Half-year Report
27/09/2024 12:25
BlackRock Latin American Investment Trust plc
(Legal Entity Identifier: UK9OG5Q0CYUDFGRX4151)
Information disclosed in accordance with Article 5 Transparency Directive and
DTR 4.2
Half Yearly Financial Results Announcement for Period Ended 30 June 2024
As at As at
30 June 31 December
2024 2023
Net assets (US$’000)(1) 144,237 189,719
Net asset value per ordinary share (US$ cents) 489.79 644.24
Ordinary share price (mid-market) (US$ cents)(2) 437.38 569.84
Ordinary share price (mid-market) (pence) 346.00 447.00
Discount(3) 10.7% 11.5%
========= =========
For the For the
six months year
ended ended
30 June 31 December
2024 2023
Performance (with dividends reinvested)
Net asset value per share (US$ cents)(3) -22.0% 37.8%
Ordinary share price (mid-market) (US$ cents)(2,3) -21.0% 35.3%
Ordinary share price (mid-market) (pence)(3) -20.3% 27.6%
MSCI EM Latin America Index (net return, on a US Dollar basis)(4) -15.7% 32.7%
========= =========
For the six For the six Change
months ended months ended %
30 June 2024 30 June 2023
Revenue
Net profit on ordinary activities after taxation (US$’000) 3,786 4,494 -15.8
Revenue earnings per ordinary share (US$ cents) 12.86 15.26 -15.7
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Dividends per ordinary share (US$ cents)
Quarter to 31 March 7.39 6.21 +19.0
Quarter to 30 June 6.13 7.54 -18.7
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Total dividends payable/paid 13.52 13.75 -1.7
========= ========= =========
1 The change in net assets reflects the portfolio movements during the
period and dividends paid.
2 Based on an exchange rate of US$1.26 to £1 at 30 June 2024 and
US$1.27 to £1 at 31 December 2023.
3 Alternative Performance Measures, see Glossary contained within the
Half Yearly Financial Report.
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.
Chairman’s Statement
Dear Shareholder,
Market Overview
Latin American markets have underperformed both developed markets and the MSCI
Emerging Markets indices over the period under review, with the MSCI EM Latin
America Index net return of -15.7% in US Dollar terms, compared to a rise in
the MSCI Emerging Markets EMEA Index net return of 2.9% in US Dollar terms and
an increase in the MSCI World Index net return of 12.0% in US Dollar terms.
All performance figures are calculated in US Dollar terms with dividends
reinvested.
Performance
Over the six months ended 30 June 2024 the Mexican peso fell circa 9%, an
unusually large amount by historical standards, which contributed to the fall
of 22% in the Company’s net asset value per share over the same period (NAV
calculations in US Dollar terms with dividends reinvested). In comparison the
benchmark fell by 15.7% and the share price fell by 21.0% (all in US Dollar
terms with income reinvested). The largest contributor to performance was
driven by the precious metals exposure in Ecuador and in Mexico. The portfolio
overweight to Colombia and off-benchmark exposure to Panama also helped
relative performance. The biggest detractor to performance was the portfolio
overweight in domestic Brazil, with stock selection in several interest rate
sensitive sectors impacting negatively. The larger than expected Brazilian
fiscal deficit reported in June put pressure on the market. Mexico, the second
largest country market exposure was hit with negative market sentiment, with
potentially detrimental judicial reforms being introduced by the new
government, creating volatility for the Mexican financial stocks with the
Mexican peso depreciating significantly as a result.
This followed the Mexican presidential landslide win in early June 2024,
giving the new government unopposed law making powers.
Further information on investment performance is given in the Investment
Manager’s Report below.
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 the Investment Managers have
used gearing actively throughout the period with a high at 111.4% of NAV in
June 2024. Average gearing for the six months ended 30 June 2024 was 107.5% of
NAV (year to 31 December 2023 was 103.1% of NAV).
Dividends declared in respect of the year to 30 June 2024
Dividend Pay date
Quarter to 30 September 2023 7.02 cents 9 November 2023
Quarter to 31 December 2023 8.05 cents 9 February 2024
Quarter to 31 March 2024 7.39 cents 16 May 2024
Quarter to 30 June 2024 6.13 cents 13 August 2024
--------------
Total 28.59 cents
=========
Revenue Returns and Dividends
Revenue return for the six months ended 30 June 2024 was 12.86 cents per share
(2023: 15.26 cents per share). The decrease of 15.7% 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. 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 28.59 cents per share in
respect of the twelve months to 30 June 2024 as detailed in the table above;
this represented a yield of 6.5% (calculated based on the Company’s share
price of 437.38 cents per share, equivalent to the Sterling price of 346.00
pence per share translated into cents at a rate of US$1.26 prevailing at 30
June 2024). As at 30 June 2024, a balance of US$5,115,000 million remained in
revenue reserves. Dividends may be 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. 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.
Discount Management and New Discount Control Mechanism
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 period from 1 January 2022 to 30 June 2024
was 5.8%, underperforming the annualised benchmark return of 8.5% over the
calculation period by 2.7% (equivalent to 270 basis points).
The cum-income discount of the Company’s ordinary shares over the
calculation period has averaged 11.0%.
For the current six month period under review the cum-income discount has
ranged from 16.5% to 4.5%, ending the period under review on a discount of
10.7% at 30 June 2024.
The Company has not bought back any shares during the six month period ended
30 June 2024 and up to the date of publication of this report.
Outlook
We have seen the first reduction in US interest rates, which should benefit
Latin American economies. Declining interest rates throughout the region
should result in better economic activity going forward and thus see a
favourable environment for asset prices. While both absolute and relative
performance in the first half have been disappointing, we strongly believe
that investing in Latin America requires patience and an ability to maintain
and add to portfolio positions when others in the market are heading for the
exit. To that end, and reflecting our view of the opportunity set, it should
be noted that we have increased our leverage by 10.8% since the end of 2023.
