Half-yearly Report
5 August 2008
BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC
Half yearly financial announcement of results in respect of the six months
ended 30 June 2008
- The Company's net asset value per share increased by 8.4% and its
benchmark, the MSCI EM Latin American Index, by 9.4% (both in US dollar
terms on a total return basis).
- The Company's share price increased by 8.2% (in both US dollar and
sterling terms on a total return basis).
- Basic earnings per share amounted to 7.26 cents for the period (six
months to 30 June 2007: 5.61 cents).
- The Directors have declared an interim dividend of 2.50 cents per share,
(in line with the interim dividend paid for the period to 30 June 2007 of
2.50 cents), payable on 26 September 2008 to shareholders on the register
on 15 August 2008.
For further information please contact:
Peter Burnell, Chairman - 01434 632292
Jonathan Ruck Keene, Managing Director Investment Companies - 020 7743 2178
Emma Phillips, Media & Communications - 020 7743 5938
BlackRock Investment Management (UK) Limited
or
William Clutterbuck - 020 7379 5151
The Maitland Consultancy
The Chairman, Peter Burnell, comments:
Performance
Over the six months ended 30 June 2008, markets on the whole have been mixed.
Latin American equity markets responded well following a difficult January and
have since returned to delivering strong absolute returns, with the Company's
net asset value (NAV) ending the period at 1,202.33 cents per share (equivalent
to 604.14 pence per share), representing a total return of 8.4%. During the
same period, the benchmark index returned 9.4% (in US dollar terms) and the
share price rose to 585.0 pence per share, a rise of 8.2% in both sterling and
US dollar terms on a total return basis.
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 Company did not
utilise any gearing during the period.
Dividends
In the six months under review, the Company generated a revenue return per
share of 7.26 cents per share (2007: 5.61 cents per share). The Board is
pleased to declare an interim dividend of 2.50 cents per share (2007: 2.50 cents
per share), which will be paid on 26 September 2008 to shareholders on the
register on 15 August 2008 and marked ex-dividend on 13 August 2008.
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 effective from 25 April 2008. As explained in
the circular to shareholders posted in March, the change follows the merger of
Merrill Lynch Investment Managers with BlackRock and a full product rebrand. I
am pleased to report that the Manager has borne all costs associated with
changing the Company's name and continues to invest in the BlackRock brand.
Tender offer
In common with previous tender offers, the Board consulted the Company's broker
Cenkos, regarding the tender offer in September 2008 and it was announced on 25
July 2008 that during a volatile period when investment trust discounts
generally had averaged 10.7%, ours had averaged 2.2% in the financial year to
date.
Against this background and given the current liquidity of the shares the Board
has decided not to implement the next tender offer which would otherwise have
taken place at the end of September but will continue to pay close attention to
the rating of the shares in the market and trading activity and where necessary
will implement buybacks.
Prospects
Rising inflation common to most global economies is no less evident in the
region and can be expected to influence market sentiment for the immediate
future. The Brazilian economy continues to look attractive, albeit at a
modestly slowing growth rate. Despite the likelihood of further interest rate
hikes, domestic demand seems likely to remain supportive and valuations do not
appear stretched. With greater concerns over Mexico and Chile, we continue to
look to Brazil to provide the major impetus for the portfolio.
Interim Management Report and Responsibility Statement
The Chairman's Statement and the Investment Manager's Report give details of
the events which have occurred during the period and their impact on the
financial statements.
Principal risks and uncertainties
The principal risks faced by the Company can be divided into various areas as
follows:
- Performance;
- Income/dividend;
- Regulatory;
- Operational; and
- Financial.
The Board reported on the principal risks and uncertainties faced by the
Company in the Annual Report and Accounts for the year ended 31 December 2007.
A detailed explanation can be found on pages 14 and 15 of the Annual Report and
Accounts which is available on the website maintained by the Investment
Manager, BlackRock Investment Management (UK) Limited, at
www.blackrock.co.uk/its.
In the view of the Board, there have not been any changes to the fundamental
nature of these risks since the previous report and these principal risks and
uncertainties are equally applicable to the remaining six months of the
financial year as they were to the six months under review.
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 3.
Directors' responsibility statement
The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority
require the Directors to confirm their responsibilities in relation to the
preparation and publication of the Interim Management Report and Financial
Statements.
