Half Yearly Report

RNS Number : 5906D

Aberdeen Latin American Inc Fd Ltd

27 April 2017

 

27 April 2017

Aberdeen Latin American Income Fund Limited

Legal Entity Identifier (LEI): 549300DN623WEGE2MY04

Half Yearly Results for the Six Months to 28 February 2017

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 2017	31 August 2016	% change
Total assets (£'000)	59,425	55,963	+6.2
Equity shareholders' funds (£'000)	52,925	48,463	+9.2
Net asset value per Ordinary share	83.52p	75.54p	+10.6
Ordinary share price (mid-market)	74.38p	66.63p	+11.6
Discount to net asset value on Ordinary shares	10.9%	11.8%

Performance (total return){A}	Six months ended	Year ended
	28 February 2017	31 August 2016
Ordinary share net asset value	+13.1%	+46.2%
Ordinary share price	+14.6%	+36.7%
Composite MSCI EM Latin American 10/40 Index/JP Morgan GBI-EM Global Diversified Index (Latin America carve out)(sterling adjusted)	+13.0%	+38.8%
Source: Aberdeen Asset Management, JP Morgan, Lipper and Morningstar.
{A}Total return represents the capital return plus dividends reinvested.

INTERIM BOARD REPORT - CHAIRMAN'S STATEMENT

Overview

Latin American markets rose over the six months to 28 February 2017, as prices of commodities recovered and the macroeconomic outlook for the region improved. Most regional stock markets made gains despite Donald Trump's US presidential election victory and the US Federal Reserve's 25-basis-point interest rate increase in December, while their currencies also strengthened against the US dollar. The notable exception was the Mexican Peso, which lost ground as markets priced in a substantial risk premium to reflect the impact of the possible changes in US foreign and trade policies.

In the six month period ended 28 February 2017, the NAV total return (capital return plus dividends reinvested) in sterling terms rose by 13.1% which compared to the rise in the composite benchmark total return of 13.0% for the same period. The Ordinary shares delivered a share price total return of 14.6% for the six months.

Brazil led the rally, as President Michel Temer pressed on with structural reforms, foremost among which were a 20-year freeze on social spending and efforts to overhaul the pension system. President Temer also vetoed a bill offering relief to debt-ridden states. While these attempted to limit the government's fiscal deficit, expansionary measures were also implemented, such as new small business loans and payroll-tax deductions. Although unemployment remained at a record high, the contraction in GDP decelerated, suggesting the economy was working its way out of an economic recession. Inflation eased by more than expected, inching closer towards the official 4.5% target, and the central bank cut rates twice in as many months. The build-up of further rate cut expectations contributed to a strong rally on the bond market. The rally in Brazil's equity and debt markets had a significant positive impact on the Company's performance.

In contrast, Mexico's debt and equity markets as well as its currency were the worst performers in the region. This was due largely to its significant links to the US, its biggest trading partner. Trump's pledge to renegotiate Nafta, impose a border tax, build a border wall and tweets deriding companies with factories there producing goods for the US market amplified concerns about the fate of the domestic economy if these threats were to materialise. At home, political rumblings grew louder after President Enrique Peña Nieto removed gas subsidies as part of broader energy sector reforms. Inflation spiked and his approval rating dropped to the lowest of any Mexican president. Meanwhile, the central bank attempted to support the battered currency by raising interest rates three times in the wake of Trump's election win.  The Company maintained underweight exposure to Mexican debt and equity markets during the reporting period.

Elsewhere, markets in Chile and Peru rose as commodities rebounded, particularly the price of copper. In Chile, the central bank cut interest rates in January for the first time since 2014, as economic growth faltered and inflation fell to its lowest level in three years. In Peru, newly-elected President Pedro Pablo Kuczynski passed new anti-corruption laws and vowed to boost infrastructure investments. Further north, Colombia's protracted negotiations with rebel group Farc resulted in a peace deal that involved disarmament and re-integration into society.

Dividends

We have declared a second interim dividend of 0.875p per Ordinary share in respect of the year to 31 August 2017 payable on 12 May 2017 to Ordinary shareholders on the register on the record date of 28 April 2017.  As indicated at the time of the Annual Report, the Board will keep the level of dividends payable to shareholders under careful review but it remains the Board's intention to pay an annual dividend of at least 3.5p per Ordinary share for the financial year ending 31 August 2017. Dividends remain subject to investee company performance, the level of income from investments and currency movements.

