Annual Financial Report

RNS Number : 3593R

Aberdeen Latin American Inc Fd Ltd

25 October 2013

 



ABERDEEN LATIN AMERICAN INCOME FUND LIMITED

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 AUGUST 2013

1.  RESULTS

	Financial Highlights
		31 August 2013	31 August 2012	% change
Total assets		£68,177,000	£75,234,000	-9.4
Total equity shareholders' funds (net assets)		£58,610,000	£65,475,000	-10.5
Ordinary share price (mid market)		86.00p	94.00p	-8.5
Subscription share price (mid market)		7.50p	6.00p	25.0
Net asset value per Ordinary share		88.04p	98.35p	-10.5
Discount to net asset value per Ordinary share		2.32%	4.42%
Net gearing {A}		14.82%	13.35%
Dividends and earnings
Total return per Ordinary share		-6.06p	0.18p
Revenue return per Ordinary share		4.43p	4.00p	10.8
Dividends per Ordinary share		4.25p	4.25p	-
Dividend cover		1.04 times	0.94 times
Revenue reserves{B}		£1,019,000	£898,000
Operating costs
Ongoing charges ratio{C}		1.83%	1.98%
{A}   Calculated in accordance with AIC guidance "Gearing Disclosures post RDR".
{B}   Excludes payment of fourth interim dividend of 1.25p (2012 - 1.25p) per Ordinary share equating to £832,000 (2012 - £832,000).
{C}   Ongoing charges ratio calculated in accordance with guidance issued by the AIC as the total of the investment management fee and administrative expenses divided by the average cum income net asset value throughout the year.

Performance (total return)

	1 year	Since launch{B}
	% return	% return
Share price	-4.7	-3.6
Net asset value	-6.7	-0.2
Composite MSCI EM Latin America 10/40 Index/JP Morgan GBI-EM Global Diversified Index (Latin America carve out) (sterling adjusted)	-7.0	-3.7
{A}      Total return represents the capital return plus dividends reinvested.
{B}      Launch date 16 August 2010.

Dividends

	Rate	xd date	Record date	Payment date
1st interim 2013	1.00p	19 December 2012	21 December 2012	31 January 2013
2nd interim 2013	1.00p	3 April 2013	5 April 2013	30 April 2013
3rd interim 2013	1.00p	3 July 2013	5 July 2013	31 July 2013
4th interim 2013	1.25p	2 October 2013	4 October 2013	31 October 2013
Total dividends 2013	4.25p
	Rate	xd date	Record date	Payment date
1st interim 2012	1.00p	21 December 2011	23 December 2011	31 January 2012
2nd interim 2012	1.00p	4 April 2012	10 April 2012	30 April 2012
3rd interim 2012	1.00p	4 July 2012	6 July 2012	31 July 2012
4th interim 2012	1.25p	3 October 2012	5 October 2012	31 October 2012
Total dividends 2012	4.25p

2.  CHAIRMAN'S STATEMENT

Overview

Latin American stockmarkets declined during the year under review, amid significant volatility. A key driver of market performance has been the quantitative easing saga that continues to play out in the US. Emerging markets were initially supported by the abundant liquidity caused by ultra-loose fiscal and monetary policy in the EU, US and Japan. However, the US Federal Reserve's indication that it might scale back its asset purchase programme triggered a sharp global sell-off. Latin America was among the regions hardest hit. Regional currencies and bond markets were similarly affected. Also weighing on sentiment was decelerating growth in China, a key destination for the region's commodity exports, along with concerns over the possibility of US military intervention in Syria, which triggered a spike in oil prices. Within the region, Peru and Chile were the main laggards, whereas Mexico and Colombia outperformed.

Economic data broadly disappointed and we saw full-year GDP forecasts being downgraded across the board. In Brazil, government intervention in some sectors of the economy failed to spur growth.  The Chinese slowdown weighed on commodity exporters, including Chile and Peru, the region's two major copper producers. In contrast, Mexico grappled with weaker government spending on infrastructure, as well as a manufacturing sector dragged down by its reliance on the US economy.

Government responses to slowing growth were varied. Brazil, which had initially reduced its interest rates to a record low, eventually made a U-turn and started raising rates in a bid to combat inflation. At the time of writing, the benchmark rate has reached 9.5% after the central bank's fifth hike this calendar year. The nation also launched a US$60 billion programme to bolster the depreciating Real. Mexican policymakers cut rates twice after second-quarter growth disappointed and unveiled a US$300 billion infrastructure spending plan aimed at boosting the economy. In contrast, Chile and Peru maintained their benchmark rates throughout the year, as domestic demand remained supportive for growth.

The general economic slowdown, combined with a growing and increasingly socially-aware middle class, resulted in far-reaching protests. In Brazil, annoyance over a hike in bus fares boiled over into nationwide demonstrations against corruption and political inefficiency. Similarly, a Colombian farmers' strike demanding subsidies to deal with falling crop prices evolved into expressions of widespread discontent over free-trade policy and stalled peace talks with rebel insurgents FARC. Meanwhile, thousands in Mexico marched against government plans to reform the education and energy sectors. Latin American authorities must now tread the fine line between granting concessions to calm their constituents and avoiding overspending, which could sabotage future growth.  

Performance

For the year ended 31 August 2013, your Company's net asset value total return was -6.7%, which compared favourably to the composite benchmark total return of -7.0% for the same period (all in sterling terms). The net asset value per share as at 31 August 2013 was 88.04p. The share price total return for the period was -4.7% and the Ordinary shares closed the period trading at a discount of 2.3% to net asset value. At the time of writing this statement, the net asset value had recovered to 95.28p per share.

Dividends

The Board has declared a fourth interim dividend for the year ended 31 August 2013 of 1.25 pence per Ordinary share which is payable on 31 October 2013 to shareholders on the register at close of business on 4 October 2013. This is an aggregate dividend of 4.25 pence per share, in line with our expectations for the year. We continue to keep the income generation of the portfolio under review with the Investment Manager and, at this early stage in the Company's financial year, subject to investee company performance, currency movements and unforeseen circumstances, it is our aim to pay a minimum dividend of 4.25 pence per Ordinary share for the year ending 31 August 2014. It remains your Board's aim to grow dividends over time. This does not constitute a profit forecast.

Gearing

We have maintained gearing in the portfolio throughout the year under review. As at 31 August 2013 we had borrowings of US$14,800,000 drawn under our £10 million multi-currency revolving credit facility which is available until 18 August 2014 at a margin of 125bp over LIBOR.

Annual General Meeting

The AGM will be held at 10.00 a.m. on 13 December 2013 at No. 1 Seaton Place, St Helier, Jersey and I look forward to meeting shareholders on the day.

The Company's has a discount management policy, the objective of which is to maintain the price at which the Ordinary shares trade relative to their net asset value at a discount of no more that 5%. This was achieved throughout the year under review without recourse to buying in shares as there was regular net demand in the market. We are proposing a resolution at the AGM to renew the Company's authority to buy back Ordinary shares and any purchases will be made through the market at a discount to net asset value in circumstances where the Directors believe that any such purchase will enhance shareholder value. The buy back of Ordinary shares, and also of Subscription shares which is the subject of a separate resolution to the AGM, will be subject to the Listing Rules and Jersey Law and will be at the absolute discretion of the Directors. We are also seeking to renew the authority to issue up to 10% of the Company's existing Ordinary share capital at the AGM. Ordinary shares will only ever be issued at a premium to net asset value per Ordinary share and will therefore be accretive and not disadvantageous to Ordinary and Subscription shareholders.

Subscription Shares

The 28 days prior to 31 December 2013 offer the first opportunity for holders of Subscription shares to exercise their right to subscribe for Ordinary shares. A reminder letter accompanies this Annual Report if you are a holder of Subscription shares.

Outlook

External headwinds are likely to continue driving sentiment in Latin American markets. In particular, developments in the US will remain of significant importance. Much uncertainty remains over the looming debt-ceiling deadline, as little headway appears to have been made in the political standoff. On a brighter note, the recent decision to delay tapering, along with Janet Yellen's nomination to chair the Federal Reserve, has provided some respite to regional stockmarkets. Developments in China will also be closely watched. The nation which almost single-handedly fuelled the commodity 'supercycle' in recent years also powered the growth of Latin American commodity exporters. A slowdown in Chinese demand would impact on the exports of Chile, Peru and Venezuela. But recent manufacturing and import data have been positive, suggesting that China's economy may be on firmer ground.

