Annual Financial Report Announcement

RNS Number : 9831P

Aberdeen Latin American Inc Fd Ltd

31 October 2012

 



ABERDEEN LATIN AMERICAN INCOME FUND LIMITED

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 AUGUST 2012

1.  RESULTS

Financial Highlights
	31 August 2012	31 August 2011{A}	% change
Total assets	£75,234,000	£58,222,000	+29.2
Total equity shareholders' funds (net assets)	£65,475,000	£53,309,000	+22.8
Ordinary share price (mid market)	94.00p	102.50p	-8.3
Subscription share price (mid market)	6.00p	12.50p	-52.0
Net asset value per Ordinary share	98.35p	102.31p	-3.9
(Discount)/premium to net asset value per Ordinary share	(4.42)%	0.19%
Actual gearing	13.35%	8.46%
Potential gearing	14.91%	9.22%
Dividends and earnings
Total return per Ordinary share	0.18p	6.44p
Revenue return per Ordinary share	4.00p	4.82p	-17.0
Dividends per Ordinary share{B}	4.25p	4.25p	-
Dividend cover	0.94 times	1.13 times
Revenue reserves{B}	£898,000	£950,000
Operating costs
Ongoing charges ratio{C}	1.98%	1.85%
{A}    Fourteen months to 31 August 2011.
{B}    Excludes payment of fourth interim dividend of 1.25p (2011 - 1.25p) per Ordinary share equating to £832,000 (2011 - £651,000).
{C}    Ongoing charges ratio calculated in accordance with guidance issued by the AIC as the total of the investment management fee and administrative expenses divided by the average cum income net asset value throughout the year. The figures for 2011 have been restated to conform with AIC guidance.

Performance (total return)

	1 year	Since launch{A}
	% return	% return
Share price	-4.0	+1.1
Net asset value	+0.5	+7.0
Composite MSCI EM Latin America 10/40 Index/JP Morgan GBI-EM Global Diversified Index (Latin America carve out) (sterling adjusted)	-2.3	+3.6
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 2012	1.00p	21 December 2011	23 December 2011	31 January 2012
2nd interim 2012	1.00p	4 April 2012	10 April 2012	30 April 2012
3rd interim 2012	1.00p	4 July 2012	6 July 2012	31 July 2012
4th interim 2012	1.25p	3 October 2012	5 October 2012	31 October 2012
Total dividends 2012	4.25p
	Rate	xd date	Record date	Payment date
1st interim 2011	1.00p	22 December 2010	24 December 2010	31 January 2011
2nd interim 2011	1.00p	6 April 2011	8 April 2011	28 April 2011
3rd interim 2011	1.00p	6 July 2011	8 July 2011	29 July 2011
4th interim 2011	1.25p	5 October 2011	7 October 2011	31 October 2011
Total dividends 2011	4.25p

2.  CHAIRMAN'S STATEMENT

Performance

I am pleased to report that in our second full year to 31 August 2012, your Company delivered a positive net asset value total return of 0.5% compared to a fall in the composite benchmark of 2.3% for the same period. The share price total return for the year fell by 4.0% as the Ordinary shares closed the period trading at a discount of 4.4% to net asset value. At the time of writing this statement, the net asset value is 101 pence per share and the Ordinary shares are trading at discount of 1%.

More detail on performance is contained in the Manager's Review but I am pleased to report that both the equity portfolio and the fixed income portfolio generated positive returns in the period, with the former delivering significant relative outperformance against the equity benchmark while the latter slightly underperformed relatively, held back by the Brazilian Real suffering an almost 20% fall as the central bank sought to prevent appreciation via capital controls.

Overview

Latin American stockmarkets declined during a volatile period and underperformed the broader emerging markets asset class, largely weighed down by global economic weakness caused by the on-going debt crisis in the Eurozone. Brazil's stockmarket was the main laggard, whereas Colombia and Mexico outperformed. Notably, uncertainty surrounding commodity markets hurt the export-dependent region. Brent crude oil prices rose to more than US$110 a barrel at the end of the period and prices for copper and natural gas declined, partly a result of waning Chinese appetite for commodities and easing consumption. Currencies across the region were not spared either, as investors turned to the relative liquidity of the US dollar.

Brazil suffered from faltering economic momentum, whilst Argentina was affected by a decline in exports. However, the pace of growth varied across the region with Mexico and Chile witnessing expansion and Chile in particular benefiting from a record US$12 billion-worth of foreign direct investment in the first half of calendar 2012. Colombia was also lifted by upbeat foreign investment inflows, while Peru was boosted by a robust labour market and government stimulus.

In view of the overall slowdown in growth, governments stepped up policy intervention. In Brazil, several temporary tax cuts were extended and a multi-billion US dollar stimulus package was introduced to spur investment in transport infrastructure. The government resorted to protectionist measures, such as raising levies on foreign goods and encouraging the purchase of locally-made products to boost domestic demand. Additionally, the Selic rate had been trimmed to a record low of 7.25% at the time of writing, while bank reserve requirements were lowered. Central banks in Chile and Colombia also reduced rates, despite accelerating inflation across the region owing to higher food prices.

Key political events in the region centred on presidential elections. Argentine president Christina Kirchner won a second four-year term by the biggest margin in three decades; Enrique Pena Nieto was elected president of Mexico, returning the Institutional Revolutionary Party to power following a 12-year hiatus, while Hugo Chavez was sworn in as Venezuela's president.

C Share Issue

As intimated in my statement for our initial period to 31 August 2011, we took shareholder authority at the EGM held in December 2011 to enable the Company to raise further funds through the issue of C shares. In my Interim Statement I reported that we subsequently raised £15.6 million gross proceeds which were quickly invested in line with the main portfolio. The calculation date was determined to be 29 February 2012 and on 11 April 2012 14,466,389 new Ordinary shares were listed, based on a conversion ratio of 0.9275 Ordinary shares for every one C share held.

Dividends

With the payment on 31 October of the fourth interim dividend of 1.25 pence per Ordinary share for the year ended 31 August 2012, we have continued to deliver a yield in accordance with the initial offering document at launch. Subscribers to the C share issue who have retained their Ordinary shares will have received the July and October interim dividends totalling 2.25 pence per share. The income generation in the portfolio is kept under regular review with the Investment Manager and it is in line with our expectations at this early stage of the Company's new financial year. It is the Company's aim, subject to investee company performance, currency movements, and possible unforeseen circumstances to pay a minimum dividend of 4.25 pence per Ordinary share for the year ending 31 August 2013 and to grow dividends over time. This does not constitute a profit forecast.

Gearing

At the end of May 2012, following discussions with the Investment Manager, we took advantage of the equity market sell off and the opportunity to invest in yield enhancing positions by deploying the remainder of our undrawn £10 million multi-currency facility. We drew down an additional US$7.5 million, allocated 25% to the equity portfolio and 75% to fixed income investments, taking the aggregate gearing to US$15.5 million. We retain that level of gearing in the portfolio which was equivalent to 13.35% of net assets at the year end. We have renewed the £10 million facility for a further 2 years to 18 August 2014 at a competitive margin of 125bp.

Annual General Meeting

The AGM will be held at 10.00 a.m on 10 December 2012 at No. 1 Seaton Place, St Helier, Jersey and I look forward to meeting shareholders on the day.

The Company has undertaken to operate an active discount management policy through the use of share buy-backs, the objective being to maintain the price at which the Company's Ordinary shares trade relative to their underlying net asset value at a discount of no more than 5%. This was achieved for the vast majority of the trading year without the Company having recourse to buying shares in the market as there was regular net demand in the market. We have therefore not purchased any Ordinary shares since the launch of the Company in August 2010. We will, however, seek to renew the power to buy back Ordinary shares at the Company's AGM. Any purchases will be made through the market at a discount to the prevailing net asset value per Ordinary share in circumstances where the Directors believe that any such purchase will enhance shareholder value. We will also renew the authority to purchase Subscription shares in the market for cancellation and any purchases of Subscription shares will only be made if the net asset value per Ordinary share is greater than 120p (the exercise price of the Subscription shares). The buy back of Ordinary and Subscription shares will be subject to the Listing Rules and Jersey Law and will be at the absolute discretion of the Directors.

We will also seek to renew the authority to issue up to 10% of the Company's existing Ordinary share capital at the AGM. Ordinary shares will only ever be issued at a premium to the prevailing net asset value per Ordinary share and will therefore be accretive and not disadvantageous to Ordinary and Subscription shareholders.

