Annual Financial Report
ABERDEEN LATIN AMERICAN INCOME FUND LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 AUGUST 2014
STRATEGIC REPORT - COMPANY SUMMARY AND FINANCIAL HIGHLIGHTS
The Company
Aberdeen Latin American Income Fund Limited (the "Company") is a Jersey-incorporated, closed-ended investment company and its shares are traded on the London Stock Exchange ("LSE"). The Company is a member of the Association of Investment Companies.
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.
Manager
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 Aberdeen Private Wealth Management Limited to Aberdeen Asset Managers Limited ("AAM"). AAM is based in London and is also a wholly-owned subsidiary of Aberdeen Asset Management PLC (the "Aberdeen Group"), a publicly-quoted company on the LSE.
References throughout this document to Aberdeen refer to both APWML and AAM and their responsibilities as Manager and Investment Manager to the Company.
Website
Up-to-date information can be found on the Company's website - www.latamincome.co.uk
Financial Highlights
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|
2014 |
2013 |
|
Ordinary share price total return |
+1.4% |
-4.7% |
|
Net asset value total return |
+10.4% |
-6.7% |
|
Benchmark total return |
+12.7% |
-7.0% |
|
Earnings per share (revenue) |
4.11p |
4.43p |
|
Dividends per Ordinary share |
4.25p |
4.25p |
|
Discount to net asset value per Ordinary share |
10.6% |
2.3% |
|
Total return represents the capital return plus dividends reinvested. |
|
|
|
Source: Aberdeen, Morningstar, Russell Mellon, Lipper & JPMorgan |
|
|
STRATEGIC REPORT - OVERVIEW OF STRATEGY
Introduction
The Company aims to attract long-term private and institutional investors seeking exposure to the above average 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. The Company's overall objective and key results are shown above. A review of the Company's activities is given below under "Business Model-Investment Policy and Approach", the Chairman's Statement and in the Investment Manager's Review which includes its principal activities, likely future developments of the business and details of any changes in the issued Ordinary share capital.
Duration
The Company does not have a fixed life.
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 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 quite unlike that of any index or benchmark.
Key Performance Indicators (KPIs)
At each Board meeting, Aberdeen circulates detailed performance attribution for the Directors to consider in order to assess the Company's progress in achieving its objectives. Below are the main KPIs which have been identified by the Board for determining the progress of the Company and a record of these measures is disclosed under Financial Highlights above:
- Net Asset Value Total Return Performance versus Benchmark Total Return
- Ordinary Share Price Total Return Performance
- Share Price Discount/Premium to Net Asset Value per Ordinary Share
- Dividends per Ordinary Share
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 section of the Annual Report.
Business Model-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 other international stock exchanges;
- companies listed on other international exchanges that derive significant revenues or profits from the Latin American region; and
- debt issued by governments and corporates in the Latin American region.
The Company invests in 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.
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 paid out of the property of the Company 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. 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 "Business Model-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 gross assets will be invested in any issuer.
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 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 Aberdeen 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.
Principal Risks and Uncertainties
The Board regularly reviews the principal risks and uncertainties which it has identified together with the delegated controls it has established to manage the risks and address the uncertainties:
Investment strategy risk
The Company's investment strategy requires investment in equity and fixed income markets, which may lead to loss of capital. Separately, inappropriate asset allocation or levels of gearing, as part of the investment strategy adopted by the Company, may result in underperformance against either the Company's benchmark index, leading to a widening of the discount at which the Company's shares trade.
The Board seeks to manage these risks by diversifying its investments, as set out in the investment restrictions and guidelines agreed with Aberdeen, and on which the Company receives regular monitoring reports from Aberdeen. At each Board meeting, the Directors review the investment process with Aberdeen by assessing relevant management information including revenue forecasts, absolute/relative performance data, attribution analysis and liquidity/risk reports.
Income and dividend risk
There is a risk that the Company fails to generate sufficient income from its investment portfolio, particularly in periods of weak equity or fixed income markets, to meet its operational expenses which results in it drawing upon, rather than replenishing, its revenue reserves. This might hamper the Company's capacity to pay dividends to Ordinary Shareholders. The Board monitors this risk through the review of income forecasts, provided by Aberdeen, at each Board meeting.
Discount volatility
Investment company shares tend to trade at discounts to their underlying net asset values, although they can also trade at premia. Discounts and premia can fluctuate considerably. In order to seek to minimise the impact of such fluctuations, where the shares are trading at a significant discount, the Company may operate a share buy-back programme. If the shares trade at a premium, the Company has the authority to issue new shares or to sell shares from treasury. Whilst these measures seek to minimise volatility, it cannot be guaranteed that they will do so.
Foreign currency risk
The Company's investment portfolio is invested in Latin American securities and the value of the Company's investments and the income derived from them will, therefore, be affected by movements in foreign exchange rates. In addition, the earnings of the Company's investments may be affected by currency movements which could have an impact on the Company's performance. The Company's borrowings are drawn in dollars and are at least matched by dollar denominated investments in the portfolio to form a natural hedge.
Operational risk
In common with other investment companies, the Company has no employees. The Company therefore relies on services provided by third parties, including Aberdeen in particular, to whom responsibility for the management of the Company has been delegated under a management agreement (the "Management Agreement") (further details of which are set out in the Annual Report). The terms of the Management Agreement cover the necessary duties and responsibilities expected of Aberdeen. The Board reviews the overall performance of Aberdeen on a regular basis and compliance with the Management Agreement on an annual basis.
Contracts with other third party providers, including share registrar and custodial services, are entered into after appropriate due diligence. Thereafter, each contract, and the performance of the provider, is subject to regular review. The security of the Company's assets is the responsibility of the custodian, BNP Paribas Securities Services SA Jersey Branch, as custodian. The effectiveness of the internal controls of the custodian is subject to review and regular reporting to the Audit Committee.
Regulatory risk
The Company operates in a complex regulatory environment and faces a number of related risks. A breach of regulations, such as the United Kingdom Listing Authority's Listing Rules or Jersey law could lead to suspension from the LSE and reputational damage. Aberdeen monitors compliance with these regulations.
Political & Market Risk
Investment in the Latin American region involves greater risks not typically associated with investment in more developed securities markets. Stockmarket movements and changes in economic conditions (including, for example, interest rates, foreign exchange rates and rates of inflation), industry conditions, competition, political and diplomatic events, tax or other laws, investors' perceptions and other factors can substantially and either adversely or favourably affect the value of the securities in which the Company invests and, therefore, the Company's performance and prospects.
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 15 to the financial statements.
Board Diversity
The Board recognises the importance of having a range of skilled, experienced individuals with the right knowledge in order to allow the Board to fulfill its obligations. At 31 August 2014, there were five male Directors. The Company has no employees. The Board's statement on diversity is set out in the Annual Report.
Environmental, Social and Human Rights Issues
The Company has no employees as it is managed by Aberdeen Private Wealth Management Limited 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 Annual Report.
Global Greenhouse Gas Emissions
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.
Richard Prosser
Chairman
4 November 2014
STRATEGIC REPORT - CHAIRMAN'S STATEMENT
Corporate Governance
The Board has introduced a Strategic Report for the first time this year in order to align the Company's Annual Report with reporting requirements for UK companies.
Overview
Latin American stockmarkets finished higher in sterling terms at the end of the year under review, amid significant market and currency volatility. Changes in monetary policy by major central banks were the main market drivers. Early in the review period, the US Federal Reserve (the "Fed") surprisingly postponed its tapering of asset purchases, but then announced a tightening schedule later in the year. The prospect of rising US interest rates reversed fund flows from emerging markets back towards developed markets. Subsequently, a sharp retraction in the prices of emerging market stocks and currencies sparked contagion fears early in 2014, and Latin American countries with weak fiscal and external accounts suffered most. However, swift policy action by vulnerable countries and reassurance from the Fed that rates would stay low for a considerable period, arrested declines. The promise of new stimulus measures by the Chinese authorities further helped to lift sentiment. Overall, Latin American equities went on to make a V-shaped recovery, underpinned by ample domestic liquidity.
In particular, Brazil's rebound was most resounding, supported by optimism that left-wing president Dilma Rousseff's incumbent government might lose in what were then upcoming presidential elections. These eventually took place in October after the Company's year end. Investors, tired of poor policymaking, bid up stocks prior to the announcement of the election result whenever her approval ratings slid.
Mexico's resurgence was also due to positive investor sentiment over reforms. The administration successfully enacted amendments to the constitution to open up its energy sector to private investment after seven decades of state control. This should revive investment into the industry, create jobs, boost production of oil and gas, and also help lower energy costs for the manufacturing sector. The projected impact of the reforms on growth and tax revenues, led to the country's credit rating being raised to 'A', the highest in Latin America together with Chile.
Meanwhile, Chile was the weakest economic performer as demand for its primary export, copper, dwindled on the back of a slowdown in China's economy. The Chilean central bank cut interest rates to stimulate growth but this also exacerbated the weakness in the local currency. Argentina also suffered a depreciating currency as the government, in populist moves, capped prices of staple products, which worsened shortages. Currency controls served to widen the spread between the official and blackmarket rates. Certain hedge funds demanded full repayment for restructured debt from the country's previous default. In a bid to revive foreign investor confidence, the government adopted more market-friendly policies, including paying Spain's Repsol US$5 billion for the nationalisation of oil company YPF.
Performance
For the year ended 31 August 2014 your Company's net asset value (NAV) total return was 10.4%, which compared to the composite benchmark total return of 12.7% for the same period (all in sterling terms). The NAV per share as at 31 August 2014 was 92.6p. The Ordinary share price total return for the period was 1.4% and the discount to NAV per Ordinary share widened from 2.3% at the start of the year to 10.6% at the year end. At the time of writing, the share price discount to NAV was 8.7% and the NAV was 81.3p per Ordinary share.
Dividends
The Board has declared a fourth interim dividend for the year ended 31 August 2014 of 1.25 pence per Ordinary share which was paid on 31 October 2014 to Ordinary Shareholders on the register at close of business on 3 October 2014. This totals an aggregate dividend of 4.25 pence per share, in line with our expectations for the year. Receipts of dividends, interest and other income were negatively impacted by the strength of sterling during the year and the total dividend payments by the Company for the year necessitated a modest transfer from the Company's brought forward revenue reserve. Following payment of the four interim dividends, the revenue reserve will stand at £102,000.
Your Board continues to keep the income generation of the portfolio under review with the investment manager and, at this early stage in the Company's financial year, subject to investee company performance, currency movements and unforeseen circumstances, it is our aim to continue to pay a minimum dividend of 4.25 pence per Ordinary share for the year ending 31 August 2015. It remains your Board's aim to grow dividends over time. This does not constitute a profit forecast.
Gearing
The Company has maintained gearing in the portfolio throughout the year under review. On 15 August 2014 the Company renewed its £10 million multi-currency revolving credit facility with Scotiabank Europe PLC for a further three years. As at 31 August 2014 the Company had borrowings of US$14,800,000 (£8,912,000) drawn under the facility at an interest rate margin of 95bp over LIBOR.
Annual General Meeting
The AGM will be held at 10.00 a.m. on 9 December 2014 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. 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%. Weakness in many Latin American markets has adversely impacted demand for the Company's shares. Accordingly, during the year under review the Company bought back 990,000 Ordinary shares for treasury at a cost of £776,000. However, the market volatility experienced over the year has impacted our ability to have a meaningful impact on the discount through the purchase of the Company's shares in the market and, consequently, the Ordinary shares traded at an average discount to their cum-income NAV of 7.7% over the year. It remains the Board's intention, in more normal market conditions, to try to maintain a discount of around 5% over the longer term.