Despite the external risks, we find there is still much to like about Latin America. Its potential growth rates still compare favourably against most of the developed world. Regional economies will likely continue to be buoyed by expanding consumer classes and relatively low levels of government debt. In the immediate term, extended quantitative easing could also buy policymakers more time to push through the structural reforms necessary for sustained growth. That said, the implementation of these reforms, in an environment of deep-seated vested interests, remains the bigger challenge.     

Richard Prosser

Chairman

24 October 2013

3.  MANAGER'S REPORT

Performance Commentary

During the financial year, the equity portfolio fell by 3.61% in sterling terms, outperforming the benchmark MSCI EM Latin America 10/40 Index's decline of 8.68%.

Stock selection in Mexico contributed most to the outperformance. Top stock contributors included airport operators OMA and Asur, which saw their shares rise on increased passenger traffic and solid earnings, while lender Banorte rallied after announcing its acquisition of Bancomer's domestic pension business and posting robust results driven by solid loan growth. Our decision to sell telecommunication services provider America Movil amid concerns over its recent investments in developed markets also proved particularly beneficial. After the divestment, the stock price fell sharply on the back of disappointing quarterly results, which saw profits depressed by the US dollar and Brazilian real weakening against the Mexican peso. Elsewhere, the non-benchmark exposure to Argentine steel-pipe maker Tenaris was positive as the stock rose on expectations that drilling activity in North America will pick up towards the year end. Hopes that reforms in the Mexican energy sector would lead to stronger future demand for its pipes are also evident.

Conversely, the lack of exposure to the cement company Cemex hurt performance as its shares rallied. Holdings in several domestically oriented consumer stocks in Brazil also detracted from performance. In particular, retailers Lojas Renner, Multiplan, Hering and Natura Cosmeticos were hampered by concerns over weak domestic consumption growth.

The fixed income portfolio fell 4.64% in sterling terms with a positive contribution from hedging reducing that fall to 3.61%, an outperformance of 0.92% when compared to the fall in the benchmark JP Morgan GBI-EM Global Diversified (Latin America) of 4.53%. The positive attribution from the holdings in Uruguay, which is not a benchmark constituent, offset the aggregate negative contributions from our holdings in the major markets.

Portfolio Activity

During the year, we purchased Brazilian beer and beverage producer AmBev due to its attractive valuation and improvements in its corporate governance. Against this, we sold the aforementioned America Movil. We also divested Brazilian health care insurer Amil after its acquisition by US health insurance company UnitedHealth Group; Mexican house-builder Urbi on quality concerns; and Brazilian publisher Saraiva due to its uncertain long-term prospects.

Elsewhere, we switched our holding in Chilean beverage company Andina's B shares for the more attractively valued A shares. We also participated in Multiplan's follow-on offering.

Country Overview

In Brazil, the man who coined the term 'currency wars' changed his tune in February and this caused the Brazilian Real to perform strongly in the first quarter of 2013. Brazil's finance minister, Mantega, said that the Real had stabilized at a favourable level that reduced the need for intervention. Brazil's central bank (BCB) increased the benchmark SELIC rate in April and May by 25 and 50 basis points respectively to 8.50%.  The BCB's second quarter inflation report in June revealed estimates pointing to a downward trend in CPI to 5.8% in 2013 and 5.2% in 2014. Brazil's first quarter Gross Domestic Product (GDP) result in May disappointed the market. The economy grew at 2.2% year-on-year which was lower than the 2.6% annual figure posted in the fourth quarter of 2012. The BCB's forecast for annual growth was revised down in June to 2.7% from 3.1% previously, although it expected domestic activity to increase in the second half of 2013 and going into 2014. The Ministry of Finance removed the Tax on Financial Operations (IOF tax) on foreign fixed income investments in June. Previously, investors had to pay an upfront tax of 6% at the time of purchase which was a major deterrent to foreign investors and caused foreign participation in Brazil's domestic market to stagnate in 2010 where it has remained at approximately 15% of the total. In other news, the BCB's monetary policy committee (Copom) hiked its SELIC policy rate by 25 basis points twice in July and August to 9.0% and by a further 50 basis points in October to 9.5%. The Copom used the same post-meeting statement in July and August, emphasising the desire to bring inflation onto a declining trend. Nevertheless, the BCB's third quarter inflation report in September showed that inflation expectations rose over the period due to the depreciation of the Real coupled with a more favourable growth outlook.

Minutes from the Central Bank of Mexico's (Banxico) mid-January meeting surprised the market with a tone which confirmed the MPC's willingness to carry out a one-off interest rate cut, although timing would depend on the direction of inflation, growth and the currency. In Mexico, the Banxico inflation survey continues to push up expectations as year-end CPI was revised up to 3.9% in June, reflecting the recent contribution of high agricultural prices. Growth forecasts of 3.5% in 2013 and 4% in 2014 remain stable. The government's reform agenda continued to move steadily with suggestions that all areas of the energy sector would be considered in the reform, principally onshore/offshore oil and gas production. President Peña Nieto announced in July a target for infrastructure spending to reach US$307 billion over the next 5 years across telecommunications, rail transportation, and the oil and gas industry. The following month the government unveiled its much anticipated reforms to the state-controlled energy sector. The main thrust of the proposals will allow private-sector participation in oil, gas and electricity industries, breaking the long-standing government monopoly in these areas. In September, Banxico unexpectedly cut interest rates by 25 basis points and the board's minutes highlighted a strong, dovish tone which lays the ground work for another reduction in the policy rate at its next meeting. Concerns about the downside risks to economic growth as well as weak job creation overcame any risks to the inflation outlook.

The Uruguayan economy positively exceeded expectations, with first quarter growth at 3.7% while industrial production for the first four months of the year was 9.6% YoY. At a joint press conference with the central bank and Ministry of Finance, a new inflation band for 2014 was announced and widened to 3% to 7% year-on-year from the current 4% to 6% band. While the central point remains at 5%, the target time horizon has been lengthened from 18 month to 24 months. Inflation has been consistently above the target, averaging 8.6% over the year. High inflation does not bode well for wage dynamics, as over half the workforce had three year wage agreements that finished in the first half of 2013. The recently published Economist Intelligence Unit Democracy Index ranked Uruguay at number 18 of 165 countries globally and the highest in Latin America, with Chile next in line at 36th.

In Peru, economic growth registered at 5.6% in the second quarter of 2013 vs 4.6% in the previous period, which was in line with consensus. The rebound was largely driven by the normalization of calendar effects after a reduced number of business days early in the year subtracted from the first quarter figures. Domestic demand expanded 6.7% during the period, while construction, services and the utilities sectors were the main engine of growth. In September, the government's official GDP growth forecast for 2013 was cut to 5.7% from 6.3%, while the 2014 estimate was unchanged at 6%. Finance Minister Castilla also proposed a zero deficit budget for 2014. Meanwhile, the central bank (BCRP) cut its 2013 growth projection to 5.5%-6.0% from 6.1% previously, and downgraded its projection for 2014 to 5.9% from 6.3%. BCRP officials expect the trade balance to record deficits of $1bn and $0.8bn in 2013 and 2014 respectively, but to swing into a $1bn surplus by 2015. BCRP kept its main policy interest rate unchanged at 4.25% in August, a record-setting 27th consecutive month. The post-meeting statement was slightly different from previous statements as it did not allude to inflation expectations, but rather emphasized inflation had stabilized within the 1.0%-3.0% target range. Another slight change was the projection that inflation will return to the target range during the third quarter of 2013 as a result of projected improvements in food supply conditions and well-anchored inflation expectations.

Outlook

Latin America's consumption-led growth model is showing signs of fatigue. Further compounding the situation are less supportive external conditions, particularly in the more developed countries. With the commodity price boom over, the region, especially the economic behemoth, Brazil, is in need of structural reforms to fuel sustainable growth.

As such, government policies will be a key focus point for investors. In particular, upcoming presidential elections in Brazil, Chile and Colombia will shape the policy environment over the next 12 months. Looking at Brazil, while its infrastructure plans should buttress its economy in the long term, they could be subject to delays in bureaucratic approvals.

Meanwhile, the development of Mexican president Peña Nieto's energy and fiscal bills remains keenly watched. The planned opening of the energy sector to private investments bodes positively for growth. Notably, the administration has been focusing on business-friendly policies, which are likely to attract foreign investment in the nation, and in turn, our holdings there.

