Annual Financial Report

RNS Number : 0977F

Aberdeen Latin American Inc Fd Ltd

25 October 2018

ABERDEEN LATIN AMERICAN INCOME FUND LIMITED

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 AUGUST 2018

Legal Entity Identifier (LEI): 549300DN623WEGE2MY04

STRATEGIC REPORT - COMPANY SUMMARY AND FINANCIAL HIGHLIGHTS

Investment Objective

The investment objective of the Company is to provide Ordinary Shareholders with a total return, with an above average yield, primarily through investing in Latin American securities.

Gearing

The Board considers that returns to Ordinary Shareholders can be enhanced by the judicious use of borrowing. The Board is responsible for the level of gearing in the Company and reviews the position on a regular basis. Pursuant to the level of gearing set by the Board, the Company may borrow up to an amount equal to 20% of its net assets. The Company will not have any fixed, long-term borrowings.

Risk Diversification

The Company has a diversified portfolio consisting primarily of equities, equity-related and fixed income investments, with at least 25% of its gross assets invested in equity and equity-related investments and at least 25% of its gross assets invested in fixed income investments. The Company's investment policy is flexible, enabling it to invest in all types of securities, including (but not limited to) equities, preference shares, debt, convertible securities, warrants, depositary receipts and other equity-related securities.

Management

The Company is managed by Aberdeen Private Wealth Management Limited ("APWML"), which is registered with the Jersey Financial Services Commission ("JFSC") for the conduct of fund services business. The investment management of the Company has been delegated by APWML to Aberdeen Asset Managers Limited ("AAM"). APWML and AAM are both wholly owned subsidiaries of Standard Life Aberdeen plc, formed by the merger of Aberdeen Asset Management PLC and Standard Life plc on 14 August 2017. Aberdeen Standard Investments is a brand of the investment businesses of the merged entity.

References throughout this document to Aberdeen Standard Investments refer to both APWML and AAM and their responsibilities as Manager and Investment Manager respectively to the Company.

Financial Highlights

Ordinary share price total return{A}		Earnings per Ordinary share (revenue)
-18.5%		3.78p
2017	+23.7%	2017	4.77p
Net asset value total return{A}		Dividends per Ordinary share
-18.8%		3.50p
2017	+25.1%	2017	3.50p
Benchmark total return		Discount to net asset value per Ordinary share {A}
-10.9%		13.6%
2017	+21.4%	2017	13.3%

{A} Considered to be an Alternative Performance Measure. Total return represents the capital return plus dividends reinvested.
Source: AAML, Morningstar, Russell Mellon, Lipper & JPMorgan

STRATEGIC REPORT - CHAIRMAN'S STATEMENT

Overview

Latin American countries, like the rest of their emerging-market peers, faced an onslaught of bad news over the course of the year under review. These ranged from problems in the broader developing world, such as Turkey's political missteps and fresh sanctions on Russia, to issues particular to Latin America, such as the Argentinian Peso's tailspin and the Brazilian government's mishandling of the truckers' strike. Unsurprisingly, fears of contagion gripped investors, who sold off their assets rather indiscriminately. Against this backdrop, your Company's net asset value (NAV) retreated by 18.8% in sterling terms, lagging its benchmark's loss of 10.9%.

One of the key reasons for the region's weakness over the period is the liquidity squeeze on the US Dollar. This stemmed from the US tax reforms that encouraged American companies to repatriate cash back home, as well as the Federal Reserve's tightening stance, both quantitatively and via its interest-rate policy. The Dollar strengthened as a result, putting additional pressure on vulnerable economies with substantial foreign debt used to finance their fiscal deficits. Bearing the brunt of the sell-off was Argentina, where equity market gains on optimism surrounding President Mauricio Macri's good showing in the mid-term election and his overhaul of the social security system, were erased. To stem the Peso's decline, the central bank raised interest rates to a record 60% and President Macri sought an accelerated US$50 billion bail-out programme with the IMF.

Another key worry weighing on sentiment was global trade tensions, resulting from tough policies emanating from the White House, which saw US President Trump aggressively taking on all of the country's major trading allies. His rhetoric on trade hit emerging markets hardest, with Latin America suffering from the fallout as Mexico and Brazil were subjected to 25% tariffs on their steel exports to the US. In response, Mexico imposed levies on American agricultural and industrial products, particularly those of political significance to President Trump.

Commodity prices also came under pressure from these trade woes, but remained elevated. Notably, Colombia benefited from Brent crude's solid recovery on the back of OPEC's pledge to curb production, the resumption of US sanctions on Iran, and several supply disruptions elsewhere. China's resilient economy continued to support both iron ore and copper prices, boosting the portfolio's mining holding in Brazil. Meanwhile, emerging technology trends in autonomous vehicles underpin growing demand for battery-manufacturing inputs, such as nickel and lithium.

Within the South American continent, politics have occupied centre stage in key markets, such as Mexico, Brazil and Chile. After a prolonged period of sluggish growth and muted investment activity, impeded by natural disasters and uncertainty surrounding the NAFTA talks, Mexican stocks and the Peso rebounded in the lead-up to Lopez Obrador's resounding presidential election victory. Concerns over the reversal of Mexico's energy reform and roll-back of public contracts have subsided, as the left-leaning populist softened his tone towards the private sector and affirmed his willingness to adopt orthodox economic policies. The mood was similarly upbeat in Chile and Colombia, where pro-market candidates Sebastian Pinera and Ivan Duque came into power, promising to unlock investment opportunities through tax reform and other incentives for businesses. In contrast, Brazilian markets were impacted by continuing disappointment with the current government and the increasing prospects of a polarised run-off between leading far-right candidate Jair Bolsonaro and leftist Fernando Haddad - former president Lula da Silva's replacement candidate for the Workers' Party.

Results and Dividends

The Company's NAV total return was 18.8% for the year ended 31 August 2018, behind the 10.9% return of the composite benchmark's return. On a total return basis the Ordinary share price fell by 18.5% to 60.8p reflecting a widening in the level of discount to NAV per share which moved from 13.3% to 13.6% at the year end.

The earnings per Ordinary share for the year ended 31 August 2018 were 3.8p (2017: 4.8p). The Company has maintained four interim dividends of 0.875p per Ordinary share in respect of the year bringing the total level of dividends for the year to 3.5p (2017: 3.5p). Allowing for the payment of the four dividends £170,000 has been transferred to the carried forward revenue reserve. The Company has no current plans to alter the level of the dividends payable to shareholders.

As previously indicated, the Board is pleased to have secured agreement from the Manager to ensure that the Company's ongoing charges ratio ("OCR") will not exceed 2.0% when calculated annually as at 31 August. Until further notice, to the extent that the OCR exceeds 2.0% the Manager will rebate part of its fees in order to bring that ratio down to 2.0%. Subsequent to the year end a sum of £22,318 has been repaid by the Manager in order to maintain the OCR at 2.0% for the year.

Portfolio

During the year the allocation between equities and bonds was further adjusted with the portfolio being 52.5% equities and 47.5% bonds at the period end, as the Investment Manager continued to seek to exploit market opportunities (2017: 50% equities 50% bonds). The Board and Manager will continue to keep the split under regular review.

Share Capital Management

During the year the Company purchased 1,672,500 Ordinary shares for treasury and a further 290,000 Ordinary shares for cancellation at a total consideration of £1.4 million, all at a discount to the NAV per share; resulting in an enhancement of 0.4% in NAV per share. Market volatility continues to impede our ability to have a meaningful impact on the discount through the purchase of the Ordinary shares in the market and over this period the discount to NAV has widened from 13.3% to 13.6%. Subsequent to the year end a further 280,000 Ordinary shares have been purchased for cancellation. The Board will continue to make selective use of share buybacks, subject to prevailing market conditions and where to do so would be in Shareholders' interests. At the time of writing the Ordinary shares were trading at a discount of 13.9%.

Gearing

The level of drawings under the Company's three year £8 million multi-currency revolving facility agreement with Scotiabank (Ireland) Designated Activity Company remained constant at £6.5 million throughout the year, representing net gearing of 14.2% at the year end. The Board will continue to monitor the level of gearing under recommendation from the Investment Manager and in the light of market conditions.

Annual General Meeting

The AGM will be held at 10.00 a.m. on 13 December 2018 at the Company's registered office, Sir Walter Raleigh House, 48 - 50 Esplanade, St Helier, Jersey JE2 3QB and I look forward to meeting Shareholders on the day.

We are proposing to renew the Company's authority to buy back Ordinary shares subject to the United Kingdom Listing Authority's Listing Rules and Jersey law and any purchases will be at the absolute discretion of the Directors. We are also seeking to renew the authority to issue new Ordinary shares equivalent to 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 NAV per Ordinary share and will therefore be accretive and not disadvantageous to Ordinary Shareholders.

Directorate

During the year the Nomination Committee conducted a search for a new independent non-executive Director using the services of an independent recruitment consultant and I am pleased to report that Ms Hazel Adam joined the Board on 27 April 2018. Hazel has brought a wealth of fund management and investment banking experience to the Board, having previously worked at Goldman Sachs International, as an executive director on the Emerging Market equities desk and at HSBC Holdings plc, as a director on the Emerging Market equities desk.

In accordance with the Board's on-going succession planning, Martin Adams has indicated that he intends to retire from the Board at the conclusion of the AGM to be held on 13 December 2018 and I would like to take this opportunity personally and on behalf of my fellow Directors to thank Martin for his significant contribution as a Director since the launch of the Company in 2010.

Outlook

I remain cautiously optimistic about the outlook for Latin American markets, as the global appetite for risk assets has abated somewhat on the back of higher interest rates in the US and normalising monetary conditions elsewhere. The deepening trade divide between Washington and Beijing will likely continue to influence commodity prices and stifle investment activity. In Latin America specifically, uncertainty surrounding Brazil's incoming administration will keep investors on edge, while roadblocks to reform in Colombia and Peru could trigger further sell-offs. At the same time, the path to recovery in Argentina will be bumpy, given waning confidence in President Macri's gradualist policies.

However, last year's synchronised global upturn has left several Latin American economies on a firmer footing where their healthy reserves and improved fiscal balances should shield the markets from external shocks. Latin American equities as an asset class retain many of their long-term drivers, including a large population with a high urbanisation rate, underpinning robust domestic consumption and rising demand for infrastructure. This bodes well for the Company's holdings in both the consumer and real estate sectors. Meanwhile, Chilean and Peruvian miners are set to benefit from the positive market dynamics for copper, as China's emphasis on sustainable growth and recent stimulus measures help it avoid a hard-landing. In addition, the political landscape in Mexico appears clearer: with a major part of the NAFTA re-negotiations completed and allowing the AMLO administration to now focus on domestic issues. At the same time the recent rise in government bond yields across the region has further boosted the Company's fixed income holdings' ability to generate sufficient income to continue to implement our distribution policy.

While the year under review was certainly very challenging for your Company these volatile markets can create buying opportunities for the Company as value in the Manager's favoured stocks and markets can emerge. I remain confident in your Manager's investment approach, which aims to construct a defensive portfolio of holdings with solid fundamentals to access the region's wide range of opportunities whilst continuing to pay an attractive dividend. Your Manager will continue to take advantage of market weakness to add to high-conviction holdings or introduce new names at attractive valuations, which should reap rewards for investors in the longer run.

Richard Prosser

Chairman

24 October 2018

STRATEGIC REPORT - OVERVIEW OF STRATEGY

Business Model

The Company aims to provide private and institutional investors with exposure to the above average long-term capital growth prospects of Latin America combined with an attractive yield.

The business of the Company is that of an investment company and the Directors do not envisage any change in this activity in the foreseeable future.

Investment Policy and Approach

The Company invests in:

- companies listed on stock exchanges in the Latin American region;

- Latin American securities (such as ADRs and GDRs) listed on international stock exchanges;

- companies listed on international exchanges that derive significant revenues or profits from the Latin American region; and

- debt issued by governments and companies in the Latin American region.

Whilst the Board has provided the Investment Manager with broad investment guidelines in order to ensure a spread of risk, the Company's portfolio is not managed by reference to any benchmark and, therefore, the composition of its portfolio is not restricted by minimum or maximum country, market capitalisation or sector weightings.

The Company may invest, where appropriate, in open-ended collective investment schemes and closed-ended funds that invest in the Latin American region.

Derivative investments may be used for efficient portfolio management and hedging and may also be used in order to achieve the investment objective and to enhance portfolio performance. The Company may purchase and sell derivative investments such as exchange-listed and over-the-counter put and call options on currencies, securities, fixed income, currency and interest rate indices and other financial instruments, purchase and sell financial futures contracts and options thereon and enter into various interest rate and currency transactions such as swaps, caps, floors or collars or credit transactions and credit derivative instruments. The Company may also purchase derivative instruments that combine features of these instruments. Aberdeen employs a risk management process to oversee and manage the Company's exposure to derivatives. Aberdeen may use one or more separate counterparties to undertake derivative transactions on behalf of the Company, and may be required to pledge collateral in order to secure the Company's obligations under such contracts. Aberdeen will assess on a continuing basis the creditworthiness of counterparties as part of its risk management process.

The Company may underwrite or sub-underwrite any issue or offer for sale of investments.

The Board considers that returns to Ordinary Shareholders can be enhanced by the judicious use of borrowing. The Board is responsible for the level of gearing in the Company and reviews the position on a regular basis. Pursuant to the level of gearing set by the Board, the Company may borrow up to an amount equal to 20% of its net assets calculated at the time of drawing. The Company will not have any fixed, long-term borrowings.

The Company may also use derivative instruments for gearing purposes, in which case the investment restrictions will be calculated on the basis that the Company has acquired the securities to which the derivatives are providing exposure.

The Company will normally be fully invested. However, during periods in which economic conditions or other factors warrant, the Company may reduce its exposure to securities and increase its position in cash and money market instruments.

The Company invests and manages its assets, including its exposure to derivatives, with the objective of spreading risk in line with the Company's investment policy.

The Company may only make material changes to its investment policy (including the level of gearing set by the Board) with the approval of Ordinary Shareholders (in the form of an ordinary resolution).

