Final Results
27/03/2024 07:00
BlackRock Latin American Investment Trust plc
(Legal Entity Identifier: UK9OG5Q0CYUDFGRX4151)
Information disclosed in accordance with Article 5 Transparency Directive, DTR
4.1
Annual Results Announcement for the year ended 31 December 2023
PERFORMANCE RECORD
As at As at
31 December 31 December
2023 2022
Net assets (US$’000)(1) 189,719 148,111
Net asset value per ordinary share (US$ cents) 644.24 502.95
Ordinary share price (mid-market) (US$ cents)(2) 569.84 457.10
Ordinary share price (mid-market) (pence) 447.00 380.00
Discount(3) 11.5% 9.1%
For the year For the year
ended ended
31 December 31 December
2023 2022
Performance (with dividends reinvested)
Net asset value per share (US$ cents)(3) 37.8% 6.6%
Ordinary share price (mid-market) (US$ cents)(2,3) 35.3% 4.7%
Ordinary share price (mid-market) (pence)(3) 27.6% 18.0%
MSCI EM Latin America Index (net return, on a US Dollar basis)(4) 32.7% 8.9%
For the For the
year ended year ended
31 December 31 December
2023 2022 Change %
Revenue
Net profit on ordinary activities after taxation (US$'000) 8,967 13,842 –35.2
Revenue earnings per ordinary share (US$ cents) 30.45 41.48 –26.6
Dividends per ordinary share (US$ cents)
Quarter to 31 March 6.21 7.76 –20.0
Quarter to 30 June 7.54 5.74 +31.4
Quarter to 30 September 7.02 6.08 +15.5
Quarter to 31 December 8.05 6.29 +28.0
Special dividend(5) – 13.00 n/a
Total dividends payable/paid 28.82 38.87 –25.9
Sources: BlackRock Investment Management (UK) Limited and Datastream.
Performance figures are calculated in US Dollar terms with dividends
reinvested.
(1) The change in net assets reflects the portfolio movements during
the year and dividends paid.
(2) Based on an exchange rate of US$1.27 to £1 at 31 December 2023
and US$1.20 to £1 at 31 December 2022.
(3) Alternative Performance Measures, see Glossary contained within
the Annual Report and Financial Statements.
(4) The Company’s performance benchmark index (the MSCI EM Latin
America Index) may be calculated on either a gross or a net return basis. Net
return (NR) indices calculate the reinvestment of dividends net of withholding
taxes using the tax rates applicable to non-resident institutional investors,
and hence give a lower total return than indices where calculations are on a
gross basis (which assumes that no withholding tax is suffered). As the
Company is subject to withholding tax rates for the majority of countries in
which it invests, the NR basis is felt to be the more accurate, appropriate,
consistent and fair comparison for the Company.
(5) During the year ended 31 December 2022, revenue earned by the
Company was enhanced by a number of stock and special dividends, coupled with
the effect of the tender offer reducing the number of ordinary shares in issue
post May 2022. In order to maintain investment trust status, which requires
the distribution of 85% of the Company’s revenue, the Board announced the
payment of an additional dividend of 13.00 cents per ordinary share for the
financial year to 31 December 2022.
CHAIRMAN’S STATEMENT
Dear Shareholder,
I am pleased to present the Annual Report to shareholders for the year ended
31 December 2023, which has delivered strong absolute returns and as I shall
discuss below, provided grounds for optimism in the outlook for Latin American
equities.
MARKET OVERVIEW
Latin American markets have significantly outperformed both developed market
and the MSCI Emerging Markets indices over the year under review, with the
MSCI EM Latin America Index net return of 32.7% in US Dollar terms, compared
to a rise in the MSCI Emerging Markets EMEA Index net return of 8.6% in US
Dollar terms and an increase in the MSCI World Index net return of 24.4% in US
Dollar terms.
PERFORMANCE
Over the year ended 31 December 2023 the Company’s net asset value per
share, with dividends reinvested rose by 37.8% in US Dollar terms, which
compares to the benchmark returns with dividends reinvested of 32.7%. The
share price rose by 35.3% in US Dollar terms (but increased by 27.6% in
Sterling terms). The outperformance was driven by good stock selection across
a range of markets, most notably driven by stock selection in Mexico, as the
country has been and continues to be a key beneficiary from the shifting of
global supply chains and coupled with a prudential fiscal policy and a strong
export sector, Mexico has replaced China as America’s largest trade partner.
The stock selection in Brazil was also a contributing factor to performance,
the portfolio was overweight in domestic Brazil, this positioning reflected
the Investment Manager’s view that interest rates were excessively high,
with their expectation for interest rates to be cut during the year which has
seen this increasingly being priced by the market in Brazil which has been a
strong contributor to the portfolio’s returns.
GEARING
The Board’s view is that 105% of NAV is the neutral level of gearing over
the longer term and that gearing should be used actively in an approximate
range of plus or minus 10% around this as measured at the time that gearing is
instigated. The Board is pleased to note that over the year the portfolio
managers have used gearing actively with a low of 100.3% in May 2023 and a
high of 108.9% of NAV in January 2023. Average gearing for the year to 31
December 2023 was 103.1% of NAV.
REVENUE RETURNS AND DIVIDENDS
Total revenue return for the year was 30.45 cents per share (2022: 41.48 cents
per share). The decrease of 26.6% was largely due to the reduction in
dividends paid by portfolio companies. Under the Company’s dividend policy
dividends are calculated and paid quarterly, based on 1.25% of the US Dollar
NAV at close of business on the last working day of March, June, September and
December respectively.
Information in respect of the payment timetable is set out in the Annual
Report and Financial Statements. Dividends will be financed through a
combination of available net income in each financial year and revenue and
capital reserves. The Company has declared interim dividends totalling 28.82
cents per share in respect of the year ended 31 December 2023 (2022: 38.87
cents per share) as detailed in the table below; this represented a yield of
5.1% based on the Company’s share price at 31 December 2023.
Dividends declared in respect of the year ended 31 December 2023
Dividend Pay date
Quarter to 31 March 2023 6.21 cents 16 May 2023
Quarter to 30 June 2023 7.54 cents 11 August 2023
Quarter to 30 September 2023 7.02 cents 9 November 2023
Quarter to 31 December 2023 8.05 cents 9 February 2024
Total 28. 82 cents
The dividends paid and declared by the Company in 2023 have been funded from
current year revenue and brought forward revenue reserves. As at 31 December
2023, a balance of US$5,876,000 remained in revenue reserves, which is
sufficient to cover approximately two and a half quarterly dividend payments
at the most recently declared dividend rate of 8.05 cents per share.
Dividends may be funded out of capital reserves to the extent that current
year revenue and revenue reserves are insufficient. The current and previous
years dividends have been funded from the high levels of income generated by
the portfolio companies and revenue reserves. Next year it is anticipated that
capital reserves may be utilised to supplement the dividend if there is lower
income received from the underlying portfolio companies. The Board believes
that this removes pressure from the portfolio managers to seek a higher income
yield from the underlying portfolio itself which could detract from total
returns. The Board also believes the Company’s dividend policy will enhance
demand for the Company’s shares and help to narrow the Company’s discount,
whilst maintaining the portfolio’s ability to generate attractive total
returns. It is promising to note that since the dividend policy was introduced
in 2018, the Company’s discount has narrowed from an average of 13.5% for
the two-year period preceding the introduction of the new policy on 13 March
2018 to 11.5% as at 31 December 2023.
ESG AND SOCIALLY RESPONSIBLE INVESTMENT
As a Board we believe that good Environmental, Social and Governance (ESG)
behaviour by the companies we invest in is important to the long-term
financial success of our Company and believe we should be active in
encouraging the companies we invest in to adopt good standards of governance.
Accordingly, the board travelled to Sao Paulo last year to meet a number of
the companies we invest in to discuss their governance policies. We also
travelled to Brasilia and met a number of government officials and politicians
to learn more about current approaches to the rainforest and Brazil’s role
as a large producer of vital food, timber, minerals and oil.
The Board receives regular reporting from the portfolio managers on ESG
matters and extensive analysis of our portfolio’s ESG footprint and actively
engages with the portfolio managers to discuss when significant engagement may
be required with the management teams of our Company’s portfolio holdings.
The portfolio managers are supported by the extensive ESG resources within
BlackRock and devote a considerable amount of time to understanding the ESG
risks and opportunities facing companies and industries in the portfolio. The
Company does not seek to become an Article 8 or 9 company under the EU’s
Sustainable Finance Disclosure Regulation legislation and does not intend to
seek to have one of the 4 sustainability labels under the FCA’s
Sustainability Disclosure Requirements regime. However, consideration of ESG
analytics, data and insights is integrated into the investment process when
weighing up the risk and reward benefits and there is more information in
relation to BlackRock’s approach to ESG integration contained within the
Annual Report and Financial Statements.
DISCOUNT MANAGEMENT AND NEW DISCOUNT CONTROL MECHANCISM
The Board remains committed to taking appropriate action to ensure that the
Company’s shares do not trade at a significant discount to their prevailing
NAV and have sought to reduce discount volatility by offering shareholders a
new discount control mechanism covering the four years to 31 December 2025.
This mechanism will offer shareholders a tender for 24.99% of the shares in
issue excluding treasury shares (at a tender price reflecting the latest
cum-income NAV less 2% and related portfolio realisation costs) in the event
that the continuation vote to be put to the Company’s AGM in 2026 is
approved, where either of the following conditions have been met:
(i) the annualised total NAV return of the Company does not exceed the
annualised benchmark index (being the MSCI EM Latin America Index) US Dollar
(net return) by more than 50 basis points over the four-year period from 1
January 2022 to 31 December 2025 (the Calculation Period); or
(ii) the average daily discount to the cum-income NAV exceeds 12% as
calculated with reference to the trading of the shares over the Calculation
Period.
In respect of the above conditions, the Company’s annualised total NAV
return on a US Dollar basis for the year ended 31 December 2023 was +21.2%,
outperforming the annualised benchmark return of +20.2% over the year by 1.0%
(equivalent to 100 basis points).
The cum-income discount of the Company’s ordinary shares over the
calculation period has averaged 10.8%.
For the current year the cum-income discount has ranged from 6.8% to 18.6%,
ending the year on a discount of 11.5% at 31 December 2023.
The Company has not bought back any shares during the year ended 31 December
2023 and up to the date of publication of this report.
BOARD COMPOSITION
As previously advised in last year’s Annual Report, Professor Doctor did not
seek re-election at the 2023 AGM. The Board wishes to thank Professor Doctor
for her many years of excellent service, we wish her the best for the future.
ANNUAL GENERAL MEETING
The Company’s Annual General Meeting will be held in person at the offices
of BlackRock at 12 Throgmorton Avenue, London EC2N 2DL on Wednesday, 22 May
2024 at 12.00 noon. Details of the business of the meeting are set out in the
Notice of Annual General Meeting contained within the Annual Report and
Financial Statements.
The Board very much looks forward to meeting shareholders and answering any
question you may have on the day. We hope you can attend this year’s AGM; a
buffet lunch will be made available to shareholders who have attended the AGM.
OUTLOOK
Following the Board’s visit to Brazil in November 2023, it was encouraging
to see the positive market sentiment for a range of the portfolio companies
operating in Brazil. The Brazilian Government had embarked on some significant
tax reforms which should allow businesses to operate more efficiently. The
government’s continued prudent fiscal policy should enable the country’s
central bank to decrease interest rates further which in turn should help
stimulate the domestic economy.
The geopolitical environment is currently changing with three blocks emerging,
US aligned, China aligned and the non-aligned, who are benefiting from trading
with both of the other blocks. The markets in the Latin American region have
managed to remain somewhat removed from the global geopolitical conflicts and
so far, have been able to benefit from significant opportunities for direct
investment as governments and businesses globally re-think supply chain
configuration and seek to diversify risk away from countries more prone to
geopolitical fallouts. The region is rich in natural resources of crude oil
and natural gas and is also a major source of copper and lithium which are
critical materials for the green energy transition. Not only is Latin America
rich in natural resources, it is also an agricultural powerhouse. The region
accounts for close to 25%(1) of global exports in agricultural and fisheries
products, and its significance in the global food supply chain is anticipated
to increase in the future. The Board is optimistic for the outlook for Latin
American equities.
Carolan Dobson
Chairman
26 March 2024
(1 )Source:
https://www.weforum.org/agenda/2024/01/latin-america-solution-food-insecurity
INVESTMENT MANAGER’S REPORT
MARKET OVERVIEW
The MSCI EM Latin America Index gained +32.7% during 2023, significantly
outperforming other Emerging Market (EM) regions. For reference, both the
Asia-Pacific (APAC) and Europe, Middle East and Africa (EMEA) regions posted
mid-single digit returns with the MSCI AC Asia Pacific ex Japan index up 4.6%
while the MSCI Emerging Markets EMEA Index climbed 8.6% in 2023. The region
also outperformed the MSCI USA Index, which was up 27.1%, and Developed Market
equities, as represented by the MSCI World Index, up 24.4%. All performance
figures are calculated in US Dollar terms with dividends reinvested.
All markets within our universe generated positive returns in 2023. Argentina
was the standout performer, returning 65.7%, making it the best performing
market globally. The market surged after libertarian Javier Milei picked up a
majority of the votes, and finished ahead of Sergio Massa, the incumbent
Finance Minister, in the elections that concluded on 19 November 2023. Javier
Milei’s unexpected victory instilled cautious optimism in the market about
the country’s potential for economic reform and the possibility of central
bank orthodoxy.
In Brazil, Luiz Inacio Lula da Silva was sworn in as president on 1 January
2023. While the Brazilian market experienced some turmoil in the first half of
the year, mainly due to concerns around fiscal prudency and lower activity
resulting from elevated interest rates, the market bounced back in the latter
half of the year, rising 32.7% in 2023. A large portion of the rally can be
attributed to the much-awaited rate cuts, which finally began in August, when
the central bank cut its policy rate by 50 basis points in response to falling
inflation. The market continued to trend upwards in the latter half of the
year, as the increased likelihood for rate cuts in the United States of
America (US) should provide room for the central bank to ease more
aggressively in 2024.
Mexico was yet another market that performed well in 2023, rising 40.9%. The
market has benefitted from a gradual fall in inflation and resulting interest
rate cut expectations. Performance had been further buoyed by a stronger than
expected US market. It is also worth pointing out that the country has been
and continues to be, a relative beneficiary of increased geopolitical
tensions, as countries such as the US are looking to diversify their supply
chains away from China. In 2023, Mexico also overtook China to become the
US’ largest trading partner.
Political and social unrest has been the dominating picture of the Chilean and
Peruvian markets throughout much of 2023, where both countries ended the year
flat. In December, the Chilean population rejected the suggested changes to
their constitution, for the second year in a row. This marks an end to the
constitutional saga, for now, that has been ongoing since 2019. In Colombia,
we note the improvement in the country’s external balance.
PERFORMANCE REVIEW AND POSITIONING
The Company outperformed its benchmark over the 12-month period ending 31
December 2023, returning +37.8% in US Dollar terms. Over the same time
horizon, the Company’s benchmark, the MSCI Latin America Index, returned
+32.7% on a net basis in US Dollar terms.
Over the period, the Company generated positive returns in a number of
countries. The most notable outperformer was Mexico, driven by strong stock
selection. Our positioning in Brazil was a reflection of the view that
interest rates would come down, a view that played out in the latter half of
the year as the central bank cut its policy rate for the first time in three
years. It has since continued to cut in response to a normalisation in
inflation, which has supported our domestic positioning in particular.