CAROLAN DOBSON
Chairman
27 September 2024
Investment Manager’s Report
Market Overview
Latin America has endured a very tough start to 2024, declining -15.5% in the
first six months of the year where Brazil (-18.7%) and Mexico (-15.7%) were
the primary drivers of the region’s underperformance. For reference, the
MSCI AC Asia Pacific ex Japan Index was up 7.2% while the MSCI Emerging
Markets EMEA Index climbed 2.9% in the first six months of 2024. The region
also underperformed the MSCI USA Index, which was up 14.9%, and developed
market equities, as represented by the MSCI World Index, up 12.0%. All
performance figures are calculated in US Dollar terms with dividends
reinvested.
Strong economic data out of the US at the beginning of the year weighed on
emerging markets more broadly as expectations of a Federal Reserve rate cut
were pushed out. This negatively impacted sentiment, particularly in Brazil,
as it raised concerns around the central bank’s ability to cut rates
further. In May, Brazil faced additional challenges with severe flooding that
disrupted agricultural output, leading to inflation concerns. More recently,
fiscal uncertainty has also put pressure on the market after a
larger-than-expected fiscal deficit was reported in June.
Mexico held presidential elections in early June and welcomed their first ever
female president. Claudia Sheinbaum, leader for the ruling party Morena, won a
landslide ~59% of the votes in what turned out to be the highest voter turnout
in Mexican (democratic) history. The outcome of the elections has created a
lot of volatility for Mexican financial assets, with the peso depreciating
significantly. Investors are concerned that the landslide win of
president-elect Sheinbaum and the Morena party will result in reduced checks
and balances for the government and detrimental judicial reforms.
Elsewhere in our universe, Argentina was the strongest performer, returning
+21.4%. The market has been excited about Milei’s push for economic reforms
which, coupled with easing inflation pressures and rising commodity prices,
has helped support the stock market. Peru was also among the best performing
markets, climbing +18.1%, helped by higher copper prices.
Performance Review and Positioning
The Company underperformed its benchmark over the six month period ended 30
June 2024, returning -22.0% on a total return basis in US Dollar terms. Over
the same time horizon, the Company’s benchmark, the MSCI EM Latin America
Index, returned -15.7% on a net basis in US Dollar terms.
The most notable positive contributor to performance was our precious metals
exposure in Ecuador and in Mexico. Our overweight to Colombia and
off-benchmark exposure to Panama also helped relative performance. Our
position in MAG Silver Corp, the Mexican silver miner, was the largest
contributor to relative returns over the period. Another precious metals stock
that helped performance was Lundin Gold, a Canadian based mining company with
operations in Ecuador. Both stocks have been propelled higher by rising gold
and silver prices and the former has also shown strong operational resilience,
delivering first quarter of 2024 EBITDA results up +18% quarter over quarter
and +6% year over year. Elsewhere, Colombian exposure through bank Bancolombia
was also supportive of relative returns. So was off-benchmark exposure in
Argentina through steel pipe manufacturer Tenaris. The stock rose following a
fourth quarter of 2023 EBITDA beat, where results had been helped due to an
increase in shipments to the Middle East and for offshore pipeline projects.
Overweight in Becle Sab De, a Mexican producer and supplier of alcoholic
beverages most famously known for their high-end tequila brand Jose Cuervo,
also helped returns. The company delivered strong results for the fourth
quarter of 2023, beating consensus by 15%.
However, these positives were more than offset by developments in Brazil. The
biggest economy in Latin America drove the majority of the underperformance on
concerns surrounding the central bank’s ability to cut rates, amidst US rate
cut expectations being pushed out and domestic fiscal challenges.
Within Brazil, a collection of rate sensitive names detracted. The largest
detractor was our overweight position in EZTEC Empreendimentos e
Participacoesa, a Brazilian homebuilder. The company has struggled with
elevated inventory levels, but this has improved over the second quarter of
2024. While the position has detracted, it remains a high conviction position
for us as the company is net cash and trades on a cheap private equity
multiple. Another detractor was Brazilian retailer, Lojas Renner, as their
latest earnings report surprised to the downside. Warm weather during
Brazil’s winter months and the flooding in Rio Grande do Sol, Renner’s
home state, have negatively affected sales. However, we regard both as
short-term issues that do not affect the medium term outlook. Positioning in
Banco Bradesco also hurt after the company reported weak loan growth paired
with conservative guidance from their new CEO. While it has taken longer than
expected, we continue to believe they will benefit from falling rates in
Brazil and subsequently, an improvement in asset quality. Elsewhere, not
owning Peruvian miner Southern Copper weighed on performance due to the
increase in copper prices.
Over the period, we have increased our exposure to Mexico. We initiated a
position in Becle Sab De, the Mexican producer and supplier of alcoholic
beverages, on the back of declining agave prices which should have a positive
impact on the company’s margins. We also initiated a position in Mexican
highway operator PINFRA, which is a well-run, conservative business that
trades on low multiples. Later in the period, we took advantage of the
relative weakness going into and following the election result to add to Grupo
Financiero Banorte as we believe the market overreacted regarding concerns
around banking taxes. We reduced our exposure to convenience store operator
FEMSA on concerns around labour cost pressures in Mexico and its impact on
their results.
Brazil is another country we have increased our exposure to, taking advantage
of the meaningful underperformance of this market. We topped up our holding in
retailer Lojas Renner as the management has been making proactive changes,
including opening a new distribution centre which we think will help their
costs and make them more competitive. We also added to our holding in
Brazilian oil and gas company Petrobrás, as we believe the government is
highly dependent on the company’s dividends for its fiscal budget, resulting
in a very attractive dividend yield.