The Directors confirm to the best of their knowledge that:
- the condensed set of financial statements contained within the half yearly
financial report has been prepared in accordance with the Accounting Standards
Board's Statement `Half Yearly Financial Reports'; and
- the interim management report, together with the Chairman's Statement and the
Investment Manager's Report, include a fair review of the information required
by 4.2.7R and 4.2.8R of the FSA's Disclosure and Transparency Rules.
The half yearly financial report for the six months to 30 June 2008 has not been
audited or reviewed by the Auditors.
The half yearly financial report was approved by the Board on 5 August 2008 and
the above responsibility statement was signed on its behalf by the Chairman.
Commenting upon performance and the outlook for the Company, Will Landers of
BlackRock Investment Management (UK) Limited, the Investment Manager, notes:
Latin American Market Overview
During the first six months of 2008, the Company posted an 8.4% appreciation of
its NAV and 8.2% appreciation of its share price, in both US dollar and
sterling terms. The MSCI EM Latin America Index posted a return of 9.4% during
the first six months of the year, once again placing Latin America among the
best performing regions in the world. While posting a strong absolute
performance in a period when most global markets posted negative returns, the
Company underperformed its benchmark during the first half of the year. Despite
being overweight in Brazil during the period, our forced underweight in oil
giant Petrobras (18.9% average weight in the benchmark during the period and
posting an 18.3% return against our 14.7% average position, close to our
regulatory 15% maximum) was responsible for a significant portion of the
underperformance against the benchmark. The two largest positive contributors
to performance during the period were Tenaris (the world's leading producer of
seamless pipes, benefiting from the strength in oil prices) and Usiminas
(Brazil's largest steel producer and our favorite Latin American steel producer
- positive attribution partially offset by underweight positions in other
Brazilian steel producers).
Latin America was the only major regional MSCI market that posted a positive
return during the first half of 2008. However, volatility was high, with 34
trading days when the MSCI EM Latin America Index increased or declined by more
than 2% (interestingly there were 17 days each on the positive and negative
side). A lot of the volatility was created by global concerns regarding growth
as markets looked to digest the magnitude of the economic slowdown in the US
and what that meant for global growth. Major European markets along with
Emerging Asia were the largest underperformers during the period. Adding to the
volatility was an increase in inflation around the world, fuelled by increases
in energy, metals and food prices. Given the concerns about US growth and the
stability of its financial system, the US Fed cut its reference rate in
aggregate by 225 basis points on four separate occasions, adding to concerns
regarding inflation in the US.
Latin American markets outperformed during the period, partly due to the
continued strengthening of local currencies against the US dollar. Local market
returns in local currency were negative in every country except Brazil, but
turned positive in US dollar terms in Peru while the MSCI Argentina return is
explained mostly by the performance of oil services giant Tenaris, which has a
larger weighting in the MSCI Argentine Index (75.1%) than in the local index
Merval (16.4%) and significantly outperformed the Merval Argentine Index during
the period.
YTD Performance Figures
%
% Local
MSCI Currency %
Country (vs. USD) Local Index
Argentina 43.5 4.1 -2.0 (Merval)
Brazil 11.0 10.9 1.8 (Ibovespa)
Chile -4.9 -5.1 -1.7 (IPSA)
Colombia -2.0 5.5 -14.2 (IGBC)
Mexico -0.7 5.8 -0.5 (IPC)
Peru 5.8 1.2 -7.0 (IGBVL)
MSCI Latin America 8.0 CRB Index 15.4
MSCI Emerging Asia -22.8 Oil 45.8
MSCI Emerging Markets -12.7 Gold 10.3
MSCI World -11.7 Copper 30.7
S&P 500 -12.8 Corn 60.0
DJ Euro 50 -17.9 Soybeans 35.1
Source: Datastream, price return.
Brazil's outperformance during the first half of the year was led by the
continued strength of commodity stocks, positive news flow regarding new
findings at Petrobrás, and culminated with Brazil's upgrade to investment grade
by S&P on 30 April 2008. The Brazilian market peaked on 20 May, and sold off
some 17% by the end of June on the back of profit taking as well as continued
concerns about the state of the US economy and the impact of Brazil's Central
Bank's interest rate hikes on the domestic economy. This caused the Ibovespa to
end the period at a level below where it was on 29 April, while it is difficult
to justify that Brazilian fundamentals have deteriorated enough to wash out the
positive implications of the investment grade upgrade.