Despite the macroeconomic uncertainty, we believe Latin America is well equipped to weather temporary shocks and market stresses. The region's sovereign credit profile remains solid, while it has robust reserves and systemically sound domestic banking sectors. In fixed income, real yields are increasingly compelling relative to developed markets. With regard to the equity portfolio, we remain confident in the sound fundamentals of the holdings, which should help them weather any possible market volatility ahead.

Aberdeen Asset Managers Limited

24 October 2013

4.  BUSINESS REVIEW

The Company was incorporated on 30 June 2010.  A review of the Company's activities is given in the Chairman's Statement and the Manager's Review.  This includes a review of the business of the Company and its principal activities, likely future developments of the business and dividends declared during the period by the Company.  The principal risks associated with the Company's financial assets are detailed in note 15 to the financial statements. The Key Performance Indicators for the Company including NAV performance, share price performance and benchmark performance are detailed above.

The current Directors, Richard Prosser, Martin Adams, Jeremy Arnold, George Baird and Martin Gilbert were the only Directors in office during the period. 

The Company does not make political donations or expenditures and has not made any donations for charitable purposes during the period and in common with most investment trusts, the Company has no employees. Directors' & Officers' liability insurance cover has been maintained throughout the period at the expense of the Company.

Results and Dividends

Details of the Group's results and dividends are shown above and in notes 7 and 8 to the financial statements. In line with expectations, interim dividends have been paid on a quarterly basis in January, April, July and October 2013, in respect of the three months ended on the preceding November, February, May and August. The Group achieved its stated intention to pay aggregate dividends of 4.25p per Ordinary share for the year ended 31 August 2013. As at 31 August 2013 the Group's brought forward revenue reserves equated to £187,000 after allowing for the fourth interim dividend which under IFRS will be accounted for in the year ending 31 August 2014.

Principal Activity and Status

The business of the Company is that of an investment company investing in the Latin American region. The Company is registered with limited liability in Jersey as a closed-end investment company under the Companies (Jersey) Law 1991 with registered number 106012. In addition, the Company constitutes and is regulated as a collective investment fund under the Collective Investments Funds (Jersey) Law 1988. The Company intends to manage its affairs so as to be a qualifying investment for inclusion in the stocks and shares component of an Individual Savings Account ('ISA') and it is the Directors' intention that the Company should continue to be a qualifying trust.

Share Capital

As at 31 August 2013 there were 66,572,574 Ordinary shares and 10,421,236 Subscription shares in issue. Each Subscription share carries the right to convert such share into one Ordinary share on 31 December in any of the years 2013 to 2015 (inclusive) at a price of 120p per share.

The 28 days prior to 31 December 2013 offer the first opportunity for holders of Subscription shares to exercise their right to subscribe for Ordinary shares. A reminder letter accompanies this Annual Report if you are a holder of Subscription shares.

5.  STATEMENT OF DIRCTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and the Group financial statements in accordance with applicable law and regulations.

Jersey Company law requires the Directors to prepare financial statements for each financial period in accordance with any generally accepted accounting principles. The consolidated financial statements of the Company are required by law to give a true and fair view of the state of affairs of the Group and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors should:

•     select suitable accounting policies and then apply them consistently;

•     make judgments and estimates that are reasonable and prudent;

•     specify which generally accepted accounting principles have been adopted in their preparation; and,

•     prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company and Group will continue in business.

The Directors are responsible for keeping accounting records which are sufficient to show and explain its transactions and are such as to disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements prepared by the Company comply with the requirements of the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors confirm that to the best of their knowledge:

•     the financial statements, prepared in accordance with IFRS, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group; and

•     the Annual Report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

For Aberdeen Latin American Income Fund Limited

Richard Prosser

Chairman

24 October 2013

6.  INVESTMENT PORTFOLIO

Ten Largest Equity Investments

As at 31 August 2013

			Valuation	Total	Valuation
			2013	assets	2012
Company	Sector	Country	£'000	%	£'000
Vale ADR
The Brazilian miner is the world's lowest-cost iron-ore producer and, in recent years, has made acquisitions to diversify its asset base.	Materials	Brazil	3,181	4.7	3,349
Petroleo Brasileiro ADR
An emerging world-class integrated oil company in Brazil, it holds vast reserves, has made substantial new oil finds and will stand to gain from the growing demand for oil from emerging economies.	Energy	Brazil	3,065	4.5	3,874
Banco Bradesco ADR
A leading Brazilian bank with a good quality loan portfolio, it has benefited from robust growth in retail lending.	Banks	Brazil	2,999	4.4	3,975
Itau Unibanco Holdings ADR
Brazil's largest privately-owned bank, it is strongly capitalised and well positioned with decent growth and asset quality.	Banks	Brazil	2,179	3.2	2,409
Grupo Financiero Banorte
The largest locally owned Mexican bank. It partnered the post office to gain access to cheaper funding and acquired a Texas bank to tap the growing Hispanic population in the US.	Banks	Mexico	1,894	2.8	1,775
Fomento Economico Mexicano ADR
The Mexican beverage company, which is also the leading Coca-Cola bottler in Latin America, is poised to benefit from rising domestic consumption. Its earnings tend to be relatively defensive because its products are largely consumer staples.	Food, Beverage & Tobacco	Mexico	1,708	2.5	1,649
Ultrapar Participacoes ADR
Brazilian fuels and chemicals company with defensive qualities. It has strengthened its distribution network with its acquisition of the Texaco-brand of gasoline stations in Brazil.	Energy	Brazil	1,605	2.4	1,507
Tenaris ADR
Tenaris manufactures, markets and distributes welded and seamless pipe. The company produces casing, tubing, pipeline and mechanical tubes for the oil and gas and energy industries and for mechanical applications and distributes its products worldwide.	Industrial Materials	Argentina	1,514	2.2	1,680
Multiplan Empreendimentos
A Brazilian mall owner with well-located shopping malls, a solid tenant base and near-full occupancy, as well as a pipeline of sites under development.	Real Estate	Brazil	1,365	2.0	1,707
Cia De Bebidas Das Americas
A Brazilian producer of beer, soft drinks, teas mineral water and sports drinks. The company is the sole distributor of Pepsi products in Brazil.	Food, Beverage & Tobacco	Brazil	1,310	1.9	-
Top ten equity investments			20,820	30.6

Investment Portfolio - Other Investments

As at 31 August 2013

Investment Portfolio - Other Investments
As at 31 August 2013
			Valuation	Total	Valuation
			2013	assets	2012
Company	Sector	Country	£'000	%	£'000
Lojas Renner	Retailing	Brazil	1,226	1.8	1,716
Grupo Aeroportuario del Centro Nort ADR	Industrial Transportation	Mexico	1,166	1.7	1,018
Banco Santander-Chile ADR	Banks	Chile	965	1.4	1,112
Natura Cosmeticos	Personal Goods	Brazil	950	1.4	1,137
Grupo Aeroportuario de Sureste	Industrial Transportation	Mexico	939	1.4	866
S.A.C.I. Falabella	General Retailers	Chile	817	1.2	732
Embotelladora Andina Pref A	Food, Beverage & Tobacco	Chile	784	1.1	382
Wal-Mart De Mexico	General Retailers	Mexico	744	1.1	805
Kimberly-Clark de Mexico	Personal Goods	Mexico	726	1.1	873
Cia Hering	Retailing	Brazil	718	1.0	602
Top twenty equity investments			29,855	43.8
Organizacion Soriana	General Retailers	Mexico	684	1.0	694
Arezzo Industria e Comercio	Retailing	Brazil	672	1.0	733
Brasil Foods Sponsored ADR	Food Producers	Brazil	660	1.0	629
Vale Preference ADR	Materials	Brazil	652	1.0	-
Almacenes Exito	General Retailers	Colombia	651	1.0	527
BM&FBovespa	Financial Services	Brazil	632	0.9	664
Grupo Bancolombia	Banks	Colombia	588	0.9	524
Localiza Rent A Car	Transportation	Brazil	586	0.9	622
Cia Souza Cruz	Tobacco	Brazil	578	0.8	715
Bradespar	Materials	Brazil	521	0.8	560
Top thirty equity investments			36,079	53.1
WEG	Electronic & Electrical Equipment	Brazil	507	0.7	418
Wilson, Sons	Industrial Transportation	Brazil	507	0.7	565
OdontoPrev	Health Care Equipment & Services	Brazil	438	0.6	624
TOTVS	Software & Computer Services	Brazil	426	0.6	465
Valid Solucoes e Servicos de Seguranca	Support Services	Brazil	329	0.5	652
Total equity investments			38,286	56.2