Gearing and Share Capital

The Company has remained geared throughout the period with £6.5 million drawn under the £10 million multi-currency revolving credit facility provided by Scotiabank Europe PLC.  The facility is due to mature in August 2017 and the Directors will review renewal options in the run up to the repayment date.  At the period end there was net gearing of 11.6%.

During the period 784,000 Ordinary shares were purchased in the market at a discount to the prevailing NAV per share (ex income).  Subsequent to the period end a further 491,000 Ordinary shares have been purchased for treasury.  At the time of writing, the Ordinary shares are trading at a discount of 8.7% to the NAV (ex income).

Aberdeen

The Board notes the recent announcement of the proposed recommended merger between Aberdeen and Standard Life. It is clearly early days in this transaction, which is subject to shareholder and regulatory approvals.  Aberdeen has informed the Board that both companies have committed to set up a highly experienced and dedicated integration team and to ensure that the Company's existing investment management team will remain focussed on looking after the interests of the Company and its shareholders.  The Board will aim to ensure that this remains the case and that excellent client service is maintained.

Outlook

The Investment Manager maintains its constructive view on the region's fixed income markets. Most regional currencies have appreciated since recording their weakest levels a year ago, and this combined with only very gradual recovery in domestic demand support on-going disinflation. Slower consumer price growth allows the regional central banks to remove the monetary tightening enacted over the last few years in the face of the spike in inflation. In Brazil the central bank can go much further, as the fiscal measures implemented by the government should result in a structural fall in the real rate. And even Mexico, where inflation is still on the rise, could be approaching the end of its monetary tightening cycle.

Latin America is likely to enjoy its good run for some time, despite ongoing macroeconomic challenges. Many governments in the region have learnt to be more prudent in managing their national finances. In response to the Trump administration's isolationist policies, many have taken the initiative and started to actively seek new avenues for trade, such as with the EU and China, as well as among themselves. Relative stability in oil and commodity prices should benefit Latin America's various economies that rely on such exports.

Notably, the Brazilian stock market is likely to remain buoyant in the foreseeable future on hopes that the recession has bottomed out and the economy is on the verge of a recovery. An influx of foreign investment heralds improving investor confidence, even as the government makes headway with its reform drive.

Mexico, which arguably has the most to lose from Trump's protectionist stance, seems to be coming to terms with the uncertainty. Consumer confidence has been surprisingly resilient since the petrol-price shock at the start of the year, and President Peña Nieto has adopted a proactive stance, urging the US to renegotiate the terms of Nafta sooner rather than later. Elsewhere, the upcoming Chilean presidential election may present an opportunity for renewal as potential candidates begin to step forward.

A long-term approach to investment means continuously focusing on seeking out and holding companies with good fundamentals that can withstand the test of time. Whatever the economic climate, the portfolio's underlying holdings are led by seasoned management who have faced these kinds of concerns before. Maintaining profit growth and balance sheet strength in spite of the challenging operating conditions are their core priorities. More broadly, the Investment Manager still sees much potential for Latin America, and favours companies that are tapped into their respective domestic growth stories. Short-term share price volatility will give rise to opportunities to add to the Investment Manager's preferred holdings. I remain assured by our Investment Manager's unyielding commitment to maintaining a diversified portfolio that is positioned for the long term.

Richard Prosser

Chairman

27 April 2017

INVESTMENT MANAGER'S REVIEW

Performance Commentary

The market benchmarks for Latin American equities and bonds rose in the six months under review, outperforming the broader emerging market asset class. Asset prices across most of the region were bolstered by more upbeat macroeconomic conditions, falling inflation and the continued rebound in oil prices. Only Mexico bucked the trend, as it bore the brunt of negative sentiment in the wake of Donald Trump's election victory and, in particular, his anti-global trade rhetoric.