Mexico's surprise during the first half of 2008 was its economic (and equity
market) resilience in the face of a weakening US economy. Despite the strong
and undeniable economic ties between the two North American economies, Mexico
was able to post relatively strong economic growth and flat stock performance.
This is largely attributable to the strength in oil prices and the positive
impact that higher than budgeted oil revenues have on the federal budget, and
the overall economy. President Calderón repeatedly stated that the Mexican
economy was going to make up the weakness from its northern neighbour through
higher infrastructure investments and increased home ownership. While
infrastructure growth yields few equity investable opportunities, the
homebuilding sector has been a focus for the Company for some time, given
continued attractive growth rates, ample mortgage funding and little correlation
with the US housing sector.
Chile's economy during the first half has been negatively impacted by the
Central Bank's inability to deal proactively with a growing inflation rate.
This is resulting in the Central Bank being forced to play catch up, reducing
consumer confidence, and translating into the worst GDP growth figure expected
in over five years. The market was hurt further by the local pension funds
adjusting equity exposure early in the year to conform with local regulations.
Despite the continued strength in copper prices, a strong economic recovery is
not expected in the foreseeable future.
Peru has been the surprise market in the first half of the year, providing
Asian Tiger-like over 7% GDP growth during the period. The country benefits
from its strong exposure to metals and gold, and President Garcia's policies
have so far been market friendly.
Colombia and Argentina retained, and in some cases strengthened, capital
control policies during the period, making local investments unattractive.
While the Colombian economy continues to prosper in this new era of security,
the equity market lacks a significant number of investable companies and the
capital controls limit what we are willing to invest in the country. President
Cristina Kirchner has maintained what we believe are less than ideal economic
policies of her husband's previous administration, further highlighted by the
ongoing farmers strike taking place while grain prices have reached all time
highs.
Portfolio
During the first half of 2008, we increased our absolute positions in Argentina
and Brazil, introduced Peru to the portfolio for the first time in several quarters,
and reduced exposure to Chile and Mexico. At the sector level, we increased our
weighting in energy and materials, mostly at the expense of airlines and
telecommunications. We also retained overweight positions in the consumer and
financial sectors.
In Brazil, we maintained a close to maximum 15% weighting in Petrobrás, (at the
period end the weighting had reached 15.3% through market appreciation) while
increasing our exposure to steel stocks and CVRD. Some of this was the result
of redeploying assets that had outperformed within the steel complex as well as
reducing exposure to some Brazilian utilities and telecommunications stocks. We
have also reduced some of our exposure to recently listed small/medium size
banks in favour of the country's larger banks, especially Bradesco, given their
funding advantage in this period of increasing interest rates.
In Mexico, we reduced the exposure in cement giant Cemex to zero given concerns
regarding cement demand in the US and Spain, while also reducing exposure to
the broadcast and retail segments given concerns regarding consumer weakness.
On the positive side, we increased our weighting in America Movil following
stock weakness after the company reported weak first quarter results and
maintained overweight positions in housing and banking.
In Chile, we reduced our exposure to retailers as well as airlines. In Peru, we
introduced the leading Peruvian bank to the portfolio halfway through the
period, also adding the country's leading gold producer as a partial inflation
hedge. Finally, in Colombia, we exchanged shares held in the country's leading
retailer for Ecopetrol, the recently listed local oil monopoly, and in
Argentina we increased our exposure to oil services giant Tenaris given
expected strength in the second half of 2008 and in 2009.
Gearing remained at zero during the first half of the year as we did not find
an opportune time to reintroduce gearing.
Outlook
Despite the significant market volatility in global markets, we remain
constructive regarding Latin American equity markets for the second half of the
year. Brazil remains our largest position, with over 73% of assets invested in
the country. We continue to have a positive view on energy and commodities,
leading to our positions in those sectors in the country. On the domestic side,
despite recent increases in inflation leading us to expect the Central Bank to
increase rates closer to 15% rather than 13.5%-14% that we had been
envisioning, recent research trips to the country by various members of our
team continue to indicate a strong domestic economy, still seeing strong and
growing demand from Brazil's emerging middle class. While volatility continues
to be high, it has been mostly driven by concerns about the US market and the
overall impact on global growth. The Brazil story itself remains solid and we
believe that recent drops in stock prices offer investors an interesting entry
point.