Colombian exposure also contributed positively. On the flipside, Argentina
exposure detracted on the margin. From a sector lens, the best performing
sectors were industrials and materials while consumer staples and health care
detracted from performance.
Our position in Vale, a Brazilian iron ore miner, was the largest contributor
to relative returns over the year. Our underweight position in the company
throughout the first half of 2023 was supportive to Company performance as
iron ore prices declined on the back of disappointing commodity demand in
China. As we became incrementally more positive on the name, and due to its
relative weakness, we added to the position in the latter half of the year
which proved timely. Rate sensitive names in Brazil have also done well with
investment management platform XP and off-benchmark exposure to low-income
homebuilder MRV Engenharia amongst the top contributors. For XP, in addition
to delivering strong results, the company is also benefitting from increased
flows from fixed income to equities as rates come down. In the case of MRV
Engenharia, lower rates entail more affordable housing and lower costs on
interest which is beneficial as this is a highly levered name. No exposure to
WEG, a Brazilian electric equipment company, has also contributed to relative
returns. The company has been faced with sequential growth challenges,
particularly due to a solar demand slowdown in Brazil which is impacting the
company’s outlook.
In Mexico, our overweight position in consumer company FEMSA, was supportive
of relative returns, with a strong operating environment at its core
convenience store business Oxxo. Cemex, the Mexican cement producer, was
another contributor on a relative basis. Being underweight the stock helped
the portfolio’s relative returns as the stock declined on fears of rising
input costs. Another significant outperformer was Fibra Uno Administracion,
the Mexican real estate operator. This is a stock that has continued to
benefit from the nearshoring theme, i.e. increased foreign investment and
demand for industrial properties. The stock also rose following the
announcement of a potential IPO where the company would carve out a new
vehicle of their industrial real estate assets.
Elsewhere in the region, Ecopetrol, a petroleum producer in Colombia,
outperformed. Chilean lithium producer Sociedad Quimica Y Minera (SQM) was
another strong performer during the last month of the year as the stock rose
in anticipation of the announcement of the partnership with state entity
Codelco, which has extended their mining lease in the Atacama until 2060.
While Brazil exposure has benefitted the Company more broadly, some names
lagged with supermarket chain Assai being the biggest detractor over the
period. The company sold off earlier in the year after its majority
shareholder, Casino, showed signs of weak liquidity. This weighed on the stock
after an announcement that Casino would be selling a portion of its shares.
Brazilian retailers Arezzo and Grupo De Moda Soma (Soma) also hurt relative
returns over the period as the retail sector was negatively impacted by the
announcement of a tax reform, which could be margin dilutive for the sector.
We maintain conviction in these names and believe that continued rate cuts
from the central bank should be supportive for domestic consumption.
Elsewhere, overweight position in Mexican silver miner MAG Silver Corp also
detracted amid declining silver prices.
Over the period, we have taken advantage of the strong performance in Brazil
to take profits in names that have outperformed or where our investment thesis
has played out. We exited our position in Gerdau, a steel producer, and
rotated this into iron ore producer Vale on a relative performance basis. We
also exited XP following strong performance. As we believe continued rate cuts
in Brazil should be supportive for domestic consumption, we initiated holdings
in retailers Soma and Lojas Renner. For Soma specifically, we believe that
mistakes made in the previous cycles have been overly penalized by the market,
and we believe that their brand Farm Rio is one of the strongest brands in
Brazil.
We also made some changes to our Mexican book. We exited Cemex, the Mexican
cement producer, and used some of the proceeds to top up our holding in
Walmart de Mexico y Centroamerica (Walmex). The latter has underperformed on
cost pressures and disinflation, but we believe the negative earnings
revisions are coming to an end. We also trimmed our exposure to rate sensitive
bank Grupo Financiero Banorte. In Colombia, we initiated a position in bank
Bancolombia on the back of cheap valuation and as the Colombian government has
shown more signs of orthodoxy than initially expected. We took profits and
exited Colombian oil & gas company Ecopetrol as our investment thesis has
played out and as we are getting incrementally more negative on the outlook
for oil prices. We also took some profits in Globant, the Argentinian IT
services company, following strong performance.
We ended the year with Argentina as the largest portfolio overweight, driven
by two off-benchmark holdings. Our second largest overweight position is in
Panama, driven by an off-benchmark holding in the industrials sector. On the
other hand, we remain underweight in Peru due to its ongoing political and
economic uncertainty. We remain optimistic about the outlook for Brazil and
have been selective in our positioning, with a preference for domestic
businesses that will benefit more from further rate cuts.
OUTLOOK
We believe that global markets are starting to feel the impact of higher
interest rates, noting slowing credit growth as evidence that a demand
slowdown may be imminent in developed markets. When combined with a Chinese
economy which is struggling to find its footing we find it difficult to see
where a meaningful pick up in global growth could come from. On the other
hand, we observe stronger fundamentals in EM, particularly in Latin America,
as inflation has decreased and central banks have eased monetary policies
across many of our markets. This is typically a good set up as domestic
economies should see a cyclical improvement.
We are especially positive about the outlook for Brazil. We believe that the
combination of a benign outlook for inflation and a relatively prudent fiscal
policy by the government will enable the central bank to decrease interest
rates faster than market participants currently expect. We expect further
upside to the equity market in the next 12-18 months as local capital starts
flowing back into the market.
We remain positive on the outlook for the Mexican economy as it is a key
beneficiary of the ‘friend-shoring’ of global supply chains. Mexico
remains defensive as both fiscal and the current accounts are in order. While
our view remains positive, we have taken some profits after a strong relative
performance, solely because we see even more upside in other Latin American
markets such as Brazil. We also note that the Mexican economy will be
relatively more sensitive to a potential slowdown in economic activity in the
United States.
We continue to closely monitor the political and economic situation in
Argentina, after libertarian Javier Milei unexpectedly won the presidential
elections in November. Milei is facing a very difficult situation, with
inflation at 210% year on year, foreign exchange reserves depleted and
multiple economic imbalances. The country needs to go through a painful
adjustment process and we worry about the hardship that this inflicts on
society. We are hopeful that the country comes out stronger after the
adjustment process, but we have limited exposure to the Argentinian economy
for now.
We remain optimistic about the outlook for Latin America. Central banks have
been proactive in increasing interest rates to help control inflation, which
has fallen significantly across the region. As such we have started to see
central banks beginning to lower interest rates, which should support both
economic activity and asset prices. In addition, the whole region is
benefitting from being relatively isolated from global geopolitical conflicts.
In a world splitting into three groups: those aligned with China, those
aligned with the US and the rest, the latter group which have been coined as
the “Transactional 25”, are uniquely positioned to benefit from their
ability to trade with both blocs. We are already seeing an increase in their
share of global Foreign Direct Investment (FDI) flows, with the prime example
being Mexico. Although some investor attention in 2024 may focus on the
political and social challenges in countries such as Ecuador, Guyana and
Panama, we maintain that the region when taken as a whole, appears to be a
more attractive investment destination than many in the market currently
believe.
Sam Vecht and Christoph Brinkmann
BlackRock Investment Management (UK) Limited
26 March 2024
TEN LARGEST INVESTMENTS
as at 31 December 2023
Together, the ten largest investments represented 55.3% of total investments
of the Company’s portfolio as at 31 December 2023 (2022: 53.5%).
1 Vale (2022: 1st)
Materials
Market value – American depositary share (ADS): US$18,331,000
Share of investments: 9.6% (2022: 9.5%)
is one of the world’s largest mining groups, with other businesses in
logistics, energy and steelmaking. Vale is the world’s largest producer of
iron ore and nickel but also operates in the coal, copper, manganese and
ferro-alloys sectors.
2 Petrobrás (2022: 2nd)
Energy
Market value – American depositary receipt (ADR): US$6,666,000
Market value – preference shares ADR: US$6,091,000
Market value – ordinary shares: US$3,705,000
Share of investments: 8.6% (2022: 7.1%)
is a Brazilian integrated oil and gas group, operating in the exploration and
production, refining, marketing, transportation, petrochemicals, oil product
distribution, natural gas, electricity, chemical-gas and biofuel segments of
the industry. The group controls significant assets across Africa, North and
South America, Europe and Asia, with a majority of production based in Brazil.
3 Banco Bradesco (2022: 6th)
Financials
Market value – ADR: US$8,726,000
Market value – preference shares: US$3,276,000
Share of investments: 6.2% (2022: 5.1%)
is one of Brazil’s largest private sector banks. The bank divides its
operations into two main areas – banking and insurance services and
management of complementary private pension plans and saving bonds.
4 Walmart de México y Centroamérica (2022: 21st)
Consumer Staples
Market value – ordinary shares: US$11,317,000
Share of investments: 5.9% (2022: 1.9%)
is also known as Walmex, it is the Mexican and Central American Walmart
division.
5 B3 (2022: 5th)
Financials
Market value – ordinary shares: US$9,814,000
Share of investments: 5.1% (2022: 5.2%)
is a stock exchange located in Brazil, providing trading services in an
exchange and OTC environment. B3’s scope of activities include the creation
and management of trading systems, clearing, settlement, deposit and
registration for the main classes of securities, from equities and corporate
fixed income securities to currency derivatives, structured transactions and
interest rates, and agricultural commodities. B3 also acts as a central
counterparty for most of the trades carried out in its markets and offers
central depository and registration services.
6 FEMSA (2022: 3rd)
Consumer Staples
Market value – ADR: US$9,126,000
Share of investments: 4.8% (2022: 6.0%)
is a Mexican beverages group which engages in the production, distribution,
and marketing of beverages. The firm also produces, markets, sells, and
distributes Coca-Cola trademark beverages, including sparkling beverages.
7 AmBev (2022: 4th)
Consumer Staples
Market value – ADR: US$6,394,000
Market value – ordinary shares: US$1,542,000
Share of investments: 4.2% (2022: 5.3%)
is a Brazilian brewing group which engages in the production, distribution,
and sale of beverages. Its products include beer, carbonated soft drinks and
other non-alcoholic and non-carbonated products with operations in Brazil,
Central America, the Caribbean and Canada.
8 Grupo Aeroportuario del Pacifico (2022: 14th)
Industrials
Market value – ADS: US$7,694,000
Share of investments: 4.0% (2022: 2.3%)
is a Mexican airport operator headquartered in Guadalajara, Mexico. The
company holds concessions to operate, maintain and develop approximately 10
international airports in the Pacific and Central regions of Mexico, and an
international airport in Jamaica.
9 Itaú Unibanco (2022: 7th)
Financials
Market value – ADR: US$7,208,000
Share of investments: 3.8% (2022: 4.9%)
is a Brazilian financial services group that services individual and corporate
clients in Brazil and abroad. Itaú Unibanco was formed through the merger of
Banco Itaú and Unibanco in 2008. It operates in the retail banking and
wholesale banking segments.
10 Grupo Financiero Banorte (2022: 8th)
Financials
Market value – ordinary shares: US$5,966,000
Share of investments: 3.1% (2022: 4.8%)
is a Mexican banking and financial services holding company and is one of the
largest financial groups in the country. It operates as a universal bank and
provides a wide array of products and services through its broker dealer,
annuities and insurance companies, retirements savings funds (Afore), mutual
funds, leasing and factoring company and warehousing.
All percentages reflect the value of the holding as a percentage of total
investments. For this purpose, where more than one class of securities is
held, these have been aggregated.
The percentages in brackets represent the value of the holding as at 31
December 2022.
PORTFOLIO OF INVESTMENTS
as at 31 December 2023
Market
value % of
US$’000 investments
Brazil
Vale – ADS 18,331 9.6
Petrobrás – ADR 6,666 } 8.6
Petrobrás – preference shares ADR 6,091
Petrobrás 3,705
Banco Bradesco – ADR 8,726 } 6.2
Banco Bradesco – preference shares 3,276
B3 9,814 5.1
AmBev – ADR 6,394 } 4.2
AmBev 1,542
Itaú Unibanco – ADR 7,208 3.8
Hapvida Participacoes 5,618 3.0
EZTEC Empreendimentos e Participacoes 4,263 2.2
Sendas Distribuidora 4,217 2.2
Arezzo Industria e Comercio 4,028 2.1
Alpargatas 3,874 2.0
Lojas Renner 3,823 2.0
Vamos 3,792 2.0
Rumo 3,441 1.8
Grupo De Moda Soma 2,808 1.5
Pagseguro Digital 1,992 1.1
Rede D'or Sao Luiz 1,912 1.0
IRB Brasil Resseguros 1,776 0.9
MRV Engenharia 1,417 0.8
114,714 60.1
Mexico
Walmart de México y Centroamérica 11,317 5.9
FEMSA – ADR 9,126 4.8
Grupo Aeroportuario del Pacifico – ADS 7,694 4.0
Grupo Financiero Banorte 5,966 3.1
Fibra Uno Administracion – REIT 5,222 2.7
MAG Silver Corp 4,595 2.4
Grupo México 4,360 2.3
America Movil – ADR 3,708 2.0
51,988 27.2
Chile
Sociedad Química Y Minera - ADR 5,585 2.9
Empresas CMPC 2,880 1.5
Cia Cervecerias Unidas 1,366 } 1.2
Cia Cervecerias Unidas – ADR 968
10,799 5.6
Argentina
Globant 2,969 1.6
Tenaris 2,513 1.3
5,482 2.9
Colombia
Bancolombia 4,714 2.5
4,714 2.5
Panama
Copa Holdings 3,178 1.7
3,178 1.7
Total investments 190,875 100.0
All investments are in equity shares unless otherwise stated.
The total number of investments held at 31 December 2023 was 39 (2022: 40). At
31 December 2023, the Company did not hold any equity interests comprising
more than 3% of any company’s share capital (2022: none).
PORTFOLIO ANALYSIS
as at 31 December 2023
Geographical weighting (gross market exposure) vs MSCI EM Latin America Index
% of net assets MSCI EM Latin America Index
Brazil 60.5 61.3
Mexico 27.4 29.0
Chile 5.6 5.4
Argentina 2.9 0.0
Colombia 2.5 1.2
Panama 1.7 0.0
Peru 0.0 3.1
Sources: BlackRock and MSCI.
Sector and geographical allocations
Net other 2023 2022
Brazil Mexico Chile Argentina Colombia Panama Peru liabilities Total Total
% % % % % % % % % %
Communication Services – 1.9 – – – – – – 1.9 2.5
Consumer Discretionary 10.6 – – – – – – – 10.6 3.2
Consumer Staples 6.4 10.8 1.2 – – – – – 18.4 18.7
Energy 8.7 – – 1.3 – – – – 10.0 9.4
Financials 17.3 3.1 – – 2.5 – – – 22.9 30.9
Health Care 4.0 – – – – – – – 4.0 4.4
Industrials 3.8 4.1 2.9 – – 1.7 – – 12.5 7.6
Information Technology – – – 1.6 – – – – 1.6 1.5
Materials 9.7 4.7 1.5 – – – – – 15.9 21.7
Real Estate – 2.8 – – – – – – 2.8 6.9
Net other liabilities – – – – – – – (0.6) (0.6) (6.8)
2023 total investments 60.5 27.4 5.6 2.9 2.5 1.7 – (0.6) 100.0 –
2022 total investments 64.0 28.5 6.1 3.4 – 2.3 2.5 (6.8) – 100.0
Source: BlackRock.
