Half-year Report

RNS Number : 4437M

Aberdeen Latin American Inc Fd Ltd

30 April 2018

 

30 April 2018

Aberdeen Latin American Income Fund Limited

Legal Entity Identifier (LEI): 549300DN623WEGE2MY04

Half Yearly Results for the Six Months to 28 February 2018

Information disclosed in accordance with paragraph 4.2 of the Disclosure Guidance and Transparency Rules

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.

	28 February 2018	31 August 2017	% change
Total assets (£'000)	58,098	62,670	-7.3
Equity shareholders' funds (£'000)	51,598	56,170	-8.1
Net asset value per Ordinary share	84.47p	90.40p	-6.6
Ordinary share price (mid-market)	72.90p	78.38p	-7.0
Discount to net asset value on Ordinary shares	13.7%	13.3%
Ongoing charges ratio{A}	2.00%	1.98%
{A}        Ongoing charges ratio calculated in accordance with guidance issued by the AIC as the total of the investment management fee and administrative expenses (annualised) divided by the average cum income net asset value throughout the year. The ratio for 28 February 2018 is based on forecast ongoing charges for the year ending 31 August 2018.

Performance (total return){A}
	Six months ended	Year ended
	28 February 2018	31 August 2017
Net asset value	-4.6%	+25.1%
Ordinary share price	-4.8%	+23.7%
Composite MSCI EM Latin American 10/40 Index/JP Morgan GBI-EM Global Diversified Index (Latin America carve out)(sterling adjusted)	-1.3%	+21.4%
{A} Total return represents the capital return plus dividends reinvested.
Source: Standard Life Aberdeen, Lipper and Morningstar.

INTERIM BOARD REPORT - CHAIRMAN'S STATEMENT

Overview

In the six month period ended 28 February 2018, the Net Asset Value ("NAV") total return (capital return plus dividends reinvested) in sterling terms fell by 4.6% which compared to a fall in the composite benchmark total return of 1.3% for the same period. The Ordinary shares delivered a share price total return of -4.8% for the six months.

The modestly positive return of Latin American equities and bonds in local currency terms was eroded by the strength of sterling, which appreciated against most currencies, gaining for instance close to 7% against the US dollar over the six month period.

Latin American saw a roller-coaster period. Markets were buoyed by better commodity prices, but suffered bouts of volatility as investors were jittery over external events, such as US policies, particularly the tariffs on steel and aluminium, which threatened to trigger a global trade war.

However, this was mitigated by positive developments in individual markets. Despite the forthcoming election, among the more resilient was Brazil, which posted solid gains, undeterred by a deteriorating sovereign credit-rating. The economy stayed on track for a recovery after two years of contraction on the back of an improved political outlook and a turnaround in investments. Against a benign inflation backdrop, interest rates fell to a record low. Meanwhile, President Michel Temer avoided two corruption charges, but had to shelve the unpopular but much-needed pension reform to reduce the country's rising debt level, due to lack of support in Congress.

Chile was another outperformer, buoyed by rising copper prices and business-friendly Sebastian Pinera's presidential victory. The election outcome saw a number of the Company's Chilean holdings rally sharply in December, including Banco Santander Chile. Robust domestic consumption and a rebound in investment activity also underpinned the upbeat sentiment. The Company is well-positioned to benefit from a continued upswing in Chile's consumer activity through investments in mall operator Parque Arauco, multi format retailer and consumer credit business Falabella and soft drinks bottler Andina. Business confidence hit a four-year high, reflecting expectations that the next administration would deliver on its pro-market initiatives. Newly-appointed Minister of Finance Felipe Larrain announced a series of austerity measures, including a public-sector spending cut, and a tax reform is also in the pipeline. Elsewhere, Argentine stocks fared well, following President Mauricio Macri's good showing in the congressional mid-term election. He was able to push for a pension overhaul, paving way for more changes towards fiscal consolidation.