Investment Portfolio - Bonds
As at 31 August 2013
			Valuation	Total	Valuation
			2013	assets	2012
Issue	Sector	Country	£'000	%	£'000
Brazil (Fed Rep of) 10% 01/01/17	Government Bonds	Brazil	10,031	14.7	5,024
Uruguay (Rep of) 5% 14/09/18	Government Bonds	Uruguay	5,262	7.7	5,239
Mexico (United Mexican States) 7.5% 03/06/27	Government Bonds	Mexico	4,538	6.7	4,975
Mexico (United Mexican States) 8% 07/12/23	Government Bonds	Mexico	2,889	4.3	3,060
Mexico (United Mexican States) 7.75% 14/12/17	Government Bonds	Mexico	2,136	3.1	2,145
Brazil (Fed Rep of) 10% 01/01/21	Government Bonds	Brazil	1,323	1.9	1,736
Peru (Rep of) 7.84% 12/08/20	Government Bonds	Peru	712	1.0	993
Peru (Rep of) 6.95% 12/08/31	Government Bonds	Peru	574	0.8	870
Brazil (Fed Rep of) 6% 15/08/16	Government Bonds	Brazil	554	0.8	638
Uruguay (Rep of) 4.25% 05/04/27	Government Bonds	Uruguay	361	0.5	401
Mexico (United Mexican States) 7.75% 13/11/42	Government Bonds	Mexico	239	0.4	-
Total value of Bonds			28,619	41.9
Total value of equity investments			38,286	56.2
Total value of investments			66,905	98.1
Net current assets{A}			1,272	1.9
Total assets			68,177	100.0
{A} Excluding bank loans of US$14,800,000 (£9,567,000).

7.   CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		Year ended 31 August 2013			Year ended 31 August 2012
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Income	3
Income from investments		3,910	-	3,910	3,176	-	3,176
Interest income		4	-	4	2	-	2
		_______	_______	_______	_______	_______	_______
Total revenue		3,914	-	3,914	3,178	-	3,178
		_______	_______	_______	_______	_______	_______
Losses on financial assets held at fair value through profit or loss	9	-	(6,435)	(6,435)	-	(2,532)	(2,532)
Currency gains		-	13	13	-	130	130
		_______	_______	_______	_______	_______	_______
		3,914	(6,422)	(2,508)	3,178	(2,402)	776
		_______	_______	_______	_______	_______	_______
Expenses
Investment management fee	4	(317)	(476)	(793)	(262)	(394)	(656)
Other operating expenses	5	(488)	-	(488)	(472)	(175)	(647)
		_______	_______	_______	_______	_______	_______
Profit/(loss) before finance items and taxation		3,109	(6,898)	(3,789)	2,444	(2,971)	(527)
Finance items
Finance costs	6	(58)	(88)	(146)	(48)	(73)	(121)
Gain on conversion of 'C' shares	13	-	-	-	-	841	841
		_______	_______	_______	_______	_______	_______
Profit/(loss) before taxation		3,051	(6,986)	(3,935)	2,396	(2,203)	193
Taxation		(100)	-	(100)	(89)	-	(89)
		_______	_______	_______	_______	_______	_______
Profit/(loss) for the year attributable to equity shareholders		2,951	(6,986)	(4,035)	2,307	(2,203)	104
		_______	_______	_______	_______	_______	_______
Earnings per Ordinary share (pence):	8
Basic & Diluted		4.43	(10.49)	(6.06)	4.00	(3.82)	0.18
		_______	_______	_______	_______	_______	_______
There is no income or expense that is not included in profit/(loss) for the year, and therefore the "Profit/(loss) for the year" is also the "Total comprehensive income for the year", as defined in IAS 1 (revised).
All of the profit/(loss) and total comprehensive income is attributable to the equity holders of the parent company.
The total column of this statement represents the Statement of Comprehensive Income, prepared in accordance with IFRS. The revenue and capital columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies.
All items in the above statement derive from continuing operations.
The accompanying notes are an integral part of these financial statements.

8.  CONSOLIDATED BALANCE SHEET

		As at	As at
		31 August	31 August
		2013	2012
	Notes	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss	9	66,905	73,937
		__________	__________
Current assets
Cash		883	1,018
Forward foreign currency contracts		69	-
Other receivables	10	589	529
		__________	__________
Total current assets		1,541	1,547
		__________	__________
Total assets		68,446	75,484
Current liabilities
Bank loan	11	(9,567)	(9,759)
Forward foreign currency contracts		-	(73)
Other payables	11	(269)	(177)
		__________	__________
Total current liabilities		(9,836)	(10,009)
		__________	__________
Net assets		58,610	65,475
		__________	__________
Equity capital and reserves
Equity capital	12	65,936	65,936
Capital reserve	13	(8,345)	(1,359)
Revenue reserve		1,019	898
		__________	__________
Equity shareholders' funds		58,610	65,475
		__________	__________
Net asset value per Ordinary share (pence):
Basic & Diluted	14	88.04	98.35
		__________	__________

9.  CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 31 August 2013
		Equity	Capital	Revenue
		capital	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000
Balance at 31 August 2012		65,936	(1,359)	898	65,475
(Loss)/profit for the year attributable to equity holders		-	(6,986)	2,951	(4,035)
Dividends paid	7	-	-	(2,830)	(2,830)
		_______	_______	_______	_______
Balance at 31 August 2013		65,936	(8,345)	1,019	58,610
		_______	_______	_______	_______
Year ended 31 August 2012
		Equity	Capital	Revenue
		capital	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000
Balance at 31 August 2011		51,515	844	950	53,309
(Loss)/profit for the year attributable to equity holders		-	(2,203)	2,307	104
Issue of equity capital on conversion of 'C' shares	12	14,756	-	-	14,756
Issue expenses		(335)	-	-	(335)
Dividends paid	7	-	-	(2,359)	(2,359)
		_______	_______	_______	_______
Balance at 31 August 2012		65,936	(1,359)	898	65,475
		_______	_______	_______	_______

10.  CONSOLIDATED CASH FLOW STATEMENT

	Year ended	Year ended
	31 August 2013	31 August 2012
	£'000	£'000
Dividend income	1,237	1,248
Fixed interest income	2,364	2,032
Deposit interest	4	2
Investment management fee paid	(738)	(692)
Other cash expenses	(504)	(666)
	_______	_______
Cash generated from operating activities before finance costs and taxation	2,363	1,924
Interest paid	(150)	(121)
Withholding taxes paid	(100)	(89)
	_______	_______
Net cash inflow from operating activities	2,113	1,714
Cash flows from investing activities
Purchases of investments	(16,921)	(37,880)
Proceeds from sales of investments	17,751	18,839
	_______	_______
Net cash inflow/(outflow) from investing activities	830	(19,041)
Cash flows from financing activities
Proceeds from issue of 'C' shares	-	15,262
Equity dividends paid	(2,830)	(2,359)
Loan (repaid)/drawn down	(442)	4,845
	_______	_______
Net cash (outflow)/inflow from financing activities	(3,272)	17,748
	_______	_______
Net (decrease)/increase in cash	(329)	421
Foreign exchange	194	194
Cash at start of year	1,018	403
	_______	_______
Cash at end of year	883	1,018
	_______	_______

11.   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 August 2013

1.	Principal activity
	The Company is a closed-end investment company incorporated in Jersey, with its shares having a premium listing on the London Stock Exchange.
	The financial statements consolidate the financial statements of the Company and its wholly-owned subsidiary, Aberdeen Latin American Income Fund LLC. The principal activity of its foreign subsidiary is similar in all relevant respects to that of its Jersey parent.