Investment Restrictions

The minimum and maximum percentage limits set out under "Investment Policy and Approach" and "Investment Restrictions" will only be applied at the time of the relevant acquisition, trade or borrowing. No more than 15% of the Company's or its subsidiary's gross assets will be invested in any company.

The Company will not invest more than 10%, in aggregate, of the value of its gross assets in other investment companies admitted to the Official List of the Financial Conduct Authority, provided that this restriction does not apply to investments in any such investment companies which themselves have stated investment policies to invest no more than 15% of their gross assets in other listed investment companies admitted to the Official List of the Financial Conduct Authority.

The Company may invest up to 25% of its gross assets in non-investment grade government debt issues (being debt issues rated BB+/Ba1 or lower).

The Company's aggregate gross exposure to derivative instruments will not exceed 50% of its gross assets.

The Company will not acquire securities that are unlisted or unquoted at the time of investment (with the exception of securities which are about to be listed or traded on a stock exchange). However, the Company may continue to hold securities that cease to be listed or quoted if the Investment Manager considers this to be appropriate.

No underwriting or sub-underwriting commitment will be entered into if the aggregate of such investments would exceed 10% of the Company's net assets and no such individual investment would exceed 5% of the Company's net assets.

The Board has adopted a policy that the value of the Company's borrowings or derivatives (but excluding collateral held in respect of any such derivatives) will not exceed 30% the Company's net assets.

Duration

The Company does not have a fixed life or continuation vote.

Benchmark

The Company measures its performance against a composite benchmark index weighted as to 60% MSCI EM Latin America 10/40 Index and 40% JP Morgan GBI-EM Global Diversified (Latin America Carve Out) (both in sterling terms) (the "Benchmark"). The Company does not seek to replicate the Benchmark index in constructing its portfolio and the portfolio is not managed by reference to any index. It is likely, therefore, that there will be periods when the Company's performance will be uncorrelated to any index or benchmark.

Key Performance Indicators (KPIs)

The Board uses a number of financial performance measures to assess the Company's success in achieving its objective and determine the progress of the Company in pursuing its investment policy. The main KPIs identified by the Board in relation to the Company which are considered at each Board meeting are as follows:

KPI	Description
Net Asset Value ("NAV") Total Return Performance versus Benchmark Index Total Return	The Board considers the Company's NAV total return figures versus the Benchmark to be the best indicator of performance over time and is therefore the main indicator of performance used by the Board. The figures for this year, three years, five years and since inception are set out in the Annual Report.
Share Price Discount/Premium to NAV per Ordinary Share	The discount/premium relative to the NAV per share represented by the share price is closely monitored by the Board. The objective is to avoid large fluctuations in the discount relative to similar investment companies investing in the region by the use of share buy backs subject to market conditions. A graph showing the share price discount/premium relative to the NAV is also shown in the Annual Report.
Ordinary Share Price Total Return Performance	The Board also monitors the price at which the Company's shares trade relative to the Benchmark on a total return basis over time. A graph showing the total NAV return and the share price performance against the comparative index is shown in the Annual Report.
Dividends per Ordinary Share	The Board's aim is to provide shareholders with an attractive yield. Dividends paid in 2017 and 2018 are set out in the Annual Report.

Further commentary on the Company's performance is contained in the Chairman's Statement and Investment Manager's Review and further explanation of the terms is provided in the Glossary in the Annual Report.

Principal Risks and Uncertainties

There are a number of risks which, if realised, could have a material adverse effect on the Company and its financial condition, performance and prospects. The Board has carried out a robust assessment of these risks and uncertainties facing the Company at the current time in the table below together with a description of the mitigating actions taken by the Board. The principal risks associated with an investment in the Company's shares are published monthly on the Company's factsheet or they can be found in the pre-investment disclosure document published by the Manager, both of which are on the Company's website. The Board reviews the risks and uncertainties faced by the Company in the form of a risk matrix and heat map at its annual audit committee and a summary of the principal risks are set out below.

An explanation of other risks relating to the Company's investment activities, specifically market risk including interest rate risk, foreign currency risk and other price risk, liquidity risk, credit risk, gearing risk and a note of how these risks are managed, is contained in note 14 to the financial statements.

Description	Mitigating Action
Investment strategy and objectives - the setting of an unattractive strategic proposition for the Company and the failure to adapt to changes in investor demand may lead to the Company becoming unattractive to investors, a decreased demand for Ordinary shares and a widening discount at which the Ordinary shares trade relative to their NAV.	The Board keeps the level of discount at which the Company's Ordinary shares trade as well as the investment objective and policy under review and the Board is updated at each Board meeting on the make up of and any movements in the Shareholder register.
Investment portfolio, investment management - investing outside of the investment restrictions and guidelines set by the Board could result in poor performance and inability to meet the Company's objectives.	The Board sets, and monitors, its investment restrictions and guidelines, and receives regular reports which include performance reporting on the implementation of the investment policy, the investment process and application of the guidelines.
Financial obligations - the ability of the Company to meet its financial obligations, or increasing the level of gearing, could result in the Company becoming over-geared and therefore unable to take advantage of potential opportunities and result in a loss of value of the Company's Shares.	The Board sets a gearing limit to ensure that covenant restrictions in the Company's loan facility are not breached and the Board receives regular updates on the actual gearing levels the Company has reached from the Investment Manager together with the assets and liabilities of the Company and reviews these at each Board meeting.
Financial and Regulatory - the financial risks associated with the portfolio could result in losses to the Company. In addition, failure to comply with relevant regulation (including the Companies (Jersey) Law, the Financial Services and Markets Act, the Alternative Investment Fund Managers Directive, Accounting Standards and the FCA's listing rules, disclosure and prospectus rules) may have a negative impact on the Company.	The financial risks associated with the Company include market risk, liquidity risk and credit risk, all of which are managed by the Investment Manager. Further details of the steps taken to mitigate the financial risks associated with the portfolio are set out in note 14 to the financial statements. The Board relies upon Aberdeen Standard Investments to ensure the Company's compliance with applicable regulations and from time to time employs external advisers to advise on specific matters.
Operational - the Company is dependent on third parties for the provision of all systems and services (in particular, those of AAM) and any control failures and gaps in these systems and services could result in a loss or damage to the Company.	The Board receives reports from the Manager on internal controls and risk management at each Board meeting and receives assurances from its significant service providers. Further details of the internal controls which are in place are set out in the Directors' Report.
Income and dividend risk - there is a risk that the portfolio could fail to generate sufficient income to meet the level of the annual dividend drawing upon, rather than replenishing, its revenue and/or capital reserves.	The Board monitors this risk through the review of income forecasts, provided by the Manager, at each Board meeting.

Viability Statement

The Company does not have a formal fixed period strategic plan but the Board formally considers risks and strategy at least annually. The Board considers the Company, with no fixed life, to be a long term investment vehicle, but for the purposes of this viability statement has decided that a period of three years is an appropriate period over which to report. The Board considers that this period reflects a balance between looking out over a long term horizon and the inherent uncertainties of looking out further than three years.

In assessing the viability of the Company over the review period the Directors have carried out a robust assessment of the principal risks focussing upon the following factors:

- The principal risks detailed in the Strategic Report;

- The ongoing relevance of the Company's investment objective in the current environment;

- The demand for the Company's Shares evidenced by the historical level of premium and or discount;

- The level of income generated by the Company;

- The liquidity of the Company's portfolio; and,

- The flexibility of the Company's multi currency loan facility which matures in August 2020 including the financial covenants of the loans. The Directors will aim to agree a new facility upon the expiry of the current one in 2020 and in the event that satisfactory renewal terms were not available at that time the facility would be repaid from portfolio sales.

Accordingly, taking into account the Company's current position, the fact that Aberdeen Standard Investments has agreed to reduce the fees payable to the Manager to the extent necessary to ensure that the Ongoing Charges Ratio does not exceed 2.0%, the fact that the Company's investments are mostly liquid and the potential impact of its principal risks and uncertainties, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due for a period of three years from the date of this Report. In making this assessment, the Board has considered that matters such as significant economic or stock market volatility, significant discount to NAV, a substantial reduction in the liquidity of the portfolio, or changes in investor sentiment could have an impact on its assessment of the Company's prospects and viability in the future.

Promoting the Company

The Board recognises the importance of promoting the Company to prospective investors both for improving liquidity and enhancing the value and rating of the Company's shares. The Board believes an effective way to achieve this is through subscription to and participation in the promotional programme run by Aberdeen on behalf of a number of investment companies under its management. The Company's financial contribution to the programme is matched by the Aberdeen Standard Investments. Aberdeen Standard Investment's promotional team reports quarterly to the Board giving analysis of the promotional activities as well as updates on the shareholder register and any changes in the make up of that register.

The purpose of the programme is both to communicate effectively with existing shareholders and to gain new shareholders with the aim of improving liquidity and enhancing the value and rating of the Company's shares. Communicating the long-term attractions of your Company is key and therefore the Company also supports the Aberdeen Standard Investments investor relations programme which involves regional roadshows, promotional and public relations campaigns.

Board Diversity

The Board recognises the importance of having a range of skilled, experienced individuals with the right knowledge represented on the Board in order to allow the Board to fulfil its obligations. The Board also recognises the benefits and is supportive of the principle of diversity in its recruitment of new Board members. The Board will not display any bias for age, gender, race, sexual orientation, religion, ethnic or national origins, or disability in considering the appointment of its Directors. However, the Board will continue to ensure that all appointments are made on the basis of merit against the specification prepared for each appointment and, therefore, the Company does not consider it appropriate to set diversity targets. At 31 August 2018, there were three male Directors and one female Director on the Board.

Environmental, Social and Human Rights Issues

The Company has no employees as it is managed by APWML and ordinarily all activities are contracted out to third party service providers. There are therefore no disclosures to be made in respect of employees. The Company's socially responsible investment policy is outlined in the Directors' Report below.

Due to the nature of the Company's business, being a company that does not offer goods and services to customers, the Board considers that it is not within the scope of the Modern Slavery Act 2015 because it has no turnover. The Company is therefore not required to make a slavery and human trafficking statement. In any event, the Board considers the Company's supply chains, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter. Furthermore the Company's Manager has confirmed that it complies with the 2015 Modern Slavery Act.

The Company has no greenhouse gas emissions to report from the operations of its business, nor does it have responsibility for any other emissions producing sources.

Future

Many of the non-performance related trends likely to affect the Company in the future are common across all closed ended investment companies, such as the attractiveness of investment companies as investment vehicles and the impact of regulatory changes (including MiFID II and Packaged Retail Investment and Insurance Products). These factors need to be viewed alongside the outlook for the Company, both generally and specifically, in relation to the portfolio. The Board's views on the general outlook for the Company can be found in the Chairman's Statement whilst the Investment Manager's views on the outlook for the portfolio are included in the Investment Manager's Review.

For and on behalf of the Board

Richard Prosser

Chairman

24 October 2018

STRATEGIC REPORT - INVESTMENT MANAGER'S REVIEW

Performance Commentary

Latin American markets were volatile and ended lower for the year under review. The first half of the year fared relatively better on signs of broadening growth, stable or declining inflation, rising commodity prices and an upbeat earnings outlook, while the latter half saw markets fall on the back of a stronger US Dollar, trade tensions concerns, political turmoil in the South American continent and currency fluctuations in the more beleaguered economies. Truly a tale of two halves.

In particular, the escalating contagion risk from Argentina and Turkey dampened sentiment and caused a rout in emerging markets, which left them in bear territory. Risk appetite was further hampered by tightening monetary policy by the US Federal Reserve which made the region particularly vulnerable to foreign outflows.

Political uncertainty from the upcoming general election has continued in Brazil whilst the country also grappled with a truckers strike in May, which brought the country to a standstill, impacting corporate results across a swathe of companies. Mexico saw the market-friendly candidate losing the presidential election and felt the pressure of the NAFTA negotiations for the better part of the year, while Argentina struggled to tackle its fiscal deficit and saw a drought hurting its soft commodity exports, resulting in a sharp devaluation of its currency.

Against this backdrop, the Company underperformed its benchmark, with both the fixed income and equity sleeves of the portfolio detracting from performance. In the fixed income part of the portfolio, exposure to Argentina had a large negative contribution, as the Peso halved its value over the review period. This was partially offset by gains from bond selection, as our exposure was concentrated in short dated policy rate linked instruments, which benefitted from the central bank's aggressive rate hikes. In Brazil gains from holding long dated Brazilian bonds, as the central bank continued its rate cutting cycle in the first half of the period, were completely wiped out as President Temer sacrificed the reform momentum to protect his presidency amidst corruption allegations. Meanwhile the country became caught up in the general emerging market sell-off. More positively, the portfolio's exposure to inflation linked bonds in Uruguay continued to be a positive contributor.

In relation to our equity holdings, asset allocation and its corresponding currency effects contributed positively overall, whereas stock selection in Brazil was the primary cause of underperformance during the period. Not holding the Brazilian state-owned oil giant, Petrobas, was a key driver of underperformance. Similarly, our overweight positions in certain Brazilian stocks dented performance. Food producer BRF suffered, as a meat scandal and truckers' strike impacted second-quarter results. However, the company has taken a positive step with the replacement of its board and chairman, initiated by our efforts to drive improvement of governance within the company. The new management's effort towards improving market share, extending debt maturity and selling assets to deleverage the balance sheet is encouraging. We added to our position in BRF after the election of its new board and the welcome improvements in corporate governance.

Another detractor was fuel distributor Ultrapar, whose net profits fell by 79% from a year ago. It failed to reassure investors on future growth, which led to a sell-off in the stock. However, we continue to have confidence in its defensive qualities and the strong distribution network that the company has across the country. Retailer Lojas Renner's second-quarter results were weak due to the truckers' strike, which capped same-store sales growth. Investors also took profits in mall operator Multiplan on price strength after it posted good results despite a slowdown in sales. Other key operating metrics were upbeat, including improving rents and lower delinquency rates.

Our underweight position in the miner Vale detracted from relative performance and was only partially offset by our off-benchmark allocation to Vale's holding company Bradespar which trades at an attractive discount to Vale and held up well during the period. Vale reported good results on higher nickel prices and declared that it will return money to shareholders via a cash back and share buy-back plan. Moreover, the company may also benefit from the Brazilian government's longer-term push for electric vehicles as demand for nickel is set to rise in line with expected demand for batteries.