ENVIRONMENAL, SOCIAL AND GOVERANCE ISSUES AND APPROACH
The Board’s approach
Environmental, social and governance (ESG) issues can present both
opportunities and risks to long-term investment performance. The securities
within the Company’s investment remit are typically large producers of vital
food, timber, minerals and oil supplies, and consequently face many ESG
challenges and headwinds as they grapple with the impact of their operations
on the environment and resources. The Board is also aware that there is
significant room for improvement in terms of disclosure and adherence to
global best practices for corporates throughout the Latin American region,
which lags global peers when it comes to ESG best practice. These ESG issues
faced by companies in the Latin American investment universe are a key focus
of the Board, and it is committed to a diligent oversight of the activities of
the Manager in these areas. Whilst the Company does not exclude investment in
stocks on ESG criteria and has not adopted an ESG investment strategy, ESG
considerations are integrated into the investment process when weighing up the
risk and reward benefits of investment decisions. The Board believes that
communication and engagement with portfolio companies is important and can
lead to better outcomes for shareholders and the environment than merely
excluding investment in certain areas.
More information on BlackRock’s approach to ESG integration, as well as
activity specific to the BlackRock Latin American Investment Trust plc
portfolio, is set out below. BlackRock has defined ESG integration as the
practice of incorporating material ESG information and consideration of
sustainability risks into investment decisions in order to enhance
risk-adjusted returns. ESG integration does not change the Company’s
investment objective or constrain the Investment Manager’s investable
universe and does not mean that an ESG or impact focused investment strategy
or any exclusionary screens have been or will be adopted by the Company.
Similarly, ESG integration does not determine the extent to which the Company
may be impacted by sustainability risks. More information on sustainability
risks may be found in the AIFMD Fund Disclosures document of the Company
available on the Company’s website at
https://www.blackrock.com/uk/individual/literature/policies/itc-disclosure-blackrock-latin-america-trust-plc.pdf.
The Company does not meet the criteria for Article 8 or 9 products under the
EU Sustainable Finance Disclosure Regulation (“SFDR”) and the investments
underlying this financial product do not take into account the EU criteria for
environmentally sustainable economic activities.
BlackRock’s approach to ESG integration
BlackRock believes that sustainability risks – including climate risk are
investment risks. As a fiduciary, we manage material risks and opportunities
that could impact portfolios. Sustainability can be a driver of investment
risks and opportunities, and we incorporate them in our firm wide processes
when they are material. This in turn (in BlackRock’s view) is likely to
drive a significant reallocation of capital away from traditional carbon
intensive industries over the next decade. BlackRock believes that
carbon-intensive companies will play an integral role in unlocking the full
potential of the energy transition, and to do this, they must be prepared to
adapt, innovate and pivot their strategies towards a low carbon economy.
BlackRock incorporates into its firmwide processes relevant, financially
material information, including financially material data and information
related to ESG. BlackRock's investment view is that doing so can provide
better risk-adjusted returns for its clients over the long term.
BlackRock has a framework for ESG integration that permits a diversity of
approaches across different investment teams, strategies and particular client
mandates. As with other investment risks and opportunities, the financial
materiality of ESG considerations may vary by issuer, sector, product,
mandate, and time horizon. As such BlackRock's ESG integration framework needs
to allow for flexibility across investment teams. Depending on the investment
approach, financially material ESG data or information may help inform the due
diligence, portfolio or index construction, and/or monitoring processes of
client portfolios, as well as BlackRock's approach to risk management.
BlackRock's ESG integration framework is built upon its history as a firm
founded on the principle of thorough and thoughtful risk management. Aladdin,
BlackRock's core risk management and investment technology platform, allows
investors to leverage financially material ESG data or information as well as
the combined experience of BlackRock's investment teams to effectively
identify investment opportunities and investment risks. BlackRock's heritage
in risk management combined with the strength of the Aladdin platform enables
BlackRock’s approach to ESG integration.
BlackRock structures its approach to ESG integration around three main
pillars: investment processes, material insights and transparency. These
pillars underpin ESG integration at BlackRock, and they are supported by
equipping BlackRock employees with investment relevant ESG data, tools, and
education.
More information in respect of BlackRock's approach to ESG integration can be
found at
https://www.blackrock.com/corporate/literature/publication/blk-esg-investment-statement-web.pdf
BlackRock Latin American Investment Trust plc - Investment Stewardship
Engagement with portfolio companies in the year ended 31 December 2023
Given the Board’s belief in the importance of engagement and communication
with portfolio companies, they receive regular updates from the Manager in
respect of activity undertaken for the year under review. The Board notes that
over the year to 31 December 2023, 53 total company engagements were held
with the management teams of 25 portfolio companies representing 74% of the
portfolio by % of holdings at 31 December 2023. To put this into context,
there were 34 companies in the BlackRock Latin American Investment Trust plc
portfolio at 31 December 2023. Additional information is set out in the table
below and charts contained within the Annual Report and Financial Statements
as well as the key engagement themes for the meetings held in respect of the
Company’s portfolio holdings.
BlackRock Latin American Investment Trust plc
year ended 31 December 2023
Number of engagements held 53
Number of companies met 25
% of equity investments covered* 74%
Shareholder meetings voted at 50
Number of proposals voted on 654
Number of votes against management 69
% of total votes represented by votes against management 8.78%
* Calculated as the percentage of the portfolio holdings at 31 December 2023
represented by the portfolio companies that engagements were held with.
Engagement Topics (1) Engagement Topics (1)
%
Climate Risk Management 25
Water and Waste 7
Other company impacts on the environment 1
Business Oversight/Risk Management 45
Corporate Strategy 44
Board Composition and Effectiveness 36
Governance Structure 35
Sustainability Reporting 26
Remuneration 15
Board Gender Diversity 7
Executive Management 6
Other 1
Human Capital Management 9
Community Relations 5
Privacy & Data Security 5
Diversity and Inclusion 2
Business Ethics and Integrity 2
Other company impacts on people/human rights 2
Indigenous Peoples Rights 1
Health and Safety 1
Supply Chain Labour Management 1
Social Risks & Opportunities 1
Engagement Themes(1)
%
Governance 53
Environmental 25
Social 22
(1) Most engagement conversations cover multiple topics. More detail
about BIS’ engagement priorities can be found here:
www.blackrock.com/corporate/literature/publication/blk-stewardship-priorities-final.pdf.
The number of meetings held in respect of the Company’s portfolio holdings;
at which a particular topic is discussed.
Investment Stewardship
Consistent with BlackRock’s fiduciary duty as an asset manager, BlackRock
Investment Stewardship (BIS) seeks to support investee companies in their
efforts to deliver long-term financial value on behalf of their clients. These
clients include public and private pension plans, governments, insurance
companies, endowments, universities, charities and ultimately, individual
investors, among others. BIS serves as a link between BlackRock’s clients
and the companies they invest in. Clients depend on BlackRock to help them
meet their investment goals; the business and governance decisions that
companies make may have a direct impact on BlackRock’s clients’ long-term
investment outcomes and financial wellbeing.
Global Principles
The BIS Global Principles, regional voting guidelines, and engagement
priorities (collectively, the ‘BIS policies’) set out the core elements of
corporate governance that guide BIS’ efforts globally and within each
regional market, including when engaging with companies and voting at
shareholder meetings when authorised to do so on behalf of clients. Each year,
BIS reviews its policies and updates them as necessary to reflect changes in
market standards and regulations, insights gained over the year through
third-parties and its own research, and feedback from clients and companies.
BIS’ Global Principles are available on its website at
https://www.blackrock.com/corporate/literature/fact-sheet/blk-responsible-investment-engprinciples-global.pdf.
Regional voting guidelines
BIS’ voting guidelines are intended to help clients and companies understand
its thinking on key governance matters. They are the benchmark against which
it assesses a company’s approach to corporate governance and the items on
the agenda to be voted on at a shareholder meeting. BIS applies its guidelines
pragmatically, taking into account a company’s unique circumstances where
relevant. BlackRock informs voting decisions through research and engages as
necessary. BIS reviews its voting guidelines annually and updates them as
necessary to reflect changes in market standards, evolving governance practice
and insights gained from engagement over the prior year. BIS’ regional
voting guidelines are available on its website at
www.blackrock.com/corporate/about-us/investment-stewardship#stewardship-policies.
BlackRock is committed to transparency in terms of disclosure on its
stewardship activities on behalf of clients. BIS publishes its stewardship
policies – such as the BIS Global Principles, regional voting guidelines and
engagement priorities – to help BlackRock’s clients understand its work to
advance their interests as long-term investors in public companies.
Additionally, BIS publishes both annual and quarterly reports detailing its
stewardship activities, as well as vote bulletins that describe its rationale
for certain votes at high profile shareholder meetings. More detail in respect
of BIS reporting can be found at
www.blackrock.com/corporate/insights/investment-stewardship.
BlackRock’s reporting and disclosures
In terms of its own reporting, BlackRock believes that the Sustainability
Accounting Standards Board provides a clear set of standards for reporting
sustainability information across a wide range of issues, from labour
practices to data privacy to business ethics.
For evaluating and reporting climate-related risks, as well as the related
governance issues that are essential to managing them, the Task Force on
Climate-related Financial Disclosures (TCFD) provides a valuable framework.
BlackRock recognises that reporting to these standards requires significant
time, analysis, and effort. BlackRock’s 2022 TCFD report can be found at
www.blackrock.com/corporate/literature/continuous-disclosure-and-important-information/tcfdreport-2022-blkinc.pdf.
STRATEGIC REPORT
The Directors present the Strategic Report of the Company for the year ended
31 December 2023.
Objective
The Company’s objective is to secure long-term capital growth and an
attractive total return primarily through investing in quoted securities in
Latin America.
Strategy, business model and investment policy
Strategy
The Company invests in accordance with the objective given above. The Board is
collectively responsible to shareholders for the long-term success of the
Company and is its governing body. There is a clear division of responsibility
between the Board and the Manager. Matters for the Board include setting the
Company’s strategy, including its investment objective and policy, setting
limits on gearing (both bank borrowings and the effect of derivatives),
capital structure, governance, and appointing and monitoring of performance of
service providers, including the Manager.
Business model
The Company’s business model follows that of an externally managed
investment trust; therefore the Company does not have any employees and
outsources its activities to third party service providers including the
Manager who is the principal service provider.
In accordance with the Alternative Investment Fund Managers’ Directive
(AIFMD), as implemented, retained and onshored in the UK, the Company is an
Alternative Investment Fund (AIF). BlackRock Fund Managers Limited (the
Manager) is the Company’s Alternative Investment Fund Manager.
The management of the investment portfolio and the administration of the
Company have been contractually delegated to the Manager who in turn (with the
permission of the Company) has delegated certain investment management and
other ancillary services to BlackRock Investment Management (UK) Limited (BIM
(UK) or the Investment Manager). The Manager, operating under guidelines
determined by the Board, has direct responsibility for the decisions relating
to the day-to-day running of the Company and is accountable to the Board for
the investment, financial and operating performance of the Company. The
Company delegates fund accounting services to the Manager, which in turn
sub-delegates these services to The Bank of New York Mellon (International)
Limited. Other service providers include the Depositary, The Bank of New York
Mellon (International) Limited and the Registrar, Computershare Investor
Services PLC.
Details of the contractual terms with these service providers are set out in
the Directors’ Report contained within the Annual Report and Financial
Statements.
Our strategy is that the portfolio will be chosen from a spread of companies
which are listed in, or whose main activities are in, Latin America.
As an actively managed fund, our primary aims over the medium term are
significant outperformance of our benchmark index (the MSCI EM Latin America
Index – net total return basis). The Investment Manager is not constrained
from investing outside the index. Our portfolio and performance will diverge
from the returns obtained simply by investing in the index.
Investment policy
As a closed-end company we are able to adopt a longer-term investment horizon,
and therefore may, when appropriate, have a higher proportion of less liquid
mid and smaller capitalisation companies than comparable open ended funds.
The portfolio is subject to a number of geographical restrictions relative to
the benchmark index but the Investment Manager is not constrained from
investing outside the index. For Brazil, Mexico, Chile, Argentina, Peru,
Colombia and Venezuela, the portfolio weighting is limited to plus or minus
20% of the index weighting for each of those countries. For all other Latin
American countries the limit is plus or minus 10% of the index weighting.
Additionally, the Company may invest in the securities of quoted companies
whose main activities are in Latin America but which are not established or
incorporated in the region or quoted on a local exchange.
The Company’s policy is that up to 10% of the gross assets of the portfolio
may be invested in unquoted securities. For the year ended 31 December 2023
and up to the date of this report, the Company did not hold any unquoted
securities.
The Company will not hold more than 15% of the market capitalisation of any
one company and no more than 15% of the Company’s investments will be held
in any one company as at the date any such investment is made.
No more than 15% of the gross assets of the portfolio shall be invested in
other UK listed investment companies (including other investment trusts).
The Company may deal in derivatives (including options, futures and forward
currency transactions) for the purposes of efficient portfolio management
(i.e. for the purpose of reducing, transferring or eliminating investment risk
in the underlying investments of a collective investment undertaking,
including any technique or instrument used to provide protection against
exchange and credit risks). No more than 20% of the Company’s portfolio by
value may be under option at any given time. The Company did not deal in any
derivatives in the year ended 31 December 2023, nor has it entered into any
derivative contracts since the year end and up to the date of this report.
The Company may underwrite or sub-underwrite any issue or offer for the sale
of investments. No such commitment will be entered into if, at that time, the
aggregate of such investments would exceed 10% of the net asset value of the
Company or any such individual investment would exceed 3% of the net asset
value of the Company.
The Company may, from time to time, use borrowings to gear its investment
portfolio or in order to fund the market purchase of its own ordinary shares.
Under the Company’s Articles of Association, the net borrowings of the
Company may not exceed 100% of the Company’s adjusted capital and reserves
(as defined in the Glossary contained within the Annual Report and Financial
Statements). However, net borrowings are not expected to exceed 25% of net
assets under normal circumstances. The Investment Manager may also hold cash
or cash-equivalent securities when it considers it to be advantageous to do
so.
The Company’s financial statements are maintained in US Dollars. Although
many investments are likely to be denominated and quoted in currencies other
than in US Dollars, the Company does not currently employ a hedging policy
against fluctuations in exchange rates.
No material change will be made to the Company’s investment policy without
shareholder approval.
Investment process
An overview of the investment process is set out below.
The Investment Manager’s main focus is to invest in securities that provide
opportunities for strong capital appreciation relative to our benchmark. We
aim to maintain a concentrated portfolio of high conviction investment ideas
that typically consists of companies with a combination of mispriced growth
potential and/or display attributes of sustained value creation that are
underappreciated by the financial markets.
The Manager’s experienced research analyst team conducts on the ground
research, meeting with target companies, competitors, suppliers and others in
the region in order to generate investment ideas for portfolio construction.
In addition, the investment team meets regularly with government officials,
central bankers, industry regulators and consultants.
Final investment decisions result from a combination of bottom-up, company
specific research with top-down, macro analysis.
Share rating and discount control
The Directors recognise that it is in the long term interests of shareholders
that shares do not trade at a significant discount to their prevailing NAV.
The Board monitors the level of the Company’s discount to NAV on an ongoing
basis.
Over the year under review, the Company’s share price traded in the range of
a discount of 6.8% to 18.6% and at the year end stood at a discount of 11.5%.
Further details setting out how the discount or premium at which the
Company’s shares trade is calculated are included in the Glossary contained
within the Annual Report and Financial Statements.
A special resolution was passed at the AGM of the Company held on 22 May 2023,
granting the Directors’ authority to make market purchases of the
Company’s ordinary shares to be held, sold, transferred or otherwise dealt
with as treasury shares or cancelled upon completion of the purchase. The
Board intends to renew this authority at the AGM to be held in May 2024.
The Board adopted a new discount control mechanism, for the four year period
from 1 January 2022 to 31 December 2025.