2.	Accounting policies
	(a)	Basis of preparation
		The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB ("IFRIC").
		The consolidated financial statements have been prepared on the historical cost basis, except for certain of the Group's financial instruments which are stated at their fair value.
		The accounting policies which follow set out those policies which apply in preparing the financial statements for the year ended 31 August 2013. There are no differences between the accounting policies applied in the Group and the Company.
		Where presentational guidance set out in the Statement of Recommended Practice ("SORP"): 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued by the Association of Investment Companies ("AIC") is consistent with the requirements of IFRS, the Directors have sought to prepare the consolidated financial statements on a basis compliant with the recommendations of the SORP.
		The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates which requires management to exercise its judgement in the process of applying the accounting policies. Actual results may differ from these estimates.
		The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.
		The consolidated financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated.
		At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but not yet effective:
		IFRS 9 Financial Instruments (effective for accounting periods beginning on or after 1 January 2015)
		IFRS 10 Consolidated Financial Statements (effective for accounting periods beginning on or after 1 January 2013)
		IFRS 11 Joint Arrangements (effective for accounting periods beginning on or after 1 January 2013)
		IFRS 12 Disclosure of Interests in Other Entities (effective for accounting periods beginning on or after 1 January 2013)
		IFRS 13 Fair Value Measurement (effective for accounting periods beginning on or after 1 January 2013)
		IAS 27 Separate Financial Statements (effective for accounting periods beginning on or after 1 January 2013)
		IAS 28 (Revised) Investments in Associates and Joint Ventures (effective for accounting periods beginning on or after 1 January 2013)
		Amendments to IFRS 7 Disclosures - Offsetting Financial Assets and Financial Liabilities  (effective for accounting periods beginning on or after 1 January 2013)
		Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities (effective for accounting periods beginning on or after 1 January 2014)
		Amendments to IFRS 9 and IFRS 7 Mandatory Effective Date and Transition Disclosures (effective for accounting periods beginning on or after 1 January 2015)
		The Directors do not anticipate that the adoption of these Standards and Interpretations in future periods will materially impact the financial results in the period of initial application although there will be revised presentations to the primary financial statements and additional disclosures. The Group intends to adopt the Standards in the reporting period when they become effective.
	(b)	Basis of consolidation
		The financial statements consolidate the financial statements of the Company and its subsidiary, Aberdeen Latin American Income Fund LLC.
		The Subsidiary is fully consolidated from the date of its inception on 30 June 2010, being the date on which the Group obtained control, and will continue to be consolidated until the date that such control ceases. Control comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities and is achieved through direct or indirect ownership of voting rights, currently exercisable or convertible potential voting rights, or by way of contractual agreement. The financial statements of the Subsidiary are prepared for the same reporting period as the parent company, using consistent accounting policies.
	(c)	Segmental reporting
		The Directors are of the opinion that the Group is engaged in a single segment of business, being investment business.
		For management purposes, the Group is organised into one main operating segment, which invests in equity securities, debt instruments and related derivatives. All of the Group's activities are interrelated, and each activity is dependent on the others. Accordingly, all significant operating decisions are based on the Group as one segment.
		The Group has a highly diversified portfolio of investments and no single investment accounts for more than 20% of the Group's income or assets.
	(d)	Income
		Dividend income from equity investments are recognised in the Consolidated Statement of Comprehensive Income on the ex-dividend date. Dividend income from equity investments where no ex-dividend date is quoted are brought into account when the Group's right to receive payment is established. Where the Group has elected to receive dividends in the form of additional shares rather than in cash, the amount of the cash dividend foregone is recognised as income in the Consolidated Statement of Comprehensive Income.
		The fixed returns on debt securities and non-equity shares are recognised using the effective interest rate method.
		Interest income from cash and short-term deposits is accrued to the end of the financial period.
	(e)	Expenses and interest payable
		All expenses, with the exception of interest, which would be recognised using the effective interest method, are accounted for on an accruals basis. Expenses are charged to the revenue column of the Consolidated Statement of Comprehensive Income except as follows:
		issue expenses;
		expenses which are incidental to the acquisition or disposal of an investment are charged to the capital column of the Consolidated Statement of Comprehensive Income and separately identified and disclosed in note 9 (b);
		expenses are charged to the capital column of the Consolidated Statement of Comprehensive Income where a connection with the maintenance or enhancement of the value of the investments can be demonstrated including costs attributable to Brazilian IOF tax. The Group charges 60% of investment management fees and finance costs to capital, in accordance with the Board's expected long-term return in the form of capital gains and income respectively from the investment portfolio of the Group.
	(f)	Taxation
		The Company is subject to income tax at a rate of 0%.
		However, in some jurisdictions, investment income and capital gains are subject to withholding tax deducted at the source of the income. The Group presents the withholding tax separately from the gross investment income in the Consolidated Statement of Comprehensive Income.
	(g)	Investments held at fair value though profit or loss
		Purchases of investments are recognised on a trade-date basis and designated upon initial recognition as held at fair value through profit or loss. This is done because all investments are considered to form part of a group of financial assets which is evaluated on a fair value basis, in accordance with the Group's documented investment strategy, and information about the grouping is provided internally on that basis. Proceeds are measured at fair value, which is regarded as the proceeds of sale less any transaction costs. Sales of investments are also recognised on a trade date basis.
		The fair value of the equity investments is based on their quoted bid price at the Balance Sheet date, without deduction for any estimated future selling costs. The fair value of the bonds is based on their quoted bid prices together with indexation where applicable.
		Changes in the value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Consolidated Statement of Comprehensive Income as "Gains or losses on investments at fair value through profit or loss". Also included within this caption are transaction costs in relation to the purchase or sale of investments, including the difference between the purchase price of an investment and its bid price at the date of purchase.
	(h)	Cash
		Cash comprises cash at banks and short-term deposits.
	(i)	Other receivables and payables
		Other receivables do not carry any interest and are short-term in nature, and are, accordingly, stated at their amortised cost. Other payables are non-interest bearing and are stated at their amortised cost.
	(j)	Dividends payable
		Dividends are recognised in the consolidated financial statements in the period in which they are declared.
	(k)	Nature and purpose of reserves
		Capital reserve
		This reserve reflects any gains or losses on investments realised in the period along with any movement in the fair value of investments held that have been recognised in the Consolidated Statement of Comprehensive Income.
		Also, expenses, including finance costs are charged to this reserve in accordance with (e) above.
		Revenue reserve
		This reserve reflects all income and costs which are recognised in the revenue column of the Consolidated Statement of Comprehensive Income.
	(l)	Foreign currency
		The consolidated financial statements are presented in Sterling which is the Group's functional currency. Sterling is the currency of the primary economic environment in which the Group operates.
		Monetary assets and liabilities are converted into Sterling at the rate of exchange ruling at the Balance Sheet date. Transactions during the period involving foreign currencies are converted at the rate of exchange ruling at the transaction date. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss and recognised in the Consolidated Statement of Comprehensive Income.
	(m)	Bank loans
		Borrowings are held at amortised cost using the effective interest rate method.
	(n)	Derivative financial instruments
		The Company's activities expose it primarily to the financial risks of changes in market prices, foreign currency exchange rates and interest rates. Derivative transactions which the Company may enter into include forward foreign exchange contracts, the purpose of which is to manage the currency risk arising from the Company's investing activities.
		Derivative financial instruments are initially recognised at fair value on the date on which the derivative contract is entered into and are subsequently remeasured at fair value. The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles.
		Changes in fair value of derivative financial instruments are recognised in the Consolidated Statement of Comprehensive Income as they arise. If capital in nature, the change in fair value would be treated as a capital item in the Consolidated Statement of Comprehensive Income.

		2013	2012
3.	Income	£'000	£'000
	Income from investments
	Dividend income	1,315	1,127
	Fixed interest income	2,595	2,049
		_______	_______
		3,910	3,176
	Other operating income
	Deposit interest	4	2
		_______	_______
	Total income	3,914	3,178
		_______	_______

		2013			2012
		Revenue	Capital	Total	Revenue	Capital	Total
4.	Investment management fee	£'000	£'000	£'000	£'000	£'000	£'000
	Investment management fee	317	476	793	262	394	656
		______	______	______	______	______	______
	The Company has an agreement with Aberdeen Private Wealth Management Limited ("APWM") for the provision of management services. This agreement has been sub-delegated to Aberdeen Asset Managers Limited.
	During the period, the management fee was payable monthly in arrears and was based on an annual amount of 1% of the net asset value of the Group, valued monthly. The agreement is terminable on one year's notice. The balance due to APWM at the year end was £118,000 (2012 - £63,000). Investment management fees are charged 40% to revenue and 60% to capital.