In contrast, Mexican equities ended in the red, as economic growth remained subdued following two earthquakes and the slowdown in oil production and construction. Meanwhile, the central bank lifted interest rates to a nine-year high to contain inflation. There were also concerns that the US tax cut could reduce the country's attractiveness as an investment destination. Further weighing on sentiment was the sluggish progress in NAFTA re-negotiation talks. 

Bond markets had a steady performance in local currency terms, supported by decelerating inflation and continued central bank rate cuts. However, as mentioned above, regional currencies depreciated against the broadly strengthening sterling.

Dividends

We have declared a second interim dividend of 0.875p per Ordinary share in respect of the year to 31 August 2018 payable on 11 May 2018 to Ordinary shareholders on the register on the record date of 27 April 2018.

Board Changes

As indicated in the 2017 Annual Report, Martin Gilbert retired as a Director following the Annual General Meeting on 7 December 2017.  The Board thanks Martin for his wise stewardship and contribution to Board deliberations during his tenure.  The Board is pleased that Hazel Adam has joined the Board as a non-executive Director from 27 April 2018.  Hazel was selected from a shortlist of strong candidates. 

Share Capital

During the period 1,052,500 Ordinary shares were purchased in the market at a weighted average discount of 11.9% to the prevailing NAV per share (ex income). Subsequent to the period end a further 420,000 Ordinary shares have been purchased for treasury. At the date of this report, there are 60,665,324 Ordinary Shares in issue and 5,907,500 held in treasury and the Ordinary shares are trading at a discount of 12.5% to the NAV (ex income).

PRIIPS (Packaged Retail and Insurance-based Investment Products)

Investors should be aware that the PRIIPS Regulation requires the Manager, as PRIIP manufacturer, to prepare a key information document ("KID") in respect of the Company. This KID must be made available by the Manager to retail investors prior to them making any investment decision and is available on the Manager's website. The Company is not responsible for the information contained in the KID and investors should note that the procedures for calculating the risks, costs and potential returns are prescribed by the law. The figures in the KID may not reflect the expected returns for the Company and anticipated performance returns cannot be guaranteed.

Loan Facility

During 2017 the Company entered into a new unsecured three year £8 million multi-currency revolving facility agreement with Scotiabank (Ireland) Designated Activity Company (the "New Facility") which replaced a £10 million unsecured facility that matured in August 2017. The existing drawings of £6.5 million were rolled over under the New Facility (see note 8 to the Financial Statements). The Board will continue to monitor the level of gearing under recommendation from the Investment Manager and in the light of market conditions.

Ownership of Manager

The Directors have received regular updates from the Manager on the progress of integration following the merger between Aberdeen Asset Management PLC and Standard Life plc that became effective in August 2017. The Board is reassured to note that the existing management and client servicing teams are unaffected by the merger and the Board will remain vigilant to ensure that the quality of service received from the Manager continues in the future.

Outlook

The outlook for Latin American markets remains positive. Supported by the broadening global growth and stabilised commodity prices, as well as improving fundamentals and benign inflation, the region seems to be in good shape to deal with domestic and external challenges. Its long-term potential lies in the rising wealth of its middle class, relatively low labour costs and an abundance of natural resources.

Also key to Latin America's narrative is its dynamic political landscape. In Chile and Argentina, leadership changes are expected to drive market-friendly reform that imposes fiscal restraint and induces a pickup in investment activity, boosting confidence. In Brazil, the upcoming election is likely to heat up with twelve candidates expected to contest.  Although former president Lula de Silva retains a commanding lead in the polls, his recent prison sentence will make him ineligible to run.  Elsewhere in Mexico, leftist hopeful Andres Manuel Lopez Obrador stays in the lead, with the ruling PRI party facing high rejection rates.  The campaign will likely focus on corruption and public security.

Other persistent risks include a hard landing in China, decline in commodities prices, faster-than-expected rate hikes in the US and tit-for-tat trade wars in developed markets which could all impact emerging markets as an asset class generally. Unfavourable weather could also be a drag on the agricultural sector, a major portion of exports in Brazil and Argentina. Meanwhile, a fallout from NAFTA re-negotiations could curb foreign direct investment in Mexico.