Outlook

Latin American equities, bonds and their currencies are expected to remain vulnerable to external headwinds. Several events, including the uncertainty of the looming "fiscal cliff" in the US and the possibility of a Chinese hard landing, could have a significant impact on the export-dependent region as well as on private investments. Following the US Federal Reserve's third round of quantitative easing, Brazilian president Dilma Roussef has warned that loose monetary policy in the developed world was threatening growth in emerging markets by inflating their currencies with easy liquidity, an indication of nervousness over the fragility of the country's economic health.

Nevertheless, economies in the region are still expected to fare well relative to their developed peers in the West. Latin America is in a better fiscal shape, which should buttress the region's growth, and there is potential in thriving sectors such as infrastructure. Given the rise in structural reforms and central bank intervention, Latin America's long-term economic growth prospects are likely to remain positive. Lower interest rates will give governments more room to reduce their debt burdens. Looking at the portfolio, the share prices of some high quality companies are trading now at attractive levels after the market correction.

Our Interim Report will be published in April 2013 but in the meantime shareholders may wish to visit the Company's website www.latamincome.co.uk where there are regular updates from the Investment Manager together with daily share price and NAV information.

Richard Prosser

Chairman

30 October 2012

3.  MANAGER'S REPORT

Performance Commentary

During the period under review, the equity portfolio rose by 2.06%, outperforming the benchmark MSCI EM Latin America 10/40 Composite Index's total return of -6.59% in sterling terms. Both stock selection and asset allocation were positive. As bottom-up stock pickers, our country and sector allocations are driven by where we can find quality companies with attractive valuations. This approach may lead to significant deviations from the index.

Our non-benchmark holdings, Mexican airport operator Grupo Aeroportuario de Sureste ("ASUR") and Argentine pipemaker Tenaris outperformed. ASUR was boosted by solid results and growing optimism about the domestic economy, while Tenaris was helped by higher margins and business stability. Brazilian holdings such as Multiplan and Ultrapar also contributed positively to relative return. Multiplan was bolstered by healthy property sales and robust growth in rental revenues, while Ultrapar rallied after it agreed to grant shareholders equal voting rights and the business continued to perform well. Mexican bank Banorte also contributed to performance, buoyed by robust loan growth and an improvement in asset quality.

Conversely, Mexican homebuilder Urbi suffered from cash flow concerns. In Brazil, book retailer Saraiva was affected by worries over growing competition. Mexican cement producer Cemex, which is not held in the portfolio, hurt performance as its shares rallied on news of its sale of a minority stake in certain of its Latin American assets.

The fixed income portfolio rose by 2.21%, marginally underperforming the JP Morgan GBI-EM GD (Latin America carve out) which rose 3.83% in the year. Satisfyingly we saw positive aggregate contributions from asset allocation (+1.52%) and stock selection (+0.88%) but these were offset by negative relative currency returns for Brazil (-1.76%) and for Colombia (-1.62%). In the case of the former, the Real was particularly weak against our reporting currency of Sterling and the latter, a country in which we had no fixed income investments.

Portfolio Activity

During the period, we introduced Bancolombia, one of Colombia's largest lenders, to gain exposure to the growing domestic banking sector; leading Colombian food retailer Almacenes Exito, which has a large share of the  retail market; Chilean Coca-Cola bottler Embotelladora Andina, which has a broad regional exposure; and Hering, a well-run Brazilian retailer at attractive valuations. Against this, we sold Embraer following its relative outperformance and because of our concerns over weak margins and the challenging operating environment.

In the fixed income portfolio, we added to the position in Uruguay which delivers an attractive yield and extended the maturity of the positions in Mexico. The small weighting to Argentina held at the end of the last financial year was disposed of.

Country Overview

Brazil's Monetary Policy Committee (Copom) cut the policy rate by 50 basis points to a new record low of 7.5%, bringing the cumulative rate cuts to 500 basis points since the easing cycle commenced in August 2011. The Copom cited an unfavourable global macro outlook and the behaviour of commodity prices for many of the Selic rate cuts however the most recent statement suggests the easing cycle has run its course. The government announced a new increase in IOF tax, raising the exemption on foreign bond issuance from two to five years. All foreign bonds or loans issued abroad with maturities of less than five years will now pay 6% IOF tax. Inflation has fallen from 7.30% to 5.24%, touching a low of 4.92%. Brazil's quarterly inflation outlook noted that risks to the inflation outlook remain limited while modestly increasing the year-end forecast to 4.7% and trimming the 2013 forecast to 5%, against an official inflation target of 4.5%. June saw the central bank downgrade the 2012 GDP forecast to 2.5% from 3.5%, this was further reinforced by May's data prints released in July, suggesting GDP headed below 2.0%.

The Mexican Monetary Policy Committee (MPC) kept the policy rate unchanged at 4.5% throughout the period. The August inflation report highlighted the deterioration in the global growth outlook, with Banxico lowering its forecasts for US growth over the next two years while maintaining its own growth expectations of 3.25 to 4.25% in 2012 and 3 to 4% in 2013. In terms of inflation, they noted that will remain above 4% in the third quarter due to temporary supply shocks observed in certain food components, but it will decrease to the 3 to 4% range by the fourth quarter of 2012 while remaining within that margin during 2013. There were no surprises in Mexico's presidential election at the start of the month with the PRI's Enrique Pena Nieto coming out on top, although the margin of victory came out in the lower end of expectations after polls suggested he would win by a double digit spread. The PRI also failed to win a simple majority in Congress, which could impact plans to address fiscal and labour reforms, although we believe that support from the outgoing PAN party will ensure such passage. The more elusive energy sector reform will entail further opposition support since it requires two-thirds backing to change the constitution that currently prohibits foreign investment in the energy sector, which is something Mexico needs in order to address declining oil output. Mexican growth has not been hurt by the slowdown, with consumption remaining healthy in the first half of 2012 following a strong 1.8% month on month expansion in June, pushing annual growth to 5.6%.

Uruguay benefitted from a credit rating revision, as Moody's upgraded the country to investment grade (Baa3) from Ba1 and moved its outlook to "positive".  A marginal reserve requirement (MRR) of 40% has been imposed on investments in Central Bank of Uruguay treasury bills in an attempt to limit "hot" capital inflows. Offshore investment in these securities had risen from 4% in February to 9% in May; but government debt (issued at more than three years) and the inflation-linked global bond are not affected. It is expected that given Uruguay's strong balance of payments the long-term effect is likely to be fairly muted.

Outlook

While sentiment was lifted briefly by central banks' monetary stimulus, structural problems remain unaddressed. Worries over growth prospects have since resurfaced. The persistence of poor unemployment and anaemic economic data in developed countries continue to weigh on emerging markets' exports. In politics, Hugo Chavez was elected as Venezuela's president, bringing nervousness into markets due to his past oil-fuelled socialist populist measures.

Despite this, South American economies have demonstrated resilience. Policy makers have also been quick to implement measures to support their economies. Long-term fundamentals remain in place and valuations are increasingly attractive. As such, we believe that the companies held in the portfolio are in good shape to weather any further weakness in the global economy while Emerging Market debt yields will continue to stand out when compared to developed markets.

Aberdeen Asset Managers Limited

30 October 2012

4.  BUSINESS REVIEW

The Company was incorporated on 30 June 2010.  A review of the Company's activities is given in the Chairman's Statement and the Manager's Review.  This includes a review of the business of the Company and its principal activities, likely future developments of the business and dividends declared during the period by the Company.  The principal risks associated with the Company are detailed in note 16 to the financial statements. The Key Performance Indicators for the Company include NAV performance, share price performance and benchmark performance.

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

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

Results and Dividends

Details of the Company's results and dividends are shown in the Financial Highlights and in notes 7 and 8 to the financial statements. In line with expectations, interim dividends have been paid on a quarterly basis in January, April, July and October 2012, in respect of the three months ended on the preceding November, February, May and August. The Company achieved its stated intention to pay aggregate dividends of 4.25p per Ordinary share for the year ended 31 August 2012. As at 31 August 2012 the Company's brought forward revenue reserves amounted to £66,000 after allowing for the fourth interim dividend which under IFRS will be accounted for in the year ending 31 August 2013.

Principal Activity and Status

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

Share Capital

As at 31 August 2012 there were 66,572,574 Ordinary shares and 10,421,236 Subscription shares in issue. Each Subscription share carries the right to convert such share into one Ordinary share on 31 December in any of the years 2013 to 2015 (inclusive) at a price of 120p per share.