Elsewhere, we exited Chilean pulp and paper company Empresas CMPC on the back
of relative performance. Pulp prices went up on supply disruptions and we
believe the overall market will become more oversupplied going forward. In
Argentina, we exited steel pipe manufacturer Tenaris as our investment case
has played out. We also further diversified our bets by adding to IT services
company Globant.
Brazil is the largest portfolio overweight at the end of the period. Mexico is
our second largest overweight. On the other hand, we remain underweight in
Peru due to its political and economic uncertainty. The second largest
portfolio underweight is Chile.
Outlook
We remain optimistic about the outlook for Latin. 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 is supporting both economic
activity and asset prices. In addition, the whole region is benefitting from
being relatively isolated from global geopolitical conflicts. We believe that
this will lead to both an increase in foreign direct investment and an
increase in allocation from investors across the region.
Brazil is the highlight of this thesis, with the central bank having already
cut the policy rate and economic activity improving strongly, while realised
inflation remains benign. However, fiscal trends have disappointed in the
first half of the year, which has led to higher inflation expectations and a
sell-off in both the currency and interest rates. After carefully examining
the data, we believe that the market is overreacting. The fiscal expenditure
year-to-date looks artificially high because the government has decided to
accelerate some of the spending that was planned over the full year into the
first half of the year 2024. We therefore expect better fiscal results over
the next few months. Nevertheless, the Brazilian central bank is pausing its
rate cutting cycle and is instead hiking interest rates in the short term to
prevent the currency from selling off further. We remain comfortable with our
equity positioning because the underlying earnings trends are positive, driven
by the strong economic activity.
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. The outcome of
the presidential elections in early June has created a lot of volatility for
Mexican financial assets, with the peso depreciating significantly. Investors
are concerned that the landslide win of president-elect Sheinbaum and the
Morena party will result in reduced checks and balances for the government.
The passing of the controversial judicial reform in early September is a good
example of this. We are certainly concerned about the implications of the
reform for judicial independence. We have visited Mexico in the week after the
election to meet with investors, business owners and political advisors. Our
conclusion from that trip is that we believe the government will remain
relatively pragmatic and fiscally prudent, even more so than during AMLO’s
(President Andrés Manuel López Obrador) term. Since the election, Sheinbaum
has made an extensive effort to seek dialogue with the business community,
which we see as a positive sign. We have therefore used the market correction
to add to certain positions.
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 around 270% year-on-year, foreign exchange reserves depleted and
multiple economic imbalances. To further gauge sentiment on the ground, we
travelled to the country in January 2024. The trip further instilled our
cautious view on the economic outlook for the country, and we see no
fundamental reasons as to why we would want to buy into this market now. We
have become incrementally more cautious on Argentina over the past month, as
the weakening of the informal exchange rate suggests that official exchange
rate might be overvalued. Therefore, we see the risk of another exchange rate
devaluation, which could reignite inflationary pressures.
The recent data in the United States supports our thesis that the US labour
market is slowing down, which has led the Federal Reserve to reduce its
monetary policy rates by 50bps in September. This should be supportive for
Emerging Market carry countries, including Latin America. We maintain our view
that declining interest rates throughout the region will result in better
economic activity going forward and thus see a favourable environment for
asset prices. While both absolute and relative performance in the first half
have been disappointing, we strongly believe that investing in Latin America
requires patience and an ability to maintain and add to portfolio positions
when others in the market are heading for the exit. To that end, and
reflecting our view of the opportunity set, it should be noted that we have
increased our leverage by 10.8% since the end of 2023.
SAM VECHT
and CHRISTOPH BRINKMANN
BlackRock Investment Management (UK) Limited
27 September 2024
Portfolio Analysis as at 30 June 2024
Geographical weighting (gross market exposure) vs MSCI EM Latin America Index
% of net assets MSCI EM Latin America Index %
Brazil 65.9 58.8
Mexico 35.0 29.5
Chile 4.2 6.1
Argentina 2.5 0.0
Colombia 2.3 1.4
Panama 1.6 0.0
Peru 0.0 4.2
Sources: BlackRock and MSCI.
Sector allocation (gross market exposure) vs MSCI EM Latin America Index
% of net assets MSCI EM Latin America Index %
Financials 29.2 25.3
Consumer Staples 18.4 16.5
Industrials 17.2 10.5
Materials 13.8 18.3
Consumer Discretionary 11.6 1.6
Energy 11.3 13.7
Health Care 4.5 1.5
Real Estate 2.9 1.1
Information Technology 2.4 0.6
Communication Services 0.2 4.2
Utilities 0.0 6.7
Sources: BlackRock and MSCI.
Ten Largest Investments as at 30 June 2024
Together, the ten largest investments represented 54.8% of total investments
of the Company’s portfolio as at 30 June 2024 (31 December 2023: 55.3%).
1 ▲ Petrobrás (2023: 2nd)
Energy
Market value – American depositary receipt (ADR): US$9,165,000
Market value – preference shares ADR: US$3,803,000
Market value – ordinary shares: US$3,310,000
Share of investments: 10.1% (2023: 8.6%)
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.
2 ▼ Vale (2023: 1st)
Materials
Market value – American depositary share (ADS): US$11,882,000
Market value – ordinary shares: US$1,460,000
Share of investments: 8.3% (2023: 9.6%)
is one of the world’s largest mining groups, with other business 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.
3 ▲ Grupo Financiero Banorte (2023: 10th)
Financials
Market value – ordinary shares: US$11,664,000
Share of investments: 7.2% (2023: 3.1%)
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.
4 ► Walmart de México y Centroamérica (2023: 4th)
Consumer Staples
Market value – ordinary shares: US$9,268,000
Share of investments: 5.8% (2023: 5.9%)
is also known as Walmex, it is the Mexican and Central American Walmart
division.