In Argentina, lender BBVA Frances' share price was weak, despite better-than-expected second-quarter results in a deteriorating macroeconomic environment. We like the company as it is well managed with a conservative strategy and a healthy balance sheet. It also has the lowest non-performing loan ratio among its peers. We took advantage of the sharp correction in the Argentinian Peso and the market, to add to the portfolio. In contrast, Argentina's IT service provider Globant and steel-pipe manufacturer Tenaris saw their shares advance, given their limited exposure to the domestic market. Over the year, we introduced Globant, which was trading at attractive valuations. The software company is focused on the fast-growing digital consulting and emerging technologies businesses, and has a well-diversified client base. Meanwhile, we took profits in Tenaris on the back of the higher share price. Nevertheless, we do like the company for its healthy balance sheet and investments in global oil extraction.

Mexican airport operator, Asur, added to relative performance. While the company suffered from dampened sentiment following natural disasters in Mexico, its development programme is expected to be value-enhancing, reaffirming our conviction in the company. Similarly, our holding in the Mexican lender Banorte was a positive as second-quarter profits jumped 27%, driven by increases in its loan portfolio. We topped up the position during the year.

The lack of exposure to several index heavyweights in Latin America, such as education major Kroton Educacional, media giant Grupo Televisa, infrastructure concession operator CCR, cement company Cemex and card operator Cielo all proved beneficial, as they tracked the wider market's decline over the period.

Portfolio Activity

During the review period, in addition to the portfolio activities mentioned above, we initiated a position in leading Mexican energy infrastructure company IEnova on attractive valuations after a sell-off ahead of the presidential elections and on concerns around NAFTA. Earlier in the year we also introduced leading pharmacy chain, Raia Drogasil, following a decline in its share price. We added to Arca Continental, Arezzo, Itausa, OMA, Grana y Montero on attractive valuations. We also took advantage of share price weakness to increase our exposure to Santander Mexico.

Conversely, we trimmed our holding in beverage distributor Andina and used the proceeds to invest in other higher-conviction names. We switched our exposure from Vale to one of its holding companies, Bradespar, to capitalise on relatively more attractive valuations but kept the overall exposure unchanged. We also reduced our positions in Santander Chile and Falabella following good share price increases.

On the fixed income side we took a cautious approach to Mexico in the run-up to the presidential and general elections in the middle of the calendar year. We used the immense sell-off in Argentina to top-up exposures, though remained defensive in our bond selection. While Brazil had been a core overweight position throughout most of the period, we reduced our exposure to the Real later in the year, in anticipation of heightened pre-election volatility. We have also reduced our exposure to Uruguay due to the risk of contagion from its neighbours. We used the proceeds to increase our allocation to Colombia, which is deemed to be the prime beneficiary of the rise in global oil prices.

Outlook

Looking ahead, challenges for the Latin American region remain, but the market has already priced in many of the risks and a relatively gloomy outlook. Fears about a US trade war with its trading partners and its impact on growth and commodities prices might resurface, while in the near term the outcome of the Brazilian election will be a major driver of sentiment. However, it is important to point out that the last few quarters saw a significant adjustment not just in asset prices, but also in economic policies. Argentina secured a large IMF program, hiked interest rates to above 60% and accelerated the pace of fiscal consolidation. Mexico continued its rate hiking cycle even as inflation moderated whilst Chile and Peru used their central bank reserves to lean against the depreciation pressure on their currencies. We expect policymakers to continue to provide adequate responses to the forthcoming challenges. On the corporate side we also saw an increased focus on controlling costs in the face of what had been a more difficult demand environment. Overall, earnings forecasts for Latin American companies appear reasonable, while valuations seem more attractive as share prices have corrected.

Given the above backdrop, we remain cautiously optimistic about the prospects for the year ahead and remain confident in your Company's portfolio, whose holdings are presided over by experienced management, backed by solid balance sheets, and guided by prudent capital management policies. These qualities should imbue these underlying holdings with the wherewithal to face the challenges that lie ahead.

Aberdeen Asset Managers Limited

24 October 2018

STRATEGIC REPORT - RESULTS

Financial Highlights	31 August 2018	31 August 2017	% change
Total assets (£'000)	48,825	62,670	-22.1
Total equity shareholders' funds (net assets) (£'000)	42,325	56,170	-24.6
Market capitalisation (£'000)	36,587	48,704	-24.9
Ordinary share price (mid market)	60.80p	78.38p	-22.4
Net asset value per Ordinary share	70.34p	90.40p	-22.2
Discount to net asset value per Ordinary share	13.56%	13.29%
Net gearing {A}	14.17%	10.58%

Dividends and earnings
Total (loss)/return per Ordinary share	(16.84p)	18.00p
Earnings per Ordinary share (revenue)	3.78p	4.77p	-20.8
Dividends per Ordinary share	3.50p	3.50p
Dividend cover {B}	1.08 times	1.36 times
Revenue reserves {C} (£'000)	2,250	2,080

Operating costs
Ongoing charges ratio {D}	2.00%	1.98%
{A} Considered to be an Alternative Performance Measure. Calculated in accordance with AIC guidance "Gearing Disclosures post Retail Distribution Review".
{B} Considered to be an Alternative Performance Measure.
{C} Excludes payment of fourth interim dividend of 0.875p (2017 - 0.875p) per Ordinary share equating to £526,000 (2017 - £543,000).
{D} Considered to be an Alternative Performance Measure. 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. Details of a cap on the ongoing charges ratio can be found in the Chairman's Statement and notes 6 and 16 to the financial statements respectively.

Performance (total return)

	1 year	3 year	5 year	Since launch{A}
	% return	% return	% return	% return
Ordinary share price	-18.47%	+37.86%	-5.32%	-8.76%
Net asset value	-18.75%	+48.59%	+3.66%	+3.42%
Benchmark	-10.94%	+50.01%	+14.54%	+10.36%
Total return represents the capital return plus dividends reinvested.
{A} Launch date 16 August 2010.

Dividends

	Rate	xd date	Record date	Payment date
1st interim 2018	0.875p	14 December 2017	15 December 2017	30 January 2018
2nd interim 2018	0.875p	26 April 2018	27 April 2018	11 May 2018
3rd interim 2018	0.875p	12 July 2018	13 July 2018	27 July 2018
4th interim 2018	0.875p	4 October 2018	5 October 2018	26 October 2018
	______
Total dividends 2018	3.500p
	______

	Rate	xd date	Record date	Payment date
1st interim 2017	0.875p	15 December 2016	16 December 2017	30 January 2017
2nd interim 2017	0.875p	27 April 2017	28 April 2017	12 May 2017
3rd interim 2017	0.875p	6 July 2017	7 July 2017	28 July 2017
4th interim 2017	0.875p	5 October 2017	6 October 2017	27 October 2017
	______
Total dividends 2017	3.500p
	______

INVESTMENT PORTFOLIO

Ten Largest Equity Investments

As at 31 August 2018

			Valuation	Total	Valuation
			2018	assets	2017
Company	Sector	Country	£'000	%{A}	£'000
Itau Unibanco Holdings ADR{B}
Brazil's largest privately-owned bank, it is well-capitalised with sound growth prospects and asset quality.	Financials	Brazil	1,766	3.6	2,155
Banco Bradesco ADR
A leading privately-owned Brazilian bank with a well-recognised brand, robust loan portfolio and experienced management team.	Financials	Brazil	1,728	3.5	2,326
Grupo Aeroportuario Sureste ADR
One of Mexico's leading airport operators, responsible for running Cancun airport amongst a number of others in Mexico. The company also operates airports in Puerto Rico and more recently Colombia.	Industrials	Mexico	1,372	2.8	1,256
Grupo Financiero Banorte
Mexico's leading privately-owned bank with a well-recognised nationwide brand, sizeable pension business and proven track record in conservative lending.	Financials	Mexico	1,353	2.8	1,266
Fomento Economico Mexicano ADR
FEMSA participates in beverages through Coca-Cola FEMSA, the largest Coca-Cola bottler globally. The company also participates in small-format convenience stores, gas stations and pharmacies through FEMSA Comercio.	Consumer Staples	Mexico	1,254	2.6	1,288
Bradespar{B}
A holding company where the single underlying asset is Brazil's iron ore producer Vale.	Materials	Brazil	1,108	2.3	958
Wal-Mart De Mexico
The largest food and general retailer in Mexico with an established presence across a number of smaller Central American markets.	Consumer Staples	Mexico	1,063	2.2	1,103
Lojas Renner{B}
One of Brazil's largest clothing retailers with a complementary financing arm catering to customers' store credit needs. More recently Lojas Renner has ventured into neighbouring Uruguay and launched a home furnishing brand by the name of Camicado.	Consumer Discretionary	Brazil	1,061	2.2	1,548
Ambev{B}
Latin America's largest producer of beer, as part of the ABI group.	Consumer Staples	Brazil	1,045	2.1	1,536
Vale ADR
One of the world's largest iron ore producers which also produces nickel, copper, aluminium, potash and numerous other minerals.	Materials	Brazil	867	1.8	1,075
Top ten equity investments			12,617	25.9
{A} total assets less current liabilities (before deducting prior charges)
{B} Held in Subsidiary.

Portfolio investments reflect consolidated investee holdings of the Company and its Subsidiary.

Investment Portfolio - Other Investments

As at 31 August 2018

			Valuation	Total	Valuation
			2018	assets	2017
Company	Sector	Country	£'000	%{A}	£'000
Multiplan Empreendimentos NPV{B}	Real Estate	Brazil	821	1.7	1,194
Arca Continental	Consumer Staples	Mexico	685	1.4	611
B3 Brasil Bolsa Balco{B}	Financials	Brazil	680	1.4	753
S.A.C.I. Falabella{B}	Consumer Discretionary	Chile	599	1.2	1,001
Ultrapar Participacoes ADR	Energy	Brazil	539	1.1	1,037
Embotelladora Andina 'A' Pref{B}	Consumer Staples	Chile	538	1.1	867
Banco Santander-Chile ADR	Financials	Chile	509	1.0	742
Arezzo Industria e Comercio{B}	Consumer Discretionary	Brazil	486	1.0	901
Parque Arauco{B}	Real Estate	Chile	451	0.9	541
WEG{B}	Industrials	Brazil	437	0.9	630
Top twenty equity investments			18,362	37.6
Localiza Rent A Car{B}	Industrials	Brazil	436	0.9	644
Infraestructura Energetica	Industrials	Mexico	389	0.8	-
Grupo Financiero Santander	Financials	Mexico	359	0.7	340
Globant	Information Technology	Argentina	354	0.7	-
Wilson, Sons{B}	Industrials	Brazil	352	0.7	413
Cementos Pacasmayo	Materials	Peru	351	0.7	474
Hoteles City Express	Consumer Discretionary	Mexico	330	0.7	261
Grupo Bancolombia	Financials	Colombia	328	0.7	503
Brazil Foods Sponsored ADR	Consumer Staples	Brazil	307	0.6	658
TOTVS{B}	Information Technology	Brazil	299	0.6	424
Top thirty equity investments			21,867	44.7
Linx{B}	Information Technology	Brazil	291	0.6	376
Raia Drogasil{B}	Consumer Staples	Brazil	290	0.6	-
Odontoprev{B}	Health Care	Brazil	286	0.6	499
Kimberly-Clark de Mexico	Consumer Staples	Mexico	286	0.6	249
Itausa Investimentos Itau{B}	Financials	Brazil	255	0.5	132
Iguatemi Empressa de Shopping{B}	Real Estate	Brazil	245	0.5	393
Tenaris ADR	Energy	Argentina	239	0.5	494
BBVA Banco Frances	Financials	Argentina	212	0.4	326
Grupo Lala	Consumer Staples	Mexico	205	0.4	311
Valid Solucoes{B}	Industrials	Brazil	204	0.4	363
Top forty equity investments			24,380	49.8
BRF{B}	Consumer Staples	Brazil	186	0.4	174
Itau Unibanco	Financials	Brazil	180	0.4	256
Cia Hering Com{B}	Consumer Discretionary	Brazil	173	0.4	309
Grupo Aeroportuario Centro Norte	Industrials	Mexico	150	0.3	-
Grana Y Montero	Industrials	Peru	143	0.3	119
Banco Bradesco{B}	Financials	Brazil	143	0.3	85
Ultrapar Participacoes{B}	Energy	Brazil	73	0.2	120
Fossal	Materials	Peru	2	-	4
Total equity investments			25,430	52.1
{A} total assets less current liabilities (before deducting prior charges)
{B} Held in Subsidiary.

Portfolio investments reflect consolidated investee holdings of the Company and its Subsidiary.

Investment Portfolio - Bonds
As at 31 August 2018

			Valuation	Total	Valuation
			2018	assets	2017
Issue	Sector	Country	£'000	%{A}	£'000
Brazil (Fed Rep of) 10% 01/01/25{B}	Government Bonds	Brazil	3,735	7.6	6,197
Colombia (Rep of) 9.85% 28/06/27	Government Bonds	Colombia	3,554	7.3	3,990
Brazil (Fed Rep of) 10% 01/01/21{B}	Government Bonds	Brazil	2,341	4.8	1,798
Mexico (United Mexican States) 8.5% 18/11/38	Government Bonds	Mexico	1,899	3.9	2,483
Uruguay (Rep of) 4.375% 15/12/28	Government Bonds	Uruguay	1,695	3.5	-
Mex Bonos Desarr Fix Rt 10% 20/11/36	Government Bonds	Mexico	1,533	3.1	2,089
Uruguay (Rep of) 9.875% 20/06/22	Government Bonds	Uruguay	1,367	2.8	1,790
Peru (Rep of) 6.95% 12/08/31	Government Bonds	Peru	1,310	2.7	1,397
Mex Bonos Desarr Fix Rt 10% 05/12/24	Government Bonds	Mexico	1,243	2.5	1,364
Brazil (Fed Rep of) 10% 01/01/27{B}	Government Bonds	Brazil	1,040	2.1	1,698
Mexico (United Mexican States) 7.5% 03/06/27	Government Bonds	Mexico	936	1.9	1,089
Uruguay (Rep of) 4.25% 05/04/27	Government Bonds	Uruguay	765	1.6	820
Peru (Rep of) 6.95% 12/08/31	Government Bonds	Peru	418	0.9	677
Argentina (Rep of) Frn 21/06/20	Government Bonds	Argentina	380	0.8	661
Argentina (Rep of) 15.5% 17/10/26	Government Bonds	Argentina	284	0.6	788
Mexico (United Mexican States) 7.75% 13/11/42	Government Bonds	Mexico	138	0.3	164
Peru (Rep of) 6.15% 12/08/32	Government Bonds	Peru	60	0.1	62
			_______	_____
Total value of Bonds			22,698	46.5
			_______	_____
Total value of equity investments			25,430	52.1
			_______	_____
Total value of portfolio investments			48,128	98.6
			_______	_____
Other net assets held in subsidiary			149	0.3
			_______	_____
Total investments			48,277	98.9
			_______	_____
Net current assets{C}			548	1.1
			_______	_____
Total assets{A}			48,825	100.0
			_______	_____

{A} total assets less current liabilities (before deducting prior charges)
{B} Held in Subsidiary.
{C} Excluding bank loans of £6,500,000.