5.  STATEMENT OF DIRCTORS' RESPONSIBILITIES

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

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

·        select suitable accounting policies and then apply them consistently;

·        make judgments and estimates that are reasonable and prudent;

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

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

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

The Directors confirm that to the best of their knowledge:

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

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

For Aberdeen Latin American Income Fund Limited

Richard Prosser

Chairman

30 October 2012

6. INVESTMENT PORTFOLIO

Ten Largest Equity Investments

As at 31 August 2012

			Valuation	Total	Valuation
			2012	assets	2011
Company	Sector	Country	£'000	%	£'000
Banco Bradesco ADR
A leading Brazilian bank with a good quality loan portfolio, it has benefited from robust growth in retail lending.	Banks	Brazil	3,975	5.3	2,891
Petroleo Brasileiro ADR
An emerging world-class integrated oil company in Brazil, it holds vast reserves, has made substantial new oil finds and will stand to gain from the growing demand for oil from emerging economies.	Energy	Brazil	3,874	5.1	3,026
Vale ADR
The Brazilian miner is the world's lowest-cost iron-ore producer and, in recent years, has made acquisitions to diversify its asset base.	Materials	Brazil	3,349	4.5	3,074
Itau Unibanco Holdings ADR
Brazil's largest privately-owned bank, it is strongly capitalised and well positioned with decent growth and asset quality.	Banks	Brazil	2,409	3.2	1,337
Grupo Financiero Banorte
The largest locally owned Mexican bank. It partnered the post office to gain access to cheaper funding and acquired a Texas bank to tap the growing Hispanic population in the US.	Banks	Mexico	1,775	2.4	1,355
Lojas Renner
One of the leading department store chains in Brazil with a nationwide presence.	Retailing	Brazil	1,716	2.3	1,517
Multiplan Empreendimentos
A Brazilian mall owner with well-located shopping malls, a solid tenant base and near-full occupancy, as well as a pipeline of sites under development.	Real Estate	Brazil	1,707	2.3	1,294
Tenaris ADR
Tenaris manufactures, markets and distributes welded and seamless pipe. The company produces casing, tubing, pipeline and mechanical tubes for the oil and gas and energy industries and for mechanical applications and distributes its products worldwide.	Industrial Materials	Argentina	1,680	2.2	1,101
Fomento Economico Mexicano ADR
The Mexican beverage company, which is also the leading Coca-Cola bottler in Latin America, is poised to benefit from rising domestic consumption. Its earnings tend to be relatively defensive because its products are largely consumer staples.	Food, Beverage & Tobacco	Mexico	1,649	2.2	1,430
Ultrapar Participacoes ADR
Brazilian fuels and chemicals company with defensive qualities. It has strengthened its distribution network with its acquisition of the Texaco-brand of gasoline stations in Brazil.	Energy	Brazil	1,507	2.0	1,331
Top ten equity investments			23,641	31.5

Investment Portfolio - Other Investments

As at 31 August 2012

			Valuation	Total	Valuation
			2012	assets	2011
Company	Sector	Country	£'000	%	£'000
Amer Movil ADR	Telecommunication Services	Mexico	1,417	1.9	2,104
Natura Cosmeticos	Personal Goods	Brazil	1,137	1.5	1,091
Banco Santander-Chile ADR	Banks	Chile	1,112	1.5	1,041
Grupo Aeroportuario del Centro Nort ADR	Industrial Transportation	Mexico	1,018	1.4	532
Kimberly-Clark de Mexico	Personal Goods	Mexico	873	1.2	628
Grupo Aeroportuario de Sureste	Industrial Transportation	Mexico	866	1.1	848
Wal-Mart de Mexico	General Retailers	Mexico	805	1.1	696
Arezzo Industria E Comercio	Personal Goods	Brazil	733	1.0	482
S.A.C.I. Falabella	General Retailers	Chile	732	1.0	628
Cia Souza Cruz	Tobacco	Brazil	715	0.9	712
Top twenty equity investments			33,049	44.1
Organizacion Soriana	General Retailers	Mexico	694	0.9	508
BM&FBovespa	Financial Services	Brazil	664	0.9	587
Valid Solucoes e Servicos de Seguranca	Support Services	Brazil	652	0.9	488
Brasil Foods Sponsored ADR	Food Producers	Brazil	629	0.8	511
OdontoPrev	Health Care Equipment & Services	Brazil	624	0.8	638
Localiza Rent a Car	General Retailers	Brazil	622	0.8	585
CIA Hering	Personal Goods	Brazil	602	0.8	-
Wilson, Sons	Industrial Transportation	Brazil	565	0.8	531
Bradespar	Materials	Brazil	560	0.7	488
Almacenes Exito	General Retailers	Colombia	527	0.7	-
Top thirty equity investments			39,188	52.2
Grupo Bancolombia	Banks	Colombia	524	0.7	245
Amil Participacoes	Health Care Equipment & Services	Brazil	467	0.6	383
TOTVS	Software & Computer Services	Brazil	465	0.6	328
WEG	Electronic & Electrical Equipment	Brazil	418	0.6	359
Embotelladora Andina Pref A	Food, Beverage & Tobacco	Chile	382	0.5	-
Saraiva Livreiros Editores	Media	Brazil	261	0.3	305
Embotelladora Andina-Pref B	Food, Beverage & Tobacco	Chile	232	0.3	-
Urbi Desarrollos Urbanos	Household Goods & Home Construction	Mexico	146	0.2	423
Total equity investments			42,083	56.0

Investment Portfolio - Bonds
As at 31 August 2012
			Valuation	Total	Valuation
			2012	assets	2011
Issue	Sector	Country	£'000	%	£'000
Brazil (Fed Rep of) 10% 01/01/15	Government Bonds	Brazil	5,336	7.1	-
Uruguay (Rep of) 5% 14/09/18	Government Bonds	Uruguay	5,239	7.0	1,230
Brazil (Fed Rep of) 10% 01/01/17	Government Bonds	Brazil	5,024	6.7	4,530
Mexico (United Mexico States) 7.5% 03/06/27	Government Bonds	Mexico	4,975	6.6	682
Mexico (United Mexico States) 8% 07/12/23	Government Bonds	Mexico	3,060	4.1	2,562
Mexico (United Mexico States) 7.75% 14/12/17	Government Bonds	Mexico	2,145	2.8	1,567
Brazil (Fed Rep of) 10% 01/01/21	Government Bonds	Brazil	1,736	2.3	1,551
Brazil (Fed Rep of) 10% 01/01/14	Government Bonds	Brazil	1,437	1.9	-
Peru (Rep of) 7.84% 12/08/20	Government Bonds	Peru	993	1.3	1,301
Peru (Rep of) 6.95% 12/08/31	Government Bonds	Peru	870	1.2	721
Brazil (Fed Rep of) 6% 15/08/16	Government Bonds	Brazil	638	0.8	-
Uruguay (Rep of) 4.25% 05/04/27	Government Bonds	Uruguay	401	0.5	-
Total value of Bonds			31,854	42.3
Total value of equity investments			42,083	56.0
Total value of investments			73,937	98.3
Net current assets{A}			1,297	1.7
Total assets			75,234	100.0
{A}    Excluding bank loans of US$15,500,000 (£9,759,000).

7.   CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

					Fourteen months
		Year ended 31 August 2012			ended 31 August 2011
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Income	3
Income from investments		3,176	-	3,176	3,355	-	3,355
Interest income		2	-	2	23	-	23
		_______	_______	_______	_______	_______	_______
Total revenue		3,178	-	3,178	3,378	-	3,378
		_______	_______	_______	_______	_______	_______
(Losses)/gains on financial assets held at fair value through profit or loss	9	-	(2,532)	(2,532)	-	1,653	1,653
Currency gains	14	-	130	130	-	93	93
		_______	_______	_______	_______	_______	_______
		3,178	(2,402)	776	3,378	1,746	5,124
		_______	_______	_______	_______	_______	_______
Expenses
Investment management fee	4	(262)	(394)	(656)	(250)	(374)	(624)
Other operating expenses	5	(472)	(175)	(647)	(464)	(416)	(880)
		_______	_______	_______	_______	_______	_______
Profit/(loss) before finance items and taxation		2,444	(2,971)	(527)	2,664	956	3,620
Finance items
Finance costs	6	(48)	(73)	(121)	(75)	(112)	(187)
Gain on conversion of 'C' shares	14	-	841	841	-	-	-
		_______	_______	_______	_______	_______	_______
Profit/(loss) before taxation		2,396	(2,203)	193	2,589	844	3,433
Taxation		(89)	-	(89)	(76)	-	(76)
		_______	_______	_______	_______	_______	_______
Profit/(loss) for the period attributable to equity shareholders		2,307	(2,203)	104	2,513	844	3,357
		_______	_______	_______	_______	_______	_______
Earnings per Ordinary share (pence):	8
Basic		4.00	(3.82)	0.18	4.82	1.62	6.44
		_______	_______	_______	_______	_______	_______
Diluted		n/a	n/a	n/a	n/a	n/a	n/a
		_______	_______	_______	_______	_______	_______
The Group does not have any income or expense that is not included in profit/(loss) for the year, and therefore the "Profit/(loss) for the year" is also the "Total comprehensive income for the year", as defined in IAS 1 (revised).
All of the profit/(loss) and total comprehensive income is attributable to the equity holders of the parent company.
The total column of this statement represents the Statement of Comprehensive Income of the Group, prepared in accordance with IFRS. The revenue and capital columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies.
All items in the above statement derive from continuing operations.
The accompanying notes are an integral part of these financial statements.