While cognisant of the challenges ahead, your Board remain confident in your Manager's disciplined investment approach, which entails a rigorous due-diligence process to sieve out the best businesses with sound balance sheets and led by prudent management. This disciplined approach should hold your Company's portfolio in good stead and shield it against near-term volatility.

Richard Prosser

Chairman

27 April 2018

INTERIM BOARD REPORT - INVESTMENT MANAGER'S REVIEW

Performance Commentary

Latin American equities were volatile, but ultimately edged higher, in the half-year under review. Markets were buoyed by signs of broadening growth, stabilising commodity prices and an upbeat earnings outlook. However, gains were capped following the passage of a US$1.5 trillion tax reform in the US, which pressured Latin American currencies on worries that the plan could reduce its attractiveness for investments. Risk appetite was also hampered by growing worries of quicker-than-expected rate hikes by the Federal Reserve, which triggered worldwide sell-offs in February. Mexico was additionally pressured by continued uncertainty over the North American Free Trade Agreement (NAFTA) re-negotiations. However, a Brazilian court's decision to uphold former President Lula da Silva's corruption conviction was positive for markets there.

Against this backdrop, your Company's equity portfolio declined marginally by 0.69% in sterling terms, lagging the benchmark MSCI Emerging Markets Latin America 10/40 Index's 1.40% gain.

A major cause of the weaker performance was the portfolio's underlying holdings in Brazil. Not holding state-owned oil giant Petrobas hurt the most, as it rallied on higher oil prices. The new management team's strategy at Petrobas has been well-received by the market, so too their efforts to deleverage the balance sheet.  However we are sceptical of the company's ability to deliver on its ambitious deleverage targets, likewise management's capacity to execute consistently in upstream and focus on efficiencies amidst ongoing political uncertainty in Brazil.  Above all, we remain wary of subpar governance standards at the state-controlled oil and gas company following the Lava Jato scandal.

Holding food producer BRF also proved costly, as investors were jittery after the company appointed a new chief executive, as well as poor full-year results due to higher financial expenses and various one-off factors. The stock suffered from lingering uncertainty over management and oversight, after local pension-fund investors called an extraordinary general meeting to nominate new directors, a move that we support. More recently, headlines about "Carne Fraca" investigation over tainted meat have resurfaced and weighed on BRF's share price. Mall operator Multiplan also fell, succumbing to profit-taking after positive results boosted its shares.

Meanwhile, holding miner Vale and its parent, Bradespar, were somewhat positive. The position in the holding company parent offset the negative impact of not holding enough of the mining subsidiary. Our exposure to Vale is split between itself and Bradespar, given that the latter continues to trade at an attractive discount to the former.

Elsewhere, airport operator Asur suffered from dampened sentiment following natural disasters in Mexico, while lender Banorte was hurt by its acquisition of the infrastructure financier Interacciones, which raised corporate governance concerns.

However, the lack of exposure to several index heavyweights in Mexico, such as media giant Grupo Televisa, cement company Cemex and telecommunications major America Movil proved beneficial, as they tracked the wider market's decline over the period. Also positive was holding steel-pipe manufacturer Tenaris and lender BBVA Banco Frances, as both companies rallied in tandem with the rising market in Argentina.

Latin American bond markets held up well in the face of yet another interest rate hike by the US Federal Reserve in December. Inflation continued to moderate, allowing an easing monetary policy. Over the review period Brazil saw 250bps of interest rate cuts, while central banks in Colombia and Peru both reduced their policy rates by 75bps. Argentina made a futile effort to curb inflation by hiking rates by 250bps in the fourth quarter of 2017.  Subsequently they had to increase the inflation target to more realistic levels which, in turn, was followed by 150bps of rate cuts in January. Mexico was the other outlier seeing inflation rising at the year end, forcing the central bank to hike rates by 50bps.