Our underweight position in Mexico continues to be caused by our concerns about
the impact of the US on the Mexican consumer economy, while in Chile our
underweight is further encouraged by a weakening economy (despite strength in
copper prices). Peru is still underweight due to lack of interesting stocks,
but we have initiated positions there given the strength in the local economy.
Geographical and sector analysis
Geographical Weightings
Country Portfolio Benchmark
Weighting % Weighting %
Brazil 73.4 69.0
Mexico 16.7 19.3
Argentina 5.5 2.8
Chile 2.1 4.4
Peru 1.2 2.8
Colombia 0.8 1.7
Panama 0.3 0.0
Total 100.0 100.0
Source: BlackRock
Sector Weightings
Sector Portfolio Benchmark
Weighting % Weighting %
Materials 27.2 29.8
Energy 18.3 22.2
Financials 16.4 14.9
Consumer 16.1 9.8
Industrials 9.3 7.0
Telecommunications 8.6 11.1
Utilities 4.1 5.2
Total 100.0 100.0
Source: BlackRock
Ten Largest Investments
Petrobrás - 15.3% (2007: 14.3%) Petrobrás represents one of the most attractive
energy stocks in all Emerging Markets. The company continues to invest heavily
on increasing its production, utilising free cash flow generated from increased
oil prices to guarantee future production growth. Recent new oil discoveries in
the pre-salt region could transform the company (and Brazil) into one of the
world's major oil producers.
CVRD - 13.2% (2007: 13.4%) Vale is the world's largest producer of iron ore,
with operations in several other commodities, including nickel, copper and
alumina, among others. Iron ore demand continues to be higher than current
supply, leading us to expect continued strength in the annual iron ore price
negotiations for several years.
América Móvil - 8.0% (2007: 9.1%) América Móvil is Latin America's leading
provider of wireless communications. We expect the company to continue posting
strong double digit subscriber growth in 2008 while improving overall operating
margins given economies of scale from its large existing subscriber base and
recently launched 3G services.
Banco Bradesco - 6.5% (2007: 6.7%) Brazil's leading private sector bank is in
an advantageous position to benefit from the strong demand for credit in
Brazil. Brazil's growing middle class continues to demand more financial
products, and Bradesco's leading branch network positions the bank to offer
such products.
Usiminas - 6.4% (2007: 3.8%) Brazil's largest steel producer is enjoying growth
of higher value-added products in the domestic market due to growing demand
from automobile and white goods manufacturers. Its newly appointed CEO is
expected to expand further the company's capital expenditure and growth plans.
Tenaris - 4.7% (2007: 3.5%) is the leading global player in the production of
high-end seamless steel pipes. High oil prices and increased rig activity have
created a very favourable environment that we expect to continue into 2009 and
beyond.
Ambev Cia De Bebidas - 2.3% (2007: 2.5%) Brazil's leading beverages company
with operations throughout the Americas. The company is well positioned to
benefit from the expected growth in the domestic economy while also growing and
improving profitability levels at operations outside Brazil.
Banco Itaú - 2.3% (2007: 1.5%) Brazil's second largest private sector bank by
assets, the bank has maintained superior profitability levels while
participating in the overall growth in the Brazilian financial system.
Unibanco - 2.1% (2007: 3.3%) Brazil's third largest private bank is a leader in
consumer financing and continues to enjoy higher margins from an ongoing cost
rationalisation program.
Grupo Financiero Banorte - 1.6% (2007: 1.0%) Mexico's sole independent publicly
traded financial institution, Banorte is enjoying expanding margins and
attractive loan growth levels.
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 2007.