8.  CONSOLIDATED BALANCE SHEET

		As at	As at
		31 August	31 August
		2012	2011
	Notes	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss	9	73,937	57,586
		__________	__________
Current assets
Cash	10	1,018	403
Other receivables	11	529	602
		__________	__________
Total current assets		1,547	1,005
		__________	__________
Total assets		75,484	58,591
Current liabilities	12
Bank loan		(9,759)	(4,913)
Forward foreign currency contracts		(73)	(108)
Other payables		(177)	(261)
		__________	__________
Total current liabilities		(10,009)	(5,282)
		_________	_________
Net assets		65,475	53,309
		__________	__________
Equity capital and reserves
Equity capital	13	65,936	51,515
Capital reserve	14	(1,359)	844
Revenue reserve		898	950
		__________	__________
Equity shareholders' funds		65,475	53,309
		__________	__________
Net asset value per Ordinary share (pence):	15
Basic		98.35	102.31
		__________	__________
Diluted		n/a	n/a
		__________	__________

9.  CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 31 August 2012
		Equity	Capital	Revenue
		capital	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000
Balance at 31 August 2011		51,515	844	950	53,309
(Loss)/profit for the year attributable to equity holders		-	(2,203)	2,307	104
Issue of equity capital on conversion of 'C' shares	13	14,756	-	-	14,756
Issue expenses		(335)	-	-	(335)
Dividends paid	7	-	-	(2,359)	(2,359)
		_______	_______	_______	_______
Balance at 31 August 2012		65,936	(1,359)	898	65,475
		_______	_______	_______	_______
Period ended 31 August 2011
		Equity	Capital	Revenue
		capital	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000
Balance on incorporation{A}		-	-	-	-
Profit for the period attributable to equity holders		-	844	2,513	3,357
Issue of equity capital	13	52,653	-	-	52,653
Issue expenses		(1,138)	-	-	(1,138)
Dividends paid	7	-	-	(1,563)	(1,563)
		_______	_______	_______	_______
Balance at 31 August 2011		51,515	844	950	53,309
		_______	_______	_______	_______
{A} 30 June 2010

10.  CONSOLIDATED CASH FLOW STATEMENT

	Year ended	Fourteen months ended
	31 August 2012	31 August 2011
	£'000	£'000
Dividend income	1,248	1,000
Fixed interest income	2,032	1,645
Deposit interest	2	23
Investment management fee paid	(692)	(526)
Other cash expenses	(666)	(769)
	_______	_______
Cash generated from operating activities before finance costs and taxation	1,924	1,373
Interest paid	(121)	(181)
Withholding taxes paid	(89)	(76)
	_______	_______
Net cash inflow from operating activities	1,714	1,116
Cash flows from investing activities
Purchases of investments	(37,880)	(72,399)
Proceeds from sales of investments	18,839	16,619
	_______	_______
Net cash outflows from investing activities	(19,041)	(55,780)
Cash flows from financing activities
Proceeds from issue of equity shares	-	51,515
Proceeds from issue of 'C' shares	15,262	-
Equity dividends paid	(2,359)	(1,563)
Loan drawn down	4,845	5,167
	_______	_______
Net cash inflows from financing activities	17,748	55,119
	_______	_______
Net increase in cash	421	455
Foreign exchange	194	(52)
Cash at start of period	403	-
	_______	_______
Cash at end of year	1,018	403
	_______	_______

11.   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 August 2012
1.	Principal activity
	The Company is a closed-end investment company incorporated in Jersey, with its shares having a premium listing on the London Stock Exchange.
	The Group financial statements consolidate the financial statements of the Company and its wholly-owned subsidiary, Aberdeen Latin American Income Fund LLC. The principal activity of its foreign subsidiary is similar in all relevant respects to that of its Jersey parent.