		2013	2012
5.	Other administrative expenses - revenue	£'000	£'000
	Directors' fees	85	80
	Marketing contribution	56	39
	Secretarial and administration fee	109	105
	Auditor's remuneration:
	- audit fees of the Group's annual accounts	25	25
	- other services to the Group	-	2
	Legal and advisory fees	12	12
	Custodian and overseas agents' charges	93	74
	Broker fees	18	31
	Stock exchange fees	13	18
	Other	77	86
		_______	_______
		488	472
		_______	_______
	The Company has an agreement with Aberdeen Asset Management PLC ("AAM PLC") for the provision of marketing services in relation to the Company's participation in the Aberdeen Investment Trust Share Plan and ISA. The total fees incurred under the agreement during the year were £56,000 (2012 - £39,000), of which £10,000 (2012 - £7,000) was due to AAM PLC at the year end.
	In addition, the Company has an agreement with Aberdeen Private Wealth Management Limited ("APWM") for the provision of company secretarial and administration services. This agreement has been sub-delegated to Aberdeen Asset Managers Limited. APWM is entitled to an annual fee of £109,000, which increases annually in line with any increase in the UK Retail Price Index. A balance of £46,000 (2012 - £17,000) was due to APWM at the year end.
		2013	2012
	Other administrative expenses - capital	£'000	£'000
	Brazilian IOF Tax - incurred relating to the purchase of investments in the Brazilian market	-	175
		_______	_______

		2013			2012
		Revenue	Capital	Total	Revenue	Capital	Total
6.	Finance costs	£'000	£'000	£'000	£'000	£'000	£'000
	Bank loans and overdrafts (see note 2 (e))	58	88	146	48	73	121
		_____	_____	_____	_____	_____	_____

		2013	2012
7.	Dividends on equity shares	£'000	£'000
	Distributions to equity holders in the period:
	Fourth interim dividend for 2012 - 1.25p (2011 - 1.25p) per Ordinary share	832	651
	First interim dividend for 2013 - 1.00p (2012 - 1.00p) per Ordinary share	666	521
	Second interim dividend for 2013 - 1.00p (2012 - 1.00p) per Ordinary share	666	521
	Third interim dividend for 2013 - 1.00p (2012 - 1.00p) per Ordinary share	666	666
		_______	_______
		2,830	2,359
		_______	_______
	The fourth interim dividend for the year has not been included as a liability in these financial statements as it was announced and paid after 31 August 2013.

8.	Return per Ordinary share
	The basic earnings or loss per Ordinary share is based on the loss for the year of £4,035,000 (2012 - profit £104,000) and on 66,572,574 (2012 - 57,718,828) Ordinary shares, being the weighted average number of Ordinary shares in issue during the year.
	There is no dilutive impact on the returns per Ordinary share for the year under IAS 33 "Earnings per Share" as the average share price for the year was less than the 120p price at which shares may be subscribed for.
	The basic earnings or loss per Ordinary share detailed above can be further analysed between revenue return and capital return as follows:
		2013			2012
	Basic	Revenue	Capital	Total	Revenue	Capital	Total
	Profit/(loss) (£'000)	2,951	(6,986)	(4,035)	2,307	(2,203)	104
	Weighted average number of Ordinary shares in issue ('000)			66,573			57,719
	Return per Ordinary share (pence)	4.43	(10.49)	(6.06)	4.00	(3.82)	0.18
		_____	_____	_____	_____	_____	_____

9.	Investments held at fair value through profit or loss	2013	2012
(a)	Group	£'000	£'000
	Cost at beginning of year	76,849	56,438
	Investment holdings (losses)/gains at beginning of year	(2,912)	1,148
		_______	_______
	Opening valuation	73,937	57,586
	Purchases at cost (see section (b) below)	17,158	37,823
	Sales	(17,755)	(18,940)
	Sales - realised net (losses)/gains	(1,126)	1,528
	Decrease in fair value of investments	(5,309)	(4,060)
		_______	_______
	Closing valuation	66,905	73,937
		_______	_______
		2013	2012
		£'000	£'000
	Closing book cost	75,126	76,849
	Closing investment holdings fair value losses	(8,221)	(2,912)
		_______	_______
	Closing valuation	66,905	73,937
		_______	_______
		2013	2012
	(Losses)/gains on investments	£'000	£'000
	Realised (losses)/gains on sales of investments	(1,126)	1,528
	Decrease in fair value of investments	(5,309)	(4,060)
		_______	_______
		(6,435)	(2,532)
		_______	_______
(b)	Transaction costs
	During the year expenses such as commissions, stamp duty and other charges incurred in acquiring or disposing of investments through recognised stock exchanges that were classified as fair value through profit or loss have been expensed through the capital column of the Consolidated Statement of Comprehensive Income. These are included within losses on investments at fair value through profit or loss in the Consolidated Statement of Comprehensive Income. The total costs were as follows:
		2013	2012
		£'000	£'000
	Purchases	6	15
	Sales	8	9
		_______	_______
		14	24
		_______	_______

		2013	2012
10.	Other receivables	£'000	£'000
	Accrued income	581	510
	Prepayments	8	19
		_______	_______
		589	529
		_______	_______

			2013	2012
11.	Current liabilities		£'000	£'000
	(a)	Bank loan	9,567	9,759
			_______	_______
		The Company has a £10 million (2012 - £10 million) revolving multi currency loan facility with Scotiabank Europe plc. At the year end, US$14,800,000 (2012 - US$15,500,000) was drawn down under the facility, fixed to 23 September 2013 at an all-in rate of 1.43516%.
		On 24 October 2013 US$14,800,000 was drawn down under this facility, fixed to 25 November 2013 at an all-in rate of 1.4218%.
		The loan outstanding at 31 August 2013 is valued at the closing rate of exchange at the period end, resulting in a foreign exchange loss of £251,000 (2012 - gain of £117,000) against the original book cost of the loan.
			2013	2012
	(b)	Other payables	£'000	£'000
		Other amounts due	269	177
			_______	_______

		2013		2012
12.	Equity capital	Number	£'000	Number	£'000
	Issued and fully paid - Ordinary shares
	Balance brought forward	66,572,574	65,389	52,106,185	50,968
	Ordinary shares issued in the period	-	-	14,466,389	14,756
	Issue expenses	-	-	-	(335)
		_______	_______	_______	_______
	Balance carried forward	66,572,574	65,389	66,572,574	65,389
		_______	_______	_______	_______
	Issued and fully paid - Subscription shares
	Balance brought & carried forward	10,421,236	547	10,421,236	547
	Equity capital	76,993,810	65,936	76,993,810	65,936
		_______	_______	_______	_______
	The Company's Ordinary shares have no par value
	In August 2010, 52,106,185 Ordinary shares were allotted and issued to investors at a price of 100p per Ordinary share. In addition 5,210,618 Subscription shares were issued on the basis of 1 Subscription share for every 10 Ordinary shares. Under the terms of the Aberdeen Subscription Share Agreement, the Manager was allotted and issued a further 5,210,618 Subscription shares, which were fully paid at a price of £0.105 per Subscription share. Expenses associated with the issue amounted to £1,138,000 and these costs were deducted from the proceeds of the issue. Trading commenced in both lines of stock on 16 August 2010.
	The Ordinary shares give shareholders the entitlement to all of the capital growth in the Group's assets and to all the income from the Company that is resolved to be distributed.
	Each Subscription share confers the right to convert such share into one Ordinary share on 31 December in any of the years 2013 to 2015 (inclusive) at a price of 120p per share.
	Following the issue of a Placing and Offer for Subscription Prospectus in January 2012, 15,597,185 C shares were allotted and issued to investors at a price of 100p per share in February. Trading commenced on 3 February 2012.
	Under the terms of the C share Prospectus, the C shares would be converted to Ordinary shares once 80% of the issue proceeds had been invested. The Directors' determined that the conversion ratio be calculated on 29 February 2012 with the conversion date of 11 April 2012. On the basis of the conversion ratio, 0.9275 Ordinary shares were issued for each C share. As a result, 14,466,389 Ordinary shares were issued on 11 April 2012.

		2013	2012
13.	Capital reserves	£'000	£'000
	At beginning of year	(1,359)	844
	Currency gains	13	130
	Gain on conversion of 'C' shares	-	841
	Movement in investment holdings fair value losses	(5,309)	(4,060)
	(Loss)/gain on sales of investments	(1,126)	1,528
	Capitalised expenses	(564)	(642)
		_______	_______
	At end of year	(8,345)	(1,359)
		_______	_______
	The profit in 2012 was arrived at after a gain on the extinguishment of the 'C' share liability and conversion to Ordinary shares, which represents the 'C' shareholders' allocation of realised gains on investments, unrealised losses on investments and investment related foreign exchange movements.
	The capital reserve includes losses of £8,221,000 (2012 - losses of £2,912,000) which relate to the revaluation of investments held at the reporting date.