Investments
Market
value % of
Country of operation US$'000 investments
Brazil
Petrobrás 88,107 15.3
CVRD 75,996 13.2
Banco Bradesco 37,777 6.5
Usiminas (Deutsche Bank Convertible Warrants
(Usiminas Pref A)) 36,885 6.4
Ambev Cia De Bebidas 13,285 2.3
Banco Itaú 12,998 2.3
Unibanco 12,058 2.1
OGX Petróleo e Gás 7,897 1.4
NET 6,170 1.1
Diagnósticos da América 4,485 0.8
Anhanguera Educacional 4,470 0.8
Tempo Participações 4,312 0.7
Localiza Rent A Car 4,242 0.7
Amil Participações 4,181 0.7
Lupatech 4,130 0.7
CTEEP 4,101 0.7
Bradespar 4,044 0.7
Hypermarcas 3,823 0.7
Saraiva Livreiros 3,754 0.6
WEG 3,710 0.6
Lojas Renner 3,707 0.6
MRV Engenharia e Participações 3,705 0.6
Copasa 3,650 0.6
Cyrela Brazil Realty 3,474 0.6
Porto Seguro 3,437 0.6
SLC AgrÃcola 3,400 0.6
GVT Holding 3,336 0.6
Bovespa Holdings (Deutsche Bank Convertible
Warrants (Bovespa Holdings)) 3,307 0.6
PDG Realty 3,296 0.6
LPS Brasil Consultoria de Imoveis 3,249 0.6
Tractebel Energia 3,236 0.6
Redecard 3,226 0.6
Embraer 3,175 0.5
CCR 2,974 0.5
Satipal Industrial 2,941 0.5
Metalfrio Solutions 2,908 0.5
Totvs 2,574 0.4
Energisa Do Brasil 2,567 0.4
Terna Participações 2,476 0.4
Banco Industrial e Comercial 2,347 0.4
Agra Empreendimentos 2,324 0.4
Gafisa 2,174 0.4
All America Latina Logistica 2,114 0.4
Login Logistica Intermodal 2,097 0.4
Bolsa de Mercadorias e Futuros (Morgan Stanley
Convertible Warrants (Bolsa de Mercadorias e
Futuros)) 2,066 0.4
Datasul 1,853 0.3
Tegma Gestão Logistica 1,846 0.3
Profarma Distribuidora 1,820 0.3
Açúcar Guarani 1,683 0.3
M Dias Branco 1,629 0.3
Banco ABC Brasil 1,628 0.3
Equatorial Energia 1,594 0.3
Rodobens Negocios Imobiliarios 1,587 0.2
------- -----
423,825 73.4
------- -----
Mexico
América Móvil 45,866 8.0
Grupo Financiero Banorte 9,408 1.6
Grupo Mexico 6,848 1.2
Desarrolladora Homex 6,815 1.2
Walmart de Mexico 6,798 1.2
Fomento Economico Mexicano 5,905 1.0
Corporacion Geo 2,618 0.4
Grupo Televisa 2,452 0.4
Genomma Lab Internacional 2,284 0.4
Empresas ICA 2,180 0.4
Grupo Aeroportuario Del Pacifico 2,055 0.4
Alsea 2,024 0.4
Megacable Holdings 902 0.1
------- -----
96,155 16.7
------- -----
Argentina
Tenaris 27,193 4.7
Ternium 4,568 0.8
------- -----
31,761 5.5
------- -----
Chile
Banco Santander-Chile 3,428 0.6
Empresas La Polar 2,980 0.5
Endesa 2,833 0.5
Cencosud 2,685 0.5
Lan Airlines 50 0.0
------- -----
11,976 2.1
------- -----
Peru
Credicorp 3,778 0.7
Buenaventura 2,935 0.5
------- -----
6,713 1.2
------- -----
Colombia
Ecopetrol 4,740 0.8
------- -----
4,740 0.8
------- -----
Panama
Copa Holdings 1,670 0.3
------- -----
1,670 0.3
------- -----
Total investments 576,840 100.0
------- -----
The total number of investments held at 30 June 2008 was 77 (31 December 2007:
76). All investments are in equity shares unless otherwise stated.