2.	Accounting policies
	(a)	Basis of preparation
		The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB ("IFRIC").
		The consolidated financial statements have been prepared on the historical cost basis, except for certain of the Group's financial instruments which are stated at their fair value.
		The accounting policies which follow set out those policies which apply in preparing the financial statements for the year ended 31 August 2012. There are no differences between the accounting policies applied in the Group and the Company.
		Where presentational guidance set out in the Statement of Recommended Practice ("SORP"): 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued by the Association of Investment Companies ("AIC") is consistent with the requirements of IFRS, the Directors have sought to prepare the consolidated financial statements on a basis compliant with the recommendations of the SORP.
		The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates which requires management to exercise its judgement in the process of applying the accounting policies. Actual results may differ from these estimates.
		The consolidated financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated.
		At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but not yet effective:
		IFRS 1 - Government Loans - Amendments to IFRS 1 (early adoption permitted (effective for annual periods on or after 1 January 2013);
		Amendments to IFRS 7 - Disclosures - Offsetting Financial Assets and Financial Liabilities (effective for annual periods beginning on or after 1 January 2013);
		IFRS 9 - Financial Instruments: Early adoption permitted (effective for annual periods beginning on or after 1 January 2015);
		IFRS 10 - Consolidated Financial Statements (early adoption permitted) (effective for annual periods beginning on or after 1 January 2013);
		IFRS 11 - Joint Arrangements (early adoption permitted) (effective for annual periods beginning on or after 1 January 2013);
		IFRS 12 - Disclosure of Interests in Other Entities (early adoption permitted) (effective for annual periods beginning on or after 1 January 2013);
		IFRS 13 - Fair Value Measurement (effective for annual periods beginning on or after 1 January 2013);
		Amendments to IAS 1 - Presentation of Items of Other Comprehensive Income (effective for annual periods beginning on or after 1 July 2012);
		Amendments to IAS 12 - Income Taxes - Deferred Tax Amendment (effective for annual periods beginning on or after 1 January 2012);
		Amendments to IAS 19 - Employee Benefits (effective for annual periods on or after 1 January 2013);
		Amendments to IAS 32 - Offsetting Financial Assets and Financial Liabilities (effective for annual periods beginning on or after 1 January 2014);
		IAS 27 - Separate Financial Statements (early adoption permitted) (effective for annual periods beginning on or after 1 January 2013);
		IAS 28 - Investments in Associates and Joint Ventures (early adoption permitted) (effective 1 January 2013);
		Amendments to IFRIC 20 - Stripping Costs in the Production Phase of a Surface Mine (effective for annual periods beginning on or after 1 January 2013).
		The Directors do not anticipate that the adoption of these Standards and Interpretations in future periods will materially impact the Group's financial results in the period of initial application although there will be revised presentations to the primary financial statements and additional disclosures. The Group intends to adopt the Standards in the reporting period when they become effective.
	(b)	Group accounts
		The Group financial statements consolidate the financial statements of the Company and its subsidiary, Aberdeen Latin American Income Fund LLC.
		The Subsidiary is fully consolidated from the date of its inception on 30 June 2010, being the date on which the Group obtained control, and will continue to be consolidated until the date that such control ceases. Control comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities and is achieved through direct or indirect ownership of voting rights, currently exercisable or convertible potential voting rights, or by way of contractual agreement. The financial statements of the Subsidiary are prepared for the same reporting period as the parent company, using consistent accounting policies.
	(c)	Segmental reporting
		The Directors are of the opinion that the Group is engaged in a single segment of business, being investment business.
		For management purposes, the Group is organised into one main operating segment, which invests in equity securities, debt instruments and related derivatives. All of the Group's activities are interrelated, and each activity is dependent on the others. Accordingly, all significant operating decisions are based on the Group as one segment.
		The Group has a highly diversified portfolio of investments and no single investment accounts for more than 20% of the Group's income or assets.
	(d)	Income
		Dividends receivable on equity investments are recognised in the Consolidated Statement of Comprehensive Income on the ex-dividend date. Dividends receivable on equity investments where no ex-dividend date is quoted are brought into account when the Group's right to receive payment is established. Where the Group has elected to receive dividends in the form of additional shares rather than in cash, the amount of the cash dividend foregone is recognised as income in the Consolidated Statement of Comprehensive Income.
		The fixed returns on debt securities and non-equity shares are recognised using the effective interest rate method.
		Interest receivable from cash and short-term deposits is accrued to the end of the financial period.
	(e)	Expenses and interest payable
		All expenses, with the exception of interest, which would be recognised using the effective interest method, are accounted for on an accruals basis. Expenses are charged to the revenue column of the Consolidated Statement of Comprehensive Income except as follows:
		issue expenses;
		expenses which are incidental to the acquisition or disposal of an investment are charged to the capital column of the Consolidated Statement of Comprehensive Income and separately identified and disclosed in note 9 (b);
		expenses are charged to the capital column of the Consolidated Statement of Comprehensive Income where a connection with the maintenance or enhancement of the value of the investments can be demonstrated; and
		the Group charges 60% of investment management fees and finance costs to capital, in accordance with the Board's expected long-term return in the form of capital gains and income respectively from the investment portfolio of the Group.
	(f)	Taxation
		The Company is subject to income tax at a rate of 0%.
		However, in some jurisdictions, investment income and capital gains are subject to withholding tax deducted at the source of the income. The Group presents the withholding tax separately from the gross investment income in the Consolidated Statement of Comprehensive Income. For the purpose of the Consolidated Cash Flow Statement, cash inflows from investments are presented net of withholding taxes, when applicable.
	(g)	Investments held at fair value though profit or loss
		All investments have been designated upon initial recognition at fair value through profit or loss. This is done because all investments are considered to form part of a group of financial assets which is evaluated on a fair value basis, in accordance with the Group's documented investment strategy, and information about the grouping is provided internally on that basis. Purchases of investments are recognised on a trade date basis and designated upon initial recognition as held at fair value through profit or loss. Sales of investments are also recognised on a trade date basis. Proceeds are measured at fair value, which is regarded as the proceeds of sale less any transaction costs.
		The fair value of the equity investments is based on their quoted bid price at the Balance Sheet date, without deduction for any estimated future selling costs. The fair value of the bonds is based on their quoted bid prices together with indexation where applicable.
		Changes in the value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Consolidated Statement of Comprehensive Income as "Gains on investments at fair value through profit or loss". Also included within this caption are transaction costs in relation to the purchase or sale of investments, including the difference between the purchase price of an investment and its bid price at the date of purchase.
	(h)	Cash and cash equivalents
		Cash comprises cash at banks and short-term deposits.
	(i)	Other receivables and payables
		Other receivables do not carry any interest and are short-term in nature, and are, accordingly, stated at their nominal value. Other payables are non-interest bearing and are stated at their nominal value.
	(j)	Dividends payable
		Dividends are recognised in the consolidated financial statements in the period in which they are declared.
	(k)	Nature and purpose of reserves
		Capital reserve
		This reserve reflects any gains or losses on investments realised in the period along with any movement in the fair value of investments held that have been recognised in the Consolidated Statement of Comprehensive Income.
		Also, expenses, including finance costs are charged to this reserve in accordance with (e) above.
		Revenue reserve
		This reserve reflects all income and costs which are recognised in the revenue column of the Consolidated Statement of Comprehensive Income.
	(l)	Foreign currency
		The consolidated financial statements are presented in Sterling which is the Group's functional currency. Sterling is the currency in which receipts from operating activities are usually retained and the currency in which distributions are made.
		Overseas monetary assets and liabilities are converted into Sterling at the rate of exchange ruling at the Balance Sheet date. Transactions during the period involving foreign currencies are converted at the rate of exchange ruling at the transaction date. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss and recognised in the Consolidated Statement of Comprehensive Income.
	(m)	Bank loans
		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 are allocated to years over the term of the debt at a constant rate on the carrying amount and, as per the Prospectus, are charged 40% to revenue and 60% to capital reserves to reflect the Company's investment policy and prospective income and capital growth.
		Borrowings are held at amortised cost using the effective interest rate method.
	(n)	Derivative financial instruments
		The Company's activities expose it primarily to the financial risks of changes in market prices, foreign currency exchange rates and interest rates. Derivative transactions which the Company may enter into include forward foreign exchange contracts, the purpose of which is to manage the currency risk arising from the Company's investing activities.
		Derivative financial instruments are initially recognised at fair value on the date on which the derivative contract is entered into and are subsequently remeasured at fair value. The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles.
		Changes in fair value of derivative financial instruments are recognised in the Consolidated Statement of Comprehensive Income as they arise. If capital in nature, the change in fair value would be treated as a capital item in the Consolidated Statement of Comprehensive Income.

		Year ended	Fourteen months
		31 August 2012	to 31 August 2011
3.	Income	£'000	£'000
	Income from investments
	Dividend income	1,127	1,158
	Fixed interest income	2,049	2,197
		_______	_______
		3,176	3,355
	Other operating income
	Deposit interest	2	23
		_______	_______
	Total income	3,178	3,378
		_______	_______

		Year ended 31 August 2012			Fourteen months to 31 August 2011
		Revenue	Capital	Total	Revenue	Capital	Total
4.	Investment management fee	£'000	£'000	£'000	£'000	£'000	£'000
	Investment management fee	262	394	656	250	374	624
		_______	_______	_______	_______	_______	_______
	The Company has an agreement with Aberdeen Private Wealth Management Limited ("APWM") for the provision of management services. This agreement has been sub-delegated to Aberdeen Asset Managers Limited.
	During the period, the management fee was payable monthly in arrears and was based on an annual amount of 1% of the net asset value of the Group, valued monthly. The agreement is terminable on one year's notice. The balance due to APWM at the year end was £63,000 (2011 - £98,000). Investment management fees are charged 40% to revenue and 60% to capital.

		Year ended	Fourteen months
		31 August 2012	to 31 August 2011
5.	Other administrative expenses - revenue	£'000	£'000
	Directors' fees	80	93
	Marketing contribution	39	39
	Secretarial and administration fee	105	104
	Auditor's remuneration:
	- audit fees of the Group's annual accounts	25	23
	- review of the Group's interim accounts	-	5
	- other services to the Group	2	-
	Legal and advisory fees	12	16
	Custodian and overseas agents' charges	74	75
	Broker fees	31	30
	Stock exchange fees	18	16
	Other	86	63
		_______	_______
		472	464
		_______	_______
	The Company has an agreement with Aberdeen Asset Management PLC ("AAM PLC") for the provision of marketing services in relation to the Company's participation in the Aberdeen Investment Trust Share Plan and ISA. The total fees paid and payable under the agreement during the period were £39,000 (2011 - £39,000), of which £7,000 (2011 - £39,000) was due to AAM PLC at the year end.
	In addition, the Company has an agreement with Aberdeen Private Wealth Management Limited for the provision of company secretarial and administration services. This agreement has been sub-delegated to Aberdeen Asset Managers Limited ("AAM Limited"). AAM Limited is entitled to an annual fee of £105,000, which increases annually in line with any increase in the UK Retail Price Index. A balance of £17,000 (2011 - £17,000) was due to AAM Limited at the year end.
		Year ended	Fourteen months
		31 August 2012	to 31 August 2011
	Other administrative expenses - capital	£'000	£'000
	Brazilian IOF Tax - incurred relating to the purchase of investments in the Brazilian market	175	416
		_______	_______

		Year ended 31 August 2012			Fourteen months to 31 August 2011
		Revenue	Capital	Total	Revenue	Capital	Total
6.	Finance costs	£'000	£'000	£'000	£'000	£'000	£'000
	Bank loans and overdrafts (see note 2 (e))	48	73	121	75	112	187
		______	______	______	______	______	______

		Year ended	Fourteen months
		31 August 2012	to 31 August 2011
7.	Dividends on equity shares	£'000	£'000
	Distributions to equity holders in the period:
	Fourth interim dividend for 2011 - 1.25p per Ordinary share	651	-
	First interim dividend for 2012 - 1.00p (2011 - 1.00p) per Ordinary share	521	521
	Second interim dividend for 2012 - 1.00p (2011 - 1.00p) per Ordinary share	521	521
	Third interim dividend for 2012 - 1.00p (2011 - 1.00p) per Ordinary share	666	521
		_______	_______
		2,359	1,563
		_______	_______
	The fourth interim dividend for the year has not been included as a liability in these financial statements as it was announced and paid after 31 August 2012.