We are proposing a resolution at the AGM to renew the Company's authority to buy back Ordinary shares and any purchases will be made through the market at a discount to NAV in circumstances where the Directors believe that any such purchase will enhance shareholder value. The buy back of Ordinary shares, and also of Subscription shares which is the subject of a separate resolution to the AGM, will be subject to the United Kingdom Listing Authority's Listing Rules and Jersey law and will be at the absolute discretion of the Directors. We are also seeking to renew the authority to issue 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 net asset value per Ordinary share and will therefore be accretive and not disadvantageous to Ordinary and Subscription Shareholders.
Alternative Investment Fund Managers Directive (AIFMD)
Following the final implementation of the Alternative Investment Fund Managers Directive in July 2014, the Company and Aberdeen have taken the necessary steps to allow the Company to market its shares, including the potential issue of new shares for cash, within the UK under the UK National Private Placement Regime.
Subscription Shares
Subscription Shareholders have an opportunity to exercise their right to subscribe for Ordinary shares in the 28 days prior to 31 December 2014. A reminder letter accompanies this Annual Report.
Outlook
International investors remain wary of a sooner-than-expected interest-rate hike by the US Federal Reserve. This has also underpinned US dollar strength and weakened commodity prices, further subdued by disappointing data from China. However, other central banks are keeping monetary policy loose. China has steadily increased stimulus measures to meet its target 7.5% GDP growth rate. Monetary policy in Europe is diverging from the US and UK, as the European central bank looks set to increase the effect on rates and liquidity by asset purchases.
There are some positive political developments within the region including Mexico's promising energy. Despite market disappointment at the narrow re-election of Brazil's President Dilma Rousseff after the year end, there is pressure from both local and foreign investors for market-friendly reforms to generate economic growth and tackle inflation. In Argentina, an agreement with holdout creditors regarding debt repayments is possible next year, after a key legal clause expires. This should help to rebuild trust among foreign investors.
Despite macroeconomic uncertainties, I continue to have confidence in the strength of Aberdeen's investment process. The portfolio's holdings have the management capability and balance sheet strength to weather such headwinds. These, along with robust competitive positions, pricing power and cost discipline, are factors that your investment manager looks for as part of identifying quality companies to invest in. The portfolio remains well-positioned to provide attractive returns over the long-term.
Richard Prosser
Chairman
4 November 2014
STRATEGIC REPORT - INVESTMENT MANAGER'S REVIEW
Performance Commentary
Over the year, the equity portion of the portfolio rose by 12.33% in sterling terms, trailing the benchmark MSCI Emerging Markets Latin America 10/40 Index's gain of 15.92% largely owing to negative stock selection. In what was a challenging year for Latin American economies, some of our consumer holdings, including Brazilian retailers Hering and Arezzo, as well as Mexican bottler Femsa, were hampered by muted domestic demand. The macroeconomic weakness was exacerbated by soft commodity prices, which weighed on holdings such as iron ore producer Vale.
Our sole Argentine holding, steel pipe maker Tenaris, also lagged. Its share price fell early this year when US authorities determined that its South Korean competitors would not be subject to anti-dumping measures. It is worth noting, though, that the company has been relatively insulated from the negative sentiment surrounding Argentina's US dollar bond default, as cash generation remains robust, and it has no need to seek further financing. Management is upbeat about 2015, citing an improved pricing environment in the US and a clearer outlook for energy reform in Mexico. As Tenaris generates less than 10% of its revenues domestically, the devaluation of the Argentine peso has benefited the company by reducing relative costs and supporting its exports.
In contrast, the weak Argentine peso had a greater impact on Chile's Andina. The Coca-Cola bottler, which derives about 20% of its pre-tax earnings from Argentina, posted lacklustre second-quarter results owing to foreign exchange losses.
On a positive note, Brazil's Banco Bradesco was the top contributor to performance. The lender posted consistently good results, on the back of expanding net interest margins and stable asset quality. We maintain our high conviction in the bank given its conservative approach. Itau Unibanco also performed well, as it continued to grow its loan book while shifting its focus towards less-risky products. Retailer Lojas Renner overcame the difficult consumer environment to post resilient results, underpinned by impressive sales growth and good cost control. Relative performance was also buoyed by our lack of exposure to certain Chilean stocks, such as retailer Cencosud and energy company Copec which are included in the Index.
The fixed income portfolio returned 7.51% in sterling terms with a negative contribution from hedging reducing that to 7.04%, an underperformance of 0.55% when compared to the rise in the benchmark JP Morgan GBI-EM Global Diversified (Latin America) of 7.59%. The positive attribution from the holdings in Colombia, Mexico, Peru and Chile offset the aggregate negative contributions from our holdings in Uruguay, which is not a benchmark constituent, and Brazil.
Slowing economic growth created a favourable environment for the local bond markets. Strong bond performance was supported by rate cuts by the central banks of Chile, Mexico and Peru. While the Colombian central bank delivered a rate hiking cycle in the face of robust growth, the increase of the country's weight in the main local market bond index created additional demand for local bonds. Brazil also had to hike rates to restore central bank credibility, but the high running yield of the bonds still made them one of the best performing local markets in the region.
Portfolio Activity
During the year, we initiated positions in Chilean mall operator Parque Arauco and Peru-based infrastructure company Grana y Montero, owing to what we believe to be attractive valuations and solid growth prospects. We also added to a number of holdings on the back of share price weakness as we remained upbeat about their growth potential. These included Brazilian retailers Arezzo and Hering, as well as beverage company Ambev, which we believe was oversold on concerns about the potential impact of higher excise taxes.
Conversely, we pared back Petrobras, after its shares gained in response to expectations that president Dilma Rousseff could lose her re-election bid. We also trimmed positions in gas and petrochemicals company Ultrapar and Mexican airport operator OMA, among others, following good share price performances.
Meanwhile, we switched part of our Mexican bonds holdings into Colombia. We also initiated a switch within the Mexico position, buying inflation-linked bonds.
Overview of Currency/Hedging
The currency returns chart in the Annual Report shows that over the review year to 31 August 2014 currencies in the Latin American region depreciated significantly against sterling. The strength of the pound itself explains the bulk of this depreciation with the region's performance against the dollar more balanced. The Brazilian Real, although negative, was the best performer as the currency recovered following earlier policy-induced weakening. The Mexican Peso was broadly unchanged in dollar terms despite the structural reforms put forward by the government. Chile's Peso had the worst performance as the collapse in business sentiment, which followed the presidential elections, contributed to a sharp deceleration of growth. We have a preference for high yielding Brazilian bonds over the lower yielding Mexican bonds, but the economic growth and external balance outlook of the latter looks superior. Over the year we had hedged some of the Brazilian Real exposure into Mexican Peso's which had a minor drag on performance over the period. However, we look to maintain this positioning in the wake of the Brazilian election result and the second term of President Dilma Rousseff.
Country Overview
Brazil:
The Brazilian central bank continued its hiking cycle in November, raising its policy rate by 50 basis points to 10%, which was in line with market expectations. Brazil's GDP grew by 1.9% year-on-year in the fourth quarter of 2013 and pushed full year growth to 2.3% year-on-year. Improved manufacturing and agricultural output as well as investment growth were the key drivers over the quarter. On the other hand, the country's fiscal accounts disappointed the market as the primary surplus was less than expected for January leaving the government facing a tough year to reach its fiscal target for 2014.
Towards the end of March, the credit rating agency, Standard and Poor's, downgraded Brazil's credit rating from BBB to BBB-, while the outlook moved from Negative to Stable. It cited a weak growth outlook and mixed policy signals as the key reasons for the decisions. Brazil's current account deficit was $25.2 billion in the first quarter of the year, marginally higher than the $24.7 billion recorded in the first three months of 2013. The reason for the deterioration was a worse trade deficit and an increase in interest payments. The labour market remained extremely tight throughout the period as unemployment declined to 4.9% explained by workers leaving the labour force, although real wage growth remained strong growing 3.5% year-on-year. The central bank expects the consumer price index (CPI) to increase to 6.4% year-on-year in the fourth quarter of 2014 and to 5.7% in the fourth quarter of 2015, while gross domestic product (GDP) estimates were also revised down to 1.6% in 2014 from 2.0%.
In politics, and since the Company's year end, president Rousseff was narrowly re-elected after a second-round runoff, beating the centre-right candidate, Aecio Neves. It was the tightest polling result in a generation; following a bitterly fought campaign that left the country split along economic and regional lines. Investors were disappointed that their business-friendly contender lost, and sold down both local stocks and the currency. Rousseff faces the challenges of a fragmented parliament and a stagnant economy. To her credit, she acknowledged the need for reforms, and seems to realise that her social programmes will require funding that only a more vibrant economy can offer.
Mexico:
In October 2013, the Mexican Senate approved a watered down version of the government's fiscal reform plan, which should increase non-oil revenues by 1.1% of GDP in 2014, compared to the original plan of 1.5% of GDP. The budget deficit has been capped at 2.5% of GDP for 2015-16. Standard and Poor's upgraded Mexico's credit rating by one notch to BBB+ citing the energy reform bill as a "watershed moment" for the country. In April 2014, Mexico's government released its National Infrastructure Plan for 2014-2018, in which most funds were directed towards the energy sector. There will be 743 projects worth nearly $600 billion, 70% higher than the previous administration's infrastructure plan. In May, it was revealed that the economy only grew by 1.8% year on year to the end of March missing the market consensus of 2.1%. Poor economic growth in the US coupled with lower oil production and an increase in tax costs were the main drivers of the slowdown. Banxico, the central bank of Mexico, surprised the market by cutting its policy interest rate by 0.5% to 3.0% in June. The minutes from the meeting showed that concerns about slackness in the economy were the main driver of the move. Mexico grew by 1.6% in the second quarter of the year which was in line with consensus but most likely paves the way for a stronger second half of the year if the US growth momentum continues and the negative effects from fiscal reform begin to dissipate.
Chile:
Chile's central bank cut its policy rate by 25bps in September 2014 and remained dovish in its post-meeting communique. The central bank is concerned by deteriorating domestic demand as investment and consumption have declined more than expected. Second quarter GDP growth was softer at 1.9%, compared to 2.4% in the first quarter of the year, as the country experienced a broad-based slowdown.
Colombia:
The announcement of an agreement on the path to completing the five point plan with FARC, the Colombian guerrilla group, helped Juan Manuel Santos to secure victory in the second round of presidential elections in Columbia. The conclusion of the IMF Article IV consultation at the end of May painted a strong picture of a relatively well capitalised banking sector, a closing output gap on the back of average growth around 4% and a supportive monetary policy. The IMF highlighted a number of key risks to the credit, including vulnerability to external shocks and the need to continue to make progress on more inclusive growth.
Peru:
Peru's recently appointed Prime Minister ("PM") Ana Jara and her government survived a no-confidence vote in Congress towards the end of the period after two failed attempts to remove them, when a majority of representatives abstained from the process. Jara's victory hinged on a slimmest possible margin: 55 votes in favour against 54 abstentions, with the deciding vote casted by congressional speaker Ana Solorzano. The divide reflected the high degree of discontent among opposition lawmakers with the Cabinet selected by President Humala. Jara is the sixth PM appointed since the start of the Humala administration in 2011.
Uruguay:
In Uruguay, the presidential election heads for a second round at the end of November between former President and leftist coalition candidate Tabare Vazquez and Luis Lacalle Pou of the National Party. Current President Jose Mujica cannot run due to the country's constitutional term limits. Economy Minister Bergova lowered the government's GDP estimate for 2014 from 4% year on year to 3% following the recent economic weakness in Brazil and Argentina. Stubbornly high CPI is affecting inflation expectations, with the latest central bank survey of 12 month forward inflation expectations rising to 8.3% in February from 7.9% in December. In an effort to address this, the central bank has announced a new target inflation band from July 2014 which will be 3% to 7% from the current 4% to 6% range, the central point remains 5%, while the target time horizon has been lengthened from 18 months to 24 months.
