Final Results

17 February 2011 BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC Annual results announcement for the year ended 31 December 2010 Financial Highlights Attributable to 31 December 31 December Change ordinary shareholders 2010 2009 % Assets Net assets (US$'000) 524,501 443,410 +18.3 Undiluted net asset value per ordinary share (US$ cents) 1,196.42 1,011.53 +18.3 - with income reinvested +20.4 Diluted net asset value per ordinary share (US$ cents) 1,208.28 1,036.42 +16.6 - with income +18.7 reinvested Ordinary share price (mid-market) (US$ cents) 1,200.07 1,037.54 +15.7 - with income reinvested +17.7 Ordinary share price (mid-market) (pence) 766.50 642.50 +19.3 - with income reinvested +21.4 For the For the year ended year ended 31 December 31 December Change 2010 2009 % Revenue Net revenue after taxation (US$'000) 12,544 8,301 +51.1 Undiluted revenue return per ordinary share (US$ cents) 28.62 18.57 +54.1 Diluted revenue return per ordinary share (US$ cents) 24.18 17.98 +34.5 First interim dividend per ordinary share (US$ cents) 5.0 2.5 +100.0 Second interim dividend per ordinary share (US$ cents) 19.0 12.5 +52.0 Chairman's Statement Overview There were a number of challenging headwinds during 2010 in Latin America, particularly in Brazil, although the benchmark, MSCI EM Latin America Index closed 2010 with a positive return of 14.9%. This was the lowest overall return of the three global emerging market regions, with Brazil, the largest equity market in the Latin American region, being ranked among the worst performing markets in the world. In contrast, Argentina and the Andean markets were particularly strong. Performance Against this background I am encouraged to report that your Company's undiluted NAV (debt at fair value) grew by 20.4% in US Dollar terms (24.2% in Sterling terms) compared to an increase in the benchmark of 14.9% (18.5% in Sterling terms). The share price increased by 17.7% in US Dollar terms (21.4% in Sterling terms). This outperformance was due mainly to stock selection, particularly in Brazil where the underweight position in the poorly performing Petrobras was the main contributor, and 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 2010 Benchmark return 14.9% Dividend reinvestment 2.1% Management fees and other operating costs -0.8% Performance fee -0.7% Taxation -0.4% Custody transaction charges and Brazilian FX costs -0.2% Financing costs -0.6% Gearing 2.1% Stock selection & asset allocation 5.7% ----- Undiluted net asset value total return (1) 22.1% Fair value adjustment -1.7% ----- Undiluted net asset value total return (2) 20.4% Decrease in discount 1.0% ----- Share price total return 21.4% ----- (1) debt at par (2) debt at fair value Source: BlackRock Under the terms of the management agreement with BlackRock Investment Management (UK) Limited ("BlackRock"), any outperformance of the benchmark index from 1 July 2007 and subsequent periods will give rise to a performance fee. For the year ended 31 December 2010 the performance fee amounted to US$2,907,000. This was the first period since inception of the agreement with BlackRock that a performance fee has been generated. Details of the performance fee calculation are shown in note 4. Since the year end, the Company's NAV has decreased by 7.5% in Sterling terms and by 5.2% in US Dollar terms. The share price has decreased by 8.9% in Sterling terms and by 6.7% in US Dollar terms. Revenue return and dividends The Company generated a total return per share for the year of 202.41 cents per share (2009: 549.49 cents per share) of which 28.62 cents per share is the revenue return (2009: 18.57 cents per share). The increase in revenue return is due partly to the income generated from investing the proceeds of the convertible bond issue, including 2.90 cents per share generated by the Company's holding in Brazilian bonds which are currently yielding 10.3% in local currency terms. Higher yields over the year including a number of special dividends, have also contributed to the enhanced return. The Board declared a first interim dividend of 5.00 cents per share which was paid on 24 September 2010 (2009: 2.50 cents per share). The Board is pleased to declare a second interim dividend of 19.00 cents per share (2009: 12.50 cents per share) which will be payable on 13 April 2011 to shareholders on the register as at 4 March 2011. This is just above the minimum dividend required to satisfy the requirements of section 1158 of the Corporation Tax Act 2010. This makes a total dividend of 24.00 cents per share (2009: 15.00 cents per share) for the year, representing an increase of 60% 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 ("the bonds"). A total of 800 bonds of US$100,000 each were allotted to participating investors. As mentioned in my interim statement, the Directors announced on 12 May 2010 that following the bondholders' meeting on 11 May 2010, the bond denomination was changed from US$100,000 per bond to US$1,000 per bond. During the year and up to the date of this report, the Company issued 3,563 ordinary shares following the conversion of US$32,000 convertible bonds into ordinary shares. As at 17 February 2011 the Company had 43,839,085 ordinary shares and US$79,968,000 convertible bonds in issue. Bondholders will have further opportunities to subscribe for ordinary shares to which the convertible bonds relates at any time up to 14 September 2012, inclusive at US$8.98 and between 15 September 2012 and 1 September 2015 at US$9.83 per ordinary share. At the date of this report the Company's NAV was US$11.34 and the share price was US$11.20 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 8 July 2010 that given the favourable background at the time, the Board concluded that it was not in the interest of shareholders as a whole to implement a semi-annual tender offer in September 2010 at a discount to NAV. Similarly, it was announced on 14 January 2011 that the Board had decided not to proceed with a semi-annual tender offer