5▼Banco Bradesco (2023: 3rd)
Financials
Market value – ADR: US$6,248,000
Market value – preference shares: US$2,759,000
Share of investments: 5.6% (2023: 6.2%)
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 savings bonds.
6 ▼ B3 (2023: 5th)
Financials
Market value – ordinary shares: US$7,045,000
Share of investments: 4.4% (2023: 5.1%)
is a stock exchange located in Brazil, providing trading services in an
exchange and OTC environment. B3’s scope of activities includes 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.
7 ▲ Grupo Aeroportuario del Pacifico (2023: 8th)
Industrials
Market value – ADS: US$6,635,000
Share of investments: 4.1% (2023: 4.0%)
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.
8 ▲ Itaú Unibanco (2023: 9th)
Financials
Market value - ADR: US$5,317,000
Share of investments: 3.3% (2023: 3.8%)
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.
9 ▲ Hapvida Participacoes (2023: 11th)
Health Care
Market value – ADR: US$4,914,000
Share of investments: 3.1% (2023: 3.0%)
is a Brazilian holding healthcare company. The company operates with a
vertical service structure and is one of the largest healthcare solutions
providers in the country. The company provides medical assistance and dental
care plans and their operating structure includes facilities such as
hospitals, walk-in emergencies, clinics and diagnostic imaging units.
10 ▲ Lojas Renner (2023: 21st)
Consumer Discretionary
Market value – ordinary shares: US$4,602,000
Share of investments: 2.9% (2023: 2.0%)
is a fashion and lifestyle company operating in Brazil, Uruguay, and
Argentina. The company operates in Retail and Financial Products segments. It
trades in a variety of products including clothes, sports products, shoes,
accessories, perfumery, housewares, towels and linen, furniture and decoration
articles.
All percentages reflect the value of the holding as a percentage of total
investments. For this purpose, where more than one class of securities is
held, these have been aggregated.
The percentages in brackets represent the value of the holding as at 31
December 2023.
Arrows indicate the change in relative ranking of the position in the
portfolio compared to its ranking as at 31 December 2023.
Portfolio of Investments as at 30 June 2024
Market % of
value investments
US$’000
Brazil
Petrobrás - ADR 9,165 } 10.1
Petrobrás - preference shares ADR 3,803
Petrobrás 3,310
Vale - ADS 11,882 } 8.3
Vale 1,460
Banco Bradesco - ADR 6,248 } 5.6
Banco Bradesco - preference shares 2,759
B3 7,045 4.4
Itaú Unibanco – ADR 5,317 3.3
Hapvida Participacoes 4,914 3.1
Lojas Renner 4,602 2.9
Rumo 4,315 2.7
EZTEC Empreendimentos e Participacoes 3,742 2.3
Sendas Distribuidora 3,671 2.3
Arezzo Industria e Comercio 3,253 2.0
Alpargatas 3,064 1.9
XP 3,006 1.9
IRB Brasil Resseguros 2,782 1.7
Vamos 2,494 1.5
AmBev - ADR 2,039 } 1.5
AmBev 406
CCR 2,118 1.3
Grupo De Moda Soma 2,027 1.3
Rede D'or Sao Luiz 1,582 1.0
--------------- ---------------
95,004 59.1
========= =========
Mexico
Grupo Financiero Banorte 11,664 7.2
Walmart de México y Centroamérica 9,268 5.8
Grupo Aeroportuario del Pacifico - ADS 6,635 4.1
MAG Silver Corp 4,228 2.6
Fibra Uno Administracion - REIT 4,155 2.6
Becle Sab De 3,528 2.2
Kimberly-Clark 3,012 1.9
PINFRA 2,810 1.7
FEMSA - ADR 2,536 1.6
Grupo México 2,289 1.4
America Movil - ADR 277 0.2
--------------- ---------------
50,402 31.3
========= =========
Chile
Sociedad Química Y Minera - ADR 4,080 2.5
Cia Cervecerias Unidas 1,209 } 1.3
Cia Cervecerias Unidas - ADR 877
--------------- ---------------
6,166 3.8
========= =========
Argentina
Globant 3,558 2.2
--------------- ---------------
3,558 2.2
========= =========
Colombia
Bancolombia 3,332 2.1
--------------- ---------------
3,332 2.1
========= =========
Panama
Copa Holdings 2,355 1.5
--------------- ---------------
2,355 1.5
========= =========
Total investments 160,817 100.0
========= =========
All investments are in equity shares unless otherwise stated.
The total number of investments held at 30 June 2024 was 41 (31 December 2023:
39). At 30 June 2024, the Company did not hold any equity interests comprising
more than 3% of any company’s share capital (31 December 2023: nil).
Interim Management Report and Responsibility Statement
The Chairman’s Statement and the Investment Manager’s Report above give
details of the events which have occurred during the period and their impact
on the financial statements.
Principal Risks and Uncertainties
The principal risks faced by the Company can be divided into various areas as
follows:
· Counterparty;
· Investment performance;
· Income/dividend;
· Legal and regulatory compliance;
· Operational;
· Market;
· Financial; and
· Marketing.
The Board reported on the principal risks and uncertainties faced by the
Company in the Annual Report and Financial Statements for the year ended 31
December 2023. A detailed explanation can be found on pages 42 to 47 and in
note 16 on pages 98 to 106 of the Annual Report and Financial Statements which
are available on the website maintained by BlackRock at
www.blackrock.com/uk/brla.
The Board and the Investment Manager continue to monitor investment
performance in line with the Company’s investment objectives, and the
operations of the Company and the publication of net asset values are
continuing.
In the view of the Board, there have not been any changes to the fundamental
nature of the principal risks and uncertainties since the previous report and
these are equally applicable to the remaining six months of the financial year
as they were to the six months under review.