Under this new mechanism the Board undertakes to make a tender offer to
shareholders for 24.99% of the issued share capital (excluding treasury
shares) of the Company at a tender price reflecting the latest cum-income Net
Asset Value (NAV) less 2% and related portfolio realisation costs if, over the
four year period from 1 January 2022 to 31 December 2025 (the ‘Calculation
Period’), either of the following conditions are met:
(i) the annualised total NAV return of the Company does not exceed the
annualised benchmark index (being the MSCI EM Latin America Index) US Dollar
net total return by more than 50 basis points over the Calculation Period; or
(ii) the average daily discount to the cum-income NAV exceeds 12% as
calculated with reference to the trading of the ordinary shares over the
Calculation Period.
The making and implementation of this tender offer will be conditional,
amongst other things, upon the Company having the required shareholder
authority or such shareholder authority being obtained, the Company having
sufficient distributable reserves to effect the repurchase of any successfully
tendered shares and, having regard to its continuing financial requirements,
sufficient cash reserves to settle the relevant transactions with
shareholders, the Company’s biennial continuation votes being approved at
the Annual General Meetings in 2024 and 2026. The Board believes that a four
year performance target enables the Manager to take a sufficiently long term
approach to investing in quality companies in the region, and it believes that
it is in shareholders’ interests as a whole that this time period for
assessing performance be adopted.
SECTION 172 STATEMENT: PROMOTING THE SUCCESS OF BLACKROCK LATIN AMERICAN
INVESTMENT TRUST PLC
The Companies (Miscellaneous Reporting) Regulations 2018 require directors to
explain more fully how they have discharged their duties under Section 172(1)
of the Companies Act 2006 in promoting the success of their companies for the
benefit of members as a whole. This enhanced disclosure covers how the Board
has engaged with and understands the views of stakeholders and how
stakeholders’ needs have been taken into account, the outcome of this
engagement and the impact that it has had on the Board’s decisions.
As the Company is an externally managed investment company and does not have
any employees or customers, the Board considers the main stakeholders in the
Company to be the shareholders, key service providers (being the Manager and
Investment Manager, the Custodian, Depositary, Registrar and Broker) and
investee companies. The reasons for this determination, and the Board’s
overarching approach to engagement, are set out in the table below.
Stakeholders
Shareholders
Continued shareholder support and engagement are critical to the continued
existence of the Company and the successful delivery of its long-term
strategy. The Board is focused on fostering good working relationships with
shareholders and on understanding the views of shareholders in order to
incorporate them into the Board’s strategy and objectives in delivering
long-term growth and income.
Manager and Investment Manager
The Board’s main working relationship is with the Manager, who is
responsible for the Company’s portfolio management (including asset
allocation, stock and sector selection) and risk management, as well as
ancillary functions such as administration, secretarial, accounting and
marketing services. The Manager has sub-delegated portfolio management to the
Investment Manager. Successful management of shareholders’ assets by the
Investment Manager is critical for the Company to successfully deliver its
investment strategy and meet its objective. The Company is also reliant on the
Manager as AIFM to provide support in meeting relevant regulatory obligations
under the AIFMD and other relevant legislation.
Other key service providers
In order for the Company to function as an investment trust with a listing on
the premium segment of the official list of the FCA and trade on the London
Stock Exchange’s (LSE) main market for listed securities, the Board relies
on a diverse range of advisors for support in meeting relevant obligations and
safeguarding the Company’s assets. For this reason the Board considers the
Company’s Custodian, Depositary, Registrar and Broker to be stakeholders.
The Board maintains regular contact with its key external providers and
receives regular reporting from them through the Board and Committee meetings,
as well as outside of the regular meeting cycle.
Investee companies
Portfolio holdings are ultimately shareholders’ assets, and the Board
recognises the importance of good stewardship and communication with investee
companies in meeting the Company’s investment objective and strategy. The
Board monitors the Manager’s stewardship activities and receives regular
feedback from the Manager in respect of meetings with the management of
investee companies.
A summary of the key areas of engagement undertaken by the Board with its key
stakeholders in the year under review and how Directors have acted upon this
to promote the long-term success of the Company are set out in the table
below.
Areas of Engagement
Investment mandate and objective
Issue
The Board is committed to promoting the role and success of the Company in
delivering on its investment mandate to shareholders over the long term.
However, the Board recognises that securities within the Company’s
investment remit may involve significant additional risk due to the political
volatility and environmental, social and governance concerns facing many of
the countries in the Company’s investment universe. These ESG issues should
be a key focus of our Manager’s research. More than ever, consideration of
material ESG information and sustainability risk is an important element of
the investment process and must be factored in when making investment
decisions. The Board also has responsibility to shareholders to ensure that
the Company’s portfolio of assets is invested in line with the stated
investment objective and in a way that ensures an appropriate balance between
spread of risk and portfolio returns.
Engagement
The Board believes that responsible investment and sustainability are
important to the longer-term delivery of growth in capital and income and has
worked very closely with the Manager throughout the year to regularly review
the Company’s performance, investment strategy and underlying policies, and
to understand how ESG considerations are integrated into the investment
process.
While the Company has not adopted an ESG investment strategy or exclusionary
screens, the Manager’s approach to the consideration of ESG factors in
respect of the Company’s portfolio, as well as its engagement with investee
companies to encourage the adoption of sustainable business practices which
support long-term value creation, are kept under review by the Board. The
Manager reports to the Board in respect of its consideration of ESG factors
and how these are integrated into the investment process; a summary of
BlackRock’s approach to ESG integration is set out within the Annual Report
and Financial Statements.
The Board discussed ESG concerns in respect of specific portfolio companies
with the Manager, including the investment rationale for holding companies
with poor ESG ratings and the engagement being entered into with management
teams to address the underlying issues driving these ratings.
The Company does not seek to become an Article 8 or 9 company under the EU
Sustainable Finance Disclosure Regulation (EU SFDR) legislation and will not
seek to have one of the 4 sustainability labels under the FCA’s
Sustainability Disclosure Requirements (SDR) regime, as the Board believes
engagement is likely to be more effective in Latin America than exclusion. The
Investment Manager has access to a range of data sources, including principal
adverse indicator (PAI) data, when making decisions on the selection of
investments. However, whilst BlackRock considers ESG risks for all portfolios
and these risks may coincide with environmental or social themes associated
with the PAIs, unless stated otherwise in the AIFMD Disclosure Document, the
Company does not commit to considering PAIs in driving the selection of its
investments.
Impact
The portfolio activities undertaken by the Manager, can be found in the
Investment Manager’s Report above.
Dividend target
Issue
A key element of the Board’s overall strategy to reduce the discount at
which the Company’s shares trade is the Company’s dividend policy whereby
the Company pays a regular quarterly dividend equivalent to 1.25% of the
Company’s US Dollar NAV at the end of each calendar quarter. The Board
believes this policy which produced a dividend yield of 5.1% (based on the
share price of 569.84 cents per share at 31 December 2023, equivalent to the
Sterling price of 447.00 pence per share translated into US cents at the rate
prevailing at 31 December 2023 of US$1.27 to £1), enhances demand for the
Company’s shares, which will help to narrow the Company’s discount over
time. These dividends are funded out of capital reserves to the extent that
current year revenue and revenue reserves are insufficient; the Board believes
that this removes pressure from the investment managers to seek a higher
income yield from the underlying portfolio itself which could detract from
total returns but keep the dividend policy and its impact on total return
under review.
Engagement
The Manager reports total return performance statistics to the Board on a
regular basis, along with the portfolio yield and the impact of the dividend
policy on brought forward distributable reserves.
The Board reviews the Company’s discount on a regular basis and holds
regular discussions with the Manager and the Company’s broker regarding the
discount level.
The Manager provides the Board with feedback and key performance statistics
regarding the success of the Company’s marketing initiatives which include
messaging to highlight the quarterly dividends.
The Board also reviews feedback from shareholders in respect of the level of
dividend, shareholders may attend the Company’s Annual General Meeting where
formal questions may be put to the Board.
Impact
Since the dividend policy was introduced in July 2018, the Company’s
discount has narrowed from an average of 13.5% for the two year period
preceding the introduction of the new policy on 13 March 2018 to an average
of 11.3% for the period from 14 March 2018 to 31 December 2023. At 22 March
2024 the discount stood at 12.1%.
Of total dividends of US$11,797,000 paid out in the year, US$6,116,000 has
been paid out of current year revenue.
The Company’s portfolio managers attend professional investor/analyst
meetings and webcast presentations live to professional and private investors
over the year to promote the Company and raise the profile in terms of the
investment strategy, including the dividend policy.
Discount management
Issue
The Board recognises that it is in the long-term interests of shareholders
that shares do not trade at a significant discount to their prevailing NAV.
Engagement
The Board has put in place a discount control mechanism covering the four
years to 31 December 2025 whereby shareholders will be offered a tender for
24.99% of the shares in issue, excluding treasury shares, (at a tender price
reflecting the latest cum income NAV less 2% and related portfolio realisation
costs) in the event that the continuation vote for each relevant biennial
period is approved (being the continuation votes at the AGMs in 2024 and
2026), where either of the following conditions have been met:
(i) the annualised total NAV return of the Company does not exceed the
annualised benchmark index (being the MSCI EM Latin America Index) US Dollar
net total return by more than 50 basis points over the four year period from
1 January 2022 to 31 December 2025; or
(ii) the average daily discount to the cum-income NAV exceeds 12% as
calculated with reference to the trading of the shares over the Calculation
Period. Further details are set out in the Strategic Report contained within
the Annual Report and Financial Statements.
The Board monitors the tender trigger targets described within the Annual
Report and Financial Statements on a regular basis in conjunction with the
Manager. The Manager provides regular performance updates and detailed
performance attribution.
Impact
The Company’s average discount for the period from 1 January 2022 to
31 December 2023 was 10.8%(1) compared to the tender discount threshold
of 12.0%(1).
The Company’s annualised NAV performance of 21.2% for the same period
outperformed the benchmark (which rose by 20.2% on an annualised basis) by
1.0% (equivalent to 100 basis points). For the tender not to be triggered,
the NAV must outperform the benchmark by more than 50 basis points on an
annualised basis over the four years to 31 December 2025. The Company’s
discount has widened over the year under review, from 9.1% at 31 December
2022 to 11.5% at 31 December 2023.
As at 22 March 2024 the discount was 12.1%.
(1) Alternative Performance Measures, see Glossary contained within the
Annual Report and Financial Statements.
Service levels of third party providers
Issue
The Board acknowledges the importance of ensuring that the Company’s
principal suppliers are providing a suitable level of service: including the
Manager in respect of investment performance and delivering on the Company’s
investment mandate; the Custodian and Depositary in respect of their duties
towards safeguarding the Company’s assets; the Registrar in its maintenance
of the Company’s share register and dealing with investor queries and the
Company’s Broker in respect of the provision of advice and acting as a
market maker for the Company’s shares.
Engagement
The Manager reports to the Board on the Company’s performance on a regular
basis. The Board carries out a robust annual evaluation of the Manager’s
performance, their commitment and available resources.
The Board performs an annual review of the service levels of all third party
service providers and concludes on their suitability to continue in their
role.
The Board receives regular updates from the AIFM, Depositary, Registrar and
Broker on an ongoing basis.
The Board works closely with the Manager to gain comfort that business
continuity plans continue to operate effectively for all of the Company’s
service providers.
Impact
All performance evaluations were performed on a timely basis and the Board
concluded that all third party service providers, including the Manager,
Custodian, Depositary and Fund Accountant were operating effectively and
providing a good level of service.
The Board has received updates in respect of business continuity planning from
the Company’s Manager, Custodian, Depositary, Fund Accountant, Broker,
Registrar and Printer, and is confident that arrangements are in place to
ensure that a good level of service will be maintained.
Board composition
Issue
The Board is committed to ensuring that its own composition brings an
appropriate balance of knowledge, experience and skills, and that it is
compliant with best corporate governance practice under the UK Code,
including guidance on tenure and the composition of the Board’s committees.
Engagement
The Board regularly reviews succession planning arrangements. The Nomination
Committee has agreed the selection criteria and the method of selection,
recruitment and appointment. Board diversity, including gender, is taken into
account when establishing recruitment criteria. When undertaking recruitment
activity, the Board will use the services of an external search consultant to
identify suitable candidates.
All Directors are subject to a formal evaluation process on an annual basis
(more details and the conclusions in respect of the 2023 evaluation process
are contained within the Annual Report and Financial Statements). All
Directors stand for re-election by shareholders annually. Shareholders may
attend the AGM and raise any queries in respect of Board composition or
individual Directors in person, or may contact the Company Secretary or the
Chairman using the details provided within the Annual Report and Financial
Statements if they wish to raise any issues.
Impact
As at the date of this report, the Board is comprised of two women and
two men.
Details of each Director’s contribution to the success and promotion of the
Company are set out in the Directors’ Report contained within the Annual
Report and Financial Statements. The Directors are not aware of any issues
that have been raised directly by shareholders in respect of Board composition
in 2023. Details for the proxy voting results in favour and against individual
Directors’ re-election at the 2022 AGM are given on the Company’s
website at www.blackrock.com/uk/brla.
Shareholders
Issue
Continued shareholder support and engagement are critical to the continued
existence of the Company and the successful delivery of its long-term
strategy.
Engagement
The Board is committed to maintaining open channels of communication and to
engage with shareholders. The Company welcomes and encourages attendance and
participation from shareholders at its Annual General Meetings. Shareholders
therefore have the opportunity to meet the Directors and Investment Manager
and to address questions to them directly.
The Annual Report and Half Yearly Financial Report are available on the
BlackRock website and are also circulated to shareholders either in printed
copy or via electronic communications. In addition, regular updates on
performance, monthly factsheets, the daily NAV and other information are also
published on the website at www.blackrock.com/uk/brla.
The Board also works closely with the Manager to develop the Company’s
marketing strategy, with the aim of ensuring effective communication with
shareholders in respect of the investment mandate and objective. Unlike
trading companies, one-to-one shareholder meetings usually take the form of a
meeting with the portfolio managers as opposed to members of the Board.
As well as attending regular investor meetings the portfolio managers hold
regular discussions with wealth management desks and offices to build on the
case for, and understanding of, long-term investment opportunities in
Latin America. The Manager also coordinates public relations activity,
including meetings between the portfolio managers and relevant industry
publications to set out their vision for the portfolio strategy and outlook
for the region. The Manager releases monthly portfolio updates to the market
to ensure that investors are kept up to date in respect of performance and
other portfolio developments, and maintains a website on behalf of the Company
that contains relevant information in respect of the Company’s investment
mandate and objective. If shareholders wish to raise issues or concerns with
the Board, they are welcome to do so at any time. The Chairman is available to
meet directly with shareholders periodically to understand their views on
governance and the Company’s performance where they wish to do so. She may
be contacted via the Company Secretary whose details are contained within the
Annual Report and Financial Statements.
Impact
The Board values any feedback and questions from shareholders ahead of and
during Annual General Meetings in order to gain an understanding of their
views and will take action when and as appropriate. Feedback and questions
will also help the Company evolve its reporting, aiming to make reports more
transparent and understandable.
Feedback from all substantive meetings between the Investment Manager and
shareholders will be shared with the Board. The Directors will also receive
updates from the Company’s broker on any feedback from shareholders, as well
as share trading activity, share price performance and an update from the
Investment Manager.
The portfolio managers attended a number of professional investor meetings
throughout the year and held discussions with a range of wealth management
desks and offices in respect of the Company during the year under review. The
Manager also held group webcasts in the year to provide investors with
portfolio updates and give them the opportunity to discuss any issues with the
portfolio managers. 53 press articles about the Company were published in the
year under review focusing on the Company’s profile and the case for
long-term investment opportunities in Latin America. These included
11 pieces of national coverage, 23 pieces of intermediary coverage and
21pieces of consumer investment coverage.