in March 2011. Over the six month period to 31 December 2010, the average discount to NAV was only 0.1 % and the Company's NAV performance had been strong with the undiluted NAV returning 39.41 % in US Dollar terms against a benchmark return of 28.3 %. The Board therefore concluded that it was not in the interests of shareholders as a whole to implement the semi-annual tender offer in March 2011 at a discount to NAV. The Board will continue to pay close attention to the rating of the shares in the market and trading activity, and where necessary will take appropriate action to address any supply/demand imbalance. Gearing The Company is geared primarily via the convertible bonds. The Company also has an overdraft facility which may be used for investment purposes and to cover short term timing differences. The maximum net gearing utilised during the year was 12.5% (net gearing is defined as redeemable shares, loans, overdrafts and bonds at par value less cash and fixed interest stocks as a percentage of net assets). Annual General Meeting The AGM will be held at 12 noon on Friday, 6 May 2011 at the offices of BlackRock at 33 King William Street, London EC4R 9AS. We hope that as many shareholders as possible will attend. Following the AGM there will be a presentation by Will Landers, the Portfolio Manager, on the outlook for the year ahead and an opportunity to meet Will and the Directors. Outlook We remain cautious about the short term prospects for businesses and the global equity markets as a whole. However, despite the underperformance of Latin America versus other emerging market regions during 2010, we are confident that the combination of positive earnings growth and attractive valuations should help the region to post strong returns over the year ahead. Peter Burnell Chairman 17 February 2011 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. Operational risk - In common with most other investment trust companies, the Company has no employees. The Company therefore relies upon the services provided by third parties and is dependent on the control systems of the Investment Manager and the Company's other service providers. The security, for example, of the Company's assets, dealing procedures, accounting records and maintenance of regulatory and legal requirements, depend on the effective operation of these systems. These have been regularly tested and monitored and an internal control report, which includes an assessment of risks together with procedures to mitigate such risks, is prepared by the Investment Manager and reviewed by the Audit Committee twice a year. The Custodian and the Investment Manager also produce annual SAS 70 reports which are 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. Financial risk - The Company's investment activities expose it to a variety of financial risks that include foreign currency risk and interest and interest rate risk. Further details are disclosed in note 19 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 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 Â£37,500, the Chairman of the Audit and Management Engagement Committee receives an annual fee of Â£28,500 and each other Director receives an annual fee of Â£25,000. With effect from 1 January 2011 the annual remuneration of the Chairman was increased to Â£39,000, the Chairman of the Audit and Management Engagement Committee to Â£30,000 and the other Directors to Â£26,000. Five 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 6,037 ordinary shares and 100 convertible bonds and Desmond O'Conor holds 11,901 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 17 February 2011 Investment Manager's Report Overview The big question mark for Latin American markets entering 2010 was what investors should expect following record returns in 2009. While valuation levels were reasonable given strong gross domestic product ("GDP") and earnings growth forecasts for the year, the beginning of 2010 saw a retrenchment of equity markets around the world as investors looked to digest the potential of an economic slowdown in China caused by inflationary scares. When markets recovered from the inflationary fears in China, concerns emerged regarding the debt crisis in Europe, particularly in Greece, and markets once again reacted negatively reaching their lows for the year during May. Once the Greek debt crisis stabilised the last seven months of the year saw markets recover, with one further set-back in the fourth quarter following concerns about Ireland's debt crisis. However, a late rally in December allowed Latin American equities to end 2010 very close to their 52-week high levels seen in early November. Overall, Latin America posted the lowest returns among the three global emerging markets regions, posting a 12.1% return. The way the region achieved such a return was the exact opposite to 2009. Brazil, the region's largest market, was the sole underperformer for the year, posting a single digit return of only 3.8%, while all other major markets in the region outperformed the overall regional index, posting strong double digit returns above 25%. Brazil's performance was negatively affected by a 23% decline in its largest stock, PetrobrÃ¡s. The region's Andean markets of Chile, Colombia and Peru were among the world's best performing equity markets, and the frontier market of Argentina also performed strongly following expectations of potential policy changes following the forthcoming presidential election in October 2011. For the most part, country risk premium as measured by the EMBI spreads remained relatively unchanged following the strong performance during 2009. Currencies also continued to appreciate versus the US Dollar in most countries given strong inflows, higher interest rates as many central banks began to tighten monetary policy in order to fight inflationary pressure, and overall economic recovery. MSCI Foreign Country risk Index exchange (EMBI) % FX/ % % YTD Region / indices change USD change BPS change