8.	Return per Ordinary share
	The basic earnings or loss per Ordinary share is based on the net profit after taxation of £104,000 (2011 - net profit £3,357,000) and on 57,718,828 (2011 - 52,106,185) Ordinary shares, being the weighted average number of Ordinary shares in issue during the year.
	The calculation of the diluted returns per Ordinary share is carried out in accordance with IAS 33, "Earnings per Share". For the purposes of calculating diluted returns per Ordinary share, the number of Ordinary shares is the weighted average used in the basic calculation plus the number of Ordinary shares deemed to be issued for on exercise of all Subscription shares by reference to the average share price of the Ordinary shares during the year. There is no dilutive impact on the returns per Ordinary share for the year as the average share price for the period was less than the 120p price at which shares may be subscribed for.
	The basic earnings or loss per Ordinary share detailed above can be further analysed between revenue return and capital return as follows:
		Year ended 31 August 2012			Fourteen months to 31 August 2011
	Basic	Revenue	Capital	Total	Revenue	Capital	Total
	Profit/(loss) (£'000)	2,307	(2,203)	104	2,513	844	3,357
	Weighted average number of Ordinary shares in issue ('000)			57,719			52,106
	Return per Ordinary share (pence)	4.00	(3.82)	0.18	4.82	1.62	6.44

			Year ended	Fourteen months
9.	Investments held at fair value through profit or loss		31 August 2012	to 31 August 2011
	(a)	Group	£'000	£'000
		Cost at 31 August 2011	56,438	-
		Investment holdings gains at 31 August 2011	1,148	-
			_______	_______
		Opening valuation	57,586	-
		Purchases at cost (see section (b) below)	37,823	72,552
		Sales	(18,940)	(16,619)
		Sales - realised net gains	1,528	505
		(Decrease)/increase in fair value of investments	(4,060)	1,148
			_______	_______
		Closing valuation	73,937	57,586
			_______	_______
			Year ended	Fourteen months
			31 August 2012	to 31 August 2011
			£'000	£'000
		Closing book cost	76,849	56,438
		Closing investment holdings fair value (losses)/gains	(2,912)	1,148
			_______	_______
		Closing valuation	73,937	57,586
			_______	_______
			Year ended	Fourteen months
			31 August 2012	to 31 August 2011
		(Losses)/gains on investments	£'000	£'000
		Realised gains on sales of investments	1,528	505
		(Decrease)/increase in fair value of investments	(4,060)	1,148
			_______	_______
			(2,532)	1,653
			_______	_______
	(b)	Transaction costs
		During the year expenses incurred in acquiring or disposing of Group investments that were classified as fair value through profit or loss have been expensed through the capital column of the Consolidated Statement of Comprehensive Income. These are included within (losses)/gains on investments at fair value through profit or loss in the Consolidated Statement of Comprehensive Income. The total costs were as follows:
			Year ended	Fourteen months
			31 August 2012	to 31 August 2011
			£'000	£'000
		Purchases	15	22
		Sales	9	8
			_______	_______
			24	30
			_______	_______

		2012	2011
10.	Cash	£'000	£'000
	Cash at bank	1,018	403
		_______	_______

		2012	2011
11.	Other receivables	£'000	£'000
	Accrued income	510	583
	Prepayments	19	19
		_______	_______
		529	602
		_______	_______

			2012	2011
12.	Current liabilities		£'000	£'000
	(a)	Bank loan	9,759	4,913
			_______	_______
		The Company has a £10 million (2011 - £10 million) revolving multi currency loan facility with Scotiabank Europe plc. At the period end, US$15,500,000 (2011 - US$8,000,000) has been drawn down under the facility, fixed to 17 September 2012 (2011 - 17 November 2011) at an all-in rate of 1.4898% (2011 - 1.3935%).
		On 30 October 2012 US$15,500,000 was drawn down under this facility, fixed to 19 November 2012 at an all-in rate of 1.4658%.
		The loan outstanding at 31 August 2012 is valued at the closing rate of exchange at the period end, resulting in a foreign exchange gain of £117,000 (2011 - gain of £254,000) against the original book cost of the loan.
			2012	2011
	(b)	Other payables	£'000	£'000
		Amounts due to brokers	-	27
		Other amounts due	177	234
			_______	_______
			177	261
			_______	_______

		2012		2011
13.	Equity capital	Number	£'000	Number	£'000
	Issued and fully paid - Ordinary shares
	Balance brought forward	52,106,185	50,968	-	-
	Ordinary shares issued in the period	14,466,389	14,756	52,106,185	52,106
	Issue expenses	-	(335)	-	(1,138)
		_________	_______	_________	_______
	Balance carried forward	66,572,574	65,389	52,106,185	50,968
		_________	_______	_________	_______
	Issued and fully paid - Subscription shares
	Balance brought forward	10,421,236	547	-	-
	Subscription shares issued in the period	-	-	10,421,236	547
		_________	_______	_________	_______
	Balance carried forward	10,421,236	547	10,421,236	547
		_________	_______	_________	_______
	Equity capital	76,993,810	65,936	62,527,421	51,515
		_________	_______	_________	_______
	The Company's Ordinary shares have no par value.
	In August 2010, 52,106,185 Ordinary shares were allotted and issued to investors at a price of 100p per Ordinary share. In addition 5,210,618 Subscription shares were issued on the basis of 1 Subscription share for every 10 Ordinary shares. Under the terms of the Aberdeen Subscription Share Agreement, the Manager was allotted and issued a further 5,210,618 Subscription shares, which were fully paid at a price of £0.105 per Subscription share. Expenses associated with the issue amounted to £1,138,000 and these costs were deducted from the proceeds of the issue. Trading commenced in both lines of stock on 16 August 2010.
	The Ordinary shares give shareholders the entitlement to all of the capital growth in the Group's assets and to all the income from the Company that is resolved to be distributed.
	Each Subscription share confers the right to convert such share into one Ordinary share on 31 December in any of the years 2013 to 2015 (inclusive) at a price of 120p per share.
	Following the issue of a Placing and Offer for Subscription Prospectus in January 2012, 15,597,185 C shares were allotted and issued to investors at a price of 100p per share in February. Trading commenced on 3 February 2012.
	Under the terms of the C share Prospectus, the C shares would be converted to Ordinary shares once 80% of the issue proceeds had been invested. The Directors' determined that the conversion ratio would be calculated on 29 February 2012 with the conversion date of 11 April 2012. On the basis of the conversion ratio, 0.9275 Ordinary shares were issued for each C share. As a result, 14,466,389 Ordinary shares were issued on 11 April 2012.

		2012	2011
14.	Capital reserves	£'000	£'000
	At 31 August 2011	844	-
	Currency gains	130	93
	Gain on conversion of 'C' shares	841	-
	Movement in investment holdings fair value (losses)/gains	(4,060)	1,148
	Gain on sales of investments	1,528	505
	Capitalised expenses	(642)	(902)
		_______	_______
	At 31 August 2012	(1,359)	844
		_______	_______
	The Group's profit for the year is arrived at after a gain on the extinguishment of the 'C' share liability and conversion to Ordinary shares, which represents the 'C' shareholders' allocation of realised gains on investments, unrealised losses on investments and investment related foreign exchange movements.
	The capital reserve includes losses of £2,912,000 (2011 - gains of £1,148,000) which relate to the revaluation of investments held at the reporting date.

15.	Net asset value per Ordinary share
	The basic net asset value per Ordinary share is based on a net asset value of £65,475,000 (2011 - £53,309,000) and on 66,572,574 (2011 - 52,106,185) Ordinary shares, being the number of Ordinary shares issued and outstanding at the year end.
	The diluted net asset value per Ordinary share is calculated by reference to the total number of Ordinary shares in issue at the period end and on the assumption that the Subscription shares which are not subscribed at the period end were subscribed on the first day of the financial period at 120p per share. There is no dilutive impact on the net asset value as the basic net asset value is less than the price at which shares may be subscribed for.