Outlook
In stark contrast to the stockmarket losses witnessed in the first half of the financial year, Latin American markets appear to be on the road to recovery. However, the region's solid showing masks the diverging prospects of individual nations. Dilma Rousseff's win in the recent elections is likely to weigh on the Brazilian stockmarket in the near term. That said, her narrow margin might compel her to tighten fiscal policy and implement the economic adjustments necessary to restore growth and confidence. On a brighter note, still-low unemployment should prove supportive for future growth, and a solid pipeline of infrastructure auctions bodes well for investment. Chile, which was the worst-performing market, may continue to be hampered by low copper prices and political concerns in the short-term. In Mexico, recent data appears to support expectations that the economy is shaking off the sluggishness it experienced in 2013. Reforms to open up the long-closed energy sector to private investment bode well for growth further down the road, although investor optimism is reflected in Mexico's relatively elevated valuations.
Despite the macroeconomic uncertainty, we see plenty of value in the region. Our investment process continues to allow us to identify companies with the ability to thrive even during leaner periods. Regardless of their domicile, our holdings are characterised by robust balance sheets and adept management; we believe they are poised to maintain earnings growth well into the future. As always, we will take advantage of attractive valuations to add to high-conviction holdings.
Aberdeen Asset Managers Limited
4 November 2014
STRATEGIC REPORT - RESULTS
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Financial Highlights |
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31 August 2014 |
31 August 2013 |
% |
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Total assets (£'000) |
69,641 |
68,177 |
2.1 |
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Total equity shareholders' funds (net assets) (£'000) |
60,729 |
58,610 |
3.6 |
|
Market capitalisation (£'000) |
54,567 |
58,034 |
-6.0 |
|
Ordinary share price (mid market) |
82.75p |
86.00p |
-3.8 |
|
Subscription share price (mid market) |
2.85p |
7.50p |
-62.0 |
|
Net asset value per Ordinary share |
92.60p |
88.04p |
5.2 |
|
Discount to net asset value per Ordinary share |
10.64% |
2.32% |
|
|
Net gearing {A} |
13.23% |
14.82% |
|
|
|
|
|
|
|
Dividends and earnings |
|
|
|
|
Total return per Ordinary share |
8.65p |
-6.06p |
|
|
Revenue return per Ordinary share |
4.11p |
4.43p |
-7.2 |
|
Dividends per Ordinary share |
4.25p |
4.25p |
- |
|
Dividend cover |
0.97 times |
1.04 times |
|
|
Revenue reserves{B} (£'000) |
922 |
1,019 |
|
|
|
|
|
|
|
Operating costs |
|
|
|
|
Ongoing charges ratio{C} |
1.99% |
1.83% |
|
|
{A} Calculated in accordance with AIC guidance "Gearing Disclosures post Retail Distribution Review". |
|||
|
{B} Excludes payment of fourth interim dividend of 1.25p (2013 - 1.25p) per Ordinary share equating to £820,000 (2013 - £832,000). |
|||
|
{C} Ongoing charges ratio calculated in accordance with guidance issued by the AIC as the total of the investment management fee and administrative expenses divided by the average cum income net asset value throughout the year. |
|||
Performance (total return)
|
|
|
|
Since launch{A} |
|
|
% return |
% return |
% |
|
Share price |
+1.4 |
-7.2 |
+2.3 |
|
Net asset value |
+10.4 |
+3.5 |
+10.2 |
|
Composite MSCI EM Latin America 10/40 Index/JP Morgan GBI-EM Global Diversified Index (Latin America carve out) (sterling adjusted) |
+12.7 |
+2.4 |
+8.6 |
|
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 2014 |
1.00p |
23 December 2013 |
27 December 2013 |
31 January 2014 |
|
2nd interim 2014 |
1.00p |
2 April 2014 |
4 April 2014 |
30 April 2014 |
|
3rd interim 2014 |
1.00p |
2 July 2014 |
4 July 2014 |
31 July 2014 |
|
4th interim 2014 |
1.25p |
1 October 2014 |
3 October 2014 |
31 October 2014 |
|
Total dividends 2014 |
4.25p |
|
|
|
|
|
|
|
|
|
|
|
Rate |
xd date |
Record date |
Payment date |
|
1st interim 2013 |
1.00p |
19 December 2012 |
21 December 2012 |
31 January 2013 |
|
2nd interim 2013 |
1.00p |
3 April 2013 |
5 April 2013 |
30 April 2013 |
|
3rd interim 2013 |
1.00p |
3 July 2013 |
5 July 2013 |
31 July 2013 |
|
4th interim 2013 |
1.25p |
2 October 2013 |
4 October 2013 |
31 October 2013 |
|
Total dividends 2013 |
4.25p |
|
|
|
INVESTMENT PORTFOLIO
Ten Largest Equity Investments
As at 31 August 2014
|
|
|
|
Valuation |
Total |
Valuation |
|
|
|
|
2014 |
assets |
2013 |
|
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 |
3,979 |
5.7 |
2,999 |
|
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 |
3,170 |
4.6 |
3,065 |
|
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 |
2,562 |
3.7 |
2,179 |
|
Vale ADR |
|
|
|
|
|
|
The Brazilian miner is the world's lowest-cost iron-ore producer. |
Materials |
Brazil |
2,471 |
3.5 |
3,181 |
|
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 |
1,663 |
2.4 |
1,708 |
|
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 |
1,626 |
2.3 |
1,365 |
|
Grupo Financiero Banorte |
|
|
|
|
|
|
Mexico's third largest bank in terms of assets and the largest and only locally owned Mexican bank, well positioned to continue growing and strengthening its competitive position to benefit from this underpenetrated market. |
Banks |
Mexico |
1,587 |
2.3 |
1,894 |
|
Lojas Renner |
|
|
|
|
|
|
The second largest clothing retailer in Brazil. |
Retailing |
Brazil |
1,538 |
2.2 |
1,226 |
|
Ambev |
|
|
|
|
|
|
Latin America's largest producer of beer and the sole distributor of Pepsi products in Brazil. |
Food, Beverage & Tobacco |
Brazil |
1,428 |
2.1 |
1,310 |
|
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 |
1,317 |
1.9 |
1,605 |
|
Top ten equity investments |
|
|
21,341 |
30.7 |
|
|
|
|
|
|
|
|
Investment Portfolio - Other Investments
As at 31 August 2014
|
|
|
|
Valuation |
Total |
Valuation |
|
|
|
|
2014 |
assets |
2013 |
|
Company |
Sector |
Country |
£'000 |
% |
£'000 |
|
Tenaris ADR |
Industrial Materials |
Argentina |
1,152 |
1.7 |
1,514 |
|
Arezzo Industria e Comercio |
Personal Goods |
Brazil |
1,037 |
1.5 |
672 |
|
Banco Santander-Chile ADR |
Banks |
Chile |
962 |
1.4 |
965 |
|
Natura Cosmeticos |
Personal Goods |
Brazil |
861 |
1.2 |
950 |
|
Grupo Aeroportuario del Centro Nort ADR |
Industrial Transportation |
Mexico |
818 |
1.2 |
1,166 |
|
Wal-Mart De Mexico |
General Retailers |
Mexico |
806 |
1.2 |
744 |
|
Grupo Aeroportuario de Sureste |
Industrial Transportation |
Mexico |
772 |
1.1 |
939 |
|
Cia Hering |
Personal Goods |
Brazil |
745 |
1.1 |
718 |
|
Embotelladora Andina Pref A |
Food, Beverage & Tobacco |
Chile |
741 |
1.1 |
784 |
|
S.A.C.I. Falabella |
General Retailers |
Chile |
721 |
1.0 |
817 |
|
Top twenty equity investments |
|
|
29,956 |
43.2 |
|
|
Vale Preference ADR |
Materials |
Brazil |
718 |
1.0 |
652 |
|
Brasil Foods Sponsored ADR |
Food Producers |
Brazil |
706 |
1.0 |
660 |
|
Organizacion Soriana |
General Retailers |
Mexico |
698 |
1.0 |
684 |
|
Kimberly-Clark de Mexico |
Personal Goods |
Mexico |
647 |
0.9 |
726 |
|
BM&FBovespa |
Financial Services |
Brazil |
632 |
0.9 |
632 |
|
Almacenes Exito |
General Retailers |
Colombia |
630 |
0.9 |
651 |
|
Wilson, Sons |
Industrial Transportation |
Brazil |
624 |
0.9 |
507 |
|
Grupo Bancolombia |
Banks |
Colombia |
620 |
0.9 |
588 |
|
Localiza Rent A Car |
Transportation |
Brazil |
614 |
0.9 |
586 |
|
Bradespar |
Materials |
Brazil |
561 |
0.8 |
521 |
|
Top thirty equity investments |
|
|
36,406 |
52.4 |
|
|
WEG |
Electronic & Electrical Equipment |
Brazil |
522 |
0.7 |
507 |
|
Grana y Montero |
Construction & Materials |
Peru |
516 |
0.7 |
- |
|
OdontoPrev |
Health Care Equipment & Services |
Brazil |
481 |
0.7 |
438 |
|
Cia Souza Cruz |
Tobacco |
Brazil |
479 |
0.7 |
578 |
|
TOTVS |
Software & Computer Services |
Brazil |
473 |
0.7 |
426 |
|
Parque Arauco |
Real Estate Investment Services |
Chile |
443 |
0.6 |
- |
|
Valid Solucoes e Servicos de Seguranca |
Support Services |
Brazil |
421 |
0.6 |
329 |
|
Total equity investments |
|
|
39,741 |
57.1 |
|
|
|
|
|
|
|
|
|
Investment Portfolio - Bonds |
|
|
|
|
|
|
As at 31 August 2014 |
|
|
|
|
|
|
|
|
|
Valuation |
Total |
Valuation |
|
|
|
|
2014 |
assets |
2013 |
|
Issue |
Sector |
Country |
£'000 |
%{B} |
£'000 |
|
Brazil (Fed Rep of) 10% 01/01/17 |
Government Bonds |
Brazil |
10,648 |
15.3 |
10,031 |
|
Uruguay (Rep of) 5% 14/09/18 |
Government Bonds |
Uruguay |
5,107 |
7.3 |
5,262 |
|
Colombia (Fed Rep of) 9.85% 28/06/27 |
Government Bonds |
Colombia |
3,090 |
4.4 |
- |
|
Mexico (United Mexican States) 8% 07/12/23 |
Government Bonds |
Mexico |
2,859 |
4.1 |
2,889 |
|
Mexico (United Mexican States) 7.5% 03/06/27 |
Government Bonds |
Mexico |
1,587 |
2.3 |
4,538 |
|
Brazil (Fed Rep of) 10% 01/01/21 |
Government Bonds |
Brazil |
1,386 |
2.0 |
1,323 |
|
Mexico (United Mexican States) 7.75% 14/12/17 |
Government Bonds |
Mexico |
1,014 |
1.4 |
2,136 |
|
Peru (Rep of) 7.84% 12/08/20 |
Government Bonds |
Peru |
679 |
1.0 |
712 |
|
Brazil (Fed Rep of) 10% 01/01/18 |
Government Bonds |
Brazil |
674 |
1.0 |
- |
|
Peru (Rep of) 6.95% 12/08/31 |
Government Bonds |
Peru |
586 |
0.8 |
574 |
|
Peru (Rep of) 6.95% 12/08/31 REGS |
Government Bonds |
Peru |
512 |
0.7 |
- |
|
Uruguay (Rep of) 4.25% 05/04/27 |
Government Bonds |
Uruguay |
381 |
0.6 |
361 |
|
Mexico (United Mexican States) 4.5% 22/11/35 |
Government Bonds |
Mexico |
216 |
0.3 |
- |
|
Total value of Bonds |
|
|
28,739 |
41.2 |
|
|
Total value of equity investments |
|
|
39,741 |
57.1 |
|
|
Total value of investments |
|
|
68,480 |
98.3 |
|
|
Net current assets{A} |
|
|
1,161 |
1.7 |
|
|
Total assets |
|
|
69,641 |
100.0 |
|
|
|
|||||
|
{A} Excluding bank loans of US$14,800,000 (£8,912,000). |
|||||
|
|
|||||
DIRECTORS' REPORT
Introduction
The current Directors, Richard Prosser, Martin Adams, Jeremy Arnold, George Baird and Martin Gilbert were the only Directors in office during the period.