Argentina 61.1 3.98 -4.7 490 -173 Brazil 3.8 1.66 +4.8 186 -5 Chile 41.8 468 +7.8 115 +20 Colombia 40.8 1,907 +6.7 169 -16 Mexico 26.0 12.34 +5.7 144 -13 Peru 49.2 2.81 +2.8 160 -5 World 10.4 GEMs 16.4 284 -3 Latin America 12.1 357 +2 Emerging Asia 16.6 175 -31 EMEA 20.9 231 +5 Sources: MSCI, Bloomberg and BlackRock. The Argentine equity market moved sideways for most of the year - liquidity was generally low given capital controls and its move into the frontiers index during 2009. The market started to move up during the third quarter as global markets rallied, but had a very strong move up in late October after the untimely death of former president and potential presidential candidate Nestor Kirchner. His passing leaves a political void, with many expecting changes in economic policies following the presidential election in October 2011. Brazil's equity market ranked among the worse performing markets in the world during 2010 after being one of the best performing markets in the world during 2009. The market suffered during periods of global uncertainty, especially early in the year with China's growth scare and the European debt crisis. In addition, the market had to digest Brazil's Central Bank bringing the Selic rate back above 10% after piercing that floor the year before, the first presidential election without Luiz InÃ¡cio Lula da Silva running as a candidate since 1989, and the PetrobrÃ¡s mega equity offering. Brazil's Central Bank increased interest rates from 8.75% to 10.75% from April to July 2010 in a move to slow down the country's economic recovery's impact on inflation. President Lula's preferred candidate Dilma Rousseff was elected president in October and is expected to give continuity to Brazil's economic program that has guided the country's economy since the implementation of the Real Plan in 1994. The US$70 billion PetrobrÃ¡s transaction completed in September was one of the main reasons for Brazil's underperformance - the stock fell over 20% in US Dollar terms given the large overhang from the transaction for the first nine months of the year and the market's digestion of what the transaction meant for the company's future after the deal was completed. Overall, Brazil's equity market significantly underperformed companies' earnings growth as well as the country's GDP growth - as a result, equity valuations de-rated during the year despite strong growth. Chile was the first country to elect a new president in the current round of presidential elections - SebastiÃ¡n PiÃ±iera was elected president in January of 2010, taking office on 11 March 2010. On the same day, Chile was hit by a 6.9 magnitude earthquake, an aftershock to the 8.8 magnitude earthquake in the previous month that caused significant devastation to the country's ConcepciÃ³n region. His government quickly shifted its focus to rebuilding affected areas and ensuring that the rest of the country was not paralysed by this effort. Chile returned to global headlines in October when the entire country rallied behind the rescue of 33 trapped miners (completed in 70 days without casualties). These two events helped to solidify consumer confidence and President PiÃ±iera's popularity, as his administration looks to ensure that Chile returns to a consistent 6% GDP growth the country had experienced in the 1990's. Mexico is the Latin American economy with the closest ties to the US. As a result of the North American Free Trade Agreement, the US accounts for almost 80% of Mexico's exports, roughly 25% of overall Mexican GDP. Despite the fact that most stocks in Mexico's exchange are related to the domestic economy, Mexico's market tends to follow the US market, and the market rallied in the fourth quarter as GDP expectations for the US were increased. Domestically, the country continues to deal with some headwinds, including the battle against the drug cartels as well as the expectation of political gridlock until the presidential election in July 2012. The Andean region, led by Peru and Colombia, posted strong results. The Peruvian economy posted a strong recovery in 2010, aided by a pick up in commodity prices and renewed growth in domestic investments. Colombia also recovered in 2010 after posting 0.4% growth in 2009 - the election of President Juan Manuel Santos ensured continuity for the successful policies of outgoing President Alvaro Uribe. Both the Peruvian and the Colombian markets benefited from a combination of international inflows along with growth in domestic investments (particularly from pension funds), driving valuations upward in markets that offer fewer investable opportunities than Brazil, Mexico or Chile. 2010 Portfolio Review The Company posted a 20.4% appreciation in its NAV (debt at fair value) during 2010, outperforming by 610 basis points its benchmark, the MSCI EM Latin America Index, which increased by 14.9% during the year. The outperformance was equally attributable to country allocation as it was to stock selection, with the structural leverage from the convertible bonds issued in 2009 adding to the overall outperformance. Country allocation provided a small percentage of the year's outperformance. The overweight in Brazil was a slight negative, as were the underweight positions in Chile and Colombia. These offset the overweight position in Peru and our positions in non-benchmark countries in the region. A majority of the year's alpha generation stemmed from stock selection, especially in Brazil; despite the fact that Brazil was the worst performing market in the region and our overweight position slightly weighed on performance at the country allocation level. The largest contributor to our outperformance was the underweight position in Petrobras - the stock underperformed due to concerns regarding the September equity offering and the impact on future results. Small and mid-cap stocks had another good year in Brazil after strong returns in 2009 - the top four contributors to our outperformance on the overweight side were small and