Going Concern
The Board is mindful of the risk that unforeseen or unprecedented events
including (but not limited to) heightened geopolitical tensions such as the
wars in Ukraine and the Middle East, their longer-term effects on the global
economy, high inflation and the current cost of living crisis could have a
significant impact on global markets. Notwithstanding this significant degree
of uncertainty, the Directors, having considered the nature and liquidity of
the portfolio, the Company’s investment objective, the Company’s projected
income and expenditure, are satisfied that the Company has adequate resources
to continue in operational existence for the foreseeable future and is
financially sound.
Related Party Disclosure and Transactions with the Manager
BlackRock Fund Managers Limited (BFM) was appointed as the Company’s AIFM
(Alternative Investment Fund Manager) with effect from 2 July 2014. 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)). Both BFM and BIM (UK) are regarded as related parties
under the Listing Rules. Details of the fees payable are set out in note 11 to
the financial statements.
The related party transactions with the Directors are set out in note 12 to
the financial statements.
Directors’ Responsibility Statement
The Disclosure Guidance and Transparency Rules of the UK Listing Authority
require the Directors to confirm their responsibilities in relation to the
preparation and publication of the Interim Management Report and Financial
Statements.
The Directors confirm to the best of their knowledge that:
· the condensed set of financial statements contained within the
Half Yearly Financial Report has been prepared in accordance with the
applicable UK Accounting Standard FRS 104 ‘Interim Financial Reporting’;
and
· the Interim Management Report, together with the Chairman’s
Statement and Investment Manager’s Report, include a fair review of the
information required by 4.2.7R and 4.2.8R of the FCA’s Disclosure Guidance
and Transparency Rules.
The Half Yearly Financial Report has not been audited or reviewed by the
Company’s Auditors.
The Half Yearly Financial Report was approved by the Board on 27 September
2024 and the above responsibility statement was signed on its behalf by the
Chairman.
CAROLAN DOBSON
For and on behalf of the board
27 September 2024
Income statement for the six months ended 30 June 2024
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
(unaudited) (unaudited) (audited)
Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
(Losses)/gains on investments held at fair value through profit or loss – (44,039) (44,039) – 33,031 33,031 – 45,717 45,717
Gains on foreign exchange – 46 46 – 25 25 – 22 22
Income from investments held at fair value through profit or loss 2 4,674 – 4,674 5,503 – 5,503 10,915 – 10,915
Other income 2 13 – 13 21 – 21 49 – 49
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total income/(loss) 4,687 (43,993) (39,306) 5,524 33,056 38,580 10,964 45,739 56,703
======= ======= ======= ======= ======= ======= ======= ======= =======
Expenses
Investment management fee 3 (158) (476) (634) (161) (482) (643) (339) (1,019) (1,358)
Other operating expenses 4 (395) (4) (399) (382) (7) (389) (724) (19) (743)
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total operating expenses (553) (480) (1,033) (543) (489) (1,032) (1,063) (1,038) (2,101)
======= ======= ======= ======= ======= ======= ======= ======= =======
Net profit/(loss) on ordinary activities before finance costs and taxation 4,134 (44,473) (40,339) 4,981 32,567 37,548 9,901 44,701 54,602
Finance costs (83) (248) (331) (43) (128) (171) (88) (263) (351)
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net profit/(loss) on ordinary activities before taxation 4,051 (44,721) (40,670) 4,938 32,439 37,377 9,813 44,438 54,251
Taxation charge (265) – (265) (444) – (444) (846) – (846)
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net profit/(loss) on ordinary activities after taxation 3,786 (44,721) (40,935) 4,494 32,439 36,933 8,967 44,438 53,405
Earnings/(loss) per ordinary share (US$ cents) 7 12.86 (151.86) (139.00) 15.26 110.15 125.41 30.45 150.90 181.35
======= ======= ======= ======= ======= ======= ======= ======= =======
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 period. All income is attributable to
the equity holders of the Company.
The net profit/(loss) on ordinary activities for the period disclosed above
represents the Company’s total comprehensive income/(loss).
Statement of Changes in Equity for the six months ended 30 June 2024
Note Called Share Capital Non- Capital Revenue Total
up share premium redemption distributable reserves reserve US$’000
capital account reserve reserve US$’000 US$’000
US$’000 US$’000 US$’000 US$’000
For the six months ended 30 June 2024 (unaudited)
At 31 December 2023 3,163 11,719 5,824 4,356 158,781 5,876 189,719
Total comprehensive (loss)/income:
Net (loss)/profit for the period – – – – (44,721) 3,786 (40,935)
Transactions with owners, recorded directly to equity:
Dividends paid(1) 5 – – – – – (4,547) (4,547)
-------------- -------------- -------------- -------------- -------------- -------------- --------------
At 30 June 2024 3,163 11,719 5,824 4,356 114,060 5,115 144,237
========= ========= ========= ========= ========= ========= =========
For the six months ended 30 June 2023 (unaudited)
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 period – – – – 32,439 4,494 36,933
Transactions with owners, recorded directly to equity:
Dividends paid(2) 5 – – – – – (7,509) (7,509)
-------------- -------------- -------------- -------------- -------------- -------------- --------------
At 30 June 2023 3,163 11,719 5,824 4,356 146,782 5,691 177,535
========= ========= ========= ========= ========= ========= =========
For the year ended 31 December 2023 (audited)
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(3) 5 – – – – – (11,797) (11,797)
-------------- -------------- -------------- -------------- -------------- -------------- --------------
At 31 December 2023 3,163 11,719 5,824 4,356 158,781 5,876 189,719
========= ========= ========= ========= ========= ========= =========
1 Quarterly dividend of 8.05 cents per share for the year ended 31
December 2023, declared on 2 January 2024 and paid on 9 February 2024; and
quarterly dividend of 7.39 cents per share for the year ending 31 December
2024, declared on 2 April 2024 and paid on 16 May 2024.
2 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; and quarterly dividend
of 6.21 cents per share for the year ending 31 December 2023, declared on 3
April 2023 and paid on 16 May 2023.