14.	Net asset value per Ordinary share
	The basic net asset value per Ordinary share is based on a net asset value of £58,610,000 (2012 - £65,475,000) and on 66,572,574 (2012 - 66,572,574) Ordinary shares, being the number of Ordinary shares issued and outstanding at the year end.
	The diluted net asset value per Ordinary share is calculated by reference to the total number of Ordinary shares in issue at the period end and on the assumption that the Subscription shares which are not subscribed at the period end were subscribed on the first day of the financial period at 120p per share. There is no dilutive impact on the net asset value as the basic net asset value is less than the price at which shares may be subscribed for.

15.	Financial risk management objectives and policies
	The Group's financial assets comprise securities and other investments, cash balances and receivables and payables that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement and receivables for accrued income, short-term receivables and payables.
	The Manager has a rigorous investment management process, which ensures that the investment policy is followed. Stock selection procedures are in place based on the active portfolio management and identification of stocks. The portfolio is reviewed on a periodic basis by a senior investment manager and also by the Manager's Investment Committee.
	The Manager has an independent Investment Risk department for reviewing the investment risk parameters of the Group's portfolio on a regular basis. The department reports to the Manager's Performance and Investment Risk Committee which is chaired by the Manager's Chief Investment Officer. The department's responsibility is to review and monitor predicted portfolio risk and style characteristics using best practice, industry standard multi-factor models.
	Additionally, the Manager's Compliance department continually monitors the Group's investment and borrowing powers and reports to the Manager's Risk Management Committee.
	The main risks arising from the Group's financial instruments are: (i) market risk; (ii) liquidity risk; and (iii) credit risk.
	The Board regularly reviews and agrees policies for managing each of these risks, and these are summarised below. These policies have remained unchanged since the inception of the Group.
	(i)	Market risk
		Market risk comprises three elements - interest rate risk, foreign currency risk and other price risk.
		Interest rate risk
		Interest rate movements may affect:
		- the fair value of the investments in fixed interest rate securities;
		- the level of income receivable on cash deposits;
		- interest payable on the Group's variable interest rate borrowings.
		Financial assets
		The Group holds a number of fixed rate government Bonds. Bond prices are determined by market perception as to the appropriate level of yields given the economic background. Key determinants include economic growth prospects, inflation, the relevant government's fiscal position, short-term interest rates and international market comparisons. The Investment Manager takes all these factors into account when making any investment decisions as well as considering the financial standing of the potential investee entity.
		Returns from bonds are fixed at the time of purchase, as the fixed coupon payments are known, as are the final redemption proceeds. This means that if a bond is held until its redemption date, the total return achieved is unaltered from its purchase date. However, over the life of a bond the market price at any given time will depend on the market environment at that time. Therefore, a bond sold before its redemption date is likely to have a different price to its purchase level and a profit or loss may be incurred.
		Financial liabilities
		The Group primarily finances its operations through use of equity, bank borrowings and any retained profits. The Group has a revolving multi currency facility, details of which are disclosed in note 11.
		The Board actively monitors its bank borrowings. A decision on whether to roll over its existing borrowings will be made prior to their maturity dates, taking into account the Group's policy of not having any fixed, long-term borrowings.
		The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions.
		Interest rate risk profile
		The interest rate risk profile of the Group, excluding short-term receivables and payables, at 31 August 2013 and 31 August 2012 was as follows:
			Weighted average	Weighted
			period for which	average interest	Fixed	Floating
			rate is fixed	rate	rate	rate
		31 August 2013	Years	%	£'000	£'000
		Assets
		Brazilian Government Bonds	3.77	10.03	11,908	-
		Mexican Government Bonds	11.05	7.05	9,802	-
		Peruvian Government Bonds	11.87	7.02	1,286	-
		Uruguayan Government Bonds	5.59	2.79	5,623	-
		Cash - Sterling	-	-	-	115
		Cash - Brazilian Real	-	-	-	690
		Cash - US Dollars	-	-	-	78
			_______	_______	_______	_______
			-	-	28,619	883
			_______	_______	_______	_______
		Liabilities
		Short-term bank loan	0.06	1.44	(9,567)	-
			_______	_______	_______	_______
			-	-	(9,567)	-
			_______	_______	_______	_______
				Weighted
			Weighted average	average
			period for which	interest	Fixed	Floating
			rate is fixed	rate	rate	rate
		31 August 2012	Years	%	£'000	£'000
		Assets
		Brazilian Government Bonds	3.75	9.37	14,171	-
		Mexican Government Bonds	11.72	6.60	10,180	-
		Peruvian Government Bonds	13.09	6.12	1,863	-
		Uruguayan Government Bonds	6.65	2.80	5,640	-
		Cash - Sterling	-	-	-	703
		Cash - Mexican Peso	-	-	-	5
		Cash - Brazilian Real	-	-	-	65
		Cash - US Dollars	-	-	-	245
			_______	_______	_______	_______
			-	-	31,854	1,018
			_______	_______	_______	_______
		Liabilities
		Short-term bank loan	0.05	1.49	(9,759)	-
			_______	_______	_______	_______
			-	-	(9,759)	-
			_______	_______	_______	_______
		The weighted average interest rate is based on the current yield of each asset, weighted by its market value. The weighted average interest rate on the bank loan is the interest rate payable.
		The floating rate assets consist of cash deposits on call earning interest at prevailing market rates, and have maturity dates of less than one year.
		Interest rate sensitivity
		The sensitivity analysis demonstrates the sensitivity of the Group's results for the year to a reasonably possible change in interest rates, with all other variables held constant.
		The sensitivity of the (loss)/profit for the year is the effect of the assumed change in interest rates on:
		- the net interest income for the year, based on the floating rate financial assets held at the Balance Sheet date; and
		- changes in fair value of investments for the year, based on revaluing fixed rate financial assets and liabilities at the Balance Sheet date.
		If interest rates had been 100 basis points higher or lower and all other variables were held constant, the Group's:
		- profit for the year ended 31 August 2013 would increase / decrease by £199,000 (2012 - £231,000). This is attributable to the Group's exposure to interest rates on its floating rate cash balances, fixed interest securities and bank loan.
		- the Group holds no financial assets that will have an equity reserve impact.
		In the opinion of the Directors, the above sensitivity analyses are not representative of the period as a whole, since the level of exposure changes frequently as part of the interest rate risk management process used to meet the Group's objectives.