Portfolio investments reflect consolidated investee holdings of the Company and its Subsidiary.

DIRECTORS' REPORT

The Directors present their Report and the audited financial statements for the year ended 31 August 2018.

Status

The Company is registered with limited liability in Jersey as a closed-ended investment company under the Companies (Jersey) Law 1991 with registered number 106012. In addition, the Company is constituted and regulated as a collective investment fund under the Collective Investments Funds (Jersey) Law 1988. The Company has no employees and makes no political or charitable donations. The Company has a wholly owned subsidiary, Aberdeen Latin American Income Fund LLC, registered in Delaware. The subsidiary is used to hold certain investments as part of the efficient management of the group.

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 and it is the Directors' intention that the Company should continue to be a qualifying investment.

Results and Dividends

Details of the Company's results and dividends are shown in the Annual Report.

Management Arrangements

The Company has an agreement (the "Management Agreement") with APWML for the provision of management services, details of which are shown in notes 5 and 16 to the financial statements.

Under the Management Agreement, the Manager is entitled to both a management fee and a company secretarial and administration fee. The Manager has agreed to ensure that the Company's ongoing charges ratio ("OCR") will not exceed 2.0% when calculated annually as at 31 August. Until further notice, to the extent that the OCR ever exceeds 2.0% the Manager will rebate part of its fees in order to bring that ratio down to 2.0%. In relation to the year ended 31 August 2018 an OCR rebate of £22,000 was payable by the Manager in order to ensure that the OCR did not exceed 2.0%.

The Directors review the terms of the Management Agreement on a regular basis and have confirmed that, due to the investment skills, experience and commitment of the Management team, in their opinion the continuing appointment of APWML, on the terms agreed, is in the interests of Shareholders as a whole.

Share Capital

As at 31 August 2018 there were 60,175,324 Ordinary shares and 6,107,500 Ordinary shares held in treasury. Details of changes to the Company's shares in issue during the year are provided in 'Your Company's Share Capital History' in the Annual Report.

Ordinary shareholders are entitled to vote on all resolutions which are proposed at general meetings of the Company. The Ordinary shares carry a right to receive dividends. On a winding up, after meeting the liabilities of the Company, the surplus assets will be paid to Ordinary shareholders in proportion to their shareholdings.

Risk Management

Details of the principal risks and uncertainties and KPIs are disclosed in the Strategic Report. Details of the financial risk management policies and objectives relative to the use of financial instruments by the Company are set out in note 14 to the financial statements.

Directors

The current Directors, Richard Prosser, Martin Adams, George Baird and Hazel Adam (appointed 27 April 2018), together with Martin Gilbert (retired 7 December 2017), were the only Directors in office during the period.

The Directors' beneficial holdings are disclosed in the Directors' Remuneration Report. No Director has a service contract with the Company. The Directors' interests in contractual arrangements with the Company are as shown in note 16 to the financial statements. Details of the Directors retiring at the Annual General Meeting on 13 December 2018 are disclosed below under Policy on Tenure.

Corporate Governance

The Company is committed to high standards of corporate governance. The Board is accountable to the Company's shareholders for good governance and, as required by the Listing Rules of the UK Listing Authority, has applied the principles identified in the UK Corporate Governance Code (published in April 2016) for the year ended 31 August 2018. The UK Corporate Governance Codes are available on the Financial Reporting Council's website: frc.org.uk.

The Company is a member of the Association of Investment Companies (AIC). The Board has considered the principles and recommendations of the AIC Code of Corporate Governance for Jersey-domiciled member companies (AIC Code) by reference to the AIC Corporate Governance Guide for Investment Companies (AIC Guide). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in the UK Corporate Governance Code, as well as setting out additional principles and recommendations on issues which are of specific relevance to the Company. Both the AIC Code and the AIC Guide are available on the AIC's website: theaic.co.uk.

The Company has complied throughout the accounting period with the relevant provisions contained within the AIC Code and the relevant provisions of the UK Corporate Governance Code except as set out below.

The UK Corporate Governance Code includes provisions relating to:

- the role of the chief executive (A.1.2);

- executive directors' remuneration (D.2.1 and D.2.2);

- the need for a Senior Independent Director; and,

- and the need for an internal audit function (C.3.6).

For the reasons set out in the AIC Code, and as explained in the UK Corporate Governance Code, the Board considers that these provisions are not relevant to the position of the Company, being an externally-managed investment company. In particular, all of the Company's day-to-day management and administrative functions are outsourced to third parties. As a result, the Company has no executive directors, employees or internal operations. The Company has therefore not reported further in respect of these provisions. The full text of the Company's Corporate Governance Statement can be found on the Company's website, latamincome.co.uk.

Directors have attended Board and Committee meetings during the year ended 31 August 2018 as follows (with their eligibility to attend the relevant meeting in brackets):

	Board	Audit Committee	MEC	Nomination Committee
R Prosser	4 (4)	2 (2)	2 (2)	2 (2)
M Adams	4 (4)	2 (2)	2 (2)	2 (2)
G Baird	4 (4)	2 (2)	2 (2)	2 (2)
H Adam*	1 (1)	0 (0)	0 (0)	0 (0)
M Gilbert**	0 (1)	n/a	n/a	0 (1)

* Ms Adam was appointed to the Board on 27 April 2018

** Mr Gilbert was not a member of the Audit Committee or Management Engagement Committee and retired from the Board on 7 December 2017

Policy on Tenure

The Board's policy on tenure is that Directors need not serve on the Board for a limited period of time only. The Board does not consider that the length of service of a Director is as important as the contribution he or she has to make, and therefore the length of service will be determined on a case-by-case basis. In accordance with corporate governance best practice, Directors who have served for more than nine years or who are non-independent will voluntarily offer themselves for re-election on an annual basis in the future.

The Board has a schedule of matters reserved to it for decision and the requirement for Board approval on these matters is communicated directly to the senior staff at Aberdeen Standard Investments. Such matters include strategy, gearing, treasury and dividend policy. Full and timely information is provided to the Board to enable the Directors to function effectively and to discharge their responsibilities. The Board also reviews the financial statements, performance and revenue budgets.

The Board has put in place necessary procedures to conduct, on an annual basis, an appraisal of the Chairman of the Board, Directors' individual self-evaluation and a performance evaluation of the Board as a whole. For the year to 31 August 2018 this was undertaken using detailed questionnaires followed by one-on-one discussions. The outcome of the appraisal process was judged by the Board to be satisfactory with all Directors having contributed effectively at the meetings that they had attended during the year. The Board also reviewed the Chairman's and Directors' other commitments and is satisfied that the Chairman and other Directors are capable of devoting sufficient time to the Company. The Board has no hesitation in recommending to Shareholders the election of Ms Adam who is due to retire at the forthcoming AGM and submit herself for election having been appointed during the year.

There is an agreed procedure for Directors to take independent professional advice if necessary and at the Company's expense. This is in addition to the access which every Director has to the advice and services of the Company Secretary, which is responsible to the Board for ensuring that Board procedures are followed and that applicable rules and regulations are complied with.

Board Committees

Under the United Kingdom Listing Authority's Listing Rules, where an investment company has only non-executive directors, the UK Code principles relating to directors' remuneration do not apply. Accordingly, the Board has not appointed a separate remuneration committee. The remuneration of the Directors has been set in order to attract individuals of a calibre appropriate to the future development of the Company. The Company's policy on Directors' remuneration, together with details of the remuneration of each Director, is detailed in the Directors' Remuneration Report in the Annual Report.

Audit Committee

The Report of the Audit Committee is contained in the Annual Report.

Management Engagement Committee ("MEC")

The Board has appointed a MEC which comprises all four independent Directors, Mr R Prosser (Chairman), Mr M Adams, Mr G Baird and Ms H Adam. The function of this Committee is to review performance and to ensure that the Manager and the Investment Manager comply with the terms of the Management Agreement and that the provisions of the agreement follow industry practice and remain competitive and in the best interest of Shareholders as a whole. The Committee remains satisfied that the continuing appointment of the Investment Manager and Manager on the terms agreed is in the interests of Shareholders as a whole. The key factors taken into account in reaching this decision are the investment skills, experience and commitment and performance record of Aberdeen Standard Investments. The Management Agreement may be terminated by either party by giving not less than 12 months' notice in writing.

Nomination Committee

Appointments to the Board of Directors are considered by the Nominations Committee which comprises the entire Board and whose Chairman is Mr R Prosser. Possible new Directors are identified against the requirements of the Company's business and the need to have a balanced Board. Every Director is entitled to receive appropriate training as deemed necessary including a full induction from the Manager. The induction includes meetings with the Manager's compliance, internal audit, investor relations and promotional teams as well as an in-depth meeting with the individual managers. The Board's overriding priority when appointing new Directors to the Board will be to identify the candidate with the best range of skills and experience to complement existing Directors.

During the year the Nomination Committee initiated a search to find a new independent non executive Director, using the services of Fletcher Jones, an independent search consultant. The Directors drew up a specification for the appointment and interviewed a shortlist of suitable candidates. Following review, the Directors appointed Ms Hazel Adam as an independent non executive Director of the Company with effect from 27 April 2018. Further details on Ms Adam are provided in the Chairman's Statement.

The Articles of Association require that all Directors shall submit themselves for election by Shareholders at the first opportunity following their appointment and shall not remain in office longer than three years since their last election or re-election without submitting themselves to re-election. Mr Adams has indicated that he intends to retire from the Board at the Annual General Meeting in December and does not intend to seek re-election. Ms Adam will retire at the Annual General Meeting having been appointed during the year, and will seek election to the Board. The Board considers that there is a balance of skills and experience within the Board relevant to the leadership and direction of the Company and that all Directors contribute effectively

The Board's policy on diversity is disclosed in the Strategic Report.

Going Concern

In accordance with the Financial Reporting Council's guidance the Directors have undertaken a rigorous review of the Company's ability to continue as a going concern. The Company's assets including those of its subsidiary consist of a diverse portfolio of listed equities, equity-related investments and fixed income investments exposed to the Latin American market which in most circumstances are realisable within a very short timescale.

The Company has considerable financial resources and, as a consequence, the Directors believe that the Company is well placed to manage its business risks successfully despite uncertainties in the economic outlook.

The Directors are mindful of the principal risks and uncertainties disclosed in the Strategic Report and have reviewed forecasts detailing revenue and liabilities and the Directors believe that the Company has adequate financial resources to continue its operational existence for the foreseeable future and at least 12 months from the date of this Annual Report. Accordingly, the Directors continue to adopt the going concern basis in preparing the financial statements of the Company as at the date of the approval of this report.

Internal Controls and Risk Management

The design, implementation and maintenance of controls and procedures to safeguard the assets of the Company and to manage its affairs properly extends to operational and compliance controls and risk management. The Board has prepared its own risk register which identifies potential risks both major and minor relating to: strategy; investment management; Shareholders; marketing; gearing; regulatory and financial obligations; third party service providers and the Board. The Board considers the potential cause and possible impact of these risks as well as reviewing the controls in place to mitigate these potential risks. A risk is rated by having a likelihood and an impact rating and the residual risk is plotted on a "heat map" and is reviewed regularly.

The Board is ultimately responsible for the Company's system of internal control and for reviewing its effectiveness. The Financial Reporting Council's Guidance on Risk Management, Internal Control and Related Financial Business Reporting (the FRC Guidance), assists Directors in applying section C.2 of the UK Code. The Board confirms that there is an ongoing process for identifying, evaluating and managing the principal risks faced by the Company. This process has been in place for the period under review and up to the date of approval of this Annual Report and financial statements, and is regularly reviewed by the Board and accords with the guidance. The Board has reviewed the effectiveness of the system of internal control. In particular, it has reviewed and updated the process for identifying and evaluating the principal risks affecting the Company and policies by which these risks are managed. The principal risks and uncertainties faced by the Company are detailed in the Strategic Report.

The key components designed to provide effective internal control are outlined below:

- the Manager prepares monthly forecasts and management accounts which allow the Board to assess the Company's activities and review its performance;

- the Board and the Manager have agreed clearly defined investment criteria, specified levels of authority and exposure limits; reports on these issues, including performance statistics and investment valuations, are regularly submitted to the Board and there are meetings with Aberdeen Standard Investments as appropriate;

- as a matter of course the Manager's compliance department continually reviews its' operations;

- written agreements are in place which specifically define the roles and responsibilities of the Manager and other third-party service providers and the Committee reviews, where relevant, periodic ISAE3402 Reports, a global assurance standard for reporting on internal controls for service organisations; the Board is made aware by the Manager of relevant exceptions in ISAE3402 reporting from key third party service providers as part of the Manager's third party service provider oversight regime.

- at its October 2018 meeting, the Audit Committee members carried out an annual assessment of internal controls for the year ended 31 August 2018 by considering documentation from Aberdeen Standard Investments, including the internal audit and compliance functions and taking account of events since 31 August 2018. The results of the assessment were then reported to the Directors at the Board meeting which followed; and,

- the Board has considered the need for an internal audit function but, because of the compliance and internal control systems in place at the Manager, has decided to place reliance on Manager's systems and internal audit procedures.