The Directors present their Report and the audited financial statements for the year ended 31 August 2014.
The Group, the Company and its Objective
The Group comprises Aberdeen Latin American Income Fund Limited (the "Company") and its wholly-owned subsidiary Aberdeen Latin American Income Fund LLC.
The objective of the Company is set out in the Strategic Report. The primary aim of the Company is to provide Ordinary Shareholders with a total return, with an above average yield, primarily through investing in Latin American securities.
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 constitutes and is 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 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 trust.
The Company is a member of the Association of Investment Companies ("AIC").
Results and Dividends
Details of the Group's results and dividends are shown under Financial Highlights above and in notes 7 and 8 to the financial statements. In line with expectations, interim dividends have been paid on a quarterly basis in January, April and July and the fourth interim was paid on 31 October 2014, in respect of the three months ended on the preceding November, February, May and August. The Group achieved its stated intention to pay aggregate dividends of 4.25p per Ordinary share for the year ended 31 August 2014. As at 31 August 2014 the Group's brought forward revenue reserves equated to £102,000 after allowing for the fourth interim dividend which under International Financial Reporting Standards is not accounted for until paid.
Management Arrangements
The Company has an agreement (the "Management Agreement") with Aberdeen Private Wealth Management Limited ("APWML") for the provision of management services, details of which are shown in notes 4 and 5 to the financial statements. The Management Agreement provides for an investment management fee of 1% of the net asset value of the Company valued monthly. The Management Agreement also provides for a company secretarial and administration fee of £112,000, increased annually in line with any increases in the UK retail price index. The Management Agreement is terminable by either the Company or Aberdeen giving the other not less than 12 months' notice in writing.
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 Aberdeen, 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 2014 there were 65,582,674 Ordinary shares and 10,421,136 Subscription shares allotted and in issue with a further 990,000 Ordinary shares held in treasury. On 10 January 2014 100 new Ordinary shares were issued at 120p per share following the exercise of 100 Subscription shares in the period to 31 December 2013. During the course of the financial year the Company bought back in the market for treasury 990,000 Ordinary shares.
Each Subscription share carries the right to convert such share into one Ordinary share on 31 December in 2014 and 2015 (inclusive) at a price of 120p per share.
The 28 days prior to 31 December 2014 offer the second opportunity for holders of Subscription shares to exercise their right to subscribe for Ordinary shares. A reminder letter accompanies this Annual Report addressed to Subscription Shareholders.
Directors
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 17 to the financial statements. No other Directors had interests in contracts with the Company. Details of the Directors retiring by rotation at the Annual General Meeting are disclosed in the Statement of Corporate Governance.
Alternative Investment Fund Managers Directive ("AIFMD")
The AIFMD came into force on 21 July 2011 and was implemented through secondary legislation in the UK in July 2013. Under the Directive the Company constitutes a 'third country' or non-EU domiciled alternative investment fund as it is incorporated in Jersey, which is not part of the EU. The AIFMD placed restrictions on the marketing of shares, including shares issued by non-EU domiciled funds, to investors in the EU. In particular, under the UK's AIFMD legislation, the marketing of the Company's shares within the UK after 22 July 2014 required registration on the UK's private placement register before any marketing may take place.
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, disclosures for potential investors in the Company are available on the Company's website: www.latamincome.co.uk.
It is expected that an EU-wide marketing passport will be introduced in 2015, but there is no guarantee this will be available to non-EU domiciled funds. The costs for the Company of complying with the AIFMD are likely to increase, potentially by a material amount, the Company's governance and administration expenses; particularly should the Company wish to take advantage of the proposed marketing passport once it is introduced. The Board and the Company's advisers will continue to monitor the progress and likely implications of the AIFMD for the Company and, in particular, costs.
Foreign Account Tax Compliance Act ("FATCA")
The States of Jersey signed an Intergovernmental Agreement ("IGA") with the United States on 13 December 2013 in a bid to improve tax compliance and implement FATCA. Jersey also signed an IGA with the UK on 22 October 2013. Companies that are classified as Financial Institutions will have an obligation to report on any UK or US specified persons identified during their due diligence. As a result of the IGAs, Jersey companies must report to the Comptroller of Taxes at the Jersey Taxes Office, and not directly to the IRS. Under US FATCA, companies may suffer a withholding tax at an effective rate of 30% as a result of non-compliance. The Company's United States Internal Revenue Service FATCA registration number (GIIN) is 9HSG0J.99999.SL.832.
New Registered Office
During the financial year Aberdeen moved its office in Jersey. The Company's registered office is now located at 1st Floor, Sir Walter Raleigh House, 48 - 50 Esplanade, St Helier JE2 3QB.
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 Company's 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 or Subscription 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 10, 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 2015.
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 net asset value at a discount of no more that 5%. As stated in the Chairman's Statement, during the year under review the Company bought back 990,000 Ordinary shares for treasury at a total cost of £776,000. However, the market volatility experienced over the year has impacted our ability to have a meaningful impact on the discount through the purchase of the Company's shares in the market and, consequently, the Ordinary shares traded at an average discount to their inclusive of income NAV of 7.7% over the year. It remains the Board's intention, in more normal market conditions, to try to maintain a discount of around 5% over the longer term.
Purchases of Ordinary shares will only be made through the market for cash at prices below the prevailing net asset value 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 net asset value at which the Ordinary shares may trade. Purchases of Subscription shares will only be made through the market for cash if the net asset value per Ordinary share is greater than 120p (being the price payable on the exercise of a Subscription share) and at prices below the prevailing net asset value attributable to a Subscription share (as last calculated) where the Directors believe such purchases will enhance Shareholder value.
Resolution 8, a Special Resolution, will be proposed to renew the Directors' authority to make market purchases of the Company's Ordinary shares in accordance with the provisions of the Listing Rules of the Financial Conduct Authority. During the year 990,000 Ordinary shares were purchased in the market for treasury. The Company will seek authority to purchase up to a maximum of 9,830,843 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 2015 unless such authority is renewed prior to such 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 of shares. 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 net asset value per Ordinary share for the benefit of all Shareholders.
Resolution 9, a Special Resolution, will be proposed to renew the Directors' authority to make market purchases of the Company's Subscription shares in accordance with the provisions of the Listing Rules of the LSE. During the period since listing and to the date of this Report, no Subscription shares have been purchased in the market for cancellation. The Company will seek authority to purchase up to a maximum of 1,562,128 Subscription shares (representing 14.99 per cent. of the current issued Subscription shares). The authority being sought shall expire at the conclusion of the Annual General Meeting in 2015 unless such authority is renewed prior to such time. Any Subscription shares purchased in this way will be cancelled and the number of Subscription shares will be reduced accordingly.
By a subscription and lock-in agreement dated 14 July 2010 between the Company and Aberdeen, Aberdeen agreed to purchase for cash such number of Subscription shares as conferred the right to subscribe for such number of Ordinary shares as represented 10% of the Ordinary shares in issue on listing. Aberdeen subscribed for and was allotted 5,210,618 Subscription shares at 10.5p each. The Company and Aberdeen have agreed that in the event the Management Agreement is terminated prior to the final subscription date for the Subscription shares, the Company will have the right to cancel all of these Subscription shares then outstanding subject to paying compensation based on the average middle market price for the 60 consecutive LSE dealing days immediately preceding the date of announcement of termination, or, if earlier, the first announcement of the intention to terminate the Management Agreement.
Recommendation
Your Board considers Resolutions 8, 9 and 10 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 8, 9 and 10 to be proposed at the Annual General Meeting, as they intend to do in respect of their own beneficial shareholdings amounting to 159,545 Ordinary shares.
Going Concern
In accordance with the Financial Reporting Council's guidance on Going Concern and Liquidity Risk issued in October 2009 the Directors have undertaken a rigorous review of the Company's ability to continue as a going concern. The Company's assets consist of a diverse portfolio of listed equities, equity-related investments and fixed income investments which in most circumstances are realisable within a very short timescale.
On 15 August 2014 the Company renewed its £10 million multi currency revolving facility agreement with Scotiabank Europe PLC for a further 36 months. Accordingly, 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 the 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.
Directors' & Officers Liability Insurance
Directors' & Officers' liability insurance cover has been maintained throughout the period at the expense of the Company.
Additional Information
- There are no restrictions on the transfer of Ordinary shares in the Company other than certain restrictions which may from time to time be imposed by law (for example, insider trading law).
- The Company is not aware of any agreements between Shareholders that may result in restriction on the transfer of securities and/or voting rights.
- The rules governing the appointment of Directors are set out in the Statement of Corporate Governance. The Company's Articles of Association may only be amended by a special resolution at a general meeting of Shareholders.
- The Company is not aware of any significant agreements to which it is a party that take effect, alter or terminate upon a change of control of the Company following a takeover.
Other than the management and administration contracts with Aberdeen, set out earlier in the report, the Company is not aware of any contractual or other agreements which are essential to its business which ought to be disclosed in the Directors' Report.
Corporate Governance
The Statement of Corporate Governance forms part of this Directors' Report and covers the Company's compliance with the UK Corporate Governance Code and is shown in the Annual Report.
Accountability and Audit
The respective responsibilities of the Directors and the auditor in connection with the financial statements are set out in the Annual Report.
Each Director confirms that, so far as he is aware, there is no relevant audit information of which the Company's auditor is unaware, and he has taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information. Additionally there are no important events since the period end other than as disclosed in the notes to the financial statements
The Directors have reviewed the level of non-audit services provided by the independent auditor during the year, together with the independent auditor's procedures in connection with the provision of such services, and remain satisfied that the auditor's objectivity and independence is being safeguarded.
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.
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") and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group;
- 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 Group's performance, business model and strategy; and
- the Strategic Report, Aberdeen's Review, Performance Statement, Currency/Market Performance and Investment Process 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 the Group faces.
By order of the Board
Aberdeen Private Wealth Management Limited
Secretary
4 November 2014
1st 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 and Group 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.