Unsurprisingly, the Mexican peso also depreciated, forcing the Mexican central bank to prop it up with four interest rate hikes over the review period. This also marked the start of a more divergent monetary policy in the region, as Argentina, Brazil, Chile and Colombia all cut rates to spur growth in their respective economies. Against this backdrop, the Company's bond portfolio returned 11.36% in sterling terms, outperforming the JPM GBI-EM Global Diversified Latin America Index's 8.98% rise. At the same time the equity portfolio gained 13.35% in sterling terms, underperforming the MSCI Emerging Markets Latin America 10/40 Index's increase of 15.57%.

In the bond portfolio our large underweight position in Mexican bonds and the currency was the largest contributor to the outperformance. Furthermore, off-benchmark exposures to the Uruguayan Peso and Argentinian bonds as well as our overweight exposure to the long end of the Brazilian yield curve also added to relative performance. On the negative side, our underweight in Colombia was a small detractor.

Over the six month period, detracting most from equity performance were the Company's underlying holdings in Brazil. Notably, poultry producer BRF suffered from weak domestic volumes and margin pressure abroad, while Ultrapar's acquisition of Alesat's fuel stations faced regulatory scrutiny over competition in the Brazilian market. Not holding index heavyweight Petrobras was another key detractor, as the state-owned oil company rebounded on the back of rising oil prices and positive governance changes under President Michel Temer's administration. Similarly, a lack of exposure to state-owned lender Banco do Brasil, which outperformed the wider market, also proved costly.

Elsewhere, stock selection in Mexico and Peru had a negative impact on performance. Mexican domestic lender Banorte came under pressure amid market weakness. Meanwhile, the portfolio's sole Peruvian holding Grana y Montero suffered on concerns over the cancellation of a gas pipeline project following the involvement of one of its partners - the Brazilian company Odebrecht - in corruption allegations.

In contrast, our overweight exposure to Brazil and underweight to Mexico were significant contributors to relative equity performance. Mexican shares and the peso weakened, on expectations that Donald Trump's protectionist stance would hurt the economy, whereas the Brazilian stockmarket was buoyed by continued momentum from Temer's austerity drive. At the stock level, the portfolio's commodity-related stocks were among the best contributors to performance. Tenaris, which produces steel pipes for the oil industry, and Bradespar, which holds iron-ore producer Vale, lifted relative returns.

Finally, not holding Brazilian payment processing company Cielo helped, as the stock suffered amid ongoing uncertainty over the regulatory environment whilst footwear retailer Arezzo was another positive contributor, as its quarterly earnings have remained on a solid footing backed by solid revenues and margin expansion.

Portfolio Activity

Over the review period, we introduced Linx, a Brazilian retail-oriented software provider that was trading at attractive valuations. We also added to Ambev and Totvs, on attractive valuations, as well as Femsa and Walmex, following a sell-off in Mexican stocks. We topped up dental service provider Odontoprev as we remain confident in the company despite a period of relative weakness.

Against this, we trimmed our holding in Tenaris following its solid rebound on the back of higher oil prices, Banco Bradesco, following a recovery in Brazilian banking stocks, and Vale, after iron-ore prices rose. We also reduced the portfolio's positions in Andina, Arezzo, Asur and Itau on the back of share price strength.

On the bond side we increased our duration position in Brazil and initiated exposure to Argentinian fixed coupon government bonds dated 2021 and 2026 that pay rewarding levels of interest.

Outlook

Despite much uncertainty swirling around Donald Trump's international trade policies, Latin American markets have performed well and should remain fairly resilient in 2017. This, together with investment inflows into the region, points to signs of improving confidence in the regional economies.

The Brazilian government's continued reform efforts are helping to rebuild credibility, particularly in its ability to manage its economy. On the other hand, while Mexico's assets lagged over the review period, the central bank's sensible monetary policy has helped shore up the peso. The rebound in prices of commodities, combined with moderate economic growth and weaker currency levels has also helped the external rebalancing, resulting in a compression of current account deficits across most countries in the region.

At the corporate level, there are encouraging signs of a turnaround in earnings, supported by improved cost management. We remain confident in the quality of the Company's underlying holdings, while valuations still appear attractive despite the market run-up over the past six months. As bottom-up investors, we continue to favour quality companies with robust balance sheets that can ride on the region's promising growth prospects.

Aberdeen Asset Managers Limited

27 April 2017

INTERIM BOARD REPORT

Going Concern

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.