3 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.
For information on the Company’s distributable reserves, please refer to
note 9 below.
Balance Sheet as at 30 June 2024
Notes 30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)
US$’000 US$’000 US$’000
Fixed assets
Investments held at fair value through profit or loss 160,817 172,973 190,875
-------------- -------------- --------------
Current assets
Debtors 1,336 1,671 2,135
Cash and cash equivalents 1,886 4,076 274
-------------- -------------- --------------
Total current assets 3,222 5,747 2,409
========= ========= =========
Creditors - amounts falling due within one year
Bank overdraft (18,560) – (2,658)
Other creditors (1,218) (1,161) (883)
-------------- -------------- --------------
Total current liabilities (19,778) (1,161) (3,541)
========= ========= =========
Net current (liabilities)/assets (16,556) 4,586 (1,132)
-------------- -------------- --------------
Total assets less current liabilities 144,261 177,559 189,743
========= ========= =========
Creditors – amounts falling due after more than one year
Non-equity redeemable shares 6 (24) (24) (24)
-------------- -------------- --------------
(24) (24) (24)
========= ========= =========
Net assets 144,237 177,535 189,719
========= ========= =========
Capital and reserves
Called up share capital 8 3,163 3,163 3,163
Share premium account 11,719 11,719 11,719
Capital redemption reserve 5,824 5,824 5,824
Non-distributable reserve 4,356 4,356 4,356
Capital reserves 114,060 146,782 158,781
Revenue reserve 5,115 5,691 5,876
-------------- -------------- --------------
Total shareholders’ funds 7 144,237 177,535 189,719
========= ========= =========
Net asset value per ordinary share (US$ cents) 7 489.79 602.86 644.24
========= ========= =========
Statement of Cash Flows for the six months ended 30 June 2024
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)
US$’000 US$’000 US$’000
Operating activities
Net (loss)/profit on ordinary activities before taxation (40,670) 37,377 54,251
Add back finance costs 331 171 351
Losses/(gains) on investments held at fair value through profit or loss 44,039 (33,031) (45,717)
Gains on foreign exchange (46) (25) (22)
Sales of investments held at fair value through profit or loss 47,126 65,988 114,570
Purchase of investments held at fair value through profit or loss (61,107) (47,848) (101,634)
Decrease/(increase) in other debtors 799 (93) (569)
Increase/(decrease) in other creditors 335 207 (71)
Taxation on investment income (265) (444) (846)
-------------- -------------- --------------
Net cash (used in)/generated from operating activities (9,458) 22,302 20,313
========= ========= =========
Financing activities
Interest paid (331) (171) (351)
Dividends paid (4,547) (7,509) (11,797)
-------------- -------------- --------------
Net cash used in financing activities (4,878) (7,680) (12,148)
========= ========= =========
(Decrease)/increase in cash and cash equivalents (14,336) 14,622 8,165
Cash and cash equivalents at the beginning of the period/year (2,384) (10,571) (10,571)
Effect of foreign exchange rate changes 46 25 22
-------------- -------------- --------------
Cash and cash equivalents at the end of the period/year (16,674) 4,076 (2,384)
========= ========= =========
Comprised of:
Cash at bank 1,886 4,076 274
Bank overdraft (18,560) — (2,658)
-------------- -------------- --------------
(16,674) 4,076 (2,384)
========= ========= =========
Notes to the Financial Statements for the six months ended 30 June 2024
1. Principal activity and basis of preparation
The principal activity of the Company is that of an investment trust company
within the meaning of Section 1158 of the Corporation Tax Act 2010.
The financial statements of the Company are prepared on a going concern basis
in accordance with Financial Reporting Standard 104 Interim Financial
Reporting (FRS 104) applicable in the United Kingdom and Republic of Ireland
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.
The accounting policies and estimation techniques applied for the condensed
set of financial statements are as set out in the Company’s Annual Report
and Financial Statements for the year ended 31 December 2023.
At 30 June 2024 the Company had net surplus management expenses of US$nil (30
June 2023: US$868,000; 31 December 2023: US$ nil) and a non-trade loan
relationship deficit of US$2,131,000 (30 June 2023: US$1,606,000; 31 December
2023: US$1,883,000). A deferred tax asset was not recognised in the period
ended 30 June 2024 or in the year ended 31 December 2023 as it was unlikely
that there would be sufficient future taxable profits to utilise these
expenses.
2. Income
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)
US$’000 US$’000 US$’000
Investment income:
Overseas dividends 4,464 5,261 10,339
Overseas REIT distributions 198 212 416
Overseas special dividends 12 30 160
-------------- -------------- --------------
Total investment income 4,674 5,503 10,915
========= ========= =========
Other income:
Deposit interest 13 21 47
Interest from Cash Fund – – 2
-------------- -------------- --------------
13 21 49
========= ========= =========
Total income 4,687 5,524 10,964
========= ========= =========
Dividends and interest received in cash during the period amounted to
US$5,267,000 and US$13,000 (six months ended 30 June 2023: US$5,058,000 and
US$21,000; year ended 31 December 2023: US$9,671,000 and US$49,000).
There were no special dividends recognised in capital in the period (six
months ended 30 June 2023: US$nil; year ended 31 December 2023: US$nil).
3. Investment Management Fee
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Investment management fee 158 476 634 161 482 643 339 1,019 1,358
========= ========= ========= ========= ========= ========= ========= ========= =========
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.