		Foreign currency risk
		The Group's total return and net assets can be significantly affected by currency translation movements as the majority of the Group's assets and income are denominated in currencies other than Sterling, which is the Group's functional currency. Forward foreign currency contracts are used to mitigate the foreign currency risk of the Group's investing activities.
		Foreign currency exposure by currency of denomination:
			31 August 2013				31 August 2012
				Net		Total			Net	Total
				monetary		currency			monetary	currency
			Investments	liabilities		exposure	Investments		liabilities	exposure
			£'000	£'000		£'000	£'000		£'000	£'000
		Argentinian Peso	1,514	-		1,514	1,680		-	1,680
		Brazilian Real	37,015	1,194		38,209	41,822		341	42,163
		Chilean Peso	2,566	-		2,566	2,458		-	2,458
		Colombian Peso	1,239	-		1,239	1,051		-	1,051
		Mexican Peso	17,662	(66)		17,596	19,424		92	19,516
		Peruvian Nuevo Sol	1,286	116		1,402	1,862		(41)	1,821
		Uruguayan Peso	5,623	121		5,744	5,640		112	5,752
		US Dollar	-	(9,516)		(9,516)	-		(9,517)	(9,517)
			_______	_______		_______	_______		_______	_______
			66,905	(8,151)		58,754	73,937		(9,013)	64,924
			_______	_______		_______	_______		_______	_______
		Foreign currency sensitivity
		The following table details the Group's sensitivity to a 10% increase and decrease in Sterling against the foreign currencies in which the Group has exposure. The sensitivity analysis includes foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates.
								2013		2012
								£'000		£'000
		Argentinian Peso						151		168
		Brazilian Real						3,821		4,216
		Chilean Peso						257		246
		Colombian Peso						124		105
		Mexican Peso						1,760		1,952
		Peruvian Nuevo Sol						140		182
		Uruguayan Peso						574		575
		US Dollar						(952)		(952)
								_______		_______
								5,875		6,492
								_______		_______
		Other price risk
		Other price risks (ie. changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments.
		It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular country or sector. Both the allocation of assets and the stock selection process act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Group are all listed on various stock exchanges throughout Latin America.
		Other price risk sensitivity
		If market prices at the Balance Sheet date had been 10% higher or lower while all other variables remained constant, the return attributable to Ordinary shareholders for the year ended 31 August 2013 would have increased /(decreased) by £6,691,000 (2012 - £7,394,000) and equity reserves would have increased /(decreased) by the same amount.
	(ii)	Liquidity risk
		This is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities. Liquidity risk is not considered to be significant, as the Group's assets mainly comprise readily realisable securities which can be sold to meet funding requirements, if necessary. The bank loan and all other payables had a maturity date of 3 months or less at 31 August 2013.
		Maturity profile
		The following table sets out the carrying amount, by maturity, of the Group's financial instruments that are exposed to the interest rate risk at the Balance Sheet date:
					Within	Within	Within		More than
					1 year	1-2 years	2-5 years		5 years		Total
		31 August 2013			£'000	£'000	£'000		£'000		£'000
		Fixed rate
		Bonds			-	-	17,983		10,636		28,619
		Bank loan			(9,567)	-	-		-		(9,567)
					(9,567)	-	17,983		10,636		19,052
		Floating rate
		Cash			883	-	-		-		883
					Within	Within	Within		More than
					1 year	1-2 years	2-5 years		5 years		Total
		31 August 2012			£'000	£'000	£'000		£'000		£'000
		Fixed rate
		Bonds			-	1,437	10,998		19,419		31,854
		Bank loan			(9,759)	-	-		-		(9,759)
					(9,759)	1,437	10,998		19,419		22,095
		Floating rate
		Cash			1,018	-	-		-		1,018
	(iii)	Credit risk
		This is failure of the counterparty to a transaction to discharge its obligations under that transaction, which could result in the Group suffering a loss.
		The risk is not considered to be significant, and is managed as follows:
		-       investment transactions are carried out with a large number of brokers, whose credit standing is reviewed regularly by the Manager, and limits are set on the amount that may be due from any one broker;
		-       the risk of counterparty exposure due to failed trades causing a loss to the Group is mitigated by the review of failed trade reports on a daily basis. In addition, the third-party administrator carries out both cash and stock reconciliations to the custodians' records on a daily basis to ensure discrepancies are picked up on a timely basis. The Manager's Compliance department carries out periodic reviews of the custodian's operations and reports its findings to the Manager's Risk Management Committee. This review will also include checks on the maintenance and security of investments held; and
		-       cash is held only with reputable banks whose credit ratings are monitored on a regular basis.
		Credit risk exposure
		In summary, compared to the amounts included in the Balance Sheet, the maximum exposure to credit risk of the bond portfolio at 31 August was as follows:
						2013			2012
						Balance	Maximum		Balance	Maximum
						Sheet	exposure		Sheet	exposure
						£'000	£'000		£'000	£'000
		Non-current assets
		Investments at fair value through profit or loss				66,905	28,619		73,937	31,854
		Current assets
		Cash				883	883		1,018	1,018
						67,788	29,502		74,955	32,872
		None of the Group's financial assets are secured by collateral or other credit enhancements.
	(iv)	Gearing risk
		The Group's policy is to increase its exposure to equity markets through the judicious use of borrowings. When borrowings are invested in such markets, the effect is to magnify the impact on shareholders' funds of changes, both positive and negative, in the value of the portfolio.
		During the period the Group's borrowings were short-term loans, details of which can be found in note 11.
		Fair values of financial assets and financial liabilities
		Investments held at fair value through profit or loss are valued at their quoted bid prices for equities and quoted bid prices together with indexation where applicable for bonds, which equate to their fair values. The Directors are of the opinion that there is no significant difference between the carrying value and fair value of other financial assets and liabilities in the Consolidated Balance Sheet.

16.	Capital management policies and procedures
	The Group's capital management objectives are:
	-	to ensure that the Group will be able to continue as a going concern; and
	-	to maximise the income and capital return to its equity shareholders through an appropriate balance of equity capital and debt. The policy is that gross debt should not exceed 20% of net assets.
			2013	2012
			£'000	£'000
	Gross debt		9,567	9,759
			_______	_______
	Equity
	Equity capital		65,936	65,936
	Retained earnings and other reserves		(7,326)	(461)
			_______	_______
	Net assets		58,610	65,475
			_______	_______
	Gross debt as a % of net assets		16.3%	14.9%
			_______	_______
	The Board, with the assistance of the Manager monitors and reviews the broad structure of the Group's capital on an ongoing basis. This review includes:
	-	the planned level of gearing, which takes account of the Manager's views on the market;
	-	the need to buy back equity shares for cancellation, which takes account of the difference between the net asset value per share and the share price (ie the level of share price discount or premium);
	-	the need for new issues of equity shares; and
	-	the extent to which revenue in excess of that which is required to be distributed should be retained.

17.	Related party transactions
	Mr R Prosser is a partner of Appleby Group and a director of its wholly-owned trust company, Appleby Trust (Jersey) Limited, which provided legal services to the Company during the year in the amount of £3,000 (2012 - £3,000).

18.

Transactions with the Manager

Mr M J Gilbert is a director of Aberdeen Asset Management PLC, of which Aberdeen Private Wealth Management Limited ("APWM") is a subsidiary. Management, marketing and secretarial and administration services are provided by APWM with details of transactions during the year and balances outstanding at the year end disclosed in notes 4 and 5. Mr Gilbert does not draw a fee for providing his services as a Director of the Company.

19.	Controlling party
	The Company has no immediate or ultimate controlling party.

20.	Fair value hierarchy
	IFRS 7 'Financial Instruments: Disclosures' requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy shall have the following levels:
	-	Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
	-	Level 2: inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (ie as prices) or indirectly (ie derived from prices); and
	-	Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs) of which there were none at 31 August 2013 and 31 August 2012.
	The financial assets and liabilities measured at fair value in the Consolidated Balance Sheet grouped into the fair value hierarchies at 31 August 2013 as follows:
				Level 1	Level 2	Total
			Note	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities		a)	38,286	-	38,286
	Quoted bonds		b)	22,441	6,178	28,619
	Forward foreign currency contracts		c)	-	69	69
	Net fair value			60,727	6,247	66,974
				Level 1	Level 2	Total
	As at 31 August 2012		Note	£'000	£'000	£'000
	Financial assets/(liabilities) at fair value through profit or loss
	Quoted equities		a)	42,083	-	42,083
	Quoted bonds		b)	25,576	6,278	31,854
	Forward foreign currency contracts		c)	-	(73)	(73)
	Net fair value			68,297	5,567	73,864
	There were no assets for which significant unobservable inputs (Level 3) were used in determining fair value during the years ended 31 August 2013 and 31 August 2012.
	a)	Quoted equities
		The fair value of the Group's investments in quoted equities has been determined by reference to their quoted bid prices at the reporting date. Quoted equities included in Fair Value Level 1 are actively traded on recognised stock exchanges.
	b)	Quoted bonds
		The fair value of the Group's investments in quoted government bonds has been determined by reference to their quoted bid prices, together with indexation where applicable, at the reporting date.
	c)	Forward foreign currency contracts
		The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles.

The Annual General Meeting will be held at 10.00 a.m. on 13 December 2013 at No.1 Seaton Place, St Helier, Jersey JE4 8YJ.

Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise and may be affected by exchange rate movements. Investors may not get back the amount they originally invested.

The Annual Financial Report Announcement is not the Company's statutory accounts. The above results for the year ended 31 August 2013 are an abridged version of the Company's full accounts, which have been approved and audited with an unqualified report. The annual audited accounts will be delivered to the Jersey Financial Services Commission in due course.

The audited Annual Report and Accounts will be posted in early November. Copies may be obtained during normal business hours from the Company's Registered Office, Aberdeen Private Wealth Management Limited, No.1 Seaton Place, St Helier, Jersey JE4 8YJ or from the Company's website, www.latamincome.co.uk*

* Neither the content of the Company's website nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of this announcement.

By Order of the Board

Aberdeen Private Wealth Management Limited

Secretary

25 October 2013

 

END

 

 

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