Internal control systems are designed to meet the Company's particular needs and the risks to which it is exposed. Accordingly, the internal control systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and by their nature can only provide reasonable and not absolute assurance against mis-statement and loss.

Management of Conflicts of Interest

The Board has a procedure in place to deal with a situation where a Director has a conflict of interest. As part of this process, the Directors prepare a list of other positions held and all other conflict situations that may need to be authorised either in relation to the Director concerned or his connected persons. The Board considers each Director's situation and decides whether to approve any conflict, taking into consideration what is in the best interests of the Company and whether the Director's ability to act in accordance with his wider duties is affected. Each Director is required to notify the Company Secretary of any potential, or actual, conflict situations that will need authorising by the Board. Authorisations given by the Board are reviewed at each Board meeting.

No Director has a service contract with the Company although each Director is issued with a letter of appointment upon appointment to the Board. The Directors' interests in contractual arrangements with the Company are as shown in note 16 to the financial statements. No other Directors had any interest in contracts with the Company during the period or subsequently.

The Board has adopted appropriate procedures designed to prevent bribery. The Company receives periodic reports from its service providers on the anti-bribery policies of these third parties. It also receives regular compliance reports from the Manager.

In the UK the Criminal Finances Act 2017 has introduced a new corporate criminal offence of "failing to take reasonable steps to prevent the facilitation of tax evasion". The Board has confirmed that it is the Company's policy to conduct all of its business in an honest and ethical manner. The Board takes a zero-tolerance approach to facilitation of tax evasion, whether under UK law or under the law of any foreign country.

Substantial Interests

The Company has been advised that the following Shareholders owned 3% or more of the issued Ordinary share capital of the Company at 31 August 2018:

Shareholder	Number of shares held	% held
City of London Investment Management	7,729,888	12.8
1607 Capital Partners	7,278,869	12.1
Aberdeen Retail Plans	7,185,814	11.9
Hargreaves Lansdown, stockbrokers	4,961,927	8.2
Philip J Milton Stockbrokers	2,931,763	4.9
Raymond James Investment Services	2,847,959	4.7
Alliance Trust Savings	1,843,654	3.1
Interactive Investor	1,815,009	3.0

On 6 September 2018 1607 Capital Partners notified the Company that its holding had increased to 7,856,869 Ordinary shares (13.1%). There have been no other significant changes notified in respect of the above holdings between 31 August 2018 and 24 October 2018.

Alternative Investment Fund Managers Directive ("AIFMD")

On 14 July 2014, the Jersey Financial Services Commission granted the Company a certificate of exemption from the application of the Alternative Investment Funds (Jersey) Regulations 2012 to any marketing it may carry out within any EU member state. APWML, as the Company's non-EEA alternative investment fund manager, also notified the UK Financial Conduct Authority ("FCA") in accordance with the requirements of the UK National Private Placement Regime for inclusion of the Company on the UK register as a non-EEA alternative investment fund being marketed in the UK.

In addition, in accordance with Article 23 of the AIFMD and Rule 3.2.2 of the FCA FUND Sourcebook, APWML is required to make available certain disclosures for potential investors in the Company and these are available on the Company's website: latamincome.co.uk.

Special Business at the Annual General Meeting

Directors' Authority to Allot Relevant Securities

There are no provisions under Jersey law which confer rights of pre-emption upon the issue or sale of any class of shares in the Company. However, as the Ordinary shares are traded on the LSE and have a premium listing, the Company is required to offer pre-emption rights to its Shareholders and the Articles of Association reflect this. Ordinary shares will only be issued at a premium to the prevailing NAV per Ordinary share and, therefore, will not be disadvantageous to existing Ordinary Shareholders.

Unless previously disapplied by special resolution, in accordance with the Listing Rules of the Financial Conduct Authority, the Company is required to first offer any new shares or securities (or rights to subscribe for, or to convert or exchange into, shares) proposed to be issued for cash to Shareholders in proportion to their holdings in the Company. In order to provide for such share issues, your Board is therefore also proposing that an annual disapplication of the pre-emption rights is given to the Directors so that they may issue shares as and when appropriate. Accordingly, Resolution 5, a Special Resolution, proposes a disapplication of the pre-emption rights in respect of 10% of the shares in issue, set to expire on the earlier of eighteen months from the date of the resolution or at the conclusion of the Annual General Meeting to be held in 2019.

Purchase of the Company's Securities

In the past the Company has quoted the aim of its discount management policy as being to try to maintain the price at which the Ordinary shares trade relative to their NAV at a discount of no more that 5%. As stated in the Chairman's Statement, during the year under review the Company bought back 1,672,500 Ordinary shares for treasury at a total cost of £1,219,000 and a further 290,000 Ordinary shares were purchased for cancellation at a cost of £188,000. Subsequent to the period end a further 280,000 Ordinary shares have been purchased for cancellation at a cost of £177,000.

Purchases of Ordinary shares will only be made through the market for cash at prices below the prevailing exclusive of income NAV per Ordinary share (as last calculated) where the Directors believe such purchases will enhance Shareholder value and are likely to assist in narrowing any discount to NAV at which the Ordinary shares may trade.

Resolution 6, a Special Resolution, will be proposed to renew the Directors' authority to make market purchases of the Ordinary shares in accordance with the provisions of the Listing Rules of the Financial Conduct Authority. The Company will seek authority to purchase up to a maximum of 8,978,309 Ordinary shares (representing 14.99 per cent. of the current issued Ordinary share capital excluding treasury shares). The authority being sought shall expire at the conclusion of the Annual General Meeting in 2019 unless such authority is renewed prior to that time. Any Ordinary shares purchased in this way will either be cancelled and the number of Ordinary shares will be reduced accordingly, or the Ordinary shares will be held in treasury, in accordance with the authority previously conferred by Shareholders.

The Companies (Jersey) Law 1991 allows companies to either cancel shares or hold them in treasury following a buy-back. These powers give Directors additional flexibility and the Board considers that it is in the interest of the Company that such powers be available, including the power to hold treasury shares. Any future sales of Ordinary shares from treasury will only be undertaken at a premium to the prevailing NAV per Ordinary share for the benefit of all Shareholders. The Directors monitor the level of shares held in treasury and whilst there are no upper limits on the number of shares that can be held in treasury consideration will be given to cancelling treasury shares if the number becomes excessively high compared to the issues share capital.

Reappointment of Independent Auditor

Our auditor, Ernst & Young LLP, has indicated its willingness to remain in office. The Directors will place a Resolution before the Annual General Meeting to re-appoint them as independent auditor for the ensuing year, and to authorise the Directors to determine their remuneration.

Recommendation

Your Board considers Resolutions 5 and 6 to be in the best interests of the Company and its members as a whole. Accordingly, your Board recommends that Ordinary Shareholders should vote in favour of Resolutions 5 and 6 to be proposed at the Annual General Meeting, as they intend to do in respect of their own beneficial shareholdings amounting to 89,000 Ordinary shares.

Directors' & Officers Liability Insurance

Directors' & Officers' liability insurance cover has been maintained throughout the period at the expense of the Company.

Relations with Shareholders

The Directors place a great deal of importance on communication with Shareholders. The Board welcomes feedback from all Shareholders. The Chairman meets periodically with the largest Shareholders to discuss the Company. The Annual Report and financial statements are widely distributed to other parties who have an interest in the Company's performance. Shareholders and investors may obtain up to date information on the Company through the Manager's freephone information service and the Company's website: latamincome.co.uk.

The Board's policy is to communicate directly with Shareholders and their representative bodies without the involvement of the management group (either the Company Secretary or the Manager) in situations where direct communication is required and representatives from the Board meet periodically with major Shareholders.

The Notice of the Annual General Meeting included within the Annual Report and financial statements is ordinarily sent out at least 20 working days in advance of the meeting. All Shareholders have the opportunity to put questions to the Board or Manager, either formally at the Company's Annual General Meeting or informally following the meeting. The Company Secretary is available to answer general Shareholder queries at any time throughout the year. The Directors are keen to encourage dialogue with Shareholders and the Chairman welcomes direct contact from Shareholders.

UK Stewardship Code and Proxy Voting as an Institutional Shareholder

Responsibility for actively monitoring the activities of portfolio companies has been delegated by the Board to the Manager which has sub-delegated that authority to the Investment Manager.

The full text of the Company's response to the Stewardship Code may be found on the Company's website.

Socially Responsible Investment Policy

The Board is aware of its duty to act in the best interests of the Company. As an investment company, the Company has no direct social, environmental or community responsibilities. However, the Board acknowledges that there are risks associated with investment in companies which fail to conduct business in a socially responsible manner and the Board, therefore, ensures that they take regular account of the social, environment and ethical factors, which may affect the performance or value of the Company's investments.

For and on behalf of the Board

Aberdeen Private Wealth Management Limited

Secretary

24 October 2018

1^st Floor, Sir Walter Raleigh House

48 - 50 Esplanade, St Helier

Jersey JE2 3QB

STATEMENT OF DIRECTORS' RESPONSIBILITIES

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

The Companies (Jersey) Law 1991 requires the Directors to prepare financial statements for each financial period in accordance with any generally accepted accounting principles. The financial statements of the Company are required by law to give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company 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;

- specify which generally accepted accounting principles have been adopted in their preparation;

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

- assess whether the Annual Report and financial statements, taken as a whole, is 'fair, balanced and understandable'.

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 Company 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 Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for ensuring that the Company complies with the provisions of the Listing Rules and the Disclosure, Guidance & Transparency Rules of the UK Listing Authority which, with regard to Corporate Governance, require the Company to disclose how it has applied the principles, and complied with the provisions, of the UK Corporate Governance Code applicable to the Company.

Declaration

The Directors listed in the Directors' Report, being the persons responsible, hereby confirm to the best of their knowledge:

- that the financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the IASB and interpretations issued by the International Financial Reporting Interpretations Committee of the International Accounting Standards Board give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;

- that in the opinion of the Directors, the Annual Report and financial statements taken as a whole, is fair, balanced and understandable and it provides the information necessary to assess the Company's performance, business model and strategy; and

- the Strategic Report, including the Chairman's Statement and the Investment Manager's Review, include a fair review of the development and performance of the business and the position of the Company together with a description of the principal risks and uncertainties that the Company faces.

For and on behalf of the Board

Richard Prosser

Chairman

24 October 2018

1st Floor, Sir Walter Raleigh House

48 - 50 Esplanade, St Helier

Jersey JE2 3QB

The Manager is responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

STATEMENT OF COMPREHENSIVE INCOME

		Year ended 31 August 2018			Year ended 31 August 2017
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Income
Income	4	3,095	-	3,095	3,772	-	3,772
(Losses)/gains on financial assets held at fair value through profit or loss		-	(12,043)	(12,043)	-	9,016	9,016
Currency gains/(losses)		-	44	44	-	(183)	(183)
Losses on forward foreign currency contracts		-	(42)	(42)	-	(65)	(65)
		_______	_______	_______	_______	_______	_______
		3,095	(12,041)	(8,946)	3,772	8,768	12,540
		_______	_______	_______	_______	_______	_______
Expenses
Investment management fee	5	(222)	(333)	(555)	(233)	(349)	(582)
Other operating expenses	6	(473)	-	(473)	(443)	-	(443)
		_______	_______	_______	_______	_______	_______
Profit/(loss) before finance costs and taxation		2,400	(12,374)	(9,974)	3,096	8,419	11,515

Finance costs		(42)	(63)	(105)	(36)	(54)	(90)
		_______	_______	_______	_______	_______	_______
Profit/(loss) before taxation		2,358	(12,437)	(10,079)	3,060	8,365	11,425

Taxation	2(d)	(45)	(171)	(216)	(46)	-	(46)
		_______	_______	_______	_______	_______	_______
Profit/(loss) for the year		2,313	(12,608)	(10,295)	3,014	8,365	11,379
		_______	_______	_______	_______	_______	_______

Earnings per Ordinary share (pence)	8	3.78	(20.62)	(16.84)	4.77	13.23	18.00
		_______	_______	_______	_______	_______	_______

The profit/(loss) for the year is also the comprehensive income for the year.
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.

BALANCE SHEET

		31 August	31 August
		2018	2017
	Notes	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss	9	48,277	61,821
		_______	_______
Current assets
Cash		411	653
Forward foreign currency contracts		96	56
Other receivables		442	473
		_______	_______
Total current assets		949	1,182
		_______	_______
Total assets		49,226	63,003

Current liabilities
Bank loan	10	(6,500)	(6,500)
Forward foreign currency contracts		(35)	(13)
Other payables		(366)	(320)
		_______	_______
Total current liabilities		(6,901)	(6,833)
		_______	_______
Net assets		42,325	56,170
		_______	_______
Equity capital and reserves
Equity capital	11	65,936	65,936
Capital reserve	12	(25,861)	(11,846)
Revenue reserve		2,250	2,080
		_______	_______
Equity Shareholders' funds		42,325	56,170
		_______	_______

Net asset value per Ordinary share (pence)	13	70.34	90.40
		_______	_______

STATEMENT OF CHANGES IN EQUITY

Year ended 31 August 2018
		Stated	Capital	Revenue
		capital	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000
Balance at 1 September 2017		65,936	(11,846)	2,080	56,170
(Loss)/profit for the year		-	(12,608)	2,313	(10,295)
Dividends paid	7	-	-	(2,143)	(2,143)
Purchase of own shares		-	(1,407)	-	(1,407)
		_______	_______	_______	_______
Balance at 31 August 2018		65,936	(25,861)	2,250	42,325
		_______	_______	_______	_______

Year ended 31 August 2017
		Stated	Capital	Revenue
		capital	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000
Balance at 1 September 2016		65,936	(18,754)	1,281	48,463
Profit for the year		-	8,365	3,014	11,379
Dividends paid	7	-	-	(2,215)	(2,215)
Purchase of own shares		-	(1,457)	-	(1,457)
		_______	_______	_______	_______
Balance at 31 August 2017		65,936	(11,846)	2,080	56,170
		_______	_______	_______	_______

CASH FLOW STATEMENT

	Year ended	Year ended
	31 August 2018	31 August 2017
	£'000	£'000
Dividend income	508	515
Fixed interest income	1,510	1,465
Income from Subsidiary	1,190	1,407
Interest income	2	-
Investment management fee paid	(522)	(576)
Other paid expenses	(508)	(408)
	_______	_______
Cash generated from operating activities before finance costs and taxation	2,180	2,403

Interest paid	(104)	(89)
Withholding taxes paid	(42)	(46)
	_______	_______
Net cash inflow from operating activities	2,034	2,268

Cash flows from investing activities
Purchases of investments	(7,853)	(12,957)
Proceeds from sales of investments	8,483	12,510
Receipts from Subsidiary	651	-
	_______	_______
Net cash inflow/(outflow) from investing activities	1,281	(447)

Cash flows from financing activities
Equity dividends paid	(2,143)	(2,215)
Repurchase of own shares	(1,415)	(1,437)
Capital returned from Subsidiary	-	3,209
Loan repaid	-	(1,000)
	_______	_______
Net cash outflow from financing activities	(3,558)	(1,443)
	_______	_______
Net (decrease)/increase in cash	(243)	378
Foreign exchange	1	(249)
Cash at start of year	653	524
	_______	_______
Cash and cash equivalents at end of year	411	653
	_______	_______

NOTES TO THE FINANCIAL STATEMENTS

1.	Principal activity
	The Company is a closed-ended investment company incorporated in Jersey, and its shares are traded on the London Stock Exchange and are listed in the premium segment of the Financial Conduct Authority's Official List. The Company's principal activity is investing in Latin American securities.