INCOME STATEMENT
for the six months ended 30 June 2008
Revenue return Capital return Total
US$'000 US$'000 US$'000
Six Six Six Six Six Six
months months Year months months Year months months Year
ended ended ended ended ended ended ended ended ended
30.06.08 30.06.07 31.12.07 30.06.08 30.06.07 31.12.07 30.06.08 30.06.07 31.12.07
Notes (unaudited) (unaudited) (audited)(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
Gains on
investments
held at
fair value
through
profit or
loss - - - 42,879 94,656 159,691 42,879 94,656 159,691
Exchange
(losses)/
gains - - - (285) 108 (245) (285) 108 (245)
Income from
investments
held at
fair value
through
profit or
loss 2 6,082 4,902 10,887 - - - 6,082 4,902 10,887
Other income 2 15 25 58 - - - 15 25 58
Investment
management
fees 3 (575) (442) (999) (1,726) (1,326) (2,998) (2,301) (1,768) (3,997)
Operating
expenses 4 (667) (667) (1,395) (30) (18) (34) (697) (685) (1,429)
----- ----- ----- ------ ------ ------- ------ ------ ------
Net return
before
finance
costs and
taxation 4,855 3,818 8,551 40,838 93,420 156,414 45,693 97,238 164,965
Finance Costs (18) (15) (40) (52) (43) (121) (70) (58) (161)
----- ----- ----- ------ ------ ------- ------ ------ ------
Return on
ordinary
activities
before
taxation 4,837 3,803 8,511 40,786 93,377 156,293 45,623 97,180 164,804
Taxation on
ordinary
activities (1,368) (1,123) (2,554) 507 411 919 (861) (712) (1,635)
----- ----- ----- ------ ------ ------- ------ ------ ------
Return on
ordinary
activities
after
taxation 3,469 2,680 5,957 41,293 93,788 157,212 44,762 96,468 163,169
----- ----- ----- ------ ------ ------- ------ ------ -------
Return per
ordinary
share -
(cents) 7 7.26 5.61 12.47 86.41 196.25 328.97 93.67 201.86 341.44
===== ===== ===== ===== ====== ====== ===== ====== ======
The total column of this statement represents the Income Statement of the
Company. The supplementary revenue and capital return columns are both prepared
under guidance published by the Association of Investment Companies ("AIC").The
Company has no recognised gains and 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 period.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Share Capital Non- Capital Capital
Share premium redemption distributable reserve - reserve - Revenue
capital account reserve reserve realised unrealised reserve Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
For the six months
ended 30 June 2008
(unaudited)
At 31 December 2007 4,779 11,655 4,207 4,356 278,882 221,895 7,507 533,281
Return for the period - - - - 38,852 2,441 3,469 44,762
Costs paid re prior
year tender offer - - - - (106) - - (106)
Dividends paid(a) - - - - - - (3,345) (3,345)
----- ------ ----- ----- ------- ------- ----- -------
At 30 June 2008 4,779 11,655 4,207 4,356 317,628 224,336 7,631 574,592
----- ------ ----- ----- ------- ------- ----- -------
For the six months
ended 30 June 2007
(unaudited)
At 31 December 2006 4,779 11,655 4,207 4,356 213,110 130,248 5,851 374,204
Return for the period - - - - 30,609 63,179 2,680 96,468
Dividends paid(b) - - - - - - (3,106) (3,106)
----- ------ ----- ----- ------- ------- ----- -------
At 30 June 2007 4,779 11,655 4,207 4,356 243,719 193,427 5,425 467,568
----- ------ ----- ----- ------- ------- ----- -------
For the year ended 31
December 2007 (audited)
At 31 December 2006 4,779 11,655 4,207 4,356 213,110 130,248 5,851 374,206
Return for the year - - - - 65,565 91,647 5,957 163,169
Shares repurchase costs
written back - - - - 207 - - 207
Dividends paid(c) - - - - - - (4,301) (4,301)
----- ------ ----- ----- ------- ------- ----- -------
At 31 December 2007 4,779 11,655 4,207 4,356 278,882 221,895 7,507 533,281
----- ------ ----- ----- ------- ------- ----- -------
a) Second interim dividend 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.
b) Second interim dividend 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.
c) 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.
During the period the Company incurred purchase transaction costs of
US$165,000, (six months ended 30 June 2007: US$114,000, year ended 31 December
2007: US$214,000) and sales transaction costs of US$202,000 (six months ended
30 June 2007: US$155,000; year ended 31 December 2007: US$331,000). All
transaction costs have been included within the capital reserve.