Performance
Details of the Company’s performance are set out in the Chairman’s
Statement above.
The Investment Manager’s Report above forms part of this Strategic Report
and includes a review of the main developments during the year, together with
information on investment activity within the Company’s portfolio.
Portfolio analysis
A detailed analysis of the investments and the sector and geographical
allocations is provided above.
Results and dividends
The results for the Company are set out in the Income Statement below. The
total gain for the year on ordinary activities, after taxation, was
US$53,405,000 (2022: gain of US$13,669,000) of which the revenue profit
amounted to US$8,967,000 (2022: US$13,842,000), and the capital gain amounted
to US$44,438,000 (2022: capital loss of US$173,000).
Under the Company’s dividend policy, dividends are calculated based on 1.25%
of the US Dollar NAV at close of business on the last working day of March,
June, September and December and are paid in May, August, November and
February respectively. Dividends will be financed through a combination of
available net income in each financial year and revenue and capital reserves.
The Company has declared interim dividends totalling 28.82 cents per share
under this policy in respect of the year ended 31 December 2023 as detailed
in the Annual Report and Financial Statements.
Details of this policy are also set out in the Chairman’s Statement above.
NAV, share price and index performance
At each meeting the Board reviews the detail of the performance of the
portfolio as well as the net asset value and share price (total return) for
the Company and compares this to the performance of other companies in the
peer group of Latin American open and closed-end funds and to our benchmark.
The Board also regularly reviews a number of indices and ratios to understand
the impact on the Company’s relative performance of the various components
such as asset allocation and stock selection.
Information on the Company’s performance is given in the performance record
contained within the Annual Report and Financial Statements and the
Chairman’s Statement and Investment Manager’s Report above.
Details of the Company’s discount control
The Board recognises that it is in the long-term interests of shareholders
that shares do not trade at a significant discount to their prevailing NAV.
The Board monitors the level of the Company’s discount to NAV on an ongoing
basis and considers strategies for managing any discount. In the year to 31
December 2023, the Company’s share price to NAV traded in the range of a
discount of 6.8% to 18.6% on a cum-income basis. The Board has in place
a discount control mechanism whereby it will offer shareholders the ability
to tender up to 24.99% of the Company’s issued share capital at the AGM in
2026 if certain performance and discount targets are not met. More details are
given in the Strategic Report contained within the Annual Report and Financial
Statements.
Further details setting out how the discount or premium at which the
Company’s shares trade is calculated are included in the Glossary contained
within the Annual Report and Financial Statements.
Ongoing charges
The ongoing charges represent the Company’s management fee and all other
operating expenses, excluding finance costs, direct transaction costs, custody
transaction charges, VAT recovered, taxation and certain non-recurring items
expressed as a percentage of average daily net assets.
The ongoing charges are based on actual costs incurred in the year as being
the best estimate of future costs. The Board reviews the ongoing charges and
monitors the expenses incurred by the Company on an ongoing basis against a
peer group of Latin American open and closed-end funds. A definition setting
out in detail how the ongoing charges ratio is calculated is included in the
Glossary contained within the Annual Report and Financial Statements.
Dividend Pay date
Quarter to 31 March 2023 6.21 cents 16 May 2023
Quarter to 30 June 2023 7.54 cents 11 August 2023
Quarter to 30 September 2023 7.02 cents 9 November 2023
Quarter to 31 December 2023 8.05 cents 9 February 2024
Total 28.82 cents
Composition of shareholder register
The Board is mindful of the importance of a diversified shareholder register
and the need to make the Company’s shares attractive to long-term investors;
it is therefore the Board’s aim to increase the diversity of the shareholder
register over time. The Board monitors the retail element of the register,
which is defined for these purposes as wealth managers, Independent Financial
Advisors (IFAs) and direct private investors. As at 31 December 2023, the
Company’s share register comprised 54.6% retail investors; the Board will
monitor this with the aim of growing the retail element of the register over
time.
Key performance indicators
At each Board meeting, the Directors consider a number of performance measures
to assess the Company’s success in achieving its objectives. The key
performance indicators (KPIs) used to measure the progress and performance of
the Company over time are comparable to those reported by other investment
trusts and are set out below.
The table below sets out the key KPIs for the Company. As indicated in
footnote 2 to the table, some of these KPIs fall within the definition of
‘Alternative Performance Measures’ (APMs) under guidance issued by the
European Securities and Markets Authority and additional information
explaining how these are calculated is set out in the Glossary contained
within the Annual Report and Financial Statements.
Year ended Year ended
31 December 31 December
2023 2022
Key Performance Indicators
Net asset value total return(1,2) 37.8% 6.6%
Share price total return(1,2) 35.3% 4.7%
Benchmark total return (net)(1) 32.7% 8.9%
Discount to net asset value(2) 11.5% 9.1%
Average discount to net asset value for the year 12.6% 8.9%
Revenue return per share 30.45c 41.48c
Ongoing charges(2,3) 1.28% 1.13%
Retail element of share register(4) 54.6% 53.2%
1 Calculated in US Dollar terms with dividends reinvested.
2 Alternative Performance Measures, see Glossary contained within the
Annual Report and Financial Statements.
3 Ongoing charges represent the management fee and all other operating
expenses excluding finance costs, direct transaction costs, custody
transaction charges, VAT recovered, taxation, prior year expenses written back
and certain non-recurring items as a % of average daily net assets.
4 Source: Richard Davies Investor Relations.
PRINCIPAL RISKS
The Company is exposed to a variety of risks and uncertainties and the key
risks are set out below. The Board has put in place a robust process to
identify, assess and monitor the principal and emerging risks. A core element
of this process is the Company’s risk register. This identifies the risks
facing the Company and assesses the likelihood and potential impact of each
risk and the quality of controls operating to mitigate it. A residual risk
rating is then calculated for each risk based on the outcome of the
assessment. This approach allows the effect of any mitigating procedures to be
reflected in the final assessment.
The risk register is regularly reviewed and the risks reassessed. The risk
environment in which the Company operates is also monitored and regularly
appraised. New risks are also added to the register as they are identified
which ensures that the document continues to be an effective risk management
tool. The risk that unforeseen or unprecedented events including (but not
limited to) heightened geo-political tensions such as the conflicts in
Russia-Ukraine and the Middle East, high inflation and the current cost of
living crisis has had a significant impact on global markets. The Board has
taken into consideration the risks posed to the Company by the crisis and
incorporated these into the Company’s risk register.
The risk register, its method of preparation and the operation of key controls
in the Manager’s and third party service providers’ systems of internal
control are reviewed on a regular basis by the Audit Committee in order to
gain a more comprehensive understanding of the Manager’s and other third
party service providers’ risk management processes and how these apply to
the Company’s business. BlackRock’s internal audit department provides an
annual presentation to the Audit Committee chairmen of the BlackRock
investment trusts setting out the results of testing performed in relation to
BlackRock’s internal control processes. Where produced, the Audit Committee
also reviews Service Organisation Control (SOC 1) reports from the Company’s
service providers.
As required by the UK Corporate Governance Code, the Board has undertaken a
robust assessment of both the principal and emerging risks facing the Company,
including those that would threaten its business model, future performance,
solvency or liquidity. Those principal risks have been described in the table
that follows, together with an explanation of how they are managed and
mitigated. The Board will continue to assess these risks on an ongoing basis.
Emerging risks are considered by the Board as they come into view and are
incorporated into the existing review of the Company’s risk register. They
were also considered as part of the annual evaluation process. Additionally,
the Manager considers emerging risks in numerous forums and the Risk and
Quantitative Analysis team produces an annual risk survey. Any material risks
of relevance to the Company identified through the annual risk survey will be
communicated to the Board.
The Board will continue to assess these risks on an ongoing basis. In relation
to the 2018 UK Corporate Governance Code, the Board is confident that the
procedures that the Company has put in place are sufficient to ensure that the
necessary monitoring of risks and controls has been carried out throughout the
reporting period.
The current risk register includes a number of risks which have been
categorised as follows:
• Counterparty;
• Investment performance;
• Income/dividend;
• Legal and regulatory compliance;
• Operational;
• Market;
• Financial; and
• Marketing.
The principal risks and uncertainties faced by the Company during the
financial year, together with the potential effects, controls and mitigating
factors, are set out in the following table.
Counterparty
Principal Risk
Potential loss that the Company could incur if a counterparty is unable (or
unwilling) to perform on its commitments.
Mitigation/Control
Due diligence is undertaken before contracts are entered into and exposures
are diversified across a number of counterparties. The Board reviews the
controls put in place by the Investment Manager to monitor and to minimise
counterparty exposure, which include intra-day monitoring of exposures to
ensure that these are within set limits.
The Depositary is liable for restitution for the loss of financial instruments
held in custody unless able to demonstrate the loss was a result of an event
beyond its reasonable control.
Investment performance
Principal Risk
Returns achieved are reliant primarily upon the performance of the portfolio.
The Board is responsible for:
• deciding the investment strategy to fulfil the
Company’s objective; and
• monitoring the performance of the Investment
Manager and the implementation of the investment strategy.
An inappropriate investment strategy may lead to:
• poor performance compared to the benchmark
index and the Company’s peer group;
• a widening discount to NAV;
• a reduction or permanent loss of capital; and
• dissatisfied shareholders and reputational
damage.
The Board is also cognisant of the long term risk to performance from
inadequate attention to ESG issues, and in particular the impact of Climate
Change. More detail in respect of these risks can be found in the AIFMD Fund
Disclosures document available on the Company’s website at
https://www.blackrock.com/uk/individual/literature/policies/itc-disclosure-blackrock-latin-america-trust-plc.pdf.
Mitigation/Control
To manage this risk the Board:
• regularly reviews the Company’s investment mandate and long-term
strategy;
• has set investment restrictions and guidelines which the
Investment Manager monitors and regularly reports on;
• receives from the Investment Manager a regular explanation of
stock selection decisions, portfolio exposure, gearing and any changes in
gearing and the rationale for the composition of the investment portfolio; and
• monitors the maintenance of an adequate spread of investments in
order to minimise the risks associated with factors specific to particular
sectors, based on the diversification requirements inherent in the investment
policy.
Consideration of material ESG information and sustainability risks is
integrated in the Manager’s investment process, as set out within the Annual
Report and Financial Statements. This is monitored by the Board.
Income/dividend
Principal Risk
The Company’s dividend policy is to pay dividends based on 1.25% of the US
Dollar net asset value at each quarter end. Under this policy, a portion of
the dividend is likely to be paid out of capital reserves, and over time this
might erode the capital base of the Company, with a consequential impact on
longer-term total returns. The rate at which this may occur and the degree to
which dividends are funded from capital are also dependent upon the level of
dividends and other income earned from the portfolio. Income returns from the
portfolio are dependent, among other things, upon the Company successfully
pursuing its investment policy.
Any change in the tax treatment of 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.
Mitigation/Control
The Board monitors this risk through the receipt of detailed income forecasts
and considers the level of income at each meeting.
The Company has the ability to make dividend distributions out of capital
reserves as well as revenue reserves to support any dividend target. These
reserves totalled US$158.8 million at 31 December 2023.
The Board is mindful of the balance of shareholder returns between income and
capital and monitors the impact of the Company’s dividend on the Company’s
capital base and the impact over time on total return.
Any changes to the Company’s dividend policy are communicated to the market
on a timely basis and shareholder approval will be sought for significant
changes.
Legal and regulatory compliance
Principal Risk
The Company has been approved by HM Revenue & Customs as an investment trust,
subject to continuing to meet the relevant eligibility conditions and 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.
Any breach of the relevant eligibility conditions could lead to the Company
losing investment trust status and being subject to corporation tax on capital
gains realised within the Company’s portfolio. In such event the investment
returns of the Company may be adversely affected.
Any serious breach could result in the Company and/or the Directors being
fined or the subject of criminal proceedings or the suspension of the
Company’s shares which would in turn lead to a breach of the Corporation Tax
Act 2010.
Amongst other relevant laws and regulations, the Company is required to comply
with the provisions of the Companies Act 2006, the Alternative Investment
Fund Managers’ Directive, the UK Listing Rules, international sanctions and
the FCA’s Disclosure Guidance and Transparency Rules.
Mitigation/Control
The Investment Manager monitors investment movements and the amount of
proposed dividends, if any, to ensure that the provisions of Chapter 4 of Part
24 of the Corporation Tax Act 2010 are not breached. The results are reported
to the Board at each meeting.
Compliance with the accounting rules affecting investment trusts is carefully
and regularly monitored. The Company Secretary and the Company’s
professional advisers provide regular reports to the Board in respect of
compliance with all applicable rules and regulations.
Following authorisation under the Alternative Investment Fund Managers’
Directive (AIFMD), the Company and its appointed Alternative Investment Fund
Manager (AIFM) are subject to the risks that the requirements are not
correctly complied with. The Board and the AIFM also monitor changes in
government policy and legislation which may have an impact on the Company.
The Market Abuse Regulation came into force on 3 July 2016. The Board takes
steps to ensure that individual Directors (and their Persons Closely
Associated) are aware of their obligations under the regulation and has
updated internal processes which seek to ensure the risk of non-compliance is
effectively mitigated.
Operational
Principal Risk
In common with most other investment trust companies, the Company has no
employees. The Company therefore relies on the services provided by third
parties. Accordingly, it is dependent on the control systems of the Manager
and The Bank of New York Mellon (International) Limited (the Custodian,
Depositary and Fund Accountant) who maintain the Company’s assets, dealing
procedures and accounting records. The Company’s share register is
maintained by the Registrar, Computershare Investor Services PLC. The security
of the Company’s assets, dealing procedures, accounting records and
adherence to regulatory and legal requirements depend on the effective
operation of the systems of these other third party service providers. There
is a risk that a major disaster, such as floods, fire, a global pandemic or
terrorist activity, renders the Company’s service providers unable to
conduct business at normal operating capacity and effectiveness.
Failure by any service provider to carry out its obligations to the Company
could have a material adverse effect on the Company’s performance.
Disruption to the accounting, payment systems or custody records could prevent
the accurate reporting and monitoring of the Company’s financial position.
Mitigation/Control
Due diligence is undertaken before contracts are entered into with third party
service providers. Thereafter, the performance of the provider is subject to
regular review and reported to the Board.
Most third party service providers produce Service Organisation Control (SOC
1) reports to provide assurance regarding the effective operation of internal
controls as reported on by their reporting accountants. These reports are
provided to the Audit Committee for their review.
The Company’s assets/financial instruments held in custody are subject to a
strict liability regime and in the event of a loss of such financial assets
held in custody, the Depositary must return assets of an identical type or the
corresponding amount, unless able to demonstrate the loss was a result of an
event beyond its reasonable control.
The Board reviews the overall performance of the Manager, Investment Manager
and all other third party service providers and compliance with the Investment
Management Agreement on a regular basis. The Board also considers the business
continuity arrangements of the Company’s key service providers on an ongoing
basis and reviews these as part of their review of the Company’s risk
register. The Board has received updates from key service providers (the
Manager, the Depositary, the Custodian, the Fund Accountant, the Broker, the
Registrar and the Printer) confirming that appropriate business continuity
arrangements are in place.
Market
Principal 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. There may be
exposure to significant economic, geo-political and currency risks due to the
location of the operation of the businesses in which the Company may invest,
or as a result of a global economic crisis such as the Russia-Ukraine and
Middle East conflicts. Shares in businesses in which the Company invests can
prove volatile and this may be reflected in the Company’s share price.