4. Other Operating Expenses
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)
US$’000 US$’000 US$’000
Allocated to revenue:
Custody fee 17 15 33
Depositary fees(1) 8 7 16
Auditors’ remuneration(2) 30 31 58
Registrar’s fees 20 21 40
Directors’ emoluments 102 117 222
Marketing fees 41 48 104
Postage and printing fees 65 46 65
AIC fees – – 2
Broker fees 21 22 45
Employer NI contributions 11 16 27
FCA fees 5 6 10
Write back of prior year expenses(3) – (6) (6)
Other administration costs 75 59 108
-------------- -------------- --------------
395 382 724
========= ========= =========
Allocated to capital:
Custody transaction charges(4) 4 7 19
-------------- -------------- --------------
399 389 743
========= ========= =========
1 All expenses other than depositary fees are paid in Sterling and are
therefore subject to exchange rate fluctuations.
2 No non-audit services are provided by the Company’s Auditor.
3 No expenses have been written back during the six month period ended
30 June 2024 (six months ended 30 June 2023: AIC fees and miscellaneous fees;
year ended 31 December 2023: AIC fees and other administration costs).
4 For the six month period ended 30 June 2024, expenses of US$4,000 (six
months ended 30 June 2023: US$7,000; year ended 31 December 2023: US$19,000)
were charged to the capital account of the Income Statement. These relate to
transaction costs charged by the custodian on sale and purchase trades.
The direct transaction costs incurred on the acquisition of investments
amounted to US$54,000 for the six months ended 30 June 2024 (six months ended
30 June 2023: US$51,000; year ended 31 December 2023: US$97,000). Costs
relating to the disposal of investments amounted to US$41,000 for the six
months ended 30 June 2024 (six months ended 30 June 2023: US$83,000; year
ended 31 December 2023: US$125,000). All transaction costs have been included
within the capital reserves.
5. Dividend
The Company’s cum-income US Dollar NAV at 31 March 2024 was 591.29 cents per
share, and the Directors declared a first quarterly interim dividend of 7.39
cents per share. The dividend was paid on 16 May 2024 to holders of ordinary
shares on the register at the close of business on 12 April 2024.
In accordance with FRS 102 Section 32 Events After the End of the Reporting
Period, the final dividend payable on ordinary shares is recognised as a
liability when approved by shareholders. Interim dividends are recognised only
when paid.
Dividends on equity shares paid during the period were:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)
US$’000 US$’000 US$’000
Quarter to 31 December 2022 – dividend of 6.29 cents – 1,852 1,852
Year to 31 December 2022 – dividend of 13.00 cents – 3,828 3,828
Quarter to 31 March 2023 – dividend of 6.21 cents – 1,829 1,829
Quarter to 30 June 2023 – dividend of 7.54 cents – – 2,221
Quarter to 30 September 2023 – dividend of 7.02 cents – – 2,067
Quarter to 31 December 2023 – dividend of 8.05 cents 2,371 – –
Quarter to 31 March 2024 – dividend of 7.39 cents 2,176 – –
-------------- -------------- --------------
4,547 7,509 11,797
========= ========= =========
6. Creditors – amounts falling due after more than one year
As at As at As at
30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)
US$’000 US$’000 US$’000
Non-equity redeemable shares 24 24 24
========= ========= =========
The redeemable shares of £1 each carry the right to receive a fixed dividend
at the rate of 0.1% per annum on the nominal amount thereof. They are capable
of being redeemed by the Company at any time and confer no rights to receive
notice of, attend or vote at general meetings except where the rights of
holders are to be varied or abrogated. On a winding up, the capital paid up on
such shares ranks pari passu with, and in proportion to, any amounts of
capital paid to the holders of ordinary shares, but does not confer any
further right to participate in the surplus assets of the Company.
7. (Loss)/earnings and net asset value per ordinary share
Total revenue, capital (loss)/earnings and net asset value per ordinary share
are shown below and have been calculated using the following:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)
Net revenue profit attributable to ordinary shareholders (US$’000) 3,786 4,494 8,967
Net capital (loss)/profit attributable to ordinary shareholders (US$’000) (44,721) 32,439 44,438
-------------- -------------- --------------
Total (loss)/profit attributable to ordinary shareholders (US$’000) (40,935) 36,933 53,405
========= ========= =========
Total shareholders’ funds (US$’000) 144,237 177,535 189,719
========= ========= =========
Earnings per share
The weighted average number of ordinary shares in issue during the period on which the earnings per ordinary share was calculated was: 29,448,641 29,448,641 29,448,641
The actual number of ordinary shares in issue at the end of the period on which the net asset value per ordinary share was calculated was: 29,448,641 29,448,641 29,448,641
Revenue earnings per share (US$ cents) - basic and diluted 12.86 15.26 30.45
Capital (loss)/earnings per share (US$ cents) - basic and diluted (151.86) 110.15 150.90
-------------- -------------- --------------
Total (loss)/earnings per share (US$ cents) - basic and diluted (139.00) 125.41 181.35
========= ========= =========
As at As at As at
30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)
Net asset value per ordinary share (US$ cents) 489.79 602.86 644.24
Ordinary share price (mid-market) (US$ cents)(1) 437.38 513.63 569.84
========= ========= =========
1 Based on an exchange rate of US$1.26 to £1 (30 June 2023: US$1.27; 31
December 2023: US$1.27).
There were no dilutive securities at 30 June 2024 (30 June 2023: nil; 31
December 2023: nil).
8. Called up share capital
(unaudited) Ordinary Treasury Total Nominal
shares shares shares value
number number number US$’000
Allotted, called up and fully paid share capital comprised:
Ordinary shares of 10 cents each:
At 31 December 2023 29,448,641 2,181,662 31,630,303 3,163
-------------- -------------- -------------- --------------
At 30 June 2024 29,448,641 2,181,662 31,630,303 3,163
========= ========= ========= =========
During the six months ended 30 June 2024, no ordinary shares were repurchased
(six months ended 30 June 2023: nil; year ended 31 December 2023: nil).