	The principal activity of its Delaware incorporated wholly owned subsidiary, Aberdeen Latin American Income Fund LLC, is similar in all relevant respects to that of its parent.

2.	Accounting policies
	(a)	Basis of preparation
		The accounting policies which follow set out those policies which apply in preparing the financial statements for the year ended 31 August 2018.

		The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by International Accounting Standards Board (IASB). The financial statements have been prepared on a historical-cost basis, except for financial assets and financial liabilities held at fair value through profit or loss.

		The Directors believe that the Company has adequate resources to continue in operational existence for the foreseeable future and, for the above reasons, they continue to adopt the going concern basis in preparing the financial statements.

		The Company's financial statements are presented in sterling, which is also the functional currency as it is the currency in which shares are issued and expenses are generally paid. All values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated.

		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 financial statements on a basis compliant with the recommendations of the SORP issued in November 2017 and updated in February 2018 with consequential amendments.

		Significant accounting judgements, estimates and assumptions
		The preparation of financial statements in conformity with IFRS requires the use of certain significant accounting judgements, estimates and assumptions which requires management to exercise its judgement in the process of applying the accounting policies.

		Management have identified two such areas in preparing the financial statements being the application of IFRS 10 'Consolidated Financial Statements' and valuation technique used to derive the fair value of the Company's subsidiary for financial reporting purposes.

		Application of IFRS 10: Assessment of investment entity
		One of the key areas for consideration has been the application of IFRS 10 'Consolidated Financial Statements' including the Amendments, 'Investment entities (Amendments to IFRS 10, IFRS 12 and IAS 27) (Investment Entity Amendments)'. The standard requires entities that meet the definition of an investment entity to fair value certain subsidiaries through profit or loss in accordance with IAS 39 'Financial Instruments: Recognition and Measurement', rather than consolidate their results. However, entities which are not themselves investment entities and provide investment related services to the Company will continue to be consolidated.

		Entities which meet the definition of an investment entity are required to fair value subsidiaries through profit or loss rather than consolidate them. An investment entity meets the definition of an investment entity if it satisfies the following three criteria:
		(i)	an entity obtains funds from one or more investors for the purpose of providing those investors with investment services; the Company provides investment services and has several investors who pool funds to gain access to these services and investment opportunities which they might not be able to as individuals.
		(ii)	an entity commits to its investors that its business purpose is to the investment in its subsidiary solely for capital appreciation, investment income, or both; the Company's investment objective is to provide Ordinary Shareholders with a total return, with an above average yield, primarily through investing in Latin American securities.
		(iii)	an entity measures and evaluates the performance of substantially all of its investments on a fair value basis; the Company has elected to measure and evaluate the performance of all of its investments on a fair value basis. The fair value basis is used to present the Company's performance in its communication with the market and the primary measurement attribute to evaluate performance of all of its investments and to make investment decisions.

		The Company meets the definition of an investment entity, and, therefore, all investments in subsidiaries are recorded at fair value through profit or loss.

		Fair value of the Subsidiary
		The Directors conclude that the net asset value of the wholly owned Subsidiary is the best estimate of fair value for financial reporting purposes based on the composition of the Subsidiary's balance sheet and the other reasons disclosed in note 9(b).

		New and amended standards and interpretations
		The following amended standard was adopted by the Company:
		IAS 7 'Amendment, Disclosure Initiative' (effective 1 January 2017) to present an analysis of changes in financing liabilities during the period. Refer to note 19.

		Standards issued but not yet effective
		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 1 January 2018, revised, early adoption permitted)
		IFRS 15 'Revenue from contracts with customers' (effective 1 January 2018)

		The Company intends to adopt the Standards and Interpretations in the reporting period when they become effective and the Board does not anticipate that the adoption of these Standards and Interpretations in future periods will materially impact the Company's financial results although there will be revised presentations to the financial statements and additional disclosures. In forming this opinion the Board notes the fundamental rewrite of accounting rules for financial instruments under IFRS 9, which is applicable for annual periods commencing 1 January 2018 and introduces a new classification model for financial assets. Financial assets are classified according to their contractual cash flow characteristics and the business models under which they are held. The Company's portfolio includes bonds, which have contractual cash flows and the Board has determined it will be appropriate to continue to classify these securities at fair value through profit or loss as they are managed on a fair value basis rather than to collect cash flows. Additionally, the Board does not believe that IFRS 15 will have any impact on the financial statements of the Company as it does not have revenue from contracts with customers.
	(b)	Income
		Dividend income from equity investments is recognised on the ex-dividend date. Dividend income from equity investments where no ex-dividend date is quoted are brought into account when the Company's right to receive payment is established. Where the Company 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. Special dividends are credited to capital or revenue according to their circumstances.

		The fixed returns on debt instruments are recognised using the accruals basis.

	(c)	Expenses and interest payable
		All expenses, with the exception of interest, which is recognised using the effective interest method, are accounted for on an accruals basis. Expenses are charged to the revenue column of the Statement of Comprehensive Income except as follows:
		costs incidental to the issue of new shares as defined in the Prospectus are charged to capital;
		expenses resulting from the acquisition or disposal of an investment are charged to the capital column of the Statement of Comprehensive Income; and
		expenses are charged to the capital column of the Statement of Comprehensive Income where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. The Company charges 60% of investment management fees and finance costs to capital, in accordance with the Board's estimate of expected long-term return in the form of capital gains and income respectively from the investment portfolio of the Company.

	(d)	Taxation
		Profits arising in the Company for the year ended 31 August 2018 will be subject to Jersey income tax at the rate of 0% (2017 - 0%).

		Investment income and capital gains are subject to withholding tax deducted at the source of the income. The Company presents the withholding tax separately from the gross investment income in the Statement of Comprehensive Income under taxation.

	(e)	Investments held at fair value through 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. All investments are considered to form part of a group of financial assets and subsequently measured on a fair value basis, in accordance with the Company's documented investment strategy, and information about the Company is provided internally on that basis. These investments also include inflation-linked bonds which are considered to be compound financial instruments. 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.

		Changes in the value of investments held at fair value through profit or loss, gains and losses on disposal and related transaction costs are recognised in the Statement of Comprehensive Income.

	(f)	Fair value measurement
		Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value is derived from unadjusted quoted bid prices in active markets, with the exception of inflation-linked bonds whose quoted bid prices are adjusted for indexation arising from the movement of the consumer prices index for the relevant country of issue of the bond. The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles. An active market is a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

	(g)	Cash and cash equivalents
		Cash comprises cash at banks and short-term deposits.

	(h)	Other receivables and payables
		Other receivables do not carry any interest and are short-term in nature and are accordingly stated at their recoverable amount. Other payables are non interest bearing and are stated at their payable amount.

	(i)	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 Statement of Comprehensive Income. These include gains and losses from foreign currency exchange differences.

		Additionally, expenses, including finance costs, are charged to this reserve in accordance with (c) above.

		When the Company purchases its Ordinary shares to be held in treasury and for cancellation, the amount of the consideration paid, which includes directly attributable costs, is net of any tax effect, and is recognised as a deduction from the capital reserve. Should these shares be sold subsequently, the amount received is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to or from the capital reserve.

		Revenue reserve
		This reserve reflects all income and costs which are recognised in the revenue column of the Statement of Comprehensive Income less dividends which have been paid.

	(j)	Foreign currency
		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 a currency gain or loss.

	(k)	Bank loans
		Monies borrowed to finance the investment objectives of the Company are stated at the amount of the net proceeds immediately after the issue plus cumulative finance costs less cumulative payments made in respect of the debt. The finance cost of such borrowings is allocated to years over the term of the debt at a constant rate on the carrying amount and is charged 40% to revenue and 60% to capital reserves to reflect the Company's investment policy and estimated prospective income and capital growth.

		Borrowings are held at amortised cost using the effective interest rate method.

	(l)	Derivative financial instruments
		The Company may use forward foreign exchange contracts to manage currency risk arising from investment activity.

		Derivatives are measured at fair value calculated by reference to forward exchange rates for contracts with similar maturity profiles.

		Changes in the fair value of derivatives are recognised in the Statement of Comprehensive Income as revenue or capital depending on their nature.

3.	Segmental reporting
	The Company is engaged in a single segment of business. For management purposes, the Company is organised into one main operating segment, which invests in equity securities, debt instruments and related derivatives. All of the Company's activities are interrelated, and each activity is dependent on the others. Accordingly, all significant operating decisions are based on the Company as one segment.

	The following table analyses the Company's income, including income derived from the Subsidiary's investments, by geographical location. The basis for attributing the income is the place of incorporation of the instrument's investment, however, where the Company invests in ADR designated securities the underlying geographic location is considered to be the basis.

		2018	2017
		£'000	£'000
	Argentina	235	212
	Brazil	1,401	1,791
	Chile	61	66
	Columbia	266	314
	Mexico	607	665
	Peru	137	160
	Uruguay	386	564
	United Kingdom	2	-
		_______	_______
		3,095	3,772
		_______	_______

	The Company's income (including that stemming from its Subsidiary's investments) is derived 28% (2017 - 20%) from equities, 72% (2017 - 80%) from bonds.

		2018	2017
4.	Income	£'000	£'000
	Income from investments
	Dividend income	545	518
	Fixed interest income	1,409	1,683
	Income from Subsidiary	1,139	1,571
		_______	_______
		3,093	3,772
		_______	_______
	Other income
	Deposit interest	2	-
		_______	_______
		3,095	3,772
		_______	_______

	The Company owns 100% of the share capital of its Subsidiary. The Company receives income from its Subsidiary and there are no significant restrictions on the transfer of funds to or from the Subsidiary. During the year net revenue of £1,139,000 (2017 - £1,571,000) was generated by the Subsidiary.

5.	Investment management fee
	The Company has an agreement with APWML for the provision of management services. Portfolio management services have been delegated by APWML to AAML.

	The management fee is based on an annual rate of 1% of the NAV of the Company, valued monthly. The agreement is terminable on one year's notice. The balance due to APWML at the year end was £85,000 (2017 - £52,000). Investment management fees are charged 40% to revenue and 60% to capital.

		2018	2017
6.	Other operating expenses	£'000	£'000
	Directors' fees	82	75
	Promotional activities	41	36
	Secretarial and administration fee	96	114
	Auditor's remuneration:
	fees payable for the audit of the annual accounts	32	33
	Legal and advisory fees	34	2
	Custodian and overseas agents' charges	69	64
	Broker fees	30	30
	Stock exchange fees	20	19
	Registrar's fees	22	19
	Printing	18	17
	Other	29	34
		_______	_______
		473	443
		_______	_______

	The Company has an agreement with AAML for the provision of promotional activities. The total fees incurred under the agreement during the year were £41,000 (2017 - £36,000), of which £7,000 (2017 - £6,000) was due to AAML at the year end.

	The Company's management agreement with APWML provides for the provision of company secretarial and administration services. This agreement has been sub-delegated to Aberdeen Asset Managers Limited. APWML is entitled to an annual fee of £118,000 (2017 - £114,000) which increases annually in line with any increase in the UK Retail Price Index. A balance of £7,000 (2017 - £28,500) was due to APWML at the year end.

	The Manager has agreed to ensure that the Company's ongoing charges ratio ("OCR") will not exceed 2.0% when calculated annually as at 31 August. As the OCR exceeded 2.0% for the year ended 31 August 2018, the Manager has agreed to rebate £22,000 (2017 - nil) of the secretarial and administration fee in order to bring the OCR down to 2.0%.

		2018	2017
7.	Dividends on equity shares	£'000	£'000
	Distributions to equity holders in the period:
	Fourth interim dividend for 2017 - 0.875p (2016 -0.875p) per Ordinary share	543	561
	First interim dividend for 2018 - 0.875p (2017 - 0.875p) per Ordinary share	540	558
	Second interim dividend for 2018 - 0.875p (2017 - 0.875p) per Ordinary share	531	550
	Third interim dividend for 2018 - 0.875p (2017 - 0.875p) per Ordinary share	529	546
		_______	_______
		2,143	2,215
		_______	_______

	The fourth interim dividend for the year of 0.875p per Ordinary share has not been included as a liability in these financial statements as it was announced and paid after 31 August 2018.

8.	Earnings per Ordinary share
	The basic earnings or loss per Ordinary share is based on the loss for the year of £10,295,000 (2017 profit - £11,379,000) and on 61,152,947 (2017 - 63,208,980) Ordinary shares, being the weighted average number of Ordinary shares in issue during the year.