Market risk includes the potential impact of events which are outside the
Company’s control, including (but not limited to) heightened geo-political
tensions and military conflict, a global pandemic and high inflation. The
Company may also invest in smaller capitalisation companies or in the
securities markets of developing countries which are not as large as the more
established securities markets and have substantially less trading volume,
which may result in a lack of liquidity and higher price volatility.
Corruption also remains a significant issue across the Latin American
investment universe and the effects of corruption could have a material
adverse effect on the Company’s performance. Accounting, auditing and
financial reporting standards and practices and disclosure requirements
applicable to many companies in Latin American countries may be less rigorous
than in other markets. As a result, there may be less information available
publicly to investors in these securities, and such information as is
available is often less reliable.
Mitigation/Control
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.
The Board also recognises the benefits of a closed-end fund structure in
extremely volatile markets such as those experienced during the Russia-Ukraine
and Middle East conflicts. Unlike open ended counterparts, closed-end funds
are not obliged to sell down portfolio holdings at low valuations to meet
liquidity requirements for redemptions. During times of elevated volatility in
markets following the Russian invasion of Ukraine and market stress, the
ability of a closed-end fund structure to remain invested for the long term
enables the portfolio managers to adhere to disciplined fundamental analysis
from a bottom-up perspective and be ready to respond to dislocations in the
market as opportunities present themselves.
Financial
Principal Risk
The Company’s investment activities expose it to a variety of financial
risks that include interest rate, currency and liquidity risk.
Mitigation/Control
Details of these risks are disclosed in note 16 to the financial statements,
together with a summary of the policies for managing these risks.
Marketing
Principal Risk
Marketing efforts are inadequate or do not comply with relevant regulatory
requirements, and fail to communicate adequately with shareholders or reach
out to potential new shareholders, resulting in reduced demand for the
Company’s shares and a widening discount.
Mitigation/Control
The Board focuses significant time on communicating directly with the major
shareholders and reviewing marketing strategy and initiatives.
All investment trust marketing documents are subject to appropriate review and
authorisation.
VIABILITY STATEMENT
In accordance with provision 31 of the 2018 UK Corporate Governance Code, the
Directors have assessed the prospects of the Company over a longer period than
the 12 months referred to by the ‘Going Concern’ guidelines. The Board
recognises that it is obliged to propose a biennial continuation vote, with
the next vote at the AGM to be held in May 2024. The outcome of these events
is unknown at the present time. In addition, the Board is cognisant of the
uncertainty surrounding the potential duration of the Russia-Ukraine conflict
and its impact on the global economy and the prospects for many of the
Company’s portfolio holdings. Notwithstanding these uncertainties, given the
factors stated below, the Board expects the Company to continue for the
foreseeable future and has therefore conducted this review for the period up
to the AGM in 2027, being a period of three years from the date of approval
of this report. The Board considers three years to be an appropriate time
horizon, being a reasonable time horizon to assess potential investments and
the period being used to assess performance for the Company’s Discount
Control mechanism (as set out in more detail within the Strategic Report
contained within the Annual Report and Financial Statements).
In choosing this period for its assessment of the viability of the Company the
Directors have considered the following matters:
• the Company’s business model should remain attractive for much
longer than the period up to the AGM in 2027, unless there is a significant
economic or regulatory change;
• the ongoing relevance of the Company’s investment objective,
business model and investment policy in the current environment (in particular
the Company’s closed-end structure which provides intraday liquidity to
investors and the ability for the portfolio managers to invest over
a longer-term time horizon than many open ended peers). This longer-term
investment horizon is well-suited to Latin America as the volatility of this
region can make short term investing more challenging. The Company is the only
investment trust with exposure to the Latin American region;
• the Board keeps the Company’s principal risks and uncertainties
as set out below under review, and is confident that the Company has
appropriate controls and processes in place to manage these and to maintain
its operating model, even given the global economic challenges posed by the
Russia-Ukraine and Middle East conflicts, the impact of climate change on
portfolio companies and the current climate of heightened geo-political risk;
• if the tender offer was to be implemented in 2026 was fully
subscribed, the Directors consider that the Company will still retain
sufficient assets and liquidity to remain viable and to continue to operate in
accordance with its business model and investment mandate; and
• the Board has reviewed the operational resilience of the Company
and its key service providers (the Manager, Depositary, Custodian, Fund
Accountant, Registrar and Broker) and have concluded that all service
providers are able to provide a good level of service for the foreseeable
future.
The Directors have also reviewed the assumptions and considerations
underpinning the Company’s existing going concern assertion which are based
on:
• processes for monitoring costs;
• key financial ratios;
• evaluation of risk management and controls;
• portfolio risk profile;
• share price discount to NAV;
• gearing; and
• counterparty exposure and liquidity risk.
Based on the results of their analysis, the Directors have a reasonable
expectation that the Company will be able to continue in operation and meet
its liabilities as they fall due over the period of their assessment.
Future prospects
The Board’s main focus is the achievement of capital growth and an
attractive total return. The future of the Company is dependent upon the
success of the investment strategy. The outlook for the Company is discussed
in both the Chairman’s Statement and the Investment Manager’s Report.
Social, community and human rights issues
As an investment trust with no employees, the Company has no direct social or
community responsibilities or impact on the environment. However, the Company
believes that it is in shareholders’ interests to consider human rights
issues, environmental, social and governance factors when selecting and
retaining investments. Details of the Company’s policy on socially
responsible investment are set out within the Annual Report and Financial
Statements.
Modern Slavery Act
As an investment vehicle the Company does not provide goods or services in the
normal course of business, and does not have customers. Accordingly, the
Directors consider that the Company is not required to make any slavery or
human trafficking statement under the Modern Slavery Act 2015. In any event,
the Board considers the Company’s supply chains, dealing predominantly with
professional advisers and service providers in the financial services
industry, to be low risk in relation to this matter.
Directors, gender representation and employees
The Directors of the Company on 31 December 2023, all of whom held office
throughout the year, are set out in the governance structure and Directors’
biographies contained within the Annual Report and Financial Statements.
The Board’s aim regarding diversity, including age, gender, educational and
professional background and other broader characteristics of diversity, is to
take these into account during the recruitment and appointment process.
However, the Board is committed to an objective of appointing the most
appropriate candidate, regardless of gender or other forms of diversity, and
therefore no targets have been set against which to report.
The Parker Review in respect of board diversity and the recent changes to the
FCA’s Listing Rules set new diversity targets and associated disclosure
requirements for UK companies listed on the premium and standard segment of
the London Stock Exchange. Listing Rule 9.8.6R (9) requires listed companies
to include a statement in their annual reports and accounts in respect of
certain targets on board diversity, or if those new targets have not been met
to disclose the reasons for this. This new requirement applies to accounting
periods commencing on or after 1 April 2022. However, the Board did meet the
diversity targets from 17 November 2009 up until Professor Mahrukh Doctor
resigned from the Board on the 31 March 2023. The Board has reduced in size to
four directors, in an effort to reduce costs, as the size of the Company has
fallen post the tender offer, which was completed in May 2022. The Board will
consider board diversity when seeking to appoint a new director in the future.
Further information on the composition and diversity of the Board can be found
in the disclosure table which follows below:
Number Number
of Board Percentage of senior
members of Board roles held(1)
Gender
Men 2 50 1
Women 2 50 1
Ethnicity(2)
White British (or any
other white background) 4 100 2
Other 0 0 0
(1) A senior position is defined as the role of Chairman, Audit Committee
Chairman or Senior Independent Director.
(2) Categorisation of ethnicity is stated in accordance with the Office of
National Statistics classification.
The Company does not have any employees, therefore there are no disclosures to
be made in that respect.
The Chairman’s Statement above, along with the Investment Manager’s Report
and portfolio analysis above, form part of the Strategic Report.
The Strategic Report was approved by the Board at its meeting on 26 March
2024.
By order of the Board
GRAHAM VENABLES
For and on behalf of
BlackRock Investment Management (UK) Limited
Company Secretary
26 March 2024
TRANSACTIONS WITH THE AIFM AND THE INVESTMENT MANAGER
BlackRock Fund Managers Limited (BFM) provides management and administration
services to the Company under a contract which is terminable on six months’
notice. BFM has (with the Company’s consent) delegated certain portfolio and
risk management services, and other ancillary services, to BlackRock
Investment Management (UK) Limited (BIM (UK)). Further details of the
investment management contract are disclosed in the Directors’ Report
contained within the Annual Report and Financial Statements.
The investment management fee is levied quarterly, based on 0.80% per annum of
the Company’s daily net asset value. The investment management fee due for
the year ended 31 December 2023 amounted to US$1,358,000 (2022: US$1,332,000),
as disclosed in note 4 to the Financial Statements (below). At the year end,
an amount of US$383,000 was outstanding in respect of these fees (2022:
US$588,000).
In addition to the above services, BIM (UK) has provided the Company with
marketing services. The total fees paid or payable for these services for the
year ended 31 December 2023 amounted to US$104,000 excluding VAT (2022:
US$83,000). Marketing fees of US$86,000 (2022: US$81,000) were outstanding at
31 December 2023.
During the year, the Manager pays the amounts due to the Directors. These fees
are then reimbursed by the Company for the amounts paid on its behalf. As at
31 December 2023, an amount of US$213,000 (2022: US$110,000) was payable to
the Manager in respect of Directors’ fees.
The ultimate holding company of the Manager and the Investment Manager is
BlackRock, Inc., a company incorporated in Delaware, USA.
RELATED PARTY DISCLOSURE
At the date of this report, the Board consists of four Non-executive
Directors, all of whom are considered to be independent of the Manager by the
Board.
Disclosures of the Directors’ interests in the ordinary shares of the
Company and fees and expenses payable to the Directors are set out in the
Directors’ Remuneration Report contained within the Annual Report and
Financial Statements. At 31 December 2023, an amount of US$17,000 (2022:
US$18,000) was outstanding in respect of Directors’ fees.
The Board currently consists of four 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. For the year ended 31 December 2023, the
Chairman received an annual fee of £50,200, the Chairman of the Audit
Committee received an annual fee of £38,600 and each other Director received
an annual fee of £34,300. This excludes expenses paid to each of the
Directors which are set out in the Directors' Remuneration Report contained
within the annual report and financial statements. For the year ending 31
December 2024, the Chairman will receive an annual fee of £52,800, the
Chairman of the Audit Committee will receive an annual fee of £40,600 and
each other Director received an annual fee of £36,100.
All current members of the Board hold ordinary shares in the Company. Carolan
Dobson holds 6,842 ordinary shares, Nigel Webber holds 5,000 ordinary shares,
Craig Cleland holds 12,000 ordinary shares and Laurie Meister holds 2,915
ordinary shares.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND
FINANCIAL STATEMENTS
The Directors are responsible for preparing the Annual Report and Financial
Statements in accordance with applicable United Kingdom law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under these laws the Directors have elected to prepare the
financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and applicable law),
including Financial Reporting Standard FRS 102 The Financial Reporting
Standard applicable in the UK and Republic of Ireland (FRS 102).
Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Company as at the end of each financial year and of the profit
or loss of the Company for that year.
In preparing those financial statements, the Directors are required to:
* select suitable accounting policies in accordance with Section 10 of FRS 102
and then apply them consistently;
* present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information;
* make judgements and accounting estimates that are reasonable and prudent;
* provide additional disclosures when compliance with the specific
requirements in FRS 102 is insufficient to enable users to understand the
impact of particular transactions, other events and conditions on the group
and company financial position and financial performance;
* state whether applicable UK Accounting Standards have been followed, subject
to any material departures disclosed and explained in the financial
statements; and
* prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company’s transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are also responsible for preparing the Strategic Report,
Directors’ Report, the Directors’ Remuneration Report, the Corporate
Governance Statement and the Report of the Audit Committee in accordance with
the Companies Act 2006 and applicable regulations, including the requirements
of the Listing Rules and the Disclosure Guidance and Transparency Rules.
The Directors have delegated responsibility to the Manager for the maintenance
and integrity of the Company’s corporate and financial information included
on the Investment Manager’s website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
Each of the Directors, whose names are listed within the Annual Report and
Financial Statements, confirm to the best of their knowledge that:
* the Financial Statements, prepared in accordance with applicable accounting
standards, give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company; and
* the Annual Report and Financial Statements include 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.
The 2018 UK Corporate Governance Code also requires Directors to ensure that
the Annual Report and Financial Statements are fair, balanced and
understandable. In order to reach a conclusion on this matter, the Board has
requested that the Audit Committee advise on whether it considers that the
Annual Report and Financial Statements fulfil these requirements. The process
by which the Committee has reached these conclusions is set out in the Audit
Committee’s report contained within the Annual Report and Financial
Statements. As a result, the Board has concluded that the Annual Report and
Financial Statements for the year ended 31 December 2023, taken as a whole,
are fair, balanced and understandable and provide the information necessary
for shareholders to assess the Company’s position, performance, business
model and strategy.
For and on behalf of the Board
CAROLAN DOBSON
Chairman
26 March 2024
INCOME STATEMENT
for the year ended 31 December 2023
2023 2022
Revenue Capital Total Revenue Capital Total
Notes US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Gains on investments held at
fair value through profit or loss – 45,717 45,717 – 1,258 1,258
Gains/(losses) on foreign exchange – 22 22 – (183) (183)
Income from investments held at
fair value through profit or loss 3 10,915 – 10,915 15,438 – 15,438
Other income 3 49 – 49 21 – 21
Total income 10,964 45,739 56,703 15,459 1,075 16,534
Expenses
Investment management fee 4 (339) (1,019) (1,358) (333) (999) (1,332)
Other operating expenses 5 (724) (19) (743) (609) (17) (626)
Total operating expenses (1,063) (1,038) (2,101) (942) (1,016) (1,958)
Net profit on ordinary activities
before finance costs and taxation 9,901 44,701 54,602 14,517 59 14,576
Finance costs (88) (263) (351) (81) (243) (324)
Net profit/(loss) on ordinary
activities before taxation 9,813 44,438 54,251 14,436 (184) 14,252
Taxation (charge)/credit (846) – (846) (594) 11 (583)
Net profit/(loss) on ordinary
activities after taxation 8,967 44,438 53,405 13,842 (173) 13,669
Earnings/(loss) per ordinary
share (US$ cents) 7 30.45 150.90 181.35 41.48 (0.52) 40.96
The total columns of this statement represent the Company’s profit and loss
account. The supplementary revenue and capital accounts are both prepared
under guidance published by the Association of Investment Companies (AIC). All
items in the above statement derive from continuing operations. No operations
were acquired or discontinued during the year. All income is attributable to
the equity holders of the Company.
The net profit/(loss) for the year disclosed above represents the Company’s
total comprehensive income/(loss).
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2023
Called Share Capital Non-
up 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 2023
At 31 December 2022 3,163 11,719 5,824 4,356 114,343 8,706 148,111
Total comprehensive income:
Net profit for the year – – – – 44,438 8,967 53,405
Transactions with owners, recorded
directly to equity:
Dividends paid(1) 6 – – – – – (11,797) (11,797)
At 31 December 2023 3,163 11,719 5,824 4,356 158,781 5,876 189,719
For the year ended
31 December 2022
At 31 December 2021 4,144 11,719 4,843 4,356 165,947 3,829 194,838
Total comprehensive (loss)/income:
Net (loss)/profit for the year – – – – (173) 13,842 13,669
Transactions with owners, recorded
directly to equity:
Tender offer(2) 8 – – – – (51,017) – (51,017)
Tender offer cost 8 – – – – (414) – (414)
Cancellation of shares (981) – 981 – – – –
Dividends paid(3) 6 – – – – – (8,965) (8,965)
At 31 December 2022 3,163 11,719 5,824 4,356 114,343 8,706 148,111
(1) Quarterly dividend of 6.29 cents per share for the year ended 31
December 2022, declared on 3 January 2023 and paid on 8 February 2023;
special dividend of 13.00 cents per share for the year ended 31 December 2022,
declared on 3 January 2023 and paid on 8 February 2023; quarterly dividend of
6.21 cents per share for the year ended 31 December 2023, declared on 3 April
2023 and paid on 16 May 2023; quarterly dividend of 7.54 cents per share for
the year ended 31 December 2023, declared on 3 July 2023 and paid on 11
August 2023; quarterly dividend of 7.02 cents per share, declared on 2 October
2023 and paid on 9 November 2023.