Richard Prosser
Chairman
4 November 2014
1st Floor, Sir Walter Raleigh House
48 - 50 Esplanade, St Helier
Jersey JE2 3QB
The Directors are 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.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
|
|
|
Year ended 31 August 2014 |
Year ended 31 August 2013 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Income |
|
|
|
|
|
|
|
|
Income from investments |
3 |
3,628 |
- |
3,628 |
3,910 |
- |
3,910 |
|
Interest income |
|
2 |
- |
2 |
4 |
- |
4 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
Total revenue |
|
3,630 |
- |
3,630 |
3,914 |
- |
3,914 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
Gains/(losses) on financial assets held at fair value through profit or loss |
9 |
- |
2,946 |
2,946 |
- |
(6,435) |
(6,435) |
|
Currency gains |
|
- |
522 |
522 |
- |
13 |
13 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
3,630 |
3,468 |
7,098 |
3,914 |
(6,422) |
(2,508) |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
Expenses |
|
|
|
|
|
|
|
|
Investment management fee |
4 |
(263) |
(394) |
(657) |
(317) |
(476) |
(793) |
|
Other operating expenses |
5 |
(480) |
- |
(480) |
(488) |
- |
(488) |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
Profit/(loss) before finance costs and taxation |
|
2,887 |
3,074 |
5,961 |
3,109 |
(6,898) |
(3,789) |
|
|
|
|
|
|
|
|
|
|
Finance costs |
6 |
(54) |
(82) |
(136) |
(58) |
(88) |
(146) |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
Profit/(loss) before taxation |
|
2,833 |
2,992 |
5,825 |
3,051 |
(6,986) |
(3,935) |
|
|
|
|
|
|
|
|
|
|
Taxation |
|
(126) |
- |
(126) |
(100) |
- |
(100) |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
Profit/(loss) for the year attributable to equity shareholders |
|
2,707 |
2,992 |
5,699 |
2,951 |
(6,986) |
(4,035) |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
Earnings per Ordinary share (pence): |
8 |
|
|
|
|
|
|
|
Basic & Diluted |
|
4.11 |
4.54 |
8.65 |
4.43 |
(10.49) |
(6.06) |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
There is no income or expense that is not included in profit/(loss) for the year, and therefore the "Profit/(loss) for the year" is also the "Total comprehensive income for the year", as defined in IAS 1 (revised). |
|||||||
|
All of the profit/(loss) and total comprehensive income is attributable to the equity holders of the parent company. |
|||||||
|
The total column of this statement represents the Statement of Comprehensive Income, prepared in accordance with IFRS. The revenue and capital columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. |
|||||||
|
All items in the above statement derive from continuing operations. |
|||||||
|
The accompanying notes are an integral part of these financial statements. |
|||||||
CONSOLIDATED BALANCE SHEET
|
|
|
As at |
As at |
|
|
|
31 August |
31 August |
|
|
|
2014 |
2013 |
|
|
Notes |
£'000 |
£'000 |
|
Non-current assets |
|
|
|
|
Investments held at fair value through profit or loss |
9 |
68,480 |
66,905 |
|
|
|
__________ |
__________ |
|
Current assets |
|
|
|
|
Cash |
|
861 |
883 |
|
Forward foreign currency contracts |
- |
69 |
|
|
Other receivables |
10 |
551 |
589 |
|
|
|
__________ |
__________ |
|
Total current assets |
|
1,412 |
1,541 |
|
|
|
__________ |
__________ |
|
Total assets |
|
69,892 |
68,446 |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
Bank loan |
11 |
(8,912) |
(9,567) |
|
Forward foreign currency contracts |
(25) |
- |
|
|
Other payables |
|
(226) |
(269) |
|
|
|
__________ |
__________ |
|
Total current liabilities |
|
(9,163) |
(9,836) |
|
|
|
__________ |
__________ |
|
Net assets |
|
60,729 |
58,610 |
|
|
|
__________ |
__________ |
|
|
|
|
|
|
Equity capital and reserves |
|
|
|
|
Equity capital |
12 |
65,936 |
65,936 |
|
Capital reserve |
13 |
(6,129) |
(8,345) |
|
Revenue reserve |
|
922 |
1,019 |
|
|
|
__________ |
__________ |
|
Equity shareholders' funds |
|
60,729 |
58,610 |
|
|
|
__________ |
__________ |
|
|
|
|
|
|
Net asset value per Ordinary share (pence): |
|
|
|
|
Basic & Diluted |
14 |
92.60 |
88.04 |
|
|
|
__________ |
__________ |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
Year ended 31 August 2014 |
|
|
|
|
|
|
|
|
Equity |
Capital |
Revenue |
|
|
|
|
capital |
reserve |
reserve |
Total |
|
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 31 August 2013 |
|
65,936 |
(8,345) |
1,019 |
58,610 |
|
Profit for the year attributable to equity holders |
|
- |
2,992 |
2,707 |
5,699 |
|
Dividends paid |
7 |
- |
- |
(2,804) |
(2,804) |
|
Purchase of own shares to be held in treasury |
- |
(776) |
- |
(776) |
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
Balance at 31 August 2014 |
65,936 |
(6,129) |
922 |
60,729 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 August 2013 |
|
|
|
|
|
|
|
|
Equity |
Capital |
Revenue |
|
|
|
|
capital |
reserve |
reserve |
Total |
|
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 31 August 2012 |
|
65,936 |
(1,359) |
898 |
65,475 |
|
(Loss)/profit for the year attributable to equity holders |
|
- |
(6,986) |
2,951 |
(4,035) |
|
Dividends paid |
7 |
- |
- |
(2,830) |
(2,830) |
|
|
_______ |
_______ |
_______ |
_______ |
|
|
Balance at 31 August 2013 |
65,936 |
(8,345) |
1,019 |
58,610 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the financial statements. |
|
||||
CONSOLIDATED CASH FLOW STATEMENT
|
|
Year ended |
Year ended |
|
|
31 August 2014 |
31 August 2013 |
|
|
£'000 |
£'000 |
|
Dividend income |
1,299 |
1,237 |
|
Fixed interest income |
2,181 |
2,364 |
|
Deposit interest |
1 |
4 |
|
Investment management fee paid |
(662) |
(738) |
|
Other cash expenses |
(529) |
(504) |
|
|
_______ |
_______ |
|
Cash generated from operating activities before finance costs and taxation |
2,290 |
2,363 |
|
Interest paid |
(134) |
(150) |
|
Withholding taxes paid |
(121) |
(100) |
|
|
_______ |
_______ |
|
Net cash inflow from operating activities |
2,035 |
2,113 |
|
|
|
|
|
Cash flows from investing activities |
|
|
|
Purchases of investments |
(7,460) |
(16,921) |
|
Proceeds from sales of investments |
9,023 |
17,751 |
|
|
_______ |
_______ |
|
Net cash inflow from investing activities |
1,563 |
830 |
|
|
|
|
|
Cash flows from financing activities |
|
|
|
Equity dividends paid |
(2,804) |
(2,830) |
|
Loan repaid |
- |
(442) |
|
Repurchase of own shares |
(776) |
- |
|
|
_______ |
_______ |
|
Net cash outflow from financing activities |
(3,580) |
(3,272) |
|
|
_______ |
_______ |
|
Net decrease in cash |
18 |
(329) |
|
Foreign exchange |
(40) |
194 |
|
Cash at start of year |
883 |
1,018 |
|
|
_______ |
_______ |
|
Cash at end of year |
861 |
883 |
|
_______ |
_______ |
_______ |
|
|
|
|
|
The accompanying notes are an integral part of the financial statements. |
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
For the year ended 31 August 2014 |
|
|
|
|
|
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 financial statements consolidate the financial statements of the Company and its wholly-owned subsidiary, Aberdeen Latin American Income Fund LLC (together referred to as the 'Group'). This subsidiary is an integral part of the Company's principal activity. |
|
2. |
Accounting policies |
|||
|
|
(a) |
Basis of preparation |
||
|
|
|
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. They also follow where appropriate the relevant professional guidance of the Association of Investment Companies ("AIC"). The historical cost basis has been used, except in respect of investments and certain related financial instruments. The relevant accounting principles which follow have been consistently applied with the previous year. |
||
|
|
|
|
||
|
|
|
The preparation of financial statements in conformity with IFRS requires the use of accounting estimates which requires management to exercise its judgement in the process of applying the accounting policies. Although these estimates are based on management's best knowledge of current facts, circumstances, future actions and events, actual results may differ from these estimates. The use of accounting estimates did not have a significant impact on the financial statements for the reporting periods presented in the financial statements. |
||
|
|
|
|
||
|
|
|
The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements. Further detail is included in the Statement of Corporate Governance (unaudited) in the Annual Report. |
||
|
|
|
|
||
|
|
|
The consolidated financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated. |
||
|
|
|
|
||
|
|
|
New and amended standards and interpretations |
||
|
|
|
The accounting policies adopted in the current year are consistent with those of the previous year, except that the Company has adopted the following new and revised accounting standards: |
||
|
|
|
IFRS 10 Consolidated Financial Statements |
||
|
|
|
IFRS 12 Disclosure of Interest in Other Entities |
||
|
|
|
IFRS 13 Fair Value Measurement |
||
|
|
|
IAS 27 Separate Financial Statements |
||
|
|
|
|
||
|
|
|
None of the above standards have made a significant impact to the financial performance and position but future periods may be impacted. Of the above standards, IFRS 10 replaces the portion of IAS 27 that addresses the accounting for consolidated financial statements. IFRS 10 establishes a single control model that applies to all entities including special purpose entities. IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 defines fair value as an exit prices. As a result of the guidance in IFRS 13, the Company reassessed its policies for measuring fair values. |
||
|
|
|
|
||
|
|
|
Other amendments apply for the first time in the current financial year. However, they do not impact the financial statements of the Company. |
||
|
|
|
|
||
|
|
|
Standards issued but not yet effective |
||
|
|
|
Standards issued but not yet effective up to the date of issuance of the Company's financial statements are listed below where the directors reasonably expect these to have an impact on the financial statements. The Company intends to adopt applicable standards when they become effective: |
||
|
|
|
Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities |
||
|
|
|
The amendments for investment entities provide an exception to the consolidation requirement for entities that meet the definition of an Investment Entity under IFRS 10 Consolidated Financial Statements and must be applied retrospectively, subject to certain transition relief. The exception to consolidation requires Investment Entities to account for subsidiaries at fair value through profit or loss. Entities are required to apply the amendments for annual periods beginning on or after 1 January 2014 with early adoption permitted. The Directors are currently considering the impact of these amendments and have concluded that at this stage it is too early to determine whether they will materially affect the financial statements. |
||
|
|
|
IFRS 9 Financial Instruments - Classification and Measurement |
||
|
|
|
In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments which reflects all phases of the financial instruments project and replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. |
||
|
|
|
IFRS 15 Revenue from Contracts with Customers |
||
|
|
|
IFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to revenue arising from contracts with customers. Under IFRS 15 revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The principles in IFRS 15 provide a more structured approach to measuring and recognising revenue. The new revenue standard is applicable to all entities and will supersede all current revenue recognition requirements under IFRS. Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2017 with early adoption permitted. |
||
|
|
|
|
||
|
|
(b) |
Basis of consolidation |
||
|
|
|
The financial statements consolidate the financial statements of the Company and its subsidiary, Aberdeen Latin American Income Fund LLC. |
||
|
|
|
|
||
|
|
|
The subsidiary is fully consolidated from the date of its inception on 30 June 2010, being the date on which the Group obtained control, and will continue to be consolidated until the date that such control ceases. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. 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 Group is engaged in a single segment of 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 following table analyses the Group's income by geographical location. The basis for attributing the income is the place of incorporation of the instrument's counterparty. |