	The basic earnings per Ordinary share detailed above can be further analysed between revenue return and capital return as follows:

		2018			2017
	Basic	Revenue	Capital	Total	Revenue	Capital	Total
	Profit/(loss) (£'000)	2,313	(12,608)	(10,295)	3,014	8,365	11,379
	Weighted average number of Ordinary shares in issue ('000)			61,153			63,209
	Return per Ordinary share (pence)	3.78	(20.62)	(16.84)	4.77	13.23	18.00

			Year ended	Year ended
9.	Investments held at fair value through profit or loss		31 August 2018	31 August 2017
	(a)	Company	£'000	£'000
		Quoted equities	14,792	16,599
		Quoted bonds	15,581	19,904
		Investment in Subsidiary	17,904	25,318
			_______	_______
		Closing valuation	48,277	61,821
			_______	_______

	(b)	Investment in Subsidiary
		The Company holds 100% of the share capital of its Subsidiary. The Company meets the definition of an investment entity, therefore it does not consolidate its Subsidiary but recognises it as an investment at fair value through profit or loss. The fair value of the Subsidiary is based on its net assets which comprises investments held at fair value, cash, income receivable and other receivables/payables. The Company receives income from its Subsidiary and there are no significant restrictions on the transfer of funds to or from the Subsidiary.

			Year ended	Year ended
			31 August 2018	31 August 2017
			£'000	£'000
		Opening book cost	17,141	21,757
		Opening investment holdings fair value gains	8,177	1,715
			_______	_______
		Opening valuation	25,318	23,472
		Movements in the year:
		Capital returned to parent Company	(651)	(3,209)
		(Decrease)/increase in investment holdings fair value gains	(5,573)	6,462
		Income paid to parent Company	(1,190)	(1,407)
			_______	_______
		Closing valuation	17,904	25,318
			_______	_______

			£'000	£'000
		Closing book cost	15,300	17,141
		Closing investment holdings fair value gains	2,604	8,177
			_______	_______
		Closing valuation	17,904	25,318
			_______	_______

	(c)	Transaction costs
		During the year, expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. The total costs were as follows:

			Year ended	Year ended
			31 August 2018	31 August 2017
			£'000	£'000
		Purchases	5	4
		Sales	3	3
			_______	_______
			8	7

		The above transaction costs are calculated in line with the AIC SORP. The transaction costs in the Company's Key Information Document are calculated on a different basis and in line with the PRIIPs regulations.

10.	Creditors: amounts falling due within one year
	Bank loan
	The Company has a £8 million (2017 - £8 million) three year unsecured revolving multi-currency loan facility with Scotiabank (Ireland) Designated Activity Company expiring on 15 August 2020. At the year end £6,500,000 was drawn down (2017 - £6,500,000 ) under the facility, fixed to 17 September 2018 at an all-in rate of 1.795250%.

	At the date this Report was approved, £6,500,000 was drawn down under this facility and fixed to 16 November 2018 at an all-in rate of 1.79988%.

	Under the terms of the loan facility the Company's borrowings must not exceed 25% of adjusted NAV. Adjusted NAV is defined as total net assets less, inter alia, the aggregate of all excluded assets, excluded assets being, without double counting, the value of any unquoted assets, all investments issued by a single issuer in excess of 15% of total NAV, all Brazilian and Mexican bonds in excess of 30%, any MSCI Industry category in excess of 25% and cash, and any shortfall in cash, equities and investment Grade bonds below 70%.

	The Directors are of the opinion that there is no significant difference between the carrying value and fair value of the bank loan due to its short term nature.

		2018		2017
11.	Stated capital	Number	£'000	Number	£'000
	Issued and fully paid - Ordinary shares
	Balance brought forward	62,137,824	65,936	64,152,824	65,936
	Ordinary shares bought back in the period	(1,962,500)	-	(2,015,000)	-
		_______	_______	_______	_______
	Balance carried forward	60,175,324	65,936	62,137,824	65,936
		_______	_______	_______	_______

		2018		2017
		Number	£'000	Number	£'000
	Issued and fully paid - Treasury shares
	Balance brought forward	4,435,000	-	2,420,000	-
	Ordinary shares bought back in the period	1,672,500	-	2,015,000	-
		_______	_______	_______	_______
	Balance carried forward	6,107,500	-	4,435,000	-
		_______	_______	_______	_______
	Stated capital	66,282,824	65,936	66,572,824	65,936
		_______	_______	_______	_______

	The Company's Ordinary shares have no par value. The number of Ordinary shares authorised for issue is unlimited.

	During the year ended 31 August 2018, 1,672,500 Ordinary shares were bought back at a total cost of £1,219,000 (2017 - 2,015,000 Ordinary shares, £1,457,000) and were placed in Treasury. In addition the Company bought back 290,000 Ordinary shares at a cost of £188,000 (2017 - nil) for cancellation. Shares held in treasury consisting of 6,107,500 (2017 - 4,435,000) Ordinary shares represent 9.21% (2017 - 6.66%) of the Company's total issued share capital at 31 August 2018.

	The Ordinary shares are entitled to all of the capital growth in the Company's assets and to all the income from the Company that is resolved to be distributed.

		2018	2017
12.	Capital reserve	£'000	£'000
	At beginning of year	(11,846)	(18,754)
	Currency gains/(losses)	44	(183)
	Forward foreign currency contracts losses	(42)	(65)
	Movement in investment holdings fair value (losses)/gains	(11,777)	9,956
	Loss on sales of investments	(266)	(940)
	Capitalised expenses	(567)	(403)
	Purchase of own shares	(1,407)	(1,457)
		_______	_______
	At end of year	(25,861)	(11,846)
		_______	_______

13.	Net asset value per Ordinary share
	The basic net asset value per Ordinary share is based on a net asset value of £42,325,000 (2017 - £56,170,000) and on 60,175,324 (2017 - 62,137,824) Ordinary shares, being the number of Ordinary shares issued and outstanding at the year end.

14.

Risk management policies and procedures

The Company, and through its Subsidiary, invests in equities and sovereign bonds for the long term so as to achieve its objective. In pursuing its investment objective, the Company is exposed to a variety of financial risks that could result in a reduction in the Company's net assets and a reduction in the revenue available for distribution by way of dividends. The Company entered into forward foreign currency contracts for the purpose of hedging short term foreign currency cash flows consistent with its investment policy. As at 31 August 2018 there were 9 open positions in derivatives transactions (2017 - 10). The Company has not entered into forward foreign currency contracts for the purpose of hedging fair values as at each reporting date.

The Directors conclude that it is appropriate to present the financial risk disclosures of the Company and its wholly owned Subsidiary in combination as this accurately reflects how the Company uses its Subsidiary to carry out its investment activities, including those relating to portfolio allocation and risk management.

These financial risks of the Company and its Subsidiary are market risk (comprising market price risk, currency risk and interest rate risk), liquidity risk and credit risk, and the Directors' approach to the management of these risks, are set out below. The Board of Directors is responsible for the Company's risk management. The overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance.

The Board determines the objectives, policies and processes for managing the risks that are set out below, under the relevant risk category and relies upon AAML's system of internal controls. The policies for the management of each risk are unchanged from the previous accounting period.

(a)

Market risk

The fair value of a financial instrument held by the Company and its Subsidiary may fluctuate due to changes in market prices. Market risk comprises - market price risk (see note 14(b)), currency risk (see note 14(c)) and interest rate risk (see note 14(d)). The Investment Manager assesses the exposure to market risk when making each investment decision, and monitors the overall level of market risk on the whole of the investment portfolio on an ongoing basis.

(b)

Market price risk

Market price risks (i.e. changes in market prices other than those arising from interest rate risk or currency risk) may affect the value of the quoted investments.

Management of the risk

The Board monitors the risks inherent in the investment portfolio by ensuring full and timely access to relevant information from the Investment Manager. The Board meets regularly and at each meeting reviews investment performance. The Board monitors the Investment Manager's compliance with the Company's objectives, and is directly responsible for oversight of the investment strategy and asset allocation.

Concentration of exposure to market price risk

A geographical analysis of the Company's and Subsidiary's combined investment portfolio is shown above. This shows the significant amounts invested in Argentina, Brazil, Chile, Colombia, Mexico, and Peru. Accordingly, there is a concentration of exposure to those countries, though it is recognised that an investment's country of domicile or of listing does not necessarily equate to its exposure to the economic conditions in that country.

Market price sensitivity

The following table illustrates the sensitivity of the return after taxation for the year and the equity to an increase or decrease of 10% (2017 - 10%) in the fair value of the Company's and its Subsidiary's investments. This level of change is considered to be reasonably possible based on observation of past and current market conditions. The sensitivity analysis is based on the Company's and its Subsidiary's investments at each balance sheet date and the investment management fees for the year ended 31 August 2018, with all other variables held constant.

2018

2017

Increase

Decrease

Increase

Decrease

in fair value

£'000

Statement of Comprehensive Income - return after tax

Revenue return

(19)

(25)

Capital return

4,710

(4,710)

6,111

(6,111)

_______

Impact on total return after tax for the year and net assets

4,691

(4,691)

6,086

(6,086)

_______

(c)

Currency risk

Most of the Company's and its Subsidiary's assets, liabilities and income are denominated in currencies other than sterling (the Company's functional currency, and in which it reports its results). As a result, movements in exchange rates may affect the sterling value of those items.

Management of the risk

The Investment Manager manages the Company's exposure to foreign currencies and reports to the Board on a regular basis.

The Investment Manager also manages the risk to the Company and its Subsidiary of the foreign currency exposure by considering the effect on the Company's NAV and income of a movement in the exchange rates to which the Company's and Subsidiary's assets, liabilities, income and expenses and those of its Subsidiary are exposed.

Income denominated in foreign currencies is converted into sterling on receipt. The Company and its Subsidiary do not use financial instruments to mitigate currency exposure in the period between the time that income is included in the financial statements and its receipt.

Foreign currency exposure

The table below shows, by currency, the split of the Company and Subsidiary's non-sterling monetary assets and investments that are denominated in currencies other than sterling. The exposure is shown on an aggregated basis and excludes forward currency contracts which are used for the purpose of ensuring the Company's foreign currency exposure is appropriately hedged.

ARS

BRL

CLP

COP

MXN

PEN

UYU

USD

2018

£'000

Debtors (due from brokers, dividends and other receivables)

144

113

189

104

Cash

(2)

Creditors (due to brokers, accruals and other creditors)

(88)

(2)

(171)

_____

____

_____

Total foreign currency exposure on net monetary items

111

102

Investments at fair value through profit or loss

1,469

21,375

2,097

3,882

11,792

1,787

3,826

1,900

_____

____

_____

Total net foreign currency exposure

1,511

21,447

2,100

3,993

11,815

1,793

3,881

2,002

_____

____

_____

ARS

BRL

CLP

COP

MXN

PEN

UYU

USD

2017

£'000

Debtors (due from brokers, dividends and other receivables)

328

170

122

Cash

Creditors (due to brokers, accruals and other creditors)

(66)

(132)

(28)

(5)

_____

____

_____

Total foreign currency exposure on net monetary items

270

(20)

159

Investments at fair value through profit or loss

2,268

29,821

3,152

4,493

11,599

2,225

4,781

3,142

_____

____

_____

Total net foreign currency exposure

2,347

30,091

3,159

4,552

11,641

2,205

4,876

3,301

_____

____

_____

Foreign currency sensitivity

The sensitivity of the total return after tax for the year and the net assets in regard to the movements in the Company's and its Subsidiary's foreign currency financial assets and financial liabilities and the exchange rates for the £/Argentine Peso (ARS), £/Brazilian Real (BRL), £/Chilean Peso (CLP), £/Colombian Peso (COP), £/Mexican Peso (MXN), £/Peruvian Nuevo Sol (PEN), £/Uruguayan Peso (UYU) and £/US Dollar (USD) are set out below. This sensitivity excludes forward currency contracts entered into for hedging short term cash flows.

It assumes the following changes in exchange rates:

£/Argentine Peso +/-246% (2017 +/-60%) (maximum downside risk 100%)

£/Brazilian Real +/-4% (2017 +/-9%)

£/Chilean Peso +/-17% (2017 +/-18%)

£/Columbian Peso +/-17% (2017 +/-19%)

£/Mexican Peso +/-4% (2017 +/-6%)

£/Peruvian Nuevo Sol +/-14% (2017 +/-12%)

£/Uruguayan Peso +/-5% (2017 +/-7%)

£/US Dollar +/-15% (2017 +/-22%)

These percentages have been determined based on the average market volatility in exchange rates in the previous 3 years and using the Company's and its Subsidiary's foreign currency financial assets and financial liabilities held at each balance sheet date.

For 2018, if sterling had strengthened against the currencies shown, this would have had the following effect, with a weakening of sterling having an equal and opposite effect with the exception of the Argentine Peso which is capped at 100% on the downside amounting to £42,000:

ARS

BRL

CLP

COP

MXN

PEN

UYU

USD

2018

£'000

Statement of Comprehensive Income - return after tax

Revenue return

(42)

(6)

(19)

(8)

(1)

(3)

(16)

Capital return

(1,469)

(852)

(357)

(660)

(465)

(250)

(191)

(285)

_____

____

_____

Impact on total return after tax for the year and net assets

(1,511)

(858)

(357)

(679)

(473)

(251)

(194)

(301)

_____

____

_____

For 2017, if sterling had strengthened against the currencies shown, this would have had the following effect, with a weakening of sterling having an equal and opposite effect:

ARS

BRL

CLP

COP

MXN

PEN

UYU

USD

2017

£'000

Statement of Comprehensive Income - return after tax

Revenue return

(47)

(30)

(11)

(10)

(1)

(7)

(27)

Capital return

(1,361)

(2,679)

(569)

(854)

(688)

(264)

(335)

(699)

_____

____

_____

Impact on total return after tax for the year and net assets

(1,408)

(2,709)

(569)

(865)

(698)

(265)

(342)

(726)

_____

____

_____

Foreign exchange contracts

The Company has the ability to enter into derivative transactions, in the form of forward exchange contracts, to ensure that foreign currency exposure is appropriately hedged. The following forward contracts were outstanding at the Balance Sheet date:

Unrealised

gain/(loss)

31 August

Buy

Sell

Settlement

Amount

Contracted

2018

Date of contract

Currency

date

'000

rate

£'000

03 July 2018

GBP

USD

11 October 2018

1,495

1.3019

(26)

03 July 2018

MXN

GBP

11 October 2018

1,446

25.0479

10 July 2018

USD

GBP

11 October 2018

339

1.3019

11 July 2018

GBP

MXN

11 October 2018

25.0479

(1)

13 July 2018

MXN

GBP

11 October 2018

246

25.0479

13 August 2018

GBP

USD

11 October 2018

427

1.3019

16 August 2018

COP

USD

27 November 2018

205

1.3046

(2)

16 August 2018

USD

PEN

27 November 2018

1,806

1.3046

(6)

22 August 2018

USD

GBP

11 October 2018

1.3019

Unrealised

gain/(loss)

31 August

Buy

Sell

Settlement

Amount

Contracted

2017

Date of contract

Currency

date

'000

rate

£'000

10 July 2017

GBP

USD

13 October 2017

2,146

1.2904

(1)

10 July 2017

MXN

GBP

13 October 2017

2,464

23.1535

19 July 2017

GBP

MXN

13 October 2017

636

23.1535

(1)

24 July 2017

USD

GBP

13 October 2017

1.2904

04 August 2017

USD

GBP

13 October 2017

778

1.2904

07 August 2017

GBP

USD

13 October 2017

1.2904

(1)

08 August 2017

GBP

USD

13 October 2017

1.2904

15 August 2017

COP

USD

22 November 2017

204

1.2920

15 August 2017

USD

PEN

22 November 2017

2,182

1.2920

(10)

18 August 2017

GBP

USD

13 October 2017

410

1.2904

The fair value of forward exchange contracts is based on forward exchange rates at the Balance Sheet date.