The Company's bond portfolio saw its value decline by 5.9% in sterling terms, underperforming the JPM GBI-EM Global Diversified Latin America Index's 5.5% fall. While over the review period Latin American local bond markets had a positive overall performance, both in local currency and in US dollar terms, the appreciation of sterling exceeded these gains. Underperformance relative to the benchmark came from not having any exposure to the Chilean peso and an underweight exposure to Colombian bonds and currency, as both countries outperformed their regional peers on the back of the recovery in global commodities prices. However, overweight exposure to Uruguay and to the long end of the Brazilian yield curve had a positive impact on relative performance.

Portfolio Activity

Over the review period, we introduced well-positioned Argentine IT services provider Globant, which was trading at attractive valuations. The software company is focused on the fast-growing digital consulting and emerging technologies businesses, and has a well-diversified client base. Management sees significant potential for growth from its 50 largest accounts, which comprises mostly Fortune 500 companies. In the bond portfolio we rotated part of our exposure in Uruguay into long dated inflation linked bonds, reduced duration in Peru, and switched out of the quasi-sovereign Pemex bonds into Mexican government bonds.

Outlook

The year ahead will see the continuation of broad-based economic recovery in Latin America.  While strengthening domestic demand will be a major driver of growth, the recent rise in commodities prices bodes well for investments.  At the same time inflation is expected to be well contained, allowing the central banks to maintain their current accommodative policies.  Market focus will increasingly be on politics, as elections approach in Colombia, Mexico and Brazil.  This could add volatility and uncertainty, but also opportunities for the Investment Manager should markets overreact.

Encouragingly, earnings expectations are being revised upwards, on the back of company-level efforts to improve margins and allocate capital more efficiently. Meanwhile, valuations are still attractive vis-à-vis global peers. The strengthening fundamentals reinforce the continent's growth potential, underpinned by several long-term positives. An expanding middle class bodes well for consumer holdings; lenders such as Bradesco and Banorte are benefiting from widening access to financial services; while construction, transportation or real estate companies will gain from growing infrastructural demand.

As such, we are optimistic about your Company's outlook. The bond portfolio continues to generate sufficient income, while the underlying corporate holdings' solid balance sheets and sensible management strategies provide us with added confidence. There is also growing acceptance of corporate governance best-practices, though we remain diligent in our engagement efforts to drive improvements. The successful nomination of independent directors to Vale's board is just one recent example. At the same time, we continue to look out for other quality companies that can take advantage of new growth opportunities, to ensure that the portfolio remains well-positioned for the future.

Aberdeen Asset Managers Limited

27 April 2018

Distribution of Investments

As at 28 February 2018

	Equities	Bonds	Total
Country	%	%	%
Argentina	2.1	2.2	4.3
Brazil	32.7	16.5	49.2
Chile	5.3	-	5.3
Colombia	0.8	6.5	7.3
Mexico	11.6	10.7	22.3
Peru	0.9	3.2	4.1
Uruguay	-	7.5	7.5
	53.4	46.6	100.0

Condensed Statement of Comprehensive Income  

		Six months ended
		28 February 2018
		(unaudited)
		Revenue	Capital	Total
	Notes	£'000	£'000	£'000
Income
Income from investments	3	1,600	-	1,600
(Losses)/gains on financial assets held at fair value through profit or loss		-	(3,639)	(3,639)
Currency gains/(losses)		-	13	13
Losses on forward currency contracts held at fair value		-	(43)	(43)
		_________	_________	_________
		1,600	(3,669)	(2,069)
		_________	_________	_________
Expenses
Investment management fee		(117)	(175)	(292)
Other operating expenses	4	(261)	-	(261)
		_________	_________	_________
Profit/(loss) before finance costs and taxation		1,222	(3,844)	(2,622)
Finance costs		(20)	(30)	(50)
		_________	_________	_________
Profit/(loss) before taxation		1,202	(3,874)	(2,672)
Taxation		(33)	-	(33)
		_________	_________	_________
Profit/(loss) for the period		1,169	(3,874)	(2,705)
		_________	_________	_________
Earnings per Ordinary share (pence)	5	1.89	(6.27)	(4.38)
		_________	_________	_________
The profit/(loss) for the period is also the comprehensive income for the period.
The total columns of this statement represent 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 the financial statements.