||
|
|
|
|
||
|
|
|
|
2014 |
2013 |
|
|
|
|
£'000 |
£'000 |
|
|
|
Argentina |
23 |
36 |
|
|
|
Brazil |
2,180 |
2,352 |
|
|
|
Chile |
93 |
79 |
|
|
|
Columbia |
118 |
26 |
|
|
|
Mexico |
602 |
754 |
|
|
|
Peru |
102 |
92 |
|
|
|
United Kingdom |
2 |
4 |
|
|
|
Uruguay |
510 |
571 |
|
|
|
|
_______ |
_______ |
|
|
|
|
3,630 |
3,914 |
|
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
|
|
The Group's income by investment type is derived 34.2% (2013 - 33.6%) from equities, 65.7% (2013 - 66.3%) from bonds and 0.1% (2013 - 0.1%) from cash holdings. |
||
|
|
|
|
||
|
|
|
Operating revenue from one counterparty which represents more than 10% of the Group's revenues amounted to £963,000 (2013 - £674,000). |
||
|
|
|
|
||
|
|
(d) |
Income |
||
|
|
|
Dividend income from equity investments are recognised in the Consolidated Statement of Comprehensive Income on the ex-dividend date. Dividend income from equity investments where no ex-dividend date is quoted are brought into account when the Group's right to receive payment is established. Where the Group has elected to receive dividends in the form of additional shares rather than in cash, the amount of the cash dividend foregone is recognised as income in the Consolidated Statement of Comprehensive Income. Special dividends are credited to capital or revenue according to their circumstances. |
||
|
|
|
|
||
|
|
|
The fixed returns on debt securities and non-equity shares are recognised using the effective interest rate method. |
||
|
|
|
|
||
|
|
|
Interest income from cash and short-term deposits is accrued to the end of the financial period. |
||
|
|
|
|
||
|
|
(e) |
Expenses and interest payable |
||
|
|
|
All expenses, with the exception of interest, which would be recognised using the effective interest method, are accounted for on an accruals basis. Expenses are charged to the revenue column of the Consolidated Statement of Comprehensive Income except as follows: |
||
|
|
|
the costs incidental to the formation of the Company and the issue of new shares as defined in the prospectus has been charged to capital; |
||
|
|
|
expenses resulting from the acquisition or disposal of an investment are charged to the capital column of the Consolidated Statement of Comprehensive Income and are separately identified and disclosed in note 9 (b); and |
||
|
|
|
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. 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 |
||
|
|
|
Profits arising in the Group for the year ended 31 August 2014 will be subject to Jersey income tax at the rate of 0% (2013 - 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 under taxation. |
||
|
|
|
|
||
|
|
(g) |
Investments held at fair value though profit or loss |
||
|
|
|
Purchases of investments are recognised on a trade-date basis and designated upon initial recognition as held at fair value through profit or loss. 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. These investments also relate to 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 loss, gains and losses on disposal and related transaction costs are recognised in the Consolidated Statement of Comprehensive Income. |
||
|
|
|
|
||
|
|
(h) |
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 within the country of their incorporation.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. 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. |
||
|
|
|
|
||
|
|
(i) |
Cash |
||
|
|
|
Cash comprises cash at banks and short-term deposits. |
||
|
|
|
|
||
|
|
(j) |
Other receivables and payables |
||
|
|
|
Other receivables are classified as loans and receivables. Payables are classified as financial liabilities. They are measured initially at their fair value plus any directly attributable incremental costs of acquisition or issue. Other receivables and payables are subsequently measured at amortised cost using the effective interest method. For other receivables any impairment is considered and recognized in profit or loss. |
||
|
|
|
|
||
|
|
(k) |
Dividends payable |
||
|
|
|
Dividends are recognised in the consolidated financial statements in the period in which they are declared. |
||
|
|
|
|
||
|
|
(l) |
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. These include gains and losses from foreign currency exchange differences. |
||
|
|
|
|
||
|
|
|
Additionally, 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. |
||
|
|
|
|
||
|
|
(m) |
Treasury shares |
||
|
|
|
When the Company purchases its ordinary shares to be held in treasury, the amount of the consideration paid, which includes directly attributable costs, is net of any tax effects, and is recognised as a deduction from the capital reserve. When these shares are sold or reissued 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. |
||
|
|
|
|
||
|
|
(n) |
Subscription shares |
||
|
|
|
The Directors are of the opinion that the Subscription shares of the Company fall within the definition for equity under IAS 32 'Financial Instruments: Presentation'. |
||
|
|
|
|
||
|
|
(o) |
Foreign currency |
||
|
|
|
The consolidated financial statements are presented in sterling which is the Company's functional 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 an exchange gain or loss and recognised in the Consolidated Statement of Comprehensive Income. |
||
|
|
|
|
||
|
|
(p) |
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, as per the Prospectus, is 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. |
||
|
|
|
|
||
|
|
(q) |
Derivative financial instruments |
||
|
|
|
The Group's derivative transactions comprise forward foreign exchange contracts to manage currency risk arising form 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 recognized in the Consolidated Statement of Comprehensive Income. If capital in nature, the change would be recorded as a capital item in that Statement |
||
|
|
|
2014 |
2013 |
|
3. |
Income from investments |
£'000 |
£'000 |
|
|
Dividend income |
1,243 |
1,315 |
|
|
Fixed interest income |
2,385 |
2,595 |
|
|
|
_______ |
_______ |
|
|
|
3,628 |
3,910 |
|
|
|
_______ |
_______ |
|
4. |
Investment management fee |
|
|
The Company has an agreement with Aberdeen Private Wealth Management Limited ("APWML") for the provision of management services. Portfolio management services have been delegated by APWML to Aberdeen Asset Managers Limited. |
|
|
|
|
|
The management fee is 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 APWML at the year end was £113,000 (2013 - £118,000). Investment management fees are charged 40% to revenue and 60% to capital. |
|
|
|
2014 |
2013 |
|
5. |
Other operating expenses |
£'000 |
£'000 |
|
|
Directors' fees |
85 |
85 |
|
|
Promotional activities |
53 |
56 |
|
|
Secretarial and administration fee |
112 |
109 |
|
|
Auditor's remuneration: |
|
|
|
|
- audit fees of the Group's annual accounts |
26 |
25 |
|
|
- other services to the Group |
2 |
- |
|
|
Legal and advisory fees |
7 |
12 |
|
|
Custodian and overseas agents' charges |
72 |
93 |
|
|
Broker fees |
28 |
18 |
|
|
Stock exchange fees |
14 |
13 |
|
|
Other |
81 |
77 |
|
|
|
_______ |
_______ |
|
|
|
480 |
488 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
The Company has an agreement with Aberdeen Asset Management PLC ("AAM PLC") for the provision of promotional activities. The total fees incurred under the agreement during the year were £53,000 (2013 - £56,000), of which £9,000 (2013 - £10,000) was due to AAM PLC 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 £112,000 which increases annually in line with any increase in the UK Retail Price Index. A balance of £19,000 (2013 - £46,000) was due to APWML at the year end. |
||
|
|
|
2014 |
2013 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
6. |
Finance costs |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Bank loans and overdrafts (see note 2 (p)) |
54 |
82 |
136 |
58 |
88 |
146 |
|
|
|
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
|
|
|
2014 |
2013 |
|
7. |
Dividends on equity shares |
£'000 |
£'000 |
|
|
Distributions to equity holders in the period: |
|
|
|
|
Fourth interim dividend for 2013 - 1.25p (2012 - 1.25p) per Ordinary share |
832 |
832 |
|
|
First interim dividend for 2014 - 1.00p (2013 - 1.00p) per Ordinary share |
660 |
666 |
|
|
Second interim dividend for 2014 - 1.00p (2013 - 1.00p) per Ordinary share |
656 |
666 |
|
|
Third interim dividend for 2014 - 1.00p (2013 - 1.00p) per Ordinary share |
656 |
666 |
|
|
|
_______ |
_______ |
|
|
|
2,804 |
2,830 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
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 2014. |
||
|
8. |
Return per Ordinary share |
||||||
|
|
The basic earnings or loss per Ordinary share is based on the profit for the year of £5,699,000 (2013 - loss of £4,035,000) and on 65,921,981 (2013 - 66,572,574) Ordinary shares, being the weighted average number of Ordinary shares in issue during the year. |
||||||
|
|
|
||||||
|
|
The basic earnings or loss per Ordinary share detailed above can be further analysed between revenue return and capital return as follows: |
||||||
|
|
|
||||||
|
|
|
2014 |
2013 |
||||
|
|
Basic |
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
Profit/(loss) (£'000) |
2,707 |
2,992 |
5,699 |
2,951 |
(6,986) |
(4,035) |
|
|
Weighted average number of Ordinary shares in issue ('000) |
|
|
65,922 |
|
|
66,573 |
|
|
Return per Ordinary share (pence) |
4.11 |
4.54 |
8.65 |
4.43 |
(10.49) |
(6.06) |
|
9. |
Investments held at fair value through profit or loss |
2014 |
2013 |
|
|
(a) Group |
£'000 |
£'000 |
|
|
Cost at beginning of year |
75,126 |
76,849 |
|
|
Investment holdings losses at beginning of year |
(8,221) |
(2,912) |
|
|
|
_______ |
_______ |
|
|
Opening valuation |
66,905 |
73,937 |
|
|
Purchases at cost (see section (b) below) |
7,698 |
17,158 |
|
|
Sales |
(9,069) |
(17,755) |
|
|
Sales - realised net losses |
(584) |
(1,126) |
|
|
Increase/(decrease) in fair value of investments |
3,530 |
(5,309) |
|
|
|
_______ |
_______ |
|
|
Closing valuation |
68,480 |
66,905 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
|
2014 |
2013 |
|
|
|
£'000 |
£'000 |
|
|
Closing book cost |
73,171 |
75,126 |
|
|
Closing investment holdings fair value losses |
(4,691) |
(8,221) |
|
|
|
_______ |
_______ |
|
|
Closing valuation |
68,480 |
66,905 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
|
2014 |
2013 |
|
|
Gains/(losses) on investments |
£'000 |
£'000 |
|
|
Realised losses on sales of investments |
(584) |
(1,126) |
|
|
Increase/(decrease) in fair value of investments |
_______ |
_______ |
|
|
|
|
|
|
|
|
2,946 |
(6,435) |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
(b) Transaction costs |
|
|
|
|
During the year expenses such as commissions, stamp duty and other charges incurred in acquiring or disposing of investments through recognised stock exchanges that were classified as fair value through profit or loss have been expensed through the capital column of the Consolidated Statement of Comprehensive Income. These are included within gains and losses on investments at fair value through profit or loss in the Consolidated Statement of Comprehensive Income. The total costs were as follows: |
||
|
|
|
|
|
|
|
|
2014 |
2013 |
|
|
|
£'000 |
£'000 |
|
|
Purchases |
5 |
6 |
|
|
Sales |
4 |
8 |
|
|
|
_______ |
_______ |
|
|
|
9 |
14 |
|
|
|
_______ |
_______ |
|
|
|
2014 |
2013 |
|
10. |
Other receivables |
£'000 |
£'000 |
|
|
Accrued income |
515 |
581 |
|
|
Prepayments |
18 |
8 |
|
|
Due from brokers |
18 |
- |
|
|
|
_______ |
_______ |
|
|
|
551 |
589 |
|
|
|
_______ |
_______ |
|
11. |
Bank loan |
|
|
The Company has a £10 million (2013 - £10 million) revolving multi currency loan facility with Scotiabank Europe plc. At the year end, US$14,800,000 (2013 - US$14,800,000) was drawn down under the facility, fixed to 15 September 2014 at an all-in rate of 1.1068%. |
|
|
|
|
|
On 15 October 2014 US$14,800,000 was drawn down under this facility and fixed to 17 November 2014 at an all-in rate of 1.1046%. |
|
|
|
|
|
The loan outstanding at 31 August 2014 is valued at the closing rate of exchange at the period end, resulting in a foreign exchange loss of £42,000 (2013 - loss of £251,000) against the original cost of the loan. |