mid cap stocks - Multiplus (the spinoff from TAM Airlines that manages its fidelity program), Anhanguera (Brazil's largest for-profit adult secondary education provider), Iochpe-Maxion (Brazil's largest rail cart manufacturer and one of the largest auto-parts manufacturers), and Odontoprev (the country's largest dental insurance provider). Some of this outperformance was partially offset by overweight positions held in TAM Airlines and retailer CBD earlier in the year. In Mexico, the positive stock selection attribution stemmed in large part from our overweight position in Genomma Lab, the country's largest provider of OTC drugs and personal care products. In addition, our overweight in pan-regional telecommunications giant America Movil and our underweight (for most of the year zero-weight) in Cemex were also positive contributors to performance. These were partially offset by not owning Grupo Carso, Mexichem and PeÃ±oles - small and mid cap stocks that outperformed during 2010. The negative allocation from the underweight in Chile was partially offset by positive stock selection from the positions we held in the country, particularly Banco Santander Chile, retailer Falabella and LAN Airlines - these were partially offset by not owning the outperforming retailer Cencosud and conglomerate CAP. No other country provided a significant attribution at the stock level. We maintained a structural gearing position throughout the year as a result of the convertible bonds issued in 2009. Gross gearing fell from about 17% at the beginning of the year to just over 14% at the end of the year as a result of the outperformance. We estimate that the deployment of gearing accounted for approximately 30% of the year's outperformance. 2011 Outlook and Positioning Latin America's underperformance versus other emerging market regions during 2010 leaves us feeling confident that the region should post strong returns during 2011. Earnings growth is expected to remain strong for the region at close to 25%. This growth is expected to come from both commodity companies enjoying strong price upgrades as well as the domestic side of the equation as the region's middle class continues to grow and have access to more affordable credit. Other than in Argentina and Venezuela, Central Banks around the region showed their discipline and resolve, in many cases being among the first around the globe to begin increasing interest rates in order to dampen inflation pressures. Liquidity levels remain strong, with the region finishing 2010 with over US$500 billion in aggregate reserves. Last, but certainly not least, the corporate sector is as strong as ever, with clean balance sheets, renewed focus on growth, and equity valuation levels that we continue to find compelling. More companies are gearing up to open their capital through IPOs, which should help to increase the region's market depth and liquidity. The Company enters 2011 with a 14% gearing position (closer to 11% net of the Brazilian government bonds position). At the country level, the Company is positioned with a large overweight in Brazil, a small overweight in Peru, overweight non-benchmark countries, neutral weighting in Mexico, with the overweights funded by gearing and underweight positions in Chile and Colombia. Brazil's underperformance during 2010 was not enough to cause us to lose faith in our overweight position - we held an overweight position in the country for the entire year - despite its underperformance, the Company produced significant alpha via stock picking in the country. We expect stock picking in Brazil to be paramount once again. Despite the expectation that GDP growth will dip below 5% after posting over 7% growth in 2010, we do not believe current valuation levels reflect expectations of earnings growth around 25% for 2011. President Rousseff's policies will be key to market performance, and we continue to expect a continuation of the economic program from the past 16 years. The Central Bank will remain vigilant against inflationary concerns, and this should allow the continued expansion of Brazil's middle class. We moved Mexico to a neutral position during 2010 and are comfortable with this position as we enter 2011. Valuations are in our opinion close to fair value and the market's dependency on the performance of the US market is a source of concern. Political gridlock should continue throughout 2011 during the year ahead of the 2012 presidential election. Security remains a major issue in 2011, with its impact on investments and overall economic growth still uncertain. Looking at the smaller markets in the region, Chile remains the perennial expensive market relative to other Latin American markets. Despite our expectation that President PiÃ±iera should succeed in growing Chile's economy 6% per annum during his presidency, valuations remain challenging. Peru continues to represent a higher weight in the Company's assets than Chile - valuations are more attractive and we expect Peru to lead the region in terms of economic growth. Despite feeling positive regarding President Santos' policies in Colombia, valuations are not compelling enough to warrant an overweight at this stage. We enter 2011 with positions in off-benchmark countries of Argentina (although the companies are registered in Luxembourg) and Panama - as always, we are happy to look for investable opportunities anywhere in Latin America. Overall, we expect Latin American equity markets to continue to perform strongly in 2011. As the global economy continues to stabilise and some of the world's developed nations show signs of positive economic recovery, emerging markets overall (and Latin America specifically) should benefit as investors appetite for risk grows. The combination of lower region-specific risks, attractive valuations, and strong earnings growth should allow Latin America to post another year of positive returns. Will Landers BlackRock Investment Management (UK) Limited 17 February 2011 Ten Largest Equity