BALANCE SHEET
as at 30 June 2008
Notes 30 June 30 June 31 December
2008 2007 2007
(unaudited) (unaudited) (audited)
US$'000 US$'000 US$'000
Fixed assets
Investments designated as held at
fair value through profit or loss 576,840 469,684 534,759
------- ------- -------
Current assets
Debtors 5,010 639 3,162
Cash at bank 698 2,264 -
------- ------- -------
5,708 2,903 3,162
Creditors - amounts falling due
within one year
Bank overdrafts - - (1,891)
Other creditors (7,932) (4,995) (2,725)
------- ------- -------
(7,932) (4,995) (4,616)
------- ------- -------
Net current liabilities (2,224) (2,092) (1,454)
------- ------- -------
Total assets less current
liabilities 574,616 467,592 533,305
Creditors - amounts falling due
after more than one year
Non equity redeemable shares (24) (24) (24)
-------- -------- -------
Net assets 574,592 467,568 533,281
======= ======= =======
Capital and reserves
Share capital 6 4,779 4,779 4,779
Share premium account 11,655 11,655 11,655
Capital redemption reserve 4,207 4,207 4,207
Non distributable reserve 4,356 4,356 4,356
Capital reserve 541,964 437,146 500,777
Revenue reserve 7,631 5,425 7,507
------- ------- -------
Total equity shareholders' funds 574,592 467,568 533,281
======= ======= =======
Net asset value per ordinary share
- (cents) 7 1,202.33 978.39 1,115.89
======= ======= =======
CASH FLOW STATEMENT
for the six months ended 30 June 2008
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2008 2007 2007
(unaudited) (unaudited) (audited)
US$'000 US$'000 US$'000
Net cash inflow from operating activities 2,273 3,007 5,114
Returns on investment and servicing of (89) (48) (163)
finance
Taxation paid (942) (392) (1,311)
Capital expenditure and financial
investment
Purchase of investments (152,842) (92,243) (203,174)
Proceeds from the sale of investments 157,953 97,295 204,581
Capital expenses (28) (21) (34)
-------- --------- ---------
Net cash inflow from capital expenditure
and financial Investment 5,083 5,031 1,373
-------- --------- ---------
Equity dividends paid (3,345) (3,106) (4,301)
-------- --------- ---------
Net cash inflow before financing 2,980 4,492 712
-------- --------- ---------
Financing
Tender offer costs paid (106) (15) (37)
-------- --------- ---------
Net cash outflow from financing (106) (15) (37)
-------- --------- ---------
Increase in cash in the period 2,874 4,477 675
===== ===== =====
RECONCILIATION OF NET RETURN BEFORE FINANCE COSTS AND TAXATION TO NET CASH FLOW
FROM OPERATING ACTIVITIES
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2007
2008 2007 (audited)
(unaudited) (unaudited) US$'000
US$'000 US$'000
Net return before finance costs and
taxation 45,693 97,238 164,965
Gains on investments held at fair value
through profit or loss (42,879) (94,656) (159,691)
Exchange losses/(gains) of a capital 285 (108) 245
nature
Non-operating expenses of a capital 30 18 34
nature
(Increase)/decrease in debtors (681) 920 (73)
Decrease in creditors (113) (346) (175)
Scrip dividends (62) (59) (191)
------- ------- -------
Net cash inflow from operating activities 2,273 3,007 5,114
------- ------- -------
Notes to the Half Yearly Financial Report
1. Principal activity and basis of preparation
The Company conducts its business so as to qualify as an investment trust
company within the meaning of section 842 of the Income and Corporation Taxes
Act 1988. The half yearly financial statements have been prepared on the basis
of the accounting policies set out in the Company's financial statements as at
31 December 2007.
Under FRS26 "Financial Instruments-Measurements" the Company has designated its
assets and liabilities as being measured at "fair value through profit or
loss". The fair value of fixed asset investments is deemed to be the bid market
value at the close of business on the balance sheet date. The taxation charge
has been calculated by applying an estimate of the annual effective tax rate to
any profit for the period.
The financial statements have been prepared in accordance with applicable
Accounting Standards, pronouncements on half yearly reporting issued by the
Accounting Standards Board and the statement of recommended practice "financial
statements of investment trust companies" ("SORP" dated January 2003, revised
in December 2005).
2. Income
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2008 2007 2007
(unaudited) (unaudited) (audited)
US$'000 US$'000 US$'000
Income from investments:
Overseas dividends 6,020 4,843 10,696
Scrip dividends 62 59 191
----- ----- ------
6,082 4,902 10,887
Other income:
Interest on cash and short term deposits 15 25 58
----- ----- ------
Total 6,097 4,927 10,945
----- ----- ------
3. Investment management fees
The investment management fee has been calculated at 0.85% per annum on the
NAV. The Investment Manager is also entitled to a performance fee equal to 10%
of any outperformance of the NAV per share against the benchmark the MSCI EM
Latin America Index (in US dollar terms on a total return basis) plus a hurdle
of 1%. The performance fee is capped at 1% of NAV.