Condensed Statement of Comprehensive Income (Cont'd)

		Six months ended
		28 February 2017
		(unaudited)
		Revenue	Capital	Total
	Notes	£'000	£'000	£'000
Income
Income from investments	3	1,939	-	1,939
(Losses)/gains on financial assets held at fair value through profit or loss		-	5,271	5,271
Currency gains/(losses)		-	(441)	(441)
Losses on forward currency contracts held at fair value		-	(65)	(65)
		_________	_________	_________
		1,939	4,765	6,704
		_________	_________	_________
Expenses
Investment management fee		(114)	(171)	(285)
Other operating expenses	4	(216)	-	(216)
		_________	_________	_________
Profit/(loss) before finance costs and taxation		1,609	4,594	6,203
Finance costs		(17)	(26)	(43)
		_________	_________	_________
Profit/(loss) before taxation		1,592	4,568	6,160
Taxation		(24)	-	(24)
		_________	_________	_________
Profit/(loss) for the period		1,568	4,568	6,136
		_________	_________	_________
Earnings per Ordinary share (pence)	5	2.46	7.17	9.63
		_________	_________	_________
The accompanying notes are an integral part of the financial statements.

Condensed Statement of Comprehensive Income (Cont'd)

		Year ended
		31 August 2017
		(audited)
		Revenue	Capital	Total
	Notes	£'000	£'000	£'000
Income
Income from investments	3	3,772	-	3,772
(Losses)/gains on financial assets held at fair value through profit or loss		-	9,016	9,016
Currency gains/(losses)		-	(183)	(183)
Losses on forward currency contracts held at fair value		-	(65)	(65)
		_________	_________	_________
		3,772	8,768	12,540
		_________	_________	_________
Expenses
Investment management fee		(233)	(349)	(582)
Other operating expenses	4	(443)	-	(443)
		_________	_________	_________
Profit/(loss) before finance costs and taxation		3,096	8,419	11,515
Finance costs		(36)	(54)	(90)
		_________	_________	_________
Profit/(loss) before taxation		3,060	8,365	11,425
Taxation		(46)	-	(46)
		_________	_________	_________
Profit/(loss) for the period		3,014	8,365	11,379
		_________	_________	_________
Earnings per Ordinary share (pence)	5	4.77	13.23	18.00
		_________	_________	_________
The accompanying notes are an integral part of the financial statements.

Condensed Balance Sheet

		As at	As at	As at
		28 February 2018	28 February 2017	31 August 2017
		(unaudited)	(unaudited)	(audited)
	Notes	£'000	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss		57,603	58,423	61,821
Current assets
Cash		36	350	653
Forward foreign currency contracts		68	239	56
Other receivables		595	729	473
		_________	_________	_________
		699	1,318	1,182
		_________	_________	_________
Current liabilities
Bank loan	8	(6,500)	(6,500)	(6,500)
Forward foreign currency contracts		(1)	(42)	(13)
Other payables		(203)	(274)	(320)
		_________	_________	_________
		(6,704)	(6,816)	(6,833)
		_________	_________	_________
Net current liabilities		(6,005)	(5,498)	(5,651)
		_________	_________	_________
Net assets		51,598	52,925	56,170
		_________	_________	_________
Equity capital and reserves
Equity capital	9	65,936	65,936	65,936
Capital reserve		(16,504)	(14,741)	(11,846)
Revenue reserve		2,166	1,730	2,080
		_________	_________	_________
Equity shareholders' funds		51,598	52,925	56,170
		_________	_________	_________
Net asset value per Ordinary share (pence)	10	84.47	83.52	90.40
		_________	_________	_________