Investments Set out below is a brief description by the Investment Manager of the Company's largest equity investments. Vale - 12.1% (2009: 10.5%) is the world's largest producer of iron ore, with operations in several other commodities, including nickel, copper and coal, among others. The company is the lowest cash cost producer of the highest quality iron ore, well positioned to benefit from a tight iron ore market and continued growth in demand from Chinese steel makers. ItaÃº Unibanco - 10.8% (2009: 7.3%) 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 size enterprises. PetrobrÃ¡s - 8.8% (2009: 11.9%) is Brazil's vertically integrated oil company. The company continues to invest heavily on increasing its production, utilising free cash flow to guarantee future production growth. Recent new oil findings in the pre-salt region could transform the company (and Brazil) into one of the world's major oil producers. The company expects to double production in the next 10 years to 4 million barrels per day. The company was hurt in 2010 by a US$70 billion equity offering, which netted the company 5 billion barrels of additional reserves. AmÃ©rica MÃ³vil - 7.7% (2009: 5.2%) is Latin America's leading provider of telecommunications services. The company is a leading provider of wireless communications throughout Latin America. 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 - 5.4% (2009: 3.4%) is Brazil's second largest private sector bank and 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 - 4.0% (2009: 4.0%) is Brazil's leading beverages company with operations throughout the Americas. The company is well positioned to continue to benefit from its defensive position as the region's largest staples producer, while maintaining a strong focus on cost containment, a perennial AmBev management strength. The company is showing good growth in Brazil and many other countries in the region while maintaining operating cost discipline throughout its operations. Cyrela Brazil Realty - 2.5% (2009: 2.3%) is one of Brazil's largest homebuilders. Traditionally the leader in the upper-end of Brazil's market, the company has quickly become a leading operator for the low income segment through its wholly owned subsidiary Living. Formento Economico Mexicano - 2.5% (2009: 1.6%) is a Mexican holding company controlling Coca-Cola's largest independent bottler - Coca-Cola Femsa with operations throughout Latin America and Mexico's fastest growing retailing chain with over 6,300 Oxxo convenience stores throughout Mexico. In addition, the company exchanged its wholly owned beer subsidiary for a 20% economic interest in Heineken Group in April 2010. OGXPetroleo e GÃ¡s ParticipacÃµes - 2.3% (2009: 1.8%) is Brazil's largest private sector oil and gas company in terms of offshore exploratory acreage. The company is moving ahead with its exploratory campaign and is potentially looking to farm out part of its Campos Basin. Grupo Televisa - 2.0% (2009: 2.4%) is Mexico's leading Television broadcasting operator and provider of satellite and cable television. The latter has allowed the company to become a leading provider of broadband internet access and Internet Protocol telephony. The company recently acquired a significant position in Univision, the leading Hispanic broadcaster in the US. 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 2009. Sector and geographical allocations Total Total Brazil Chile Argentina Mexico Colombia Panama Peru 2010* 2009* % % % % % % % % % Energy 11.2 - 0.4 - 1.6 - - 13.2 15.4 Consumer discretionary 8.0 1.0 - 2.5 - - - 11.5 10.1 Consumer staples 5.9 - - 3.5 - - - 9.4 10.3 Financials 21.0 1.0 - 0.5 - - 1.4 23.9 18.7 Health 0.9 - - 1.0 - - - 1.9 2.4 Industrials 5.9 - - 0.2 - 1.4 - 7.5 6.1 Information technology 0.6 - - - - - - 0.6 2.4 Materials 12.5 - 0.6 1.3 - - 3.0 17.4 15.1 Telecommunications 0.4 0.9 - 7.7 - - - 9.0 5.8 Utilities 2.8 0.5 - - - - - 3.3 7.1 Fixed Income 2.3 - - - - - - 2.3 6.6 ---- --- --- ---- --- --- --- ----- ----- Total investments 71.5 3.4 1.0 16.7 1.6 1.4 4.4 100.0 - ---- --- --- ---- --- --- --- ----- ----- 2009 Totals 78.3 2.3 1.8 14.4 - 1.1 2.1 - 100.0 ---- --- --- ---- --- --- --- ----- ----- *Expressed as a percentage of portfolio Source: BlackRock. Geographical Weighting vs MSCI EM Latin America Index MSCI EM Latin America Country Company Index Argentina 1.0 - Brazil 71.5 67.4 Chile 3.4 7.2 Colombia 1.6 3.3 Mexico 16.7 19.1 Panama 1.4 - Peru 4.4 3.0 Source: BlackRock. Investments 31 December 2010 Market value % of Country of operation US$'000 investments Brazil Vale 77,843 12.1 ItaÃº Unibanco 69,257 10.8 PetrobrÃ¡s 56,110 } 8.8 PetrobrÃ¡s warrants* } Banco Bradesco 34,594 5.4 AmBev 25,600 4.0 Cyrela Brazil Realty 16,262 } 2.5 Cyrela Brazil Realty } warrants* } OGX Petroleo e GÃ¡s 14,867 } 2.3 ParticipacÃµes } OGX Petroleo e GÃ¡s } ParticipacÃµes warrants* Republic of Brazil 0% 01/01/11 14,278 2.2 PDG Realty 11,006 } 1.7 PDG Realty warrants* } Lojas Renner 10,751 } 1.7 Lojas Renner warrants* } Banco do Brasil 10,677 1.7 CCR 10,261 1.6 Hypermarcas 8,954 } 1.4 Hypermarcas warrants* } BM&F Bovespa 8,068 1.3 Anhanguera Educacional 7,927 1.2 Iochpe-Maxion 6,176 1.0 Multiplus 5,449 0.9 Localiza Rent a Car 5,388 0.8 Saraiva Livreiros 4,380 0.7 CESP 4,168 0.7 Tractebel Energia 4,022 0.6 BR Malls 3,914 0.6 BR Properties 3,759 0.6 Totvs 3,756 0.6 Natura CosmÃ©ticos 3,548 } 0.6 Natura CosmÃ©ticos warrants* } CTEEP 3,018 0.5 Klabin 2,907 0.5 DASA 2,711 0.4 Profarma Distribuidora 2,673 0.4 Rossi Residencial 2,658 } 0.4 Rossi Residencial warrants* } Cemig 2,654 0.4 Banco ABC Brasil 2,642 0.4 AES Tiete 2,603 } 0.4 AES Tiete warrants* } Marisa Lojas 2,598 0.4 Tim ParticipacÃµes 2,595 0.4 WEG 2,455 0.4 Metalfrio Solutions 1,981 0.3 Iguatemi Empresa de Shopping 1,608 0.2 Centers LPS Brasil 1,546 0.2 Light 1,532 0.2 Lupatech 1,015 0.2 ------- ----- 458,211 71.5 ------- ----- Mexico AmÃ©rica MÃ³vil 49,312 7.7 Formento Economico Mexicano 15,914 2.5 Grupo Televisa 12,955 2.0 Grupo MÃ©xico 8,118 1.3 Genomma Lab