No performance fee is payable in respect of the six months ended 30 June 2008
(6 months ended 30 June 2007 and year ended 31 December 2007: US$nil).
4. Operating expenses
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2008 2007 2007
(unaudited) (unaudited) (audited)
US$'000 US$'000 US$'000
Custody fee 280 179 418
Directors' fees 155 144 307
Other administration costs 232 344 670
--- --- -----
667 667 1,395
--- --- -----
5. Dividend
The Board has declared a first interim dividend of 2.50 cents (2007: 2.5 cents)
payable on 26 September 2008 to shareholders on the register as at 15 August
2008. The total cost of this dividend, based on 47,789,753 ordinary shares in
issue is US$1,195,000 (30 June 2007: 47,789,753 shares and cost of
US$1,195,000).
6. Share capital
Authorised Issued and fully paid
Number nominal Number nominal
US$'000 US$'000
Ordinary shares of 10 cents each:
Balance as at 31 December 2007
and 30 June 2008 110,000,000 11,000 47,789,753 4,779
7. Returns and net asset value per ordinary share
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2008 2007 2007
(unaudited) (unaudited) (audited)
Net revenue return attributable to
ordinary shareholders (US$'000) 3,469 2,680 5,957
Net capital return attributable to
ordinary shareholders (US$'000) 41,293 93,788 157,212
------- -------- -------
Net total return attributable to ordinary
shareholders (US$'000) 44,762 96,468 163,169
------- -------- -------
Equity shareholders' funds (US$'000) 574,592 467,568 533,281
------- ------- -------
The actual and weighted number of
ordinary shares in issue during the
period, on which the return and net asset
value was calculated, was: 47,789,753 47,789,753 47,789,753
Revenue return per share - (cents) 7.26 5.61 12.47
Capital return per share - (cents) 86.41 196.25 328.97
-------- ------- --------
Total return per share - (cents) 93.67 201.86 341.44
-------- ------- --------
Net asset value per share - (cents) 1,202.33 978.39 1,115.89
Share price * 1,164.18 938.00 1,082.90
-------- ------ --------
* The Company's share price is quoted in sterling and the above price
represents the US dollar equivalent.
8. Distributable status of capital reserve
The Institute of Chartered Accountants in England and Wales has issued guidance
(TECH 01/08) stating that profits arising out of a change in fair value of
assets, recognised in accordance with Accounting Standards, may be distributed,
provided the relevant assets can be readily converted into cash. Securities
listed on a recognised stock exchange are generally regarded as being readily
convertible into cash and hence unrealised profits less losses amounting to
US$224,336,000, currently included within "Other capital reserves - unrealised
reserve", may be regarded as distributable. However, under the terms of the
Company's Articles of Association, sums within "Other capital reserves" are
available for distribution only by way of redemption or purchase of any of the
Company's own shares. In addition, in order to maintain investment trust
status, the Company may only distribute accumulated "realised" profits.
9. Publication of non-statutory accounts
The financial information contained in this half yearly financial report does
not constitute statutory accounts as defined in section 435 of the Companies
Act 2006. The financial information for the six months ended 30 June 2008 and
30 June 2007 has not been audited.
The information for the year ended 31 December 2007 has been extracted from the
latest published audited financial statements, which have been filed with the
Registrar of Companies. The report of the auditors on those accounts contained
no qualification or statement under sections 498(2) or (3) of the Companies Act
2006.
10. Annual results
The Board expects to announce the annual results for the year ended 31 December
2008 in February 2009. Copies of the preliminary announcement can be obtained
from the Secretary on 020 7743 3000. The annual report should be available in
March 2009.
11. Copies of the half yearly financial report will be posted to shareholders
as soon as practicable. Copies will also be available to the public from the
Company's registered office at 33 King William Street, London EC4R 9AS, and on
BlackRock Investment Management's website at www.blackrock.co.uk/its
5 August 2008
33 King William Street
London EC4R 9AS
Monday, 3rd February 2025
COMPANIES COVERED:
Latest directors dealings
- 7 hours ago Bango
- 7 hours ago Legal & General Group
- 7 hours ago Legal & General Group
- 7 hours ago Sage Group
- 8 hours ago North American Income Trust (The)