The Company has a £10 million multi-currency loan facility with Scotiabank Europe plc which is due to mature in August 2017. Closer to the time the Directors will review options to replace the facility. However, at this stage it is too early to confirm that the facility will be renewed. If acceptable terms are available from the existing bankers, or any alternative, the Company expects to continue to access a similarly sized facility. However, should the Board decide not to replace the facility any outstanding borrowing would be repaid through the proceeds of the sale of investments from the portfolio.

The Directors are mindful of the principal risks and uncertainties disclosed below and review on a regular basis forecasts detailing revenue and liabilities and the Company's operational expenses. Consequently the Directors believe that the Company has adequate financial resources to continue its operational existence for the foreseeable future and at least 12 months from the date of this Half Yearly Report. Accordingly, they continue to adopt the going concern basis in preparing the Half Yearly Report.

Related Party Transactions

During the period the the Board decided to reinstate the company secretarial and administration fee which had been previously been waived for the years ending 31 August 2015 and 2016.  Further details of the reinstatement of this fee and other transactions with Aberdeen are disclosed in Note 11.

Principal Risks and Uncertainties

The principal risks and uncertainties affecting the Company are set out in detail on page 10 of the Annual Report and Financial Statements for the year ended 31 August 2016 and have not changed. They can be summarised under the following headings:

-    Investment Strategy and Objectives

-    Investment Portfolio and Investment Management

-    Financial Obligations

-    Financial and Regulatory

-    Operational

-    Income and Dividend

Directors' Responsibility Statement

The Directors are responsible for preparing this Half Yearly Report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge:

-    The condensed set of financial statements has been prepared in accordance with IAS34 "Interim Financial Reporting" and gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and,

-    the Interim Board Report contained within the Half Yearly Report includes a fair review of the information required by 4.2.7R and 4.2.8R of the FCA's Disclosure Guidance and Transparency Rules.

The Half Yearly Report includes a fair review of the information required on material transactions with related parties and any changes to those described in the Annual Report.

For and on behalf of the Board

Richard Prosser

Chairman

27 April 2017

Distribution of Investments

As at 28 February 2017

	Equity	Bonds	Total
Country	%	%	%
Argentina	0.9	1.9	2.8
Brazil	27.2	21.3	48.5
Chile	4.4	-	4.4
Colombia	0.7	9.0	9.7
Mexico	8.4	12.1	20.5
Peru	0.8	4.0	4.8
Uruguay	-	9.3	9.3
	______________	_____________	____________
	42.4	57.6	100.0
	______________	_____________	____________

Statement of Comprehensive Income  

		Six months ended
		28 February 2017
		(unaudited)
		Revenue	Capital	Total
	Notes	£'000	£'000	£'000
Income
Income from investments	3	1,939	-	1,939
Gains/(losses) on financial assets held at fair value through profit or loss			5,271	5,271
Currency losses		-	(441)	(441)
(Losses)/gains 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 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.

Statement of Comprehensive Income (Cont'd)

		Six months ended
		29 February 2016
		(unaudited)
		Revenue	Capital	Total
	Notes	£'000	£'000	£'000
Income
Income from investments	3	1,418	-	1,418
Gains/(losses) on financial assets held at fair value through profit or loss			(467)	(467)
Currency losses		-	(528)	(528)
(Losses)/gains on forward currency contracts held at fair value		-	(132)	(132)
		_________	_________	_________
		1,418	(1,127)	291
		_________	_________	_________
Expenses
Investment management fee		(80)	(120)	(200)
Other operating expenses	4	(168)	-	(168)
		_________	_________	_________
Profit/(loss) before finance costs and taxation		1,170	(1,247)	(77)
Finance costs		(18)	(27)	(45)
		_________	_________	_________
Profit/(loss) before taxation		1,152	(1,274)	(122)
Taxation		-	-	-
		_________	_________	_________
Profit/(loss) for the period		1,152	(1,274)	(122)
		_________	_________	_________
Earnings per Ordinary share (pence)	5	1.78	(1.96)	(0.18)
		_________	_________	_________

Condensed Statement of Comprehensive Income (Cont'd)