16.	Financial risk management objectives and policies
	The Group's financial assets comprise securities and other investments, cash balances and receivables and payables that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement and receivables for accrued income, short-term receivables and payables.
	The Manager has a rigorous investment management process, which ensures that the investment policy is followed. Stock selection procedures are in place based on the active portfolio management and identification of stocks. The portfolio is reviewed on a periodic basis by a senior investment manager and also by the Manager's Investment Committee.
	The Manager has an independent Investment Risk department for reviewing the investment risk parameters of the Group's portfolio on a regular basis. The department reports to the Manager's Performance and Investment Risk Committee which is chaired by the Manager's Chief Investment Officer. The department's responsibility is to review and monitor predicted portfolio risk and style characteristics using best practice, industry standard multi-factor models.
	Additionally, the Manager's Compliance department continually monitors the Group's investment and borrowing powers and reports to the Manager's Risk Management Committee.
	The main risks arising from the Group's financial instruments are: (i) market risk; (ii) liquidity risk; and (iii) credit risk.
	The Board regularly reviews and agrees policies for managing each of these risks, and these are summarised below. These policies have remained unchanged since the inception of the Group.
	(i)	Market risk
		Market risk comprises three elements - interest rate risk, foreign currency risk and other price risk.
		Interest rate risk
		Interest rate movements may affect:
		- the fair value of the investments in fixed interest rate securities;
		- the level of income receivable on cash deposits;
		- interest payable on the Group's variable interest rate borrowings.
		Financial assets
		The Group holds a number of fixed rate Government Bonds. Bond prices are determined by market perception as to the appropriate level of yields given the economic background. Key determinants include economic growth prospects, inflation, the Government's fiscal position, short-term interest rates and international market comparisons. The Investment Manager takes all these factors into account when making any investment decisions as well as considering the financial standing of the potential investee entity.
		Returns from bonds are fixed at the time of purchase, as the fixed coupon payments are known, as are the final redemption proceeds. This means that if a bond is held until its redemption date, the total return achieved is unaltered from its purchase date. However, over the life of a bond the market price at any given time will depend on the market environment at that time. Therefore, a bond sold before its redemption date is likely to have a different price to its purchase level and a profit or loss may be incurred.
		Financial liabilities
		The Group primarily finances its operations through use of equity, bank borrowings and any retained profits. The Group has a revolving multi currency facility, details of which are disclosed in note 12. At the period end US$15,500,000 (2011 - US$8,000,000), equivalent to £9,759,000 (2011 - £4,913,000), had been drawn down at an all-in rate of 1.4898% (2011 - 1.3935%) per annum. Interest is due at the maturity date, being 17 September 2012 (2011 - 17 November 2011).
		The Board actively monitors its bank borrowings. A decision on whether to roll over its existing borrowings will be made prior to their maturity dates, taking into account the Group's policy of not having any fixed, long-term borrowings.
		The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions.
		Interest rate profile
		The interest rate risk profile of the Group, excluding short-term receivables and payables, at 31 August 2012 and 31 August 2011 was as follows:
						Weighted average						Weighted average
						period for which						interest				Fixed	Floating
						rate is fixed						rate				rate	rate
		31 August 2012				Years						%				£'000	£'000
		Assets
		Brazilian Government Bonds				3.75						9.37				14,171	-
		Mexican Government Bonds				11.72						6.60				10,180	-
		Peruvian Government Bonds				13.09						6.12				1,863	-
		Uruguayan Government Bonds				6.65						2.80				5,640	-
		Cash - Sterling				-						-				-	703
		Cash - Mexican Peso				-						-				-	5
		Cash - Brazilian Real				-						-				-	65
		Cash - US Dollars				-						-				-	245
						_______						_______				_______	_______
						-						-				31,854	1,018
						_______						_______				_______	_______
		Liabilities
		Short-term bank loan				0.05						1.49				(9,759)	-
						_______						_______				_______	_______
						-						-				(9,759)	-
						_______						_______				_______	_______
						Weighted average						Weighted average
						period for which						interest				Fixed	Floating
						rate is fixed						rate				rate	rate
		31 August 2011				Years						%				£'000	£'000
		Assets
		Argentinian Government Bonds				6.44						0.96				381	-
		Brazilian Government Bonds				3.81						10.45				12,349	-
		Mexican Government Bonds				10.24						6.92				7,810	-
		Peruvian Government Bonds				16.04						6.86				2,022	-
		Uruguayan Government Bonds				7.04						3.16				1,230	-
		Cash - Sterling				-						-				-	422
		Cash - Argentinian Peso				-						-				-	32
		Cash - Mexican Peso				-						-				-	56
		Cash - Brazilian Real				-						-				-	17
		Cash - US Dollars				-						-				-	20
						_______						_______				_______	_______
						-						-				23,792	547
						_______						_______				_______	_______
		Liabilities
		Bank overdraft - Colombian Peso				-						-				-	(144)
		Short-term bank loan				0.21						1.39				(4,913)	-
						_______						_______				_______	_______
						-						-				(4,913)	(144)
						_______						_______				_______	_______
		The weighted average interest rate is based on the current yield of each asset, weighted by its market value. The weighted average interest rate on the bank loan is the interest rate payable.
		The floating rate assets consist of cash deposits on call earning interest at prevailing market rates, and have maturity dates of less than one year.
		Interest rate sensitivity
		The sensitivity analysis demonstrates the sensitivity of the Group's results for the year to a reasonably possible change in interest rates, with all other variables held constant.
		The sensitivity of the (loss)/profit for the year is the effect of the assumed change in interest rates on:
		-        the net interest income for the year, based on the floating rate financial assets held at the Balance Sheet date; and
		-        changes in fair value of investments for the year, based on revaluing fixed rate financial assets at the Balance Sheet date.
		If interest rates had been 100 basis points higher or lower and all other variables were held constant, the Group's:
		-        profit for the year ended 31 August 2012 would increase / decrease by £231,000 (2011 - £192,000). This is attributable to the Group's exposure to interest rates on its floating rate cash balances, fixed interest securities and bank loan.
		-        the Group holds no financial assets that will have an equity reserve impact.
		In the opinion of the Directors, the above sensitivity analyses are not representative of the period as a whole, since the level of exposure changes frequently as part of the interest rate risk management process used to meet the Group's objectives.
		Foreign currency risk
		The Group's total return and net assets can be significantly affected by currency translation movements as the majority of the Group's assets and income are denominated in currencies other than Sterling, which is the Group's functional currency. Forward foreign currency contracts are used to mitigate the foreign currency risk of the Group's investing activities.
		Foreign currency exposure by currency of denomination:
			31 August 2012								31 August 2011
					Net			Total							Net		Total
					monetary			currency							monetary		currency
			Investments		assets			exposure			Investments				assets		exposure
			£'000		£'000			£'000			£'000				£'000		£'000
		Argentinian Peso	1,680		-			1,680			381				32		413
		Brazilian Real	41,822		341			42,163			34,604				17		34,621
		Chilean Peso	2,458		-			2,458			1,669				-		1,669
		Colombian Peso	1,051		-			1,051			245				(144)		101
		Mexican Peso	19,424		92			19,516			16,334				56		16,390
		Peruvian Nuevo Sol	1,862		(41)			1,821			2,022				-		2,022
		Uruguayan Peso	5,640		112			5,752			1,230				-		1,230
		US Dollar	-		(9,517)			(9,517)			1,101				(4,893)		(3,792)
			_______		_______			_______			_______				_______		_______
			73,937		(9,013)			64,924			57,586				(4,932)		52,654
			_______		_______			_______			_______				_______		_______
		Foreign currency sensitivity
		The following table details the Group's sensitivity to a 10% increase and decrease in Sterling against the foreign currencies in which the Group has exposure. The sensitivity analysis includes foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates.
													2012				2011
													£'000				£'000
		Argentinian Peso											168				41
		Brazilian Real											4,216				3,462
		Chilean Peso											246				167
		Colombian Peso											105				10
		Mexican Peso											1,952				1,639
		Peruvian Nuevo Sol											182				202
		Uruguayan Peso											575				123
		US Dollar											(952)				(379)
													_______				_______
													6,492				5,265
													_______				_______
		Other price risk
		Other price risks (ie. changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments.
		It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular country or sector. Both the allocation of assets and the stock selection process act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Group are all listed on various stock exchanges throughout Latin America.
		Other price risk sensitivity
		If market prices at the Balance Sheet date had been 10% higher or lower while all other variables remained constant, the return attributable to Ordinary shareholders for the year ended 31 August 2012 would have increased /(decreased) by £7,394,000 (2011 - £5,759,000) and equity reserves would have increased /(decreased) by the same amount.
	(ii)	Liquidity risk
		This is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities. Liquidity risk is not considered to be significant, as the Group's assets mainly comprise readily realisable securities which can be sold to meet funding requirements, if necessary. The bank loan and all other payables had a maturity date of 3 months or less at 31 August 2012.
		Maturity profile
		The following table sets out the carrying amount, by maturity, of the Group's financial instruments that are exposed to the interest rate risk at the Balance Sheet date:
				Within			Within			Within				More than
				1 year			1-2 years			2-5 years				5 years			Total
		31 August 2012		£'000			£'000			£'000				£'000			£'000
		Fixed rate
		Bonds		-			1,437			10,998				19,419			31,854
		Bank loan		(9,759)			-			-				-			(9,759)
				_______			_______			_______				_______			_______
				(9,759)			1,437			10,998				19,419			22,095
				_______			_______			_______				_______			_______
		Floating rate
		Cash		1,018			-			-				-			1,018
				_______			_______			_______				_______			_______
				Within			Within			Within				More than
				1 year			1-2 years			2-5 years				5 years			Total
		31 August 2011		£'000			£'000			£'000				£'000			£'000
		Fixed rate
		Bonds		-			6,268			-				17,524			23,792
		Bank loan		(4,913)			-			-				-			(4,913)
				_______			_______			_______				_______			_______
				(4,913)			6,268			-				17,524			18,879
				_______			_______			_______				_______			_______
		Floating rate
		Cash		403			-			-				-			403
				_______			_______			_______				_______			_______
	(iii)	Credit risk
		This is failure of the counterparty to a transaction to discharge its obligations under that transaction, which could result in the Group suffering a loss.
		The risk is not considered to be significant, and is managed as follows:
		-       investment transactions are carried out with a large number of brokers, whose credit standing is reviewed periodically by the Manager, and limits are set on the amount that may be due from any one broker;
		-       the risk of counterparty exposure due to failed trades causing a loss to the Group is mitigated by the review of failed trade reports on a daily basis. In addition, the third-party administrator carries out both cash and stock reconciliations to the custodians' records on a daily basis to ensure discrepancies are picked up on a timely basis. The Manager's Compliance department carries out periodic reviews of the custodian's operations and reports its findings to the Manager's Risk Management Committee. This review will also include checks on the maintenance and security of investments held; and
		-       cash is held only with reputable banks whose credit ratings are monitored on a regular basis.
		Credit risk exposure
		In summary, compared to the amounts included in the Balance Sheet, the maximum exposure to credit risk at 31 August was as follows:
						2012								2011
						Balance			Maximum					Balance			Maximum
						Sheet			exposure					Sheet			exposure
						£'000			£'000					£'000			£'000
		Non-current assets
		Investments at fair value through profit or loss				73,937			31,854					57,586			23,792
		Current assets
		Cash				1,018			1,018					403			403
						_______			_______					_______			_______
						74,955			32,872					57,989			24,195
						_______			_______					_______			_______
		None of the Group's financial assets are secured by collateral or other credit enhancements.
	(iv)	Gearing risk
		The Group's policy is to increase its exposure to equity markets through the judicious use of borrowings. When borrowings are invested in such markets, the effect is to magnify the impact on shareholders' funds of changes, both positive and negative, in the value of the portfolio.
		During the period the Group's borrowings were short-term loans, details of which can be found in note 12.
		Fair values of financial assets and financial liabilities
		Investments held at fair value through profit or loss are valued at their quoted bid prices which equate to their fair values. The Directors are of the opinion that there is no significant difference between the carrying value and fair value of other financial assets and liabilities in the Consolidated Balance Sheet.