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
The share premium account and capital redemption 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 reserve and the revenue reserve
may be distributed by way of dividend. The loss on the capital reserve arising
on the revaluation of investments of US$23,534,000 (30 June 2023: gain of
US$24,454,000; 31 December 2023: gain of US$28,638,000) is subject to fair
value movements and may not be readily realisable at short notice, as such it
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. Financial risks and valuation of financial instruments
The Company’s investment activities expose it to the various types of risk
which are associated with the financial instruments and markets in which it
invests. The risks are substantially consistent with those disclosed in the
previous annual financial statements with the exception of those outlined
below.
Market risk arising from price risk
Price risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market prices (other than
those arising from interest rate risk or currency risk), whether those changes
are caused by factors specific to the individual financial instrument or its
issuer, or factors affecting similar financial instruments traded in the
market. Local, regional or global events such as war, acts of terrorism, the
spread of infectious illness or other public health issues, recessions,
climate change or other events could have a significant impact on the Company
and the market price of its investments and could result in increased premiums
or discounts to the Company’s net asset value.
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 and cash equivalents and
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 on pages 90 and 91 of
the Annual Report and Financial Statements for the year ended 31 December
2023.
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 all 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
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 at 30 June 2024 (unaudited) Level 1 Level 2 Level 3 Total
US$’000 US$’000 US$’000 US$’000
Equity investments 160,817 – – 160,817
-------------- -------------- -------------- --------------
Total 160,817 – – 160,817
========= ========= ========= =========
Financial assets at fair value through profit or loss at 30 June 2023 (unaudited) Level 1 Level 2 Level 3 Total
US$’000 US$’000 US$’000 US$’000
Equity investments 172,973 – – 172,973
-------------- -------------- -------------- --------------
Total 172,973 – – 172,973
========= ========= ========= =========
Financial assets at fair value through profit or loss at 31 December 2023 (audited) Level 1 Level 2 Level 3 Total
US$’000 US$’000 US$’000 US$’000
Equity investments 190,875 – – 190,875
-------------- -------------- -------------- ----------------
Total 190,875 – – 190,875
========= ========= ========= =========
The Company held no Level 3 securities as at 30 June 2024 (30 June 2023: none;
31 December 2023: none).
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 business
risks, including climate change risk, in accordance with the fair value
related requirements of the Company’s financial reporting framework.
11. 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 on page 51
of the Directors’ Report in the Company’s Annual Report and Financial
Statements for the year ended 31 December 2023.
The investment management fee is levied quarterly, based on 0.80% per annum of
the net asset value. The investment management fee due for the six months
ended 30 June 2024 amounted to US$634,000 (six months ended 30 June 2023:
US$643,000; year ended 31 December 2023: US$1,358,000). At the period end, an
amount of US$634,000 was outstanding in respect of these fees (30 June 2023:
US$643,000; 31 December 2023: US$383,000).
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
period ended 30 June 2024 amounted to US$41,000 excluding VAT (six months
ended 30 June 2023: US$48,000; year ended 31 December 2023: US$104,000). At
the period end, an amount of US$128,000 was outstanding in respect of these
fees (30 June 2023: US$128,000; 31 December 2023: US$86,000).
During the period, 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 30 June 2024, an amount of US$214,000 (30 June 2023: US$227,000; 31
December 2023: US$213,000) 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.
12. Related party disclosure
Directors’ emoluments
The Board consists of four non-executive Directors, all of whom are considered
to be independent of the Manager by the Board. None of the Directors has a
service contract with the Company. The Chairman receives an annual fee of
£52,800, the Chairman of the Audit Committee receives an annual fee of
£40,600, the Senior Independent Director and Chairman of the Remuneration
Committee receives an annual fee of £38,100 and each of the other Directors
receives an annual fee of £36,100.
At the period end members of the Board held ordinary shares in the Company as
set out below:
As at As at As at
30 June 30 June 31 December
2024 2023 2023
Ordinary Ordinary Ordinary
shares shares shares
Carolan Dobson (Chairman) 6,842 4,792 4,792
Craig Cleland 12,000 12,000 12,000
Laurie Meister 2,915 2,915 2,915
Nigel Webber 5,000 5,000 5,000
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).
Total % of shares Total % of shares held Number of
held by Related by Significant Investors Significant Investors
BlackRock Funds who are not affiliates who are not affiliates
of BlackRock Group or of BlackRock Group or
BlackRock, Inc. BlackRock, Inc.
As at 30 June 2024 1.0 22.2 1
As at 30 June 2023 1.2 21.2 1
As at 31 December 2023 1.0 21.6 1
13. Contingent liabilities
There were no contingent liabilities at 30 June 2024 (30 June 2023: none; 31
December 2023: none).
14. Publication of non statutory accounts
The financial information contained in this Half Yearly Financial Report does
not constitute statutory accounts as defined in Section 435 of the Companies
Act 2006. The financial information for the six months ended 30 June 2024 and
30 June 2023 has not been audited or reviewed by the Company’s auditor.
The information for the year ended 31 December 2023 has been extracted from
the latest published audited financial statements, which have been filed with
the Registrar of Companies. The report of the auditor in those financial
statements contained no qualification or statement under Sections 498(2) or
(3) of the Companies Act 2006.
15. Annual results
The Board expects to announce the annual results for the year ending 31
December 2024 in March 2025. Copies of the results announcement can be
obtained from the Secretary on 020 7743 3000 or by email at
cosec@blackrock.com. The Annual Report and Financial Statements should be
available by mid-March 2025, with the Annual General Meeting being held in May
2025.
For further information, please contact:
Sarah Beynsberger, Director, 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
27 September 2024
12 Throgmorton Avenue
London EC2N 2DL
END
The Half Yearly Financial Report will also be available on the BlackRock
Investment Management website at http://www.blackrock.com/uk/brla. Neither the
contents of the Manager’s website nor the contents of any website accessible
from hyperlinks on the Manager’s website (or any other website) is
incorporated into, or forms part of, this announcement.
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