Condensed Statement of Changes in Equity

Six months ended 28 February 2018 (unaudited)
		Stated	Capital	Revenue
		capital	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000
Balance at 31 August 2017		65,936	(11,846)	2,080	56,170
(Loss)/profit for the period		-	(3,874)	1,169	(2,705)
Dividends paid	6	-	-	(1,083)	(1,083)
Purchase of own shares for treasury		-	(784)	-	(784)
		______	______	______	______
Balance at 28 February 2018		65,936	(16,504)	2,166	51,598
		______	______	______	______
Six months ended 28 February 2017 (unaudited)
		Stated	Capital	Revenue
		capital	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000
Balance at 31 August 2016		65,936	(18,754)	1,281	48,463
Profit for the period		-	4,568	1,568	6,136
Dividends paid	6	-	-	(1,119)	(1,119)
Purchase of own shares for treasury		-	(555)	-	(555)
		______	______	______	______
Balance at 28 February 2017		65,936	(14,741)	1,730	52,925
		______	______	______	______
Year ended 31 August 2017 (audited)
		Stated	Capital	Revenue
		capital	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000
Balance at 31 August 2016		65,936	(18,754)	1,281	48,463
Profit for the period		-	8,365	3,014	11,379
Dividends paid	6	-	-	(2,215)	(2,215)
Purchase of own shares for treasury		-	(1,457)	-	(1,457)
		______	______	______	______
Balance at 31 August 2017		65,936	(11,846)	2,080	56,170
		______	______	______	______

Condensed Cash Flow Statement

	Six months ended	Six months ended	Year ended
	28 February 2018	28 February 2017	31 August 2017
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Operating activities
Dividend income	124	119	515
Fixed interest income	660	405	1,465
Income from Subsidiary	565	748	1,407
Investment management fee paid	(295)	(189)	(576)
Other cash expenses	(271)	(310)	(408)
	_________	_________	_________
Cash generated from operating activities before finance costs and taxation	783	773	2,403
Interest paid	(49)	(45)	(89)
Withholding taxes paid	(8)	(7)	(46)
	_________	_________	_________
Net cash inflow from operating activities	726	721	2,268
Cash flows from investing activities
Purchases of investments	(6,386)	(4,259)	(12,957)
Sales of investments	6,063	2,874	12,510
	_________	_________	_________
Net cash outflow from investing activities	(323)	(1,385)	(447)
	_________	_________	_________
Cash flows from financing activities
Equity dividends paid	(1,083)	(1,119)	(2,215)
Repurchase of own shares	(771)	(555)	(1,437)
Capital returned from Subsidiary	864	3,670	3,209
Loan repaid	-	(1,000)	(1,000)
	_________	_________	_________
Net cash (outflow)/inflow from financing activities	(990)	996	(1,443)
	_________	_________	_________
Net (decrease)/increase in cash	(587)	332	378
	_________	_________	_________
Analysis of changes in cash during the period
Cash at start of period	653	524	524
(Decrease)/increase in cash as above	(587)	332	378
Effect of foreign exchange rate changes	(30)	(506)	(249)
	_________	_________	_________
Cash at end of period	36	350	653
	_________	_________	_________

Notes to the Financial Statements

For the six month period ended 28 February 2018

1.	Principal activity
	The Company is a closed-ended investment company incorporated in Jersey. Its Ordinary shares are traded on the London Stock Exchange and are listed in the premium segment of the Financial Conduct Authority's Official List. The Company's principal activity is investing in Latin American securities.
	The principal activity of its Delaware incorporated wholly owned subsidiary, Aberdeen Latin American Income Fund LLC, is similar in all relevant respects to that of its parent.

2.	Accounting policies - basis of preparation
	The Half-Yearly Report has been prepared in accordance with International Accounting Standards (IAS) 34 - 'Interim Financial Reporting'. It has also been prepared using the same accounting policies applied for the year ended 31 August 2017 financial statements (which received an unqualified audit report), and which were prepared in accordance with International Financial Reporting Standards.
	The financial statements have been prepared under a going concern basis. In accordance with the Financial Reporting Council's guidance on 'Going Concern and Liquidity Risk' the Directors have undertaken a review of the Company's assets which primarily consist of a diverse portfolio of listed equity shares, equity-related investments and fixed income investments which, in most circumstances, are realisable within a very short timescale.