(2) On 26 May 2022, the Company repurchased and subsequently cancelled
9,810,979 shares. The price at which tendered shares were repurchased was
417.09 pence per share.
(3) Quarterly dividend of 6.21 cents per share for the year ended 31
December 2021, declared on 4 January 2022 and paid on 8 February 2022;
quarterly dividend of 7.76 cents per share for the year ended 31 December
2022, declared on 1 April 2022 and paid on 16 May 2022; quarterly dividend of
5.74 cents per share for the year ended 31 December 2022, declared on 1 July
2022 and paid on 12 August 2022; quarterly dividend of 6.08 cents per share,
declared on 3 October 2022 and paid on 9 November 2022.
For information on the Company’s distributable reserves, please refer to
note 15 contained within the Annual Report and Financial Statements.
BALANCE SHEET
as at 31 December 2023
2023 2022
Notes US$’000 US$’000
Fixed assets
Investments held at fair value through profit or loss 190,875 158,149
Current assets
Debtors 2,135 1,572
Cash and cash equivalents 274 160
Total current assets 2,409 1,732
Creditors – amounts falling due within one year
Bank overdraft (2,658) (10,731)
Other creditors (883) (1,015)
Total current liabilities (3,541) (11,746)
Net current liabilities (1,132) (10,014)
Total assets less current liabilities 189,743 148,135
Creditors – amounts falling due after more than one year
Non-equity redeemable shares (24) (24)
(24) (24)
Net assets 189,719 148,111
Capital and reserves
Called up share capital 8 3,163 3,163
Share premium account 9 11,719 11,719
Capital redemption reserve 9 5,824 5,824
Non-distributable reserve 9 4,356 4,356
Capital reserves 9 158,781 114,343
Revenue reserve 9 5,876 8,706
Total shareholders’ funds 7 189,719 148,111
Net asset value per ordinary share (US$ cents) 7 644.24 502.95
STATEMENT OF CASH FLOWS
for the year ended 31 December 2023
2023 2022
US$’000 US$’000
Operating activities
Net profit on ordinary activities before taxation 54,251 14,252
Add back finance costs 351 324
Gains on investments held at fair value through profit or loss (45,717) (1,258)
(Gains)/losses on foreign exchange (22) 183
Sale of investments held at fair value through profit or loss 114,570 123,691
Purchase of investments held at fair value through profit or loss (101,634) (68,345)
Increase in other debtors (569) (1,100)
Decrease in other creditors (71) (304)
Taxation on investment income (846) (594)
Net cash generated from operating activities 20,313 66,849
Financing activities
Interest paid (351) (324)
Tender offer – (51,017)
Tender offer costs – (414)
Dividends paid (11,797) (8,965)
Net cash used in financing activities (12,148) (60,720)
Increase in cash and cash equivalents 8,165 6,129
Cash and cash equivalents at the start of the year (10,571) (16,517)
Effect of foreign exchange rate changes 22 (183)
Cash and cash equivalents at end of the year (2,384) (10,571)
Comprised of:
Cash at bank 274 160
Bank overdraft (2,658) (10,731)
(2,384) (10,571)
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2023
1. Principal activity
The Company was incorporated on 12 March 1990 and its principal activity is
that of an investment trust company within the meaning of Section 1158 of the
Corporation Tax Act 2010.
2. Accounting policies
The principal accounting policies adopted by the Company are set out below.
(a) Basis of preparation
The financial statements have been prepared on a going concern basis in
accordance with The Financial Reporting Standard applicable in the UK and
Republic of Ireland (FRS 102) and the revised Statement of Recommended
Practice – Financial Statements of Investment Trust Companies and Venture
Capital Trusts (SORP), issued by the Association of Investment Companies (AIC)
in October 2019 and updated in July 2022, and the provisions of the Companies
Act 2006.
Substantially, all of the assets of the Company consist of securities that are
readily realisable and, accordingly, the Directors are satisfied that the
Company has adequate resources to continue in operational existence for the
period to 31 December 2025, being a period of at least 12 months from the date
of approval of these financial statements, and therefore consider the going
concern assumption to be appropriate. The Directors have reviewed compliance
with the covenants associated with the bank overdraft, income and expense
projections and the liquidity of the investment portfolio in making their
assessment.
The Directors have considered the impact of climate change on the value of the
investments included in the Financial Statements and have concluded that there
was no further impact of climate change to be considered as the investments
are valued based on market pricing as required by FRS 102.
None of the Company’s other assets and liabilities were considered to be
potentially impacted by climate change.
The principal accounting policies adopted by the Company are set out below.
Unless specified otherwise, the policies have been applied consistently
throughout the year and are consistent with those applied in the preceding
year. All of the Company’s operations are of a continuing nature.
The Company’s financial statements are presented in US Dollars, which is
the functional and presentation currency of the Company. The US Dollar is the
functional currency because it is the currency in which the bulk of the
Company’s assets (notably portfolio investments, cash at bank, bank
overdrafts and amounts due to and from brokers) are denominated. All values
are rounded to the nearest thousand US Dollars (US$’000) except where
otherwise indicated.
(b) Presentation of Income Statement
In order to reflect the activities of an investment trust company and in
accordance with guidance issued by the AIC, supplementary information which
analyses the Income Statement between items of a revenue and a capital nature
has been presented alongside the Income Statement.
(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.
Special dividends are recognised on an ex-dividend basis and treated as
capital or revenue depending on the facts or circumstances of each particular
dividend.
Dividends are accounted for in accordance with Section 29 of FRS 102 on the
basis of income actually receivable, without adjustment for tax credits
attaching to the dividend. Dividends from overseas companies continue to be
shown gross of withholding tax.
Deposit interest receivable is accounted for using the effective interest rate
method in accordance with Section 11 of FRS 102.
Where the Company has elected to receive its dividends in the form of
additional shares rather than in cash, the cash equivalent of the dividend is
recognised as revenue. Any excess in the value of the shares received over the
amount of the cash dividend is recognised in capital.
Fixed returns on non-equity securities are recognised on a time apportionment
basis. The return on a fixed interest security is recognised on a time
apportionment basis so as to reflect the effective yield on the debt security.
Amounts amortised during the year are recognised in the Income Statement.
Interest income is accounted for on an accruals basis.
(e) Expenses
All expenses, including finance costs, are accounted for on an accruals basis.
Expenses have been charged wholly to the revenue account of the Income
Statement, except as follows:
• expenses which are incidental to the acquisition or disposal of an
investment are treated as capital. Details of transaction costs on the
purchases and sales of investments are disclosed in note 10 of the Annual
Report and Financial Statements;
• expenses are treated as capital where a connection with the
maintenance or enhancement of the value of the investments can be
demonstrated; and
• the investment management fee and finance costs have been
allocated 75% to the capital account and 25% to the revenue account 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.
(f) Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax. The tax currently payable is based on the taxable profit for the year.
Taxable profit differs from net profit as reported in the Income Statement
because it excludes items of income or expenses that are taxable or deductible
in other years and it further excludes items that are never taxable or
deductible. The Company’s liability for current tax is calculated using tax
rates that were applicable at the balance sheet date.
The current 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 tax for the accounting period.
Deferred taxation is recognised in respect of all timing differences at the
financial reporting date, where transactions or events that result in an
obligation to pay more taxation in the future or right to less taxation in the
future have occurred at the balance sheet date. Deferred taxation is measured
on a non-discounted basis, at the average tax rates that are expected to
apply in the periods in which the timing differences are expected to reverse
based on tax rates and laws that have been enacted or substantively enacted by
the balance sheet date. This is subject to deferred taxation 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 timing differences can
be deducted.
(g) 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 Sections 11 and 12 of FRS 102 and are
managed and evaluated on a fair value basis in accordance with its investment
strategy.
All investments are classified upon initial recognition as held at fair value
through profit or loss. Purchases of investments are recognised on a trade
date basis. Sales are recognised at the trade date of the disposal and the
proceeds are measured at fair value, which is regarded as the proceeds of the
sale less any transaction costs.
The fair value of the financial investments 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.
Unquoted investments are valued by the Directors at fair value using
International Private Equity and Venture Capital Valuation Guidelines. This
policy applies to all current and non-current asset investments of the
Company. These guidelines are aligned with FRS 102 and, where this does not
align, FRS 102 prevails.
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.
The fair value hierarchy consists of the following three levels:
Level 1 – Quoted market prices for identical instruments in active markets.
Level 2 – Valuation techniques using observable inputs.
Level 3 – Valuation techniques using significant unobservable inputs.
(h) Debtors
Debtors include sales for future settlement, other debtors and prepayments and
accrued income in the ordinary course of business. If collection is expected
in one year or less, they are classified as current assets. If not, they are
presented as non-current assets.
(i) Creditors
Creditors include purchases for future settlement, interest payable, share buy
back costs and accruals in the ordinary course of business. Creditors are
classified as creditors – amounts falling due within one year if payment is
due within one year or less. If not, they are presented as creditors –
amounts falling due after more than one year.
(j) Dividends payable
Under Section 32 of FRS 102, 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 Statement of Changes in Equity when they have been approved by
shareholders and have become a liability of the Company. Interim dividends are
only recognised in the financial statements in the period in which they are
paid. Dividends are financed through a combination of available net income in
each financial year and revenue and capital reserves.
(k) Cash and cash equivalents
Cash comprises cash in hand and demand deposits. Cash equivalents include bank
overdrafts repayable on demand and short-term, highly liquid investments, that
are readily convertible to known amounts of cash and that are subject to an
insignificant risk of changes in value.
(l) Foreign currency translation
In accordance with Section 30 of FRS 102, the Company is required to determine
a functional currency being the currency in which the Company predominately
operates. The functional and reporting currency is US Dollars, reflecting the
primary economic environment in which the Company operates. Transactions in
foreign currencies are translated into US Dollars at the rates of exchange
ruling on the date of the transaction. Foreign currency monetary assets and
liabilities held at fair value are translated into US Dollars at the rates of
exchange ruling at the balance sheet date. Non-monetary assets held at fair
value are translated into US Dollars at the rates of exchange ruling when the
fair value was determined. Profits and losses thereon are recognised in the
capital account of the Income Statement and taken to the capital reserve.
(m) Share repurchases, share reissues and new share issues
Shares repurchased and subsequently cancelled – share capital is reduced by
the nominal value of the shares repurchased and capital redemption reserve is
correspondingly increased in accordance with Section 733 of the Companies Act
2006. The full cost of the repurchase is charged to the capital reserve.
Shares repurchased and held in treasury – the full cost of the repurchase is
charged to the capital redemption reserve.
Where treasury shares are subsequently re-issued:
• amounts received to the extent of the
repurchase price are credited to the capital redemption reserve; and
• any surplus received in excess of the
repurchase price is taken to the share premium account.
Where new shares are issued, the par value is taken to called up share capital
and amounts received to the extent of any surplus received in excess of the
par value are taken to the share premium account.
Share issue costs are charged to the share premium account. Costs on share
reissues are charged to the capital reserve.
(n) Bank borrowings
Bank overdrafts are recorded as the proceeds received. Finance charges are
accounted for on an accruals basis in the Income Statement using the Effective
Interest Method and are added to the carrying amount of the instruments to the
extent that they are not settled in the period in which they arise.
(o) Critical accounting estimates and judgements
The Company makes estimates and assumptions concerning the future. The
resulting accounting estimates and assumptions will, by definition, seldom
equal the related actual results. Estimates and judgements are regularly
evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the
circumstances. The Directors do not believe that any accounting judgements or
estimates have a significant risk of causing a material adjustment to the
carrying amount of assets and liabilities within the next financial year.
3. Income
2023 2022
US$’000 US$’000
Investment income:
Overseas dividends 10,339 14,515
Overseas REIT distributions 416 421
Overseas special dividends 160 480
Fixed interest income – 22
Total investment income 10,915 15,438
Other income:
Deposit interest 47 21
Interest from Cash Fund 2 –
49 21
Total income 10,964 15,459
Dividends and interest received in cash during the year amounted to
US$9,671,000 and US$49,000 (2022: US$14,413,000 and US$45,000).
No special dividends have been recognised in capital in 2023 (2022: US$nil).
4. Investment management fee
2023 2022
Revenue Capital Total Revenue Capital Total
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Investment management fee 339 1,019 1,358 333 999 1,332
Under the terms of the investment management agreement, BFM is entitled to a
fee of 0.80% per annum based on the Company’s daily Net Asset Value (NAV).
The fee is levied quarterly.
The investment management fee is allocated 25% to the revenue account and 75%
to the capital account of the Income Statement. There is no additional fee for
company secretarial and administration services.
5. Other operating expenses
2023 2022
US$’000 US$’000
Allocated to revenue:
Custody fees 33 35
Depositary fees(1) 16 15
Auditor’s remuneration(2) 58 50
Registrar’s fees 40 33
Directors’ emoluments(3) 222 231
Marketing fees 104 83
Postage and printing fees 65 45
AIC fees 2 –
Broker fees 45 38
Employer NI contributions 27 23
FCA fee 10 10
Write back of prior year expenses(4) (6) (23)
Other administration costs 108 69
724 609
Allocated to capital:
Custody transaction charges(5) 19 17
743 626
The Company’s ongoing charges(6), calculated as a percentage of average daily net assets and
using the management fee and all other operating expenses, excluding finance costs, direct
transaction costs, custody transaction charges, VAT recovered, taxation, prior year expenses
written back and certain non-recurring items were: 1.28% 1.13%
(1) All expenses, other than depositary fees, are paid in British
Pound Sterling and are therefore subject to exchange rate fluctuations.
(2) No non-audit services were provided by the Company’s Auditor.
(3) Further information on Directors’ emoluments can be found in the
Directors’ Remuneration Report contained within the Annual Report and
Financial Statements. The Company has no employees.
(4) Relates to prior year accruals for AIC fees and other
administration costs written back during the year ended 31 December 2023
(2022: postage and printing fees, broker fees and other administration costs).
(5) For the year ended 31 December 2023, expenses of US$19,000 (2022:
US$17,000) were charged to the capital account of the Income Statement. These
relate to transaction costs charged by the Custodian on sale and purchase
trades.
(6) Alternative Performance Measures, see Glossary contained within
the Annual Report and Financial Statements.
6. Dividends
2023 2022
Dividends paid on equity shares: Record date Payment date US$’000 US$’000
Quarter to 31 December 2022 – dividend of 6.29 cents 13 January 2023 8 February 2023 1,852 2,438
Year to 31 December 2022 – dividend of 13.00 cents 13 January 2023 8 February 2023 3,828 –
Quarter to 31 March 2023 – dividend of 6.21 cents 14 April 2023 16 May 2023 1,829 3,047
Quarter to 30 June 2023 – dividend of 7.54 cents 14 July 2023 11 August 2023 2,221 1,690
Quarter to 30 September 2023 – dividend of 7.02 cents 13 October 2023 9 November 2023 2,067 1,790
11,797 8,965
The Company’s dividend policy is to pay regular quarterly dividends
equivalent to 1.25% of the Company’s US Dollar NAV on the last working day
of March, June, September and December each year, with the dividends being
paid in May, August, November and February each year, respectively. For the
year ending 31 December 2023, the quarterly dividends were calculated based on
the Company’s cum-income US Dollar NAV at the last working day of the
quarter.