Internacional 6,617 1.0 Walmart de MÃ©xico 6,300 1.0 Compartamos 2,980 0.5 CorporaciÃ³n Geo 2,927 0.5 Empresas ICA 1,527 0.2 ------- ----- 106,650 16.7 ------- ----- Peru Minas Buenaventura 11,000 1.7 Credicorp 8,905 1.4 Southern Copper 8,524 1.3 ------- ----- 28,429 4.4 ------- ----- Chile Banco Santander-Chile 6,543 1.0 Empresa Nacional de 5,594 0.9 Telecomunicaciones Falabella 5,039 0.8 Empresa Nacional de 3,485 0.5 Electricidad Empresas La Polar 1,086 0.2 ------- ----- 21,747 3.4 ------- ----- Colombia Pacific Rubiales Energy 10,330 1.6 ------- ----- 10,330 1.6 ------- ----- Panama Copa 8,816 1.4 ------- ----- 8,816 1.4 ------- ----- Argentina Ternium 4,026 0.6 Tenaris 2,841 0.4 ------- ----- 6,867 1.0 ------- ----- Total 641,050 100.0 ------- ----- *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 at 31 December 2010 was 62 (31 December 2009: 74). All investments are in equity shares unless otherwise stated. INCOME STATEMENT for the year ended 31 December 2010 Revenue Revenue Capital Capital Total Total 2010 2009 2010 2009 2010 2009 Notes US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Gains on investments held at fair value through profit or loss - - 95,606 262,094 95,606 262,094 Change in value of convertible bonds held at fair value through profit or loss - - (9,587) (22,400) (9,587) (22,400) Exchange (losses)/ gains - - (347) 567 (347) 567 Income from investments held at fair value through profit or loss 3 16,823 11,986 - - 16,823 11,986 Other income 3 1 1 - - 1 1 Investment management and performance fees 4 (1,097) (761) (6,198) (2,283) (7,295) (3,044) Operating expenses 5 (1,119) (1,103) (743) (187) (1,862) (1,290) ------ ------ ------ ------- ------ ------- Net return before finance costs and taxation 14,608 10,123 78,731 237,791 93,339 247,914 Finance costs (697) (520) (2,091) (1,560) (2,788) (2,080) ------ ------ ------ ------- ------ ------- Net return on ordinary activities before taxation 13,911 9,603 76,640 236,231 90,551 245,834 Taxation on ordinary activities (1,367) (1,302) (454) 1,154 (1,821) (148) ------ ------ ------ ------- ------ ------- Return on ordinary activities after taxation 12,544 8,301 76,186 237,385 88,730 245,686 ------ ------ ------ ------- ------ ------- Undiluted return per ordinary share (US$ cents) 7 28.62 18.57 173.79 530.92 202.41 549.49 ------ ------ ------ ------- ------ ------- Diluted return per ordinary share (US$ cents) 7 24.18 17.98 145.64 502.69 169.82 520.67 ------ ------ ------ ------- ------ ------- 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 2010 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$'000 For the year ended 31 December 2010 At 31 December 2009 4,739 11,655 4,247 4,356 405,451 12,962 443,410 Return for the year - - - - 76,186 12,544 88,730 Shares issued on conversion of convertible bonds - 32 - - - - 32 Shares cancelled from treasury (355) - 355 - - - - Dividends paid (1) 6 - - - - - (7,671) (7,671) ----- ------ ----- ----- ------- ------ ------- At 31 December 2010 4,384 11,687 4,602 4,356 481,637 17,835 524,501 ----- ------ ----- ----- ------- ------ ------- For the year ended 31 December 2009 At 31 December 2008 4,779 11,655 4,207 4,356 184,808 10,259 220,064 Return for the year - - - - 237,385 8,301 245,686 Shares purchased and - - - - (16,534) - (16,534) held in treasury Share purchase costs - - - - (208) - (208) Shares cancelled (40) - 40 - - - - from treasury Dividends paid (2) 6 - - - - - (5,598) (5,598) ----- ------ ----- ----- ------- ------ ------- At 31 December 2009 4,739 11,655 4,247 4,356 405,451 12,962 443,410 ----- ------ ----- ----- ------- ------ ------- (1) Second interim dividend paid in respect of the year ended 31 December 2009 of 12.50 cents per share declared on 17 February 2010 and paid on 14 April 2010 and the first interim dividend for the year ended 31 December 2010 of 5.00 cents per share declared on 3 August 2010 and paid on 24 September 2010. (2) Second interim dividend paid in respect of the year ended 31 December 2008 of 9.50 cents per share declared on 18 February 2009 and paid on 15 April 2009 and the first interim dividend for the year ended 31 December 2009 of 2.50 cents per share declared on 14 August 2009 and paid on 25 September 2009. BALANCE SHEET as at 31 December 2010 2010 2009 Notes US$'000 US$'000 Fixed assets Investments held at fair value through profit or loss 641,050 542,523 Current assets Debtors 3,960 2,691 Cash 5 5,413 -------- -------- 3,965 8,104 Creditors - amounts falling due within one year Bank overdraft (232) - Other creditors (8,303) (4,793) -------- -------- (8,535) (4,793) -------- -------- Net current (liabilities)/ assets (4,570) 3,311 -------- -------- Total assets less current liabilities 636,480 545,834 Creditors - amounts falling due after more than one year Convertible bonds held at fair value through profit or loss (111,955) (102,400) Non-equity redeemable shares (24) (24) -------- -------- (111,979) (102,424) -------- -------- Net assets 524,501 443,410 -------- -------- Capital and reserves Share capital 8 4,384 4,739 Share premium account 9 11,687 11,655 Capital redemption reserve 9 4,602 4,247 Non distributable reserve 9 4,356 4,356 Capital reserves 9 481,637 405,451 Revenue reserve 17,835 12,962 -------- -------- Total equity shareholders' funds 524,501 443,410 -------- -------- Net asset value per ordinary 7 1,196.42 1,011.53 share (US$ cents) - basic -------- -------- Net asset value per ordinary share (US$ cents) - diluted 7 1,208.28 1,036.42 -------- -------- CASH FLOW STATEMENT for the year ended 31 December 2010 2010 2009 Note US$'000 US$'000 Net cash inflow from operating activities 5 9,344 9,119 ------- ------- Servicing of finance Finance costs (3,002) (1,330) Taxation paid (863) (1,426) Capital expenditure and financial investment Purchase of investments (362,368) (248,684) Proceeds from sale of investments 359,952 199,422 Capital expenses (685) (185) ------- ------- Net cash outflow from capital expenditure and financial investment (3,101) (49,447) ------- ------- Equity dividends paid (7,671) (5,598) ------- ------- Net cash outflow before financing (5,293) (48,602) ------- ------- Financing Repayment of US Dollar loan - (12,500) Repurchase of ordinary shares - (16,688) Convertible bonds issue proceeds - 80,000 ------- ------- Net cash inflow from financing - 50,812 ------- ------- (Decrease)/increase in cash in the year (5,293) 2,210 ------- ------- NOTES TO THE FINAL STATEMENTS 1. Principal activity The principal activity of the Company is that of an investment trust company within the meaning of section 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. 