		Six months ended	Six months ended	Year ended
		28 February 2018	28 February 2017	31 August 2017
3.	Income from investments	£'000	£'000	£'000
	Dividend income	267	219	518
	Fixed interest income	735	873	1,683
	Income from Subsidiary	598	847	1,571
		_________	_________	_________
		1,600	1,939	3,772
		_________	_________	_________

		Six months ended	Six months ended	Year ended
		28 February 2018	28 February 2017	31 August 2017
4.	Other operating expenses - revenue	£'000	£'000	£'000
	Directors' fees	38	38	75
	Secretarial and administration fees	59	57	114
	Promotional activities	20	18	36
	Auditor's remuneration:
	fees payable for the audit of the annual accounts	15	18	33
	Legal and advisory fees	30	4	2
	Custodian and overseas agents' charges	36	21	64
	Broker fees	15	15	30
	Stock Exchange fees	9	9	19
	Registrar's fees	13	14	19
	Printing	12	8	17
	Other	14	14	34
		_________	_________	_________
		261	216	443
		_________	_________	_________

		Six months ended	Six months ended	Year ended
		28 February 2018	28 February 2017	31 August 2017
5.	Earnings per share	p	p	p
	Ordinary share - basic
	Revenue return	1.89	2.46	4.77
	Capital return	(6.27)	7.17	13.23
		_________	_________	_________
	Total return	(4.38)	9.63	18.00
		_________	_________	_________
	The figures above are based on the following:
		£'000	£'000	£'000
	Revenue return	1,169	1,568	3,014
	Capital return	(3,874)	4,568	8,365
		_________	_________	_________
	Total return	(2,705)	6,136	11,379
		_________	_________	_________
	Weighted average number of Ordinary shares in issue	61,743,487	63,744,620	63,208,980
		_________	_________	_________

		Six months ended	Six months ended	Year ended
		28 February 2018	28 February 2017	31 August 2017
6.	Dividends on Ordinary shares	£'000	£'000	£'000
	Distributions to equity holders in the period:
	Second interim dividend for 2017 - 0.875p	-	-	550
	Third interim dividend for 2017 - 0.875p	-	-	546
	Fourth interim dividend for 2017 - 0.875p (2016 - 0.875p)	543	561	561
	First interim dividend for 2018 - 0.875p (2017 - 0.875p)	540	558	558
		_________	_________	_________
		1,083	1,119	2,215
		_________	_________	_________

7.	Transaction costs
	During the period expenses incurred in acquiring or disposing of investments held at fair value though profit or loss have been expensed through the capital column of the Condensed Statement of Comprehensive Income, included within (losses)/gains on financial assets held at fair value through profit or loss. The total costs were as follows:
		Six months ended	Six months ended	Year ended
		28 February 2018	28 February 2017	31 August 2017
		£'000	£'000	£'000
	Purchases	3	1	4
	Sales	2	1	3
		_________	_________	_________
		5	2	7
		_________	_________	_________

8.	Bank loan
	The Company has a £8 million three year revolving multi-currency facility with Scotiabank (Ireland) Designated Activity Company. At the period end, £6,500,000 (28 February 2017 - £6,500,000; 31 August 2017 - £6,500,000) had been drawn down in Sterling under the facility, fixed to 15 March 2018 at an all-in rate of 1.57031% (28 February 2017 - 1.21861%; 31 August 2017 - 1.32544%).
	At the date of this Report, £6,500,000 remains drawn down, fixed to 16 May 2018 at an all-in rate of 1.60619%.