17.	Capital management policies and procedures
	The Group's capital management objectives are:
	-	to ensure that the Group will be able to continue as a going concern; and
	-	to maximise the income and capital return to its equity shareholders through an appropriate balance of equity capital and debt. The policy is that debt should not exceed 20% of net assets.
			2012	2011
			£'000	£'000
	Debt		9,759	4,913
			_______	_______
	Equity
	Equity capital		65,936	51,515
	Retained earnings and other reserves		(461)	1,794
			_______	_______
	Net assets		65,475	53,309
			_______	_______
	Debt as a % of net assets		14.9%	9.2%
			_______	_______
	The Board, with the assistance of the Manager monitors and reviews the broad structure of the Group's capital on an ongoing basis. This review includes:
	-	the planned level of gearing, which takes account of the Manager's views on the market;
	-	the need to buy back equity shares for cancellation, which takes account of the difference between the net asset value per share and the share price (ie the level of share price discount or premium);
	-	the need for new issues of equity shares; and
	-	the extent to which revenue in excess of that which is required to be distributed should be retained.

18.	Related party transactions
	Mr M J Gilbert is a director of Aberdeen Asset Management PLC, of which Aberdeen Private Wealth Management Limited ("APWM") is a subsidiary. Management, marketing and secretarial and administration services are provided by APWM. Mr Gilbert does not draw a fee for providing his services as a Director of the Company.
	The management fee is payable monthly in arrears based on an annual amount of 1% of the net asset value of the Company valued monthly. During the year £656,000 (2011 - £624,000) of management fees were payable, of which £63,000 (2011 - £98,000) was due at the period end.
	The marketing fee is based on an annual amount of £39,000 (2011 - £39,000) and is reviewed annually. During the period £7,000 (2011 - £39,000) of fees was payable and due at the period end.
	The company secretarial and administration fee is based on an annual amount of £105,000, increased annually in line with any increases in the UK RPI, payable quarterly in arrears. During the period £105,000 (2011 - £104,000) of fees were payable, of which £17,000 (2011 - £17,000) was due at the period end.
	Mr R Prosser is a partner of Appleby Group and a director of its wholly owned trust company, Appleby Trust (Jersey) Limited, which provided legal services to the Company in the amount of £3,000 during the year.

19.	Controlling party
	In the opinion of the Directors on the basis of shareholdings advised to them, the Company has no immediate or ultimate controlling party.

20.	Fair value hierarchy
	IFRS 7 'Financial Instruments: Disclosures' requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy shall have the following levels:
	-	Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
	-	Level 2: inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (ie as prices) or indirectly (ie derived from prices); and
	-	Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
	The financial assets and liabilities measured at fair value in the Consolidated Balance Sheet grouped into the fair value hierarchy at 31 August 2012 as follows:
					Level 1	Level 2	Level 3	Total
				Note	£'000	£'000	£'000	£'000
	Financial assets/(liabilities) at fair value through profit or loss
	Quoted equities			a)	42,083	-	-	42,083
	Quoted bonds			b)	26,214	5,640	-	31,854
	Forward foreign currency contracts			c)	-	(73)	-	(73)
					_______	_______	_______	_______
	Net fair value				68,297	5,567	-	73,864
					_______	_______	_______	_______
					Level 1	Level 2	Level 3	Total
	As at 31 August 2011			Note	£'000	£'000	£'000	£'000
	Financial assets/(liabilities) at fair value through profit or loss
	Quoted equities			a)	33,794	-	-	33,794
	Quoted bonds{A}			b)	22,562	1,230	-	23,792
	Forward foreign currency contracts			c)	-	(108)	-	(108)
					_______	_______	_______	_______
	Net fair value				56,356	1,122	-	57,478
					_______	_______	_______	_______
	{A} Restated to reflect the value of the holding in Uruguay (Rep of) 5% 14/09/18 as Level 2 (from Level 1), in line with the 2012 disclosure.
	a)		Quoted equities
			The fair value of the Group's investments in quoted equities has been determined by reference to their quoted bid prices at the reporting date. Quoted equities included in Fair Value Level 1 are actively traded on recognised stock exchanges.
	b)		Quoted bonds
			The fair value of the Group's investments in quoted government bonds has been determined by reference to their quoted bid prices, together with indexation where applicable, at the reporting date.
	c)		Forward foreign currency contracts
			The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles.

The Annual General Meeting will be held at 10.00 a.m. on 10 December 2012 at No.1 Seaton Place, St Helier, Jersey JE4 8YJ.

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

The Annual Financial Report Announcement is not the Company's statutory accounts. The above results for the year ended 31 August 2012 are an abridged version of the Company's full accounts, which have been approved and audited with an unqualified report. The annual audited accounts will be delivered to the Jersey Financial Services Commission in due course.

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

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

By Order of the Board

Aberdeen Private Wealth Management Limited - Secretary

31 October 2012

 

END

 

 

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