The Company’s cum-income US Dollar NAV at 31 December 2023 as issued to the
market was 644.24 cents per share, and the Directors have declared a fourth
quarterly interim dividend of 8.05 cents per share. The fourth quarterly
interim dividend was paid on 9 February 2024 to holders of ordinary shares on
the register at the close of business on 12 January 2024.
The total dividends payable in respect of the year which form the basis of
determining retained income for the purpose of Section 1158 of the Corporation
Tax Act 2010 and Section 833 of the Companies Act 2006, and the amount
proposed for the year ended 31 December 2023, meet the relevant requirements
as set out in this legislation.
2023 2022
US$’000 US$’000
Dividends paid or proposed on equity shares:
Quarter to 31 March 2023 – 6.21 cents (2022: 7.76) 1,829 3,047
Quarter to 30 June 2023 – 7.54 cents (2022: 5.74) 2,221 1,690
Quarter to 30 September 2023 – 7.02 cents (2022: 6.08) 2,067 1,790
Quarter to 31 December 2023 – 8.05 cents(1) (2022: 6.29) 2,371 1,852
Year to 31 December 2023 – nil cents (2022: 13.00) – 3,828
8,488 12,207
(1) Based on 29,448,641 ordinary shares in issue
at 12 January 2024.
All dividends paid or payable are distributed from the Company’s
distributable reserves.
7. Earnings and net asset value per ordinary share
Total revenue, capital earnings/(loss) and net asset value per ordinary share
are shown below and have been calculated using the following:
2023 2022
Net revenue profit attributable to ordinary shareholders (US$’000) 8,967 13,842
Net capital profit/(loss) attributable to ordinary shareholders (US$’000) 44,438 (173)
Total profit attributable to ordinary shareholders (US$'000) 53,405 13,669
Total shareholders’ funds (US$’000) 189,719 148,111
Earnings per share
The weighted average number of ordinary shares in issue during the year on which the
earnings per ordinary share was calculated was: 29,448,641 33,373,033
The actual number of ordinary shares in issue at the year end on which the net asset
value was calculated was: 29,448,641 29,448,641
Revenue earnings per share (US$ cents) – basic and diluted 30.45 41.48
Capital earnings/(loss) per share (US$ cents) – basic and diluted 150.90 (0.52)
Total earnings per share (US$ cents) – basic and diluted 181.35 40.96
As at As at
31 December 31 December
2023 2022
Net asset value per ordinary share (US$ cents) 644.24 502.95
Ordinary share price (US$ cents)(1) 569.84 457.10
(1) Based on an exchange rate of US$1.27 to £1 at 31 December 2023 and
US$1.20 to £1 at 31 December 2022.
There are no dilutive securities at the year end.
8. Share capital
Ordinary Treasury Total Nominal
shares shares shares value
number number number US$’000
Allotted, called up and fully paid share capital comprised:
Ordinary shares of 10 cents each
At 31 December 2022 29,448,641 2,181,662 31,630,303 3,163
At 31 December 2023 29,448,641 2,181,662 31,630,303 3,163
During the period to 31 December 2023, no ordinary shares were repurchased
(2022: 9,810,979 shares for a total cost of US$51,431,000) and no ordinary
shares were issued (2022: none).
The ordinary shares give shareholders voting rights, the entitlement to all of
the capital growth in the Company’s assets and to all income from the
Company that is resolved to be distributed.
9. Reserves
Distributable Reserves
Capital
reserve
Capital arising on
reserve revaluation
Share Capital Non- arising on of
premium redemption distributable investments investments Revenue
account reserve reserve sold held reserve
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
At 31 December 2022 11,719 5,824 4,356 114,178 165 8,706
Movement during the year:
Total comprehensive income:
Net profit for the year – – – 15,965 28,473 8,967
Transactions with owners, recorded directly to equity:
Dividends paid during the year – – – – – (11,797)
At 31 December 2023 11,719 5,824 4,356 130,143 28,638 5,876
Distributable Reserves
Capital
reserve
Capital arising on
reserve revaluation
Share Capital Non- arising on of
premium redemption distributable investments investments Revenue
account reserve reserve sold held reserve
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
At 31 December 2021 11,719 4,843 4,356 158,700 7,247 3,829
Movement during the year:
Total comprehensive income/(loss):
Net profit/(loss) for the year – – – 6,909 (7,082) 13,842
Transactions with owners, recorded directly to equity:
Tender offer – – – (51,017) – –
Tender offer cost – – – (414) – –
Cancellation of shares – 981 – – – –
Dividends paid during the year from revenue – – – – – (8,965)
At 31 December 2022 11,719 5,824 4,356 114,178 165 8,706
The share premium account, capital redemption reserve and non-distributable
reserve are not distributable reserves under the Companies Act 2006. In
accordance with ICAEW Technical Release 02/17BL on Guidance on Realised and
Distributable Profits under the Companies Act 2006, the capital reserve may be
used as distributable reserves for all purposes and, in particular, the
repurchase by the Company of its ordinary shares and for payments such as
dividends. In accordance with the Company’s Articles of Association, capital
reserves and the revenue reserve may be distributed by way of dividend. The
capital reserve arising on the revaluation of investments of US$28,638,000
(2022: gain of US$165,000) is subject to fair value movements and may not be
readily realisable at short notice, as such any gains may not be entirely
distributable. The investments are subject to financial risks; as such capital
reserves (arising on investments sold) and the revenue reserve may not be
entirely distributable if a loss occurred during the realisation of these
investments.
10. Valuation of financial instruments
Financial assets and financial liabilities are either carried in the Balance
Sheet at their fair value (investments) or at an amount which is a reasonable
approximation of fair value (due from brokers, dividends and interest
receivable, due to brokers, accruals, cash at bank and bank overdrafts).
Section 34 of FRS 102 requires the Company to classify fair value measurements
using a fair value hierarchy that reflects the significance of inputs used in
making the measurements. The valuation techniques used by the Company are
explained in the accounting policies note to the Financial Statements
contained within the Annual Report and Financial Statements.
Categorisation within the hierarchy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant asset.
The fair value hierarchy has the following levels:
Level 1 – Quoted market price for identical instruments in active markets
A financial instrument is regarded as quoted in an active market if quoted
prices are readily available from an exchange, dealer, broker, industry group,
pricing service or regulatory agency and those prices represent actual and
regularly occurring market transactions on an arm’s length basis. These
include exchange traded derivatives. The Company does not adjust the quoted
price for these instruments.
Level 2 – Valuation techniques using observable inputs
This category includes instruments valued using quoted prices for similar
instruments in markets that are considered less than active, or other
valuation techniques where significant inputs are directly or indirectly
observable from market data.
Valuation techniques used for non-standardised financial instruments such as
over-the-counter derivatives, include the use of comparable recent arm’s
length transactions, reference to other instruments that are substantially the
same, discounted cash flow analysis, option pricing models and other valuation
techniques commonly used by market participants making the maximum use of
market inputs and relying as little as possible on entity specific inputs.
Level 3 – Valuation techniques using significant unobservable inputs
This category includes all instruments where the valuation technique includes
inputs not based on market data and these inputs could have a significant
impact on the instrument’s valuation.
This category also includes instruments that are valued based on quoted prices
for similar instruments where significant entity determined adjustments or
assumptions are required to reflect differences between the instruments and
instruments for which there is no active market. The Investment Manager
considers observable data to be that market data that is readily available,
regularly distributed or updated, reliable and verifiable, not proprietary,
and provided by independent sources that are actively involved in the relevant
market.
The level in the fair value hierarchy within which the fair value measurement
is categorised in its entirety is determined on the basis of the lowest level
input that is significant to the fair value measurement. If a fair value
measurement uses observable inputs that require significant adjustment based
on unobservable inputs, that measurement is a Level 3 measurement.
Assessing the significance of a particular input to the fair value measurement
in its entirety requires judgement, considering factors specific to the asset
or liability including an assessment of the relevant risks including but not
limited to credit risk, market risk, liquidity risk, business risk and
sustainability risk. The determination of what constitutes ‘observable’
inputs requires significant judgement by the Investment Manager and these
risks are adequately captured in the assumptions and inputs used in the
measurement of Level 3 assets or liabilities.
Fair values of financial assets and financial liabilities
The table below is an analysis of the Company’s financial instruments
measured at fair value at the balance sheet date.
Financial assets at fair value through profit or loss as at Level 1 Level 2 Level 3 Total
31 December 2023 US$’000 US$’000 US$’000 US$’000
Equity investments 190,875 – – 190,875
Total 190,875 – – 190,875
Financial assets at fair value through profit or loss as at Level 1 Level 2 Level 3 Total
31 December 2022 US$’000 US$’000 US$’000 US$’000
Equity investments 158,149 – – 158,149
Total 158,149 – – 158,149
There were no transfers between levels for financial assets and financial
liabilities during the year recorded at fair value as at 31 December 2023 and
31 December 2022. The Company did not hold any Level 3 securities throughout
the financial year or as at 31 December 2023 (2022: nil).
For exchange listed equity investments, the quoted price is the bid price.
Substantially, all investments are valued based on unadjusted quoted market
prices. Where such quoted prices are readily available in an active market,
such prices are not required to be assessed or adjusted for any price related
risks, including climate risk, in accordance with the fair value related
requirements of the Company’s financial reporting framework.
11. Capital management policies and procedures
The Company’s capital management objectives are:
– to ensure it will be able to continue as a going
concern; and
– to secure long-term capital growth and an
attractive total return primarily through investing in quoted securities in
Latin America.
Gearing will be selectively employed with the aim of enhancing returns. The
Board view that 105% of the net asset value is the neutral level of gearing
over the longer term and that gearing should be used actively in an
approximate range of plus or minus 10% around this as measured at the time
that gearing is instigated. These current parameters sit within the
Company’s gearing policy as set out in the investment policy contained
within the Annual Report and Financial Statements which states that net
borrowings are not expected to exceed 25% of net assets under normal
circumstances, and the Company’s Articles of Association which limit net
borrowings to 100% of capital and reserves.
The Company’s total capital as at 31 December 2023 was US$189,719,000 (2022:
US$148,111,000) comprised of equity, capital and reserves.
Under the terms of the overdraft facility agreement, the Company’s total
indebtedness shall at no time exceed US$25 million or 30% of the Company’s
net asset value (whichever is the lowest) (2022: US$25 million or 30% of the
Company’s net asset value (whichever is the lowest)).
The Board with the assistance of the Investment Manager monitors and reviews
the broad structure of the Company’s capital on an ongoing basis. This
review includes:
– the planned level of gearing, which takes into account the
Investment Manager’s view on the market; and
– the need to buy back equity shares, either for cancellation or to be
held in treasury, which takes account of the difference between the NAV per
share and the share price (i.e. the level of share price discount or premium).
The Company is subject to externally imposed capital requirements:
– as a public company, the Company has a minimum share capital of
£50,000; and
– in order to be able to pay dividends out of profits available for
distribution, the Company has to be able to meet one of the two capital
restrictions tests imposed on investment companies by law.
During the year, the Company complied with the externally imposed capital
requirements to which it was subject.
12. Transactions with the Investment Manager and AIFM
BlackRock Fund Managers Limited (BFM) provides management and administration
services to the Company under a contract which is terminable on six months’
notice. BFM has (with the Company’s consent) delegated certain portfolio and
risk management services, and other ancillary services, to BlackRock
Investment Management (UK) Limited (BIM (UK)). Further details of the
investment management contract are disclosed in the Directors’ Report
contained within the Annual Report and Financial Statements.
The investment management fee is levied quarterly, based on 0.80% per annum of
the Company’s daily net asset value. The investment management fee due for
the year ended 31 December 2023 amounted to US$1,358,000 (2022: US$1,332,000),
as disclosed in note 4 to the Financial Statements (above). At the year end,
an amount of US$383,000 was outstanding in respect of these fees (2022:
US$588,000).
In addition to the above services, BIM (UK) has provided the Company with
marketing services. The total fees paid or payable for these services for the
year ended 31 December 2023 amounted to US$104,000 excluding VAT (2022:
US$83,000). Marketing fees of US$86,000 (2022: US$81,000) were outstanding at
31 December 2023.
During the year, the Manager pays the amounts due to the Directors. These fees
are then reimbursed by the Company for the amounts paid on its behalf. As at
31 December 2023, an amount of US$213,000 (2022: US$110,000) was payable to
the Manager in respect of Directors’ fees.
The ultimate holding company of the Manager and the Investment Manager is
BlackRock, Inc., a company incorporated in Delaware, USA.
13. Related party disclosure
At the date of this report, the Board consists of four Non-executive
Directors, all of whom are considered to be independent of the Manager by the
Board.
Disclosures of the Directors’ interests in the ordinary shares of the
Company and fees and expenses payable to the Directors are set out in the
Directors’ Remuneration Report contained within the Annual Report and
Financial Statements. At 31 December 2023, an amount of US$17,000 (2022:
US$18,000) was outstanding in respect of Directors’ fees.
Significant holdings
The following investors are:
a. funds managed by the BlackRock Group or are affiliates of BlackRock,
Inc. (Related BlackRock Funds); or
b. investors (other than those listed in (a) above) who held more than 20%
of the voting shares in issue in the Company and are as a result, considered
to be related parties to the Company (Significant Investors).
As at 31 December 2023
Total % of shares held by Significant Number of Significant Investors who
Total % of shares held by Related Investors who are not affiliates of are not affiliates of BlackRock Group
BlackRock Funds BlackRock Group or BlackRock, Inc. or BlackRock, Inc.
1.0 20.7 1
As at 31 December 2022
Total % of shares held by Significant Number of Significant Investors who
Total % of shares held by Related Investors who are not affiliates of are not affiliates of BlackRock Group
BlackRock Funds BlackRock Group or BlackRock, Inc. or BlackRock, Inc.
1.7 20.7 1
14. Contingent liabilities
There were no contingent liabilities at 31 December 2023 (2022: none).
15. 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 2023 Annual
Report and Financial Statements will be filed with the Registrar of Companies
shortly.
The Report of the Auditors for the year ended 31 December 2023 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
2022, which have been filed with the Registrar of Companies, unless otherwise
stated. The Report of the Auditor on those financial statements contained no
qualification or statement under Section 498 of the Companies Act.
This announcement was approved by the Board of Directors on 26 March 2024.
16. Annual Report
Copies of the Annual Report will be sent to members shortly and will also be
available from the registered office, c/o The Company Secretary, BlackRock
Latin American Investment Trust plc, 12 Throgmorton Avenue, London EC2N 2DL.
17. Annual General Meeting
The Annual General Meeting of the Company will be held at 12 Throgmorton
Avenue, London EC2N 2DL on Wednesday, 22 May 2024 at 12:00 noon.
ENDS
The Annual Report will also be available on the BlackRock Investment
Management website at http://www.blackrock.co.uk/brla. 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:
Melissa Gallagher, Managing Director, Investment Trusts, BlackRock Investment
Management (UK) Limited
Tel: 020 7743 3000
Press Enquiries:
Ed Hooper, Lansons Communications – Tel: 020 7294 3620
E-mail: BlackRockInvestmentTrusts@lansons.com or EdH@lansons.com
26 March 2024
12 Throgmorton Avenue
London EC2N 2DL
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