		28 February 2018		28 February 2017		31 August 2017
9.	Stated capital	Number	£'000	Number	£'000	Number	£'000
	Issued and fully paid
	Ordinary shares in issue	61,085,324	65,936	63,368,824	65,936	62,137,824	65,936
	Ordinary shares held in Treasury	5,487,500	-	3,204,000	-	4,435,000	-
			_______		_______		______
			65,936		65,936		65,936
			_______		_______		______
	The Company's Ordinary shares have no par value.
	During the period ended 28 February 2018, 1,052,500 (28 February 2017 - 784,000; 31 August 2017 - 2,015,000) Ordinary shares were bought back at a total cost of £784,000 (28 February 2017 - £555,000; 31 August 2017 - £1,457,000) including expenses, all of which were placed in treasury. At 28 February 2018 there were 5,487,500 (28 February 2017- 3,204,000; 31 August 2017 - 4,435,000) Ordinary shares held in treasury, which represented 8.24% (28 February 2017 - 4.81%; 31 August 2017 - 6.66%) of the Company's total issued share capital on those dates.
	Following the period end a further 420,000 Ordinary shares have been bought back for treasury at a total cost of £298,000 resulting in there being 60,665,324 Ordinary shares in issue and 5,907,500 Ordinary shares held for treasury at the date this Report was approved. Ordinary shares that have been purchased for treasury are available to be cancelled or sold at a later date.

10.	Net asset value per share
	The basic net asset value per Ordinary share and the net asset values attributable to Ordinary shareholders at the period end calculated in accordance with the Articles of Association were as follows:
		As at	As at	As at
	Basic	28 February 2018	28 February 2017	31 August 2017
	Attributable net assets to Ordinary shareholders (£'000)	51,598	52,925	56,170
	Number of Ordinary shares in issue	61,085,324	63,368,824	62,137,824
	Net asset value per Ordinary share (p)	84.47	83.52	90.40

11.	Related party transactions and transactions with the Manager
	Mr Gilbert was a director of the Company until his resignation on 7 December 2017. Mr Gilbert is a director of Standard Life Aberdeen plc, of which Aberdeen Private Wealth Management Limited ("APWML") is a subsidiary. Management, promotional activities, company secretarial and administration services are provided by APWML. Mr Gilbert did not charge a fee for providing his services as a Director of the Company.
	The management fee is payable monthly in arrears based on an annual amount of 1% of the net asset value of the Company valued monthly. During the period £292,000 (28 February 2017 - £285,000; 31 August 2017 - £582,000) of management fees were payable, of which £49,000 (28 February 2017 - £142,000; 31 August 2017 - £52,000) was outstanding at the period end.
	During the period fees in respect of promotional activities of £20,000 (28 February 2017 - £18,000; 31 August 2017 - £36,000) were payable with £7,000 (28 February 2017 - £6,000; 31 August 2017 - £6,000) outstanding at the period end.
	The company secretarial and administration fee is based on an annual amount of £118,000 (28 February 2017 - £114,000; 31 August 2017 - £114,000), increasing annually in line with any increases in the UK Retail Price Index, payable quarterly in arrears. During the period £59,000 (28 February 2017 - £57,000; 31 August 2017 - £114,000) was payable with £30,000 (28 February 2017 - £57,000; 31 August 2017 - 29,000) outstanding at the period end.
	The Manager has agreed to ensure that the Company's ongoing charges ratio ("OCR") will not exceed 2.0% when calculated annually as at 31 August. Until further notice, to the extent that the OCR ever exceeds 2.0% the Manager will rebate part of its fees in order to bring that ratio down to 2.0%.

12.	Half-Yearly Financial Report
	The financial information for the six months ended 28 February 2018 and for the six months ended 28 February 2017 has not been audited.
	This Half-Yearly Financial Report was approved by the Board on 27 April 2018.

The Half-Yearly Financial Report will be available on the Company's website, www.latamincome.co.uk, and the Half-Yearly Report will be posted to shareholders in May 2018 and copies will be available from the Investment Manager.

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.  Investors may not get back the amount they originally invested

 

END

 

 

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