|
|
|
2014 |
2013 |
||
|
12. |
Equity capital |
Number |
£'000 |
Number |
£'000 |
|
|
Issued and fully paid - Ordinary shares |
|
|
|
|
|
|
Balance brought forward |
66,572,574 |
65,389 |
66,572,574 |
65,389 |
|
|
Ordinary shares bought back in the period |
(990,000) |
- |
- |
- |
|
|
Subscription shares exercised in the period |
100 |
- |
- |
- |
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
Balance carried forward |
65,582,674 |
65,389 |
66,572,574 |
65,389 |
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
Issued and fully paid - Subscription shares |
|
|
|
|
|
|
Balance brought forward |
10,421,236 |
547 |
10,421,236 |
547 |
|
|
Subscription shares exercised in the period |
(100) |
- |
- |
- |
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
Balance carried forward |
10,421,136 |
547 |
10,421,236 |
547 |
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
Treasury shares |
|
|
|
|
|
|
Balance brought forward |
- |
- |
- |
- |
|
|
Ordinary shares bought back in the period |
990,000 |
- |
- |
- |
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
Balance carried forward |
990,000 |
- |
- |
- |
|
|
|
_______ |
_______ |
|
|
|
|
Equity capital |
76,993,810 |
65,936 |
76,993,810 |
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 2014, 990,000 Ordinary shares were bought back at a total cost of £776,000 including expenses. All of these shares were placed in treasury. Shares held in treasury consisting of 990,000 Ordinary shares represent 1.49% of the Company's total issued share capital at 31 August 2014. |
||||
|
|
|
||||
|
|
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, Aberdeen 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. |
||||
|
|
|
||||
|
|
The Ordinary shares are entitled 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 Subscription share. The Subscription shares carry no rights to receive dividends or other income distributions, whether out of the revenue or other profit of the Company. In addition, the Subscription shares carry no rights to receive any payment out of the assets of the Company on a return of capital on liquidation (whether for the purpose of reorganisation, amalgamation or simple dissolution) or otherwise. |
||||
|
|
|
||||
|
|
During the year ended 31 August 2014, a total of 100 Subscription shares were exercised for a total consideration of £120. At the year end the Company's share capital included 10,421,136 Subscription shares. |
||||
|
|
|
2014 |
2013 |
|
13. |
Capital reserve |
£'000 |
£'000 |
|
|
At beginning of year |
(8,345) |
(1,359) |
|
|
Currency gains |
522 |
13 |
|
|
Movement in investment holdings fair value gains/(losses) |
3,530 |
(5,309) |
|
|
Loss on sales of investments |
(584) |
(1,126) |
|
|
Capitalised expenses |
(476) |
(564) |
|
|
Purchase of own shares to be held in treasury |
(776) |
- |
|
|
|
_______ |
_______ |
|
|
At end of year |
(6,129) |
(8,345) |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
The capital reserve includes losses of £4,691,000 (2013 - losses of £8,221,000) which relate to the revaluation of investments held at the reporting date. |
||
|
14. |
Net asset value per Ordinary share |
|
|
The basic net asset value per Ordinary share is based on a net asset value of £60,729,000 (2013 - £58,610,000) and on 65,582,674 (2013 - 66,572,574) Ordinary shares, being the number of Ordinary shares issued and outstanding at the year end. |
|
|
|
|
|
The diluted net asset value per Ordinary share is calculated by reference to the total number of Ordinary shares in issue at the period end and on the assumption that the Subscription shares which are not subscribed at the period end were subscribed on the first day of the financial period at 120p per share. There is no dilutive impact on the net asset value as the basic net asset value is less than the price at which shares may be subscribed for. |
|
15. |
Financial risk management objectives and policies |
||||||||||||||||||||||
|
|
The Group's objective is noted in the Strategic Report and financial assets and financial liabilities held to meet this objective comprise equities, bonds, forward foreign currency contracts and other derivatives, cash, loans and other financial assets and liabilities. |
||||||||||||||||||||||
|
|
|
||||||||||||||||||||||
|
|
Aberdeen has a rigorous investment management process, which ensures that the investment policy explained in the Strategic Report 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 Aberdeen's Investment Committee. |
||||||||||||||||||||||
|
|
|
||||||||||||||||||||||
|
|
Aberdeen 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 Aberdeen's Performance and Investment Risk Committee which is chaired by Aberdeen'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, Aberdeen's Compliance department continually monitors the Group's investment and borrowing powers and reports to the Aberdeen's Risk Management Committee. |
||||||||||||||||||||||
|
|
|
||||||||||||||||||||||
|
|
The main risks arising from the Group's financial instruments are: (i) market risk; (ii) liquidity risk; and (iii) credit risk. |
||||||||||||||||||||||
|
|
|
||||||||||||||||||||||
|
|
The Board regularly reviews and agrees policies for managing each of these risks, and these are summarised below. These policies have remained unchanged since the inception of the Group. |
||||||||||||||||||||||
|
|
|
||||||||||||||||||||||
|
|
(i) |
Market risk |
|||||||||||||||||||||
|
|
|
Market risk comprises three elements - interest rate risk, foreign currency risk and other price risk. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
Interest rate risk |
|||||||||||||||||||||
|
|
|
Interest rate movements may affect: |
|||||||||||||||||||||
|
|
|
the fair value of the investments in fixed interest rate securities; |
|||||||||||||||||||||
|
|
|
the level of income receivable on cash deposits; |
|||||||||||||||||||||
|
|
|
interest payable on the Group's variable interest rate borrowings. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
Financial assets |
|||||||||||||||||||||
|
|
|
The Group holds a number of fixed rate government bonds. Bond prices are determined by market perception as to the appropriate level of yields given the economic background. Key determinants include economic growth prospects, inflation, the relevant government's fiscal position, short-term interest rates and international market comparisons. The investment manager takes all these factors into account when making any investment decisions as well as considering the financial standing of the potential investee entity. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
Returns from bonds are fixed at the time of purchase, as the fixed coupon payments are known, as are the final redemption proceeds. This means that if a bond is held until its redemption date, the total return achieved is unaltered from its purchase date. However, over the life of a bond the market price at any given time will depend on the market environment at that time. Therefore, a bond sold before its redemption date is likely to have a different price to its purchase level and a profit or loss may be incurred. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
Financial liabilities |
|||||||||||||||||||||
|
|
|
The Group primarily finances its operations through use of equity, bank borrowings and any retained profits. The Group has a revolving multi currency facility, details of which are disclosed in note 11. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
The Board actively monitors its bank borrowings. A decision on whether to roll over its existing borrowings will be made prior to their maturity dates, taking into account the Group's policy of not having any fixed, long-term borrowings. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
Interest rate risk profile |
|||||||||||||||||||||
|
|
|
The interest rate risk profile of the Group, excluding short-term receivables and payables, at 31 August 2014 and 31 August 2013 was as follows: |
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
|
Weighted average |
Weighted average |
|
|
|||||||||||||||||
|
|
|
|
Period for which |
interest |
Fixed |
Floating |
|||||||||||||||||
|
|
|
31 August 2014 |
Years |
% |
£'000 |
£'000 |
|||||||||||||||||
|
|
|
Assets |
|
|
|
|
|||||||||||||||||
|
|
|
Brazilian Government Bonds |
2.83 |
10.32 |
12,708 |
- |
|||||||||||||||||
|
|
|
Colombian Government Bonds |
12.83 |
7.48 |
3,090 |
- |
|||||||||||||||||
|
|
|
Mexican Government Bonds |
9.64 |
6.59 |
5,676 |
- |
|||||||||||||||||
|
|
|
Peruvian Government Bonds |
12.75 |
6.49 |
1,777 |
- |
|||||||||||||||||
|
|
|
Uruguayan Government Bonds |
4.64 |
2.49 |
5,488 |
- |
|||||||||||||||||
|
|
|
Cash - Sterling |
- |
- |
- |
403 |
|||||||||||||||||
|
|
|
Cash - Brazilian Real |
- |
- |
- |
45 |
|||||||||||||||||
|
|
|
Cash - Mexican Pesos |
- |
- |
- |
19 |
|||||||||||||||||
|
|
|
Cash - US Dollars |
- |
- |
- |
394 |
|||||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
|
|
|
|
- |
- |
28,739 |
861 |
|||||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
Weighted |
|
|
|||||||||||||||||
|
|
|
|
Weighted average |
average |
|
|
|||||||||||||||||
|
|
|
|
period for which |
interest |
Fixed |
Floating |
|||||||||||||||||
|
|
|
|
rate is fixed |
rate |
rate |
rate |
|||||||||||||||||
|
|
|
|
Years |
% |
£'000 |
£'000 |
|||||||||||||||||
|
|
|
Liabilities |
|
|
|
|
|||||||||||||||||
|
|
|
Short-term bank loan |
0.04 |
1.11 |
(8,912) |
- |
|||||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
|
|
|
|
- |
- |
(8,912) |
- |
|||||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
Weighted |
|
|
|||||||||||||||||
|
|
|
|
Weighted average |
average |
|
|
|||||||||||||||||
|
|
|
|
period for which |
interest |
Fixed |
Floating |
|||||||||||||||||
|
|
|
|
rate is fixed |
rate |
rate |
rate |
|||||||||||||||||
|
|
|
31 August 2013 |
Years |
% |
£'000 |
£'000 |
|||||||||||||||||
|
|
|
Assets |
|
|
|
|
|||||||||||||||||
|
|
|
Brazilian Government Bonds |
3.77 |
10.03 |
11,908 |
- |
|||||||||||||||||
|
|
|
Mexican Government Bonds |
11.05 |
7.05 |
9,802 |
- |
|||||||||||||||||
|
|
|
Peruvian Government Bonds |
11.87 |
7.02 |
1,286 |
- |
|||||||||||||||||
|
|
|
Uruguayan Government Bonds |
5.59 |
2.79 |
5,623 |
- |
|||||||||||||||||
|
|
|
Cash - Sterling |
- |
- |
- |
115 |
|||||||||||||||||
|
|
|
Cash - Brazilian Real |
- |
- |
- |
690 |
|||||||||||||||||
|
|
|
Cash - US Dollars |
- |
- |
- |
78 |
|||||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
|
|
|
|
- |
- |
28,619 |
883 |
|||||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
Liabilities |
|
|
|
|
|||||||||||||||||
|
|
|
Short-term bank loan |
0.06 |
1.44 |
(9,567) |
- |
|||||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
|
|
|
|
- |
- |
(9,567) |
- |
|||||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
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 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 100 basis points higher or lower and all other variables were held constant, the Group's profit for the year ended 31 August 2014 would increase / decrease by £207,000 (2013 - £199,000). This is attributable to the Group's exposure to interest rates on its floating rate cash balances, fixed interest securities and bank loan. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
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 Company's total return and net assets can be significantly affected by currency translation movements as the majority of the Company's assets and income are denominated in currencies other than Sterling, which is the Company'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 country of origin: |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
|
31 August 2014 |
31 August 2013 |
|||||||||||||||||||
|
|
|
|
|
Net |
Total |
|
Net |
Total |
|||||||||||||||
|
|
|
|
|
monetary |
currency |
|
monetary |
currency |
|||||||||||||||
|
|
|
|
Investments |
liabilities |
exposure |
Investments |
liabilities |
exposure |
|||||||||||||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|||||||||||||||
|
|
|
Argentinian Peso |
1,152 |
- |
1,152 |
1,514 |
- |
1,514 |
|||||||||||||||
|
|
|
Brazilian Real |
39,675 |
246 |
39,921 |
37,015 |
1,194 |
38,209 |
|||||||||||||||
|
|
|
Chilean Peso |
2,867 |
- |
2,867 |
2,566 |
- |
2,566 |
|||||||||||||||
|