A sensitivity analysis of foreign currency contracts is not presented as the Directors conclude that these are not significant given the short duration of the contracts and expected volatility of the respective foreign exchange rates over the term of the contracts.

(d)

Interest rate risk

Interest rate risk is the risk that arises from fluctuating interest rates. 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 Company's variable interest rate borrowings.

The interest rate risk applicable to a bond is dependent on the sensitivity of its price to interest rate changes in the market. The sensitivity depends on the bond's time to maturity, and the coupon rate of the bond.

Management of the risk

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 decisions.

Financial assets

The Company and its Subsidiary hold fixed rate government bonds with prices determined by market perception as to the appropriate level of yields given the economic background. Key determinants of market quoted prices 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 investment decisions. Each quarter the Board reviews the decisions made by the Investment Manager and receives reports on each market in which the Company and its Subsidiary invest together with economic updates.

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 price and a profit or loss may be incurred.

Financial liabilities

The Company primarily finances its operations through use of equity and bank borrowings.

The Company has a revolving multi-currency facility, details of which are disclosed in note 10.

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 Company'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 exposure

The exposure at 31 August of financial assets and financial liabilities to interest rate risk is shown by reference to floating interest rates - when the interest rate is due to be re-set.

2018

2017

Within

one year

Total

one year

Total

£'000

Exposure to floating interest rates

Cash

411

653

Borrowings under loan facility

(6,500)

________

Total net exposure to interest rates

(6,089)

(5,847)

________

The Company does not have any fixed interest rate exposure to cash or bank borrowings at 31 August 2018 (2017 - nil). Interest receivable and finance costs are at the following rates:

interest received on cash balances, or paid on bank overdrafts, is at a margin below LIBOR or its foreign currency equivalent (2017 - same).

interest paid on borrowings under the loan facility was at a margin above LIBOR. The weighted average interest rate of these at 31 August 2018 was 1.434264%.

Interest rate sensitivity

A sensitivity analysis demonstrates the sensitivity of the Company's results for the year to a reasonably possible change in interest rates, with all other variables held constant.

The sensitivity of the profit/(loss) 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 50 basis points higher or lower and all other variables were held constant, the Company's net interest for the year ended 31 August 2018 would decrease/increase by £30,000 (2017 - £29,000). This is attributable to the Company's exposure to interest rates on its floating rate cash balances and bank loan.

If interest rates had been 50 basis points higher and all other variables were held constant, a change in fair value of the Company's fixed rate financial assets at the year ended 31 August 2018 of £22,698,000 (2017 - £30,766,000) would result in a decrease of £649,000 (2017 - £880,000). If interest rates had been 50 basis points lower and all other variables were held constant, a change in fair value of the Company's fixed rate financial assets at the year ended 31 August 2018 would result in an increase of £679,000 (2017 - £923,000).

(e)

Liquidity risk

This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.

Management of the risk

All of the Company's and its Subsidiary's portfolios are investments in quoted bonds and equities that are actively traded. The Company's level of borrowings is subject to regular review.

The Company's investment policy allows the Investment Manager to determine the maximum amount of the Company's resources that should be invested in any one company.

Liquidity risk exposure

The remaining contractual maturities of the financial liabilities at 31 August 2018, based on the earliest date on which payment can be required are as follows:

Due

between

Due

within

3 months

after

3 months

and 1 year

1 year

Total

31 August 2018

£'000

Creditors: amounts falling due within one year

Borrowings under the loan facility (including interest)

(6,505)

Amounts due on forward foreign currency contracts

(35)

Amounts due to brokers and accruals

(361)

________

(6,901)

________

Due

between

Due

within

3 months

after

3 months

and 1 year

1 year

Total

31 August 2017

£'000

Creditors: amounts falling due within one year

Borrowings under the loan facility (including interest)

(6,504)

Amounts due on forward foreign currency contracts

(13)

Amounts due to brokers and accruals

(316)

________

(6,833)

________

(f)

Credit risk

The failure of the counterparty to a transaction to discharge its obligations under that transaction could result in the Company or its Subsidiary suffering a loss.

Management of the risk

Investment transactions are carried out with a number of brokers, whose credit-standing is reviewed regularly by AAML, 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 Company or its Subsidiary is mitigated by the review of failed trade reports on a daily basis. In addition, the administrator carries out both cash and stock reconciliations to the custodians' records on a daily basis to ensure discrepancies are detected on a timely basis.

Cash is held only with reputable banks with high quality external credit ratings. None of the Company's or its Subsidiary's financial assets have been pledged as collateral.

Credit risk exposure

In summary, compared to the amounts included in the Balance Sheet, the maximum exposure to credit risk at 31 August was as follows:

2018

2017

Balance

Maximum

Balance

Maximum

Sheet

exposure

Sheet

exposure

£'000

Non-current assets

Bonds at fair value through profit or loss{A}

22,698

30,766

Current assets

Cash

411

653

Other receivables

442

473

Forward foreign currency contracts

________

23,647

31,948

________

{A} Includes quoted bonds held by the Company and its Subsidiary on an aggregated basis. For more detail on these bonds refer to the Investment Portfolio listing.

None of the Group's financial assets are secured by collateral or other credit enhancements and none are past their due date or impaired.

Credit ratings

The table below provides a credit rating profile using Standard and Poors credit ratings for the bond portfolio at 31 August 2018 and 31 August 2017:

2018

2017

£'000

7,459

A-

7,477

2,136

10,861

BB-

7,116

BBB

2,460

8,771

BBB-

3,554

Non-rated

2,091

1,539

________

22,698

30,766

________

At 31 August 2018 the Standard and Poors credit ratings agency did not provide a rating for the Argentinian bonds or the Peruvian corporate bond held by the Company and were accordingly categorised as non-rated in the table above.

15.	Capital management policies and procedures
	The Company's capital management objectives are:
	- to ensure that it will be able to continue as a going concern; and
	- to maximise the income and capital return to its Equity Shareholders through equity capital and debt.

	The Company's capital at 31 August 2018 comprises its equity capital and reserves that are shown in the Balance Sheet at a total of £42,325,000 (2017 - £56,170,000). As at 31 August 2018 gross debt as a percentage of net assets stood at 15.4% (2017 - 11.6%).

	The Board, with the assistance of Aberdeen, monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes:
	- the planned level of gearing, which takes account of Aberdeen's views on the market;
	- the need to buy back Ordinary shares for cancellation or treasury, which takes account of the difference between the net asset value per share and the share price (i.e. the level of share price discount);
	- the need for new issues of Ordinary shares, including issues from treasury; and
	- the extent to which distributions from reserves may be made.

	The Company's objectives, policies and processes for managing capital are unchanged from the preceding accounting period.

16.	Related party transactions
	Fees payable during the year to the Directors are disclosed within the Directors' Remuneration Report in the annual Report and in note 6.

	Mr Gilbert was a Director of the Company until his retirement on 7 December 2017. Mr Gilbert is a director of Standard Life Aberdeen plc, of which APWML is a subsidiary. Management, promotional activities and secretarial, administration and custody services are provided by APWML with details of transactions during the year and balances outstanding at the year end disclosed in notes 5 and 6. Mr Gilbert did not draw a fee for providing his services as a Director of the Company.

	Under the terms of the management agreement with the Company, APWML is entitled to receive both a management fee and a company secretarial and administration fee. The company secretarial and administration fee is based on an annual amount of £118,000 (2017 - £114,000), increasing annually in line with any increases in the UK Retail Prices Index, payable quarterly in arrears. During the year £96,000 (2017 - £114,000) was payable after the deduction of a rebate £22,000 (2017 - nil) to bring the OCR down to 2.0%, with £7,000 (2017 - £29,000) outstanding at the period end.

	The Manager has agreed to ensure that the Company's OCR will not exceed 2.0% when calculated annually as at 31 August. Until further notice, to the extent that the OCR ever exceeds 2.0% the Manager will rebate part of its fees in order to bring that ratio down to 2.0%.

	The Company owns 100% of the share capital of the Subsidiary. The Company receives income from the Subsidiary and there are no significant restrictions on the transfer of funds to or from the Subsidiary. During the year the Subsidiary transferred £1,841,000 (2017 - £4,616,000) to the Company by way of income and capital returns and at 31 August 2018 the amount due to the Company by its Subsidiary was £15,300,000 (2017 - £17,141,000), which is a loan to the Subsidiary and incorporated in the fair value of the investment in the Subsidiary as at the year end.

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

18.	Fair value hierarchy
	IFRS 13 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 Company has classified fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has 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 (i.e. as prices) or indirectly (i.e. derived from prices); and
	Level 3:		inputs for the asset or liability that are not based on observable market data (unobservable inputs).

	Financial assets and financial liabilities are either carried in the balance sheet at their fair value (investments and forward currency contracts) or the balance sheet amount is a reasonable approximation of fair value (due from brokers, dividends and interest receivable, due to brokers, accruals, cash at bank and amounts due under the loan facility).

	The financial assets and liabilities measured at fair value in the Balance Sheet grouped into the fair value hierarchy at 31 August 2018 as follows:

					Level 1	Level 2	Total
				Note	£'000	£'000	£'000
	Financial assets/(liabilities) at fair value through profit or loss
	Quoted equities			a)	14,792	-	14,792
	Quoted bonds			b)	-	15,581	15,581
	Investment in Subsidiary			c)	-	17,904	17,904
					________	________	________
					14,792	33,485	48,277
	Forward foreign currency contracts			d)	-	96	96
	Forward foreign currency contracts			d)	-	(35)	(35)
					________	________	________
	Net fair value				14,792	33,546	48,338
					________	________	________

					Level 1	Level 2	Total
	As at 31 August 2017			Note	£'000	£'000	£'000
	Financial assets/(liabilities) at fair value through profit or loss
	Quoted equities			a)	16,599	-	16,599
	Quoted bonds			b)	-	19,904	19,904
	Investment in Subsidiary			c)	-	25,318	25,318
					________	________	________
					16,599	45,222	61,821
	Forward foreign currency contracts			d)	-	56	56
	Forward foreign currency contracts			d)	-	(13)	(13)
					________	________	________
	Net fair value				16,599	45,265	61,864
					________	________	________

	There were no assets for which significant unobservable inputs (Level 3) were used in determining fair value during the years ended 31 August 2018 and 31 August 2017. For the years ended 31 August 2018 and 31 August 2017 there were no transfers between any levels.

	a)	Quoted equities
		The fair value of the Company'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 Level 2 quoted bonds has been determined by reference to their quoted bid prices within markets not considered to be active. Index-linked bonds are adjusted for indexation arising from the movement of the consumer prices index within the country of their incorporation.
	c)	Investment in Subsidiary
		The Company's investment in its Subsidiary is categorised in Fair Value Level 2 as its fair value is determined by reference to its unadjusted net asset value which is not a quoted price but is derived predominantly from quoted investments. The net asset value of the Subsidiary is unadjusted as it has no restrictions on distributions.
	d)	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.

19.	Analysis of changes in financing liabilities during the year
	The following table shows the movements during the period of financing liabilities in the Statement of Financial Position:

		At		Other	At
		1 September 2017	Cash flows	Movements {A}	31 August 2018
		£000	£000	£000	£000
	Financing activities
	Loan	(6,500)	-	-	(6,500)
	Amounts due relating to repurchase of own shares	(20)	1,415	(1,407)	(12)
		________	________	________	________
	Total	(6,520)	1,415	(1,407)	(6,512)
		________	________	________	________

	{A} The other movements column represents the cost of repurchasing own shares as disclosed in the Statement of Changes in Equity.

20.	Subsequent events
	Subsequent to the Balance Sheet date, the Company purchased a further 280,000,000 Ordinary shares to be held in treasury for a total cost of £177,000.

The Annual General Meeting will be held at 10.00 a.m. on 13 December 2018 at 1^st Floor, Sir Walter Raleigh House, 48 - 50 Esplanade, St Helier, Jersey JE2 3QB.

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 2018 are an abridged version of the Company's full financial statements, which have been approved and audited with an unqualified report. The Annual Report and financial statements will be delivered to the Jersey Financial Services Commission in due course.

The audited Annual Report and financial statements will be posted in November. Copies may be obtained during normal business hours from the Company's Registered Office, Aberdeen Private Wealth Management Limited, 1^st Floor, Sir Walter Raleigh House, 48 - 50 Esplanade, St Helier, Jersey JE2 3QB or from the Company's website, 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

24 October 2018

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

FR PGGRUUUPRGQC

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abrdn Latin American Income Fund Limited NPV (ALAI)

Thursday, 23rd May 2024

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