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 mostly 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 better reflect 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' (FRS16) 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 capital column of the Income Statement; - 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 Instrument: 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. (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 (additional information is given in note 15 of the annual report). 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. 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 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) 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. (m) 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. (n) Going concern The Company's Articles of Association require that an Ordinary Resolution be put to the Company's shareholders biannually at the AGM 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 AGM in 2012. 3. Income 2010 2009 US$'000 US$'000 Investment income: Overseas dividends 14,735 11,130 Interest income 2,088 856 ------ ------ 16,823 11,986 ------ ------ Other income: Deposit interest 1 1 ------ ------ 16,824 11,987 ------ ------ 4. Investment management and performance fees 2010 2009 Revenue Capital Total Revenue Capital Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Investment management fee 1,097 3,291 4,388 761 2,283 3,044 Performance fee - 2,907 2,907 - - - ----- ----- ----- --- ----- ----- Total 1,097 6,198 7,295 761 2,283 3,044 ----- ----- ----- --- ----- ----- 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). 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 has been disclosed in the financial highlights section 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 have 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 1,405.58p, generating outperformance of 7.16% above the benchmark index prior to applying the 1% hurdle. Performance fees have been wholly allocated to the capital column in the Income Statement as the performance has been predominantly generated through capital returns from the investment portfolio. As at 31 December 2010, there was a performance fee payable to the Investment manager of US$2,907,000 (2009: nil). 5. Other operating expenses 2010 2009 US$'000 US$'000 (a) Other operating expenses AIC subscriptions 30 37 Auditors' remuneration: - audit services 46 54 - other audit services - 7 Custody fee 267 385 Directors' and Officers' liability insurance 17 16 Directors' emoluments: - fees for services to the Company 267 280 Printing and postage 48 69 Professional fees 117 61 Registrar's fees 51 24 Other administrative costs 276 170 ----- ----- 1,119 1,103 ----- ----- The Company's total expense ratio, ("TER") calculated as a percentage of average net assets and using expenses, excluding performance fees and finance costs, after relief for taxation was: 0.8% 0.9% ----- ----- There were no fees payable in the year in respect of non-audit services (2009: US$7,000 for services relating to advice in respect of the convertible bonds issue). The underlying audit fee is invoiced in Sterling and is therefore susceptible to exchange rate fluctuations. The fee has not changed materially from year to year. 2010 2009 US$'000 US$'000 (b) Reconciliation of net return before finance costs and taxation to net cash flow from operating activities Net return before finance costs and taxation 93,339 247,914 Gains on investments held at fair value through profit or loss (95,606) (262,094) Fair value adjustment for the convertible bonds 9,587 22,400 Exchange losses/(gains) of a capital nature 347 (567) Non-operating expenses of a capital nature 743 187 Increase in accrued income (954) (214) Decrease in other debtors - 20 Increase in creditors 1,888 1,553 ----- ----- Net cash inflow from operating activities 9,344 9,199 ----- ----- Expenses of 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 (2009: US$187,000). 6. Dividends 2010 2009 Dividends on ordinary shares Register date Payment date US$'000 US$'000 2008 Second interim of 9.50 cents 27 February 2009 15 April 2009 - 4,502 2009 First interim of 2.50 cents 14 August 2009 25 September 2009 - 1,096 2009 Second interim of 12.50 cents 5 March 2010 14 April 2010 5,479 - 2010 First interim of 5.00 cents 13 August 2010 24 September 2010 2,192 - ----- ----- 7,671 5,598 ----- ----- The Directors propose to pay a second interim dividend in respect of the year ended 31 December 2010 of 19.00 cents per share on 13 April 2011 to shareholders on the register as at 4 March 2011. The proposed second interim dividend has not been included as a liability in these financial statements as interim dividends are only recognised in the financial statements in the period in which they are paid. The dividends disclosed in the note below have been considered in view of the requirements of section 1158 of the Corporation Tax Act 2010 and section 833 of the Companies Act 2006, and the amounts proposed meet the relevant requirements as set out in this legislation. 