|
|
Colombian Peso |
4,340 |
41 |
4,381 |
1,239 |
- |
1,239 |
|||||||||||||||
|
|
|
Mexican Peso |
12,666 |
189 |
12,855 |
17,662 |
(66) |
17,596 |
|||||||||||||||
|
|
|
Peruvian Nuevo Sol |
2,292 |
13 |
2,305 |
1,286 |
116 |
1,402 |
|||||||||||||||
|
|
|
Uruguayan Peso |
5,488 |
115 |
5,603 |
5,623 |
121 |
5,744 |
|||||||||||||||
|
|
|
US Dollar |
- |
(9,210) |
(9,210) |
- |
(9,516) |
(9,516) |
|||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|||||||||||||||
|
|
|
|
68,480 |
(8,606) |
59,874 |
66,905 |
(8,151) |
58,754 |
|||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
Foreign currency sensitivity |
|||||||||||||||||||||
|
|
|
The following table details the Group's sensitivity to a 10% increase/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. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
|
2014 |
2013 |
|||||||||||||||||||
|
|
|
|
10% increase |
10% decrease |
10% increase |
10% decrease |
|||||||||||||||||
|
|
|
|
in Sterling |
in Sterling |
in Sterling |
in Sterling |
|||||||||||||||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|||||||||||||||||
|
|
|
Argentinian Peso |
(115) |
115 |
(151) |
151 |
|||||||||||||||||
|
|
|
Brazilian Real |
(3,992) |
3,992 |
(3,821) |
3,821 |
|||||||||||||||||
|
|
|
Chilean Peso |
(287) |
287 |
(257) |
257 |
|||||||||||||||||
|
|
|
Colombian Peso |
(438) |
438 |
(124) |
124 |
|||||||||||||||||
|
|
|
Mexican Peso |
(1,286) |
1,286 |
(1,760) |
1,760 |
|||||||||||||||||
|
|
|
Peruvian Nuevo Sol |
(230) |
230 |
(140) |
140 |
|||||||||||||||||
|
|
|
Uruguayan Peso |
(560) |
560 |
(574) |
574 |
|||||||||||||||||
|
|
|
US Dollar |
921 |
(921) |
952 |
(952) |
|||||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
|
|
|
|
(5,987) |
5,987 |
(5,875) |
5,875 |
|||||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
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 Company'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 other price risk. Aberdeen 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 recognised stock exchanges. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
Other price risk sensitivity |
|||||||||||||||||||||
|
|
|
If market prices at 31 August 2014 had been 10% higher or lower while all other variables remained constant, the return attributable to Ordinary shareholders for the year ended 31 August 2014 would have increased/(decreased) by £3,974,000 (2013 - £3,829,000) and equity reserves would have increased/(decreased) by the same amount. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
(ii) |
Liquidity risk |
|||||||||||||||||||||
|
|
|
Liquidity risk is defined as the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. 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 2014. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
Maturity profile |
|||||||||||||||||||||
|
|
|
The following table sets out the carrying amount, by maturity, of the Group's financial instruments at 31 August 2014: |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
|
|
Due |
|
|
|||||||||||||||||
|
|
|
|
Due |
between |
Due |
|
|||||||||||||||||
|
|
|
|
within |
3 months |
after |
|
|||||||||||||||||
|
|
|
|
3 months |
and 1 year |
1 year |
Total |
|||||||||||||||||
|
|
|
31 August 2014 |
£'000 |
£'000 |
£'000 |
£'000 |
|||||||||||||||||
|
|
|
Fixed rate |
|
|
|
|
|||||||||||||||||
|
|
|
Bonds |
- |
- |
28,739 |
28,739 |
|||||||||||||||||
|
|
|
Bank loan |
(8,916) |
- |
- |
(8,916) |
|||||||||||||||||
|
|
|
Forward foreign currency contracts |
(25) |
- |
- |
(25) |
|||||||||||||||||
|
|
|
Other payables |
(226) |
- |
- |
(226) |
|||||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
|
|
|
|
(9,167) |
- |
28,739 |
19,572 |
|||||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
|
|
|
Floating rate |
|
|
|
|
|||||||||||||||||
|
|
|
Cash |
861 |
- |
- |
861 |
|||||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
Due |
|
|
|||||||||||||||||
|
|
|
|
Due |
between |
Due |
|
|||||||||||||||||
|
|
|
|
within |
3 months |
after |
|
|||||||||||||||||
|
|
|
|
3 months |
and 1 year |
1 year |
Total |
|||||||||||||||||
|
|
|
31 August 2013 |
£'000 |
£'000 |
£'000 |
£'000 |
|||||||||||||||||
|
|
|
Fixed rate |
|
|
|
|
|||||||||||||||||
|
|
|
Bonds |
- |
- |
28,619 |
28,619 |
|||||||||||||||||
|
|
|
Bank loan |
(9,571) |
- |
- |
(9,571) |
|||||||||||||||||
|
|
|
Other payables |
(269) |
- |
- |
(269) |
|||||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
|
|
|
|
(9,840) |
- |
28,619 |
18,779 |
|||||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
|
|
|
Floating rate |
|
|
|
|
|||||||||||||||||
|
|
|
Cash |
883 |
- |
- |
883 |
|||||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
(iii) |
Credit risk |
|||||||||||||||||||||
|
|
|
Credit risk relates to the 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 managed as follows: |
|||||||||||||||||||||
|
|
|
investment transactions are carried out with a large number of brokers, whose credit standing is reviewed regularly by Aberdeen's Counterparty Credit Risk department, 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 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. Aberdeen's Compliance department carries out periodic reviews of the custodian's operations and reports its findings to Aberdeen'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: |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
|
2014 |
2013 |
|||||||||||||||||||
|
|
|
|
Balance |
Maximum |
Balance |
Maximum |
|||||||||||||||||
|
|
|
|
Sheet |
exposure |
Sheet |
exposure |
|||||||||||||||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|||||||||||||||||
|
|
|
Non-current assets |
|
|
|
|
|||||||||||||||||
|
|
|
Bonds at fair value through profit or loss |
28,739 |
28,739 |
28,619 |
28,619 |
|||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
Current assets |
|
|
|
|
|||||||||||||||||
|
|
|
Cash |
861 |
861 |
883 |
883 |
|||||||||||||||||
|
|
|
Other receivables |
551 |
551 |
589 |
589 |
|||||||||||||||||
|
|
|
Forward foreign currency contracts |
- |
- |
69 |
69 |
|||||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
|
|
|
|
30,151 |
30,151 |
30,160 |
30,160 |
|||||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
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 S&P credit ratings for the bond portfolio at 31 August 2014 and 31 August 2013: |
|||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
2014 |
2013 |
|||||||||||||||||||
|
|
|
|
£'000 |
£'000 |
|||||||||||||||||||
|
|
|
A |
5,676 |
- |
|||||||||||||||||||
|
|
|
A- |
679 |
22,422 |
|||||||||||||||||||
|
|
|
BBB |
3,090 |
- |
|||||||||||||||||||
|
|
|
BBB- |
5,488 |
5,623 |
|||||||||||||||||||
|
|
|
BBB+ |
12,708 |
- |
|||||||||||||||||||
|
|
|
Non-rated |
1,098 |
574 |
|||||||||||||||||||
|
|
|
|
_______ |
_______ |
|||||||||||||||||||
|
|
|
|
28,739 |
28,619 |
|||||||||||||||||||
|
|
|
|
_______ |
_______ |
|||||||||||||||||||
|
16. |
Capital management policies and procedures |
||
|
|
The Group's capital management objectives are: |
||
|
|
to ensure that the Group will be able to continue as a going concern; and |
||
|
|
to maximise the income and capital return to its equity shareholders through an appropriate balance of equity capital and debt. The policy is that gross debt should not exceed 20% of net assets. |
||
|
|
|
|
|
|
|
|
2014 |
2013 |
|
|
|
£'000 |
£'000 |
|
|
Gross debt |
8,912 |
9,567 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
Equity |
|
|
|
|
Equity capital |
65,936 |
65,936 |
|
|
Retained earnings and other reserves |
(5,207) |
(7,326) |
|
|
|
_______ |
_______ |
|
|
Net assets |
60,729 |
58,610 |
|
|
|
_______ |
_______ |
|
|
Gross debt as a % of net assets |
14.7% |
16.3% |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
The Board, with the assistance of Aberdeen 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 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 (ie. the level of share price discount); |
||
|
|
the need for new issues of Ordinary shares; and |
||
|
|
the extent to which revenue in excess of that which is required to be distributed should be retained. |
||
|
17. |
Related party transactions and transactions with the Manager |
|
|
Fees payable during the year to the Directors are disclosed within the Directors' Remuneration Report in the Annual Report. |
|
|
|
|
|
Mr R Prosser is a partner of Appleby Group and a director of its wholly-owned trust company, Appleby Trust (Jersey) Limited, which provides legal services to the Company on an ad-hoc basis. During the year no services were provided (2013 - services amounted to £3,000). |
|
|
|
|
|
Mr M J Gilbert is a director of Aberdeen Asset Management PLC, of which Aberdeen Private Wealth Management Limited ("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 4 and 5. Mr Gilbert does not draw a fee for providing his services as a Director of the Company. |
|
|
|
|
|
The Company has in place a Subscription share and lock-in agreement with APWML dated 14 July 2010 which provided for the purchase by APWML of 5,210,618 Subscription shares issued by the Company on the basis of 1 Subscription share for every 10 Ordinary shares, which were allotted and issued in August 2010. |
|
18. |
Controlling party |
|
|
The Company has no immediate or ultimate controlling party. |
|
19. |
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 (ie. as prices) or indirectly (ie. derived from prices); and |
||||
|
|
- |
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs) of which there were none at 31 August 2014 and 31 August 2013. |
||||
|
|
|
|
||||
|
|
The financial assets and liabilities measured at fair value in the Consolidated Balance Sheet grouped into the fair value hierarchy at 31 August 2014 as follows: |
|||||
|
|
|
|||||
|
|
|
|
Level 1 |
Level 2 |
Total |
|
|
|
|
Note |
£'000 |
£'000 |
£'000 |
|
|
|
Financial assets/(liabilities) at fair value through profit or loss |
|
|
|
|
|
|
|
Quoted equities |
a) |
39,741 |
- |
39,741 |
|
|
|
Quoted bonds |
b) |
23,035 |
5,704 |
28,739 |
|
|
|
Forward foreign currency contracts |
c) |
- |
(25) |
(25) |
|
|
|
Financial liabilities at amortised cost |
d) |
- |
(8,912) |
(8,912) |
|
|
|
|
|
_______ |
_______ |
_______ |
|
|
|
Net fair value |
|
62,776 |
(3,233) |
59,543 |
|
|
|
|
|
|
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1 |
Level 2 |
Total |
|
|
As at 31 August 2013 |
Note |
£'000 |
£'000 |
£'000 |
|
|
|
Financial assets/(liabilities) at fair value through profit or loss |
|
|
|
|
|
|
|
Quoted equities |
a) |
38,286 |
- |
38,286 |
|
|
|
Quoted bonds |
b) |
22,441 |
6,178 |
28,619 |
|
|
|
Forward foreign currency contracts |
c) |
- |
69 |
69 |
|
|
|
Financial liabilities at amortised cost |
d) |
- |
(9,567) |
(9,567) |
|
|
|
|
|
_______ |
_______ |
_______ |
|
|
|
Net fair value |
|
60,727 |
(3,320) |
57,407 |
|
|
|
|
|
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
There were no assets for which significant unobservable inputs (Level 3) were used in determining fair value during the years ended 31 August 2014 and 31 August 2013. For the years ended 31 August 2014 and 31 August 2013 there were no transfers between any level. |
|||||
|
|
|
|||||
|
|
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 Level 1 quoted government bonds has been determined by reference to their quoted bid prices in active markets. The fair value of Level 2 quoted government bonds has been determined by reference to their quoted bid prices which are adjusted for indexation arising from the movement of the Consumer Prices Index within the country of their incorporation. |
||||
|
|
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. |
||||
|
|
d) |
Financial liabilities at amortised cost |
||||
|
|
|
Financial liabilities in the form of short term borrowings are held at amortised cost. The fair value is considered to be the same as the carrying value and is categorised as Level 2. |
||||
The Annual General Meeting will be held at 10.00 a.m. on 9 December 2014 at 1st 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 2014 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 financial statements 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, 1st Floor, Sir Walter Raleigh House, 48 - 50 Esplanade, St Helier, Jersey JE2 3QB 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
4 November 2014
This information is provided by RNS
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