV per share with debt fully converted at the conversion price of US$8.98 per share. This information is presented to provide useful additional relevant information for readers of the financial statements. 2011 2010 US$'000 US$'000 Net assets with convertible bonds at fair value per balance sheet 391,550 524,501 Add back convertible bonds at fair value 83,945 111,955 Accrued interest on convertible bonds at 31 December 2011 840 840 ------- ------- Adjusted net assets following conversion of the convertible bonds (a) 476,335 637,296 ======= ======= Number of ordinary shares at 31 December 2011 43,841,312 43,839,085 Number of shares arising on conversion of the convertible bonds (US$79,948,000 @ US$8.98 (2010: US$79,968,000 @ US$8.98)) 8,902,895 8,905,122 ---------- ---------- Adjusted shares following conversion of the convertible bonds (b) 52,744,207 52,744,207 ========== ========== Net asset value per share - debt converted (US$ cents (a/b)) 903.10 1,208.28 ========== ========== 8. Called-up share capital Ordinary shares Total number shares US$'000 Allotted, called up and fully paid share capital comprised: Ordinary shares of 10 cents each ---------- ---------- ----- At 1 January 2011 43,839,085 43,839,085 4,384 Conversion of bonds into ordinary shares 2,227 2,227 - ---------- ---------- ----- At 31 December 2011 43,841,312 43,841,312 4,384 ========== ========== ===== During the year 2,227 (2010: 3,563) ordinary shares were issued following the conversion of US$20,000 (2010: US$32,000) convertible bonds. The number of ordinary shares in issue at the year end was 43,841,312 (2010: 43,839,085). There were no ordinary shares repurchased (2010: nil). The ordinary shares (excluding any shares held in treasury) carry the right to receive any dividends and have one voting right per ordinary share. There are no restrictions on the voting rights of the shares or on transfer of the shares. 9. Reserves Capital Capital reserve reserve Share Capital Non (arising on (arising on premium redemption distributable investments investments account reserve reserve sold) held) US$'000 US$'000 US$'000 US$'000 US$'000 At 1 January 2011 11,687 4,602 4,356 298,695 182,942 Movement during the year: Shares issued following conversion of bonds 20 - - - - Share issue costs (66) - - 16 - Gains on realisation of investments - - - 9,315 - Fair value adjustment in respect of convertible bonds - - - - 27,990 Change in investment holding gains - - - - (169,111) Loss on foreign currency transactions - - - (1,337) - Interest and expenses charged to capital after taxation - - - (5,458) 684 ------- ------- ------- ------- ------- At 31 December 2011 11,641 4,602 4,356 301,231 42,505 ======= ======= ======= ======= ======= 10. Publication of non statutory accounts The financial information contained in this announcement does not constitute statutory accounts as defined in the Companies Act 2006. The 2011 annual report and financial statements will be filed with the Registrar of Companies shortly. The report of the Auditor for the year ended 31 December 2011 contains no qualification or statement under section 498(2) or (3) of the Companies Act 2006. The comparative figures are extracts from the audited financial statements of BlackRock Latin American Investment Trust plc for the year ended 31 December 2010, which have been filed with the Registrar of Companies, unless otherwise stated. The report of the Auditor on those accounts contained no qualification or statement under section 498 of the Companies Act. This announcement was approved by the Board of Directors on 7 March 2012. 11. Annual Report Copies of the annual report will be sent to members shortly and will also be available from the registered office, c/o The Company Secretary, BlackRock Latin American Investment Trust plc, 12 Throgmorton Avenue, London EC2N 2DL. 12. Annual General Meeting The Annual General Meeting of the Company will be held at 12 Throgmorton Avenue, London EC2N 2DL on Tuesday, 15 May 2012 at 12 noon. ENDS The Annual Report will also be available on the BlackRock Investment Management website at http://www.blackrock.co.uk/literature/annual-report/blackrock-latin- american-investment-trust-plc-annual-report.pdf. Neither the contents of the Investment Manager's website nor the contents of any website accessible from hyperlinks on the Investment Manager's website (or any other website) is incorporated into, or forms part of, this announcement. 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 7 March 2012 12 Throgmorton Avenue London EC2N 2DL

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