2010 2009 US$'000 US$'000 Dividend payable on equity shares: First interim paid 5.00 cents (2009: 2.50 cents) 2,192 1,096 Second interim payable 19.00 cents (2009: 12.50 cents) 8,329 5,479 ------ ----- 10,521 6,575 ------ ----- 7. Return and net asset value per ordinary share Revenue and capital returns per share are shown below and have been calculated using the following: 2010 2009 Net revenue return attributable to ordinary shareholders (US$'000) 12,544 8,301 Net capital return attributable to ordinary shareholders (US$'000) 76,186 237,385 ---------- ---------- Total return (US$'000) 88,730 245,686 ---------- ---------- Equity shareholders' funds (US$'000) 524,501 443,410 ---------- ---------- Net revenue return on which the diluted return per share has been calculated (with accrued interest costs of US$210,000 in respect of convertible bonds added back): 12,754 8,511 Net capital return on which the diluted return per share has been calculated (with accrued interest costs of US$630,000 in respect of convertible bonds added back): 76,816 238,015 The weighted average number of ordinary shares in issue during the year, on which the undiluted return per ordinary share was calculated, was: 43,836,049 44,711,908 ---------- ---------- The weighted average number of ordinary shares in issue during the year, on which the diluted return per ordinary share was calculated, was: 52,744,207 47,347,903 ---------- ---------- The actual number of ordinary shares in issue at the end of each year, on which the undiluted net asset value was calculated, was 43,839,085 43,835,522 ---------- ---------- The notional number of ordinary shares in issue at the end of each year, on which the diluted net asset value was calculated, was 52,744,207 52,744,207 ---------- ---------- 2010 2009 Revenue Capital Total Revenue Capital Total cents cents cents cents cents cents Undiluted return per share Calculated on weighted average number of shares 28.62 173.79 202.41 18.57 530.92 549.49 Calculated on actual number of shares 28.61 173.79 202.40 18.94 541.53 560.47 Diluted return per share Calculated on the weighted average number of shares 24.18 145.64 169.82 17.98 502.69 520.67 -------- -------- Net asset value per share - undiluted 1,196.42 1,011.53 -------- -------- Diluted net asset value per share 2010 2009 US$'000 US$'000 Net assets with convertible bonds at fair value per balance sheet 524,501 443,410 Add back convertible bonds at fair value 111,955 102,400 Accrued interest on convertible bonds at 31 December 2010 840 840 ---------- ---------- Adjusted net assets following conversion of the convertible bonds(a) 637,296 546,650 ---------- ---------- Number of ordinary shares for NAV at 31 December 2010 43,839,085 43,835,522 Number of shares arising on conversion of the convertible bonds (US$79,968,000 @ US$8.98 (2009: US$80,000,000 @ US$8.98)) 8,905,122 8,908,685 ---------- ---------- Total(b) 52,744,207 52,744,207 ---------- ---------- Diluted NAV per share (US$ cents (a/b)) 1,208.28 1,036.42 ---------- ---------- 8. Share capital Ordinary Treasury shares shares Total number number shares US$'000 Allotted, called up and fully paid share capital comprised: Ordinary shares of 10 cents each At 1 January 2010 43,835,522 3,554,231 47,389,753 4,739 Shares cancelled from treasury on 31 March 2010 - (3,554,231) (3,554,231) (355) Conversion of bonds into ordinary shares 3,563 - 3,563 - ---------- --------- ---------- ----- At 31 December 2010 43,839,085 - 43,839,085 4,384 ---------- --------- ---------- ----- During the year no ordinary shares were repurchased (2009: 3,554,231 ordinary shares repurchased at a cost of US$16,742,000). The 3,554,231 ordinary shares held in treasury were cancelled on 31 March 2010. In addition, 3,563 ordinary shares were issued following the conversion of US$32,000 convertible bonds. The number of ordinary shares in issue at the year end was 43,839,085 (2009: 43,835,522). There are no shares held in treasury (2009: 3,554,231). The ordinary shares (excluding any shares held in treasury) carry the right to receive any dividends and have one voting right per ordinary share. There are no restrictions on the voting rights of the shares or on transfer of the shares. 9. Reserves Capital Capital reserve reserve Share Capital Non (arising on (arising on premium redemption distributable investments investments account reserve reserve sold) held) US$'000 US$'000 US$,000 US$'000 US$'000 At 1 January 2010 11,655 4,247 4,356 245,198 160,253 Movement during the year: Shares issued following conversion of bonds 32 - - - - Treasury shares cancelled - 355 - - - Gains on realisation of investments - - - 62,372 - Fair value adjustment in respect of convertible bonds - - - - (9,587) Change in investment holding gains - - - - 33,234 Loss on foreign currency transactions - - - (347) - Interest and expenses charged to capital after taxation - - - (8,528) (958) ------ ----- ----- ------- ------- At 31 December 2010 11,687 4,602 4,356 298,695 182,942 ------ ----- ----- ------- ------- 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 2010 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 2010 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 2009, which have been filed with the Registrar of Companies. 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 17 February 2011. 11. Annual Report Copies of the annual report will be sent to members shortly and will be available from the registered office, c/o The Company Secretary, BlackRock Latin American Investment Trust plc, 33 King William Street, London EC4R 9AS. 12. Annual General Meeting The Annual General Meeting of the Company will be held at 33 King William Street, London EC4R 9AS on Friday, 6 May 2011 at 12 noon. ENDS The Annual Report will also be available on the BlackRock Investment Management website at http://www.blackrock.co.uk/content/groups/uksite/documents/ literature/emea02013474.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: Jonathan Ruck Keene, Managing Director, Investment Companies, BlackRock Investment Management (UK) Limited Tel: 020 7743 2178 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 17 February 2011 33 King William Street London EC4R 9AS END

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Monday, 13th May 2024

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