		Year ended
		31 August 2016
		(audited)
		Revenue	Capital	Total
	Notes	£'000	£'000	£'000
Income
Income from investments	3	3,544	-	3,544
Gains/(losses) on financial assets held at fair value through profit or loss			13,984	13,984
Currency losses		-	(1,222)	(1,222)
(Losses)/gains on forward currency contracts held at fair value		-	132	132
		_________	_________	_________
		3,544	12,894	16,438
		_________	_________	_________
Expenses
Investment management fee		(181)	(271)	(452)
Other operating expenses	4	(322)	-	(322)
		_________	_________	_________
Profit/(loss) before finance costs and taxation		3,041	12,623	15,664
Finance costs		(40)	(60)	(100)
		_________	_________	_________
Profit/(loss) before taxation		3,001	12,563	15,564
Taxation		(27)	-	(27)
		_________	_________	_________
Profit/(loss) for the period		2,974	12,563	15,537
		_________	_________	_________
Earnings per Ordinary share (pence)	5	4.60	19.44	24.04
		_________	_________	_________

Condensed Balance Sheet

		As at	As at	As at
		28 February 2017	29 February 2016	31 August 2016
		(unaudited)	(unaudited)	(audited)
	Notes	£'000	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss		58,423	39,545	55,177
		_________	_________	_________
Current assets
Cash		350	246	524
Forward foreign currency contracts		239	114	86
Other receivables		729	575	338
		_________	_________	_________
		1,318	935	948
		_________	_________	_________
Current liabilities
Bank loan	8	(6,500)	(6,000)	(7,500)
Forward foreign currency contracts		(42)	(159)	(21)
Other payables		(274)	(141)	(141)
		_________	_________	_________
		(6,816)	(6,300)	(7,662)
		_________	_________	_________
Net current liabilities		(5,498)	(5,365)	(6,714)
		_________	_________	_________
Net assets		52,925	34,180	48,463
		_________	_________	_________
Stated capital and reserves
Stated capital	9	65,936	65,936	65,936
Capital reserve		(14,741)	(32,340)	(18,754)
Revenue reserve		1,730	584	1,281
		_________	_________	_________
Equity shareholders' funds		52,925	34,180	48,463
		_________	_________	_________
Net asset value per Ordinary share (pence)	10	83.52	52.91	75.54
		_________	_________	_________

Condensed Statement of Changes in Equity

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 attributable to equity holders		-	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
		______	______	______	______
Six months ended 29 February 2016 (unaudited)
		Stated	Capital	Revenue
		capital	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000
Balance at 31 August 2015		65,936	(30,722)	658	35,872
(Loss)/profit for the period attributable to equity holders		-	(1,274)	1,152	(122)
Dividends paid	6	-	(154)	(1,226)	(1,380)
Purchase of own shares for treasury		-	(190)	-	(190)
		______	______	______	______
Balance at 29 February 2016		65,936	(32,340)	584	34,180
		______	______	______	______
Year ended 31 August 2016 (audited)
		Stated	Capital	Revenue
		capital	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000
Balance at 31 August 2015		65,936	(30,722)	658	35,872
Profit for the period attributable to equity holders		-	12,563	2,974	15,537
Dividends paid	6	-	(154)	(2,351)	(2,505)
Purchase of own shares for treasury		-	(441)	-	(441)
		______	______	______	______
Balance at 31 August 2016		65,936	(18,754)	1,281	48,463
		______	______	______	______

Condensed Cash Flow Statement

	Six months ended	Six months ended	Year ended
	28 February 2017	29 February 2016	31 August 2016
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Operating activities
Dividend income	119	90	338
Fixed interest income	405	395	1,116
Income from Subsidiary	4,418	1,792	2,302
Investment management fee paid	(189)	(203)	(442)
Other cash expenses	(310)	(71)	(276)
	_________	_________	_________
Cash generated from operating activities before finance costs and taxation	4,443	2,003	3,038
Interest paid	(45)	(44)	(99)
Withholding taxes paid	(7)	(4)	(25)
	_________	_________	_________
Net cash inflow from operating activities	4,391	1,955	2,914
Cash flows from investing activities
Purchases of investments	(4,259)	(1,980)	(3,940)
Sales of investments	2,874	4,262	6,027
	_________	_________	_________
Net cash (outflow)/inflow from investing activities	(1,385)	2,282	2,087
	_________	_________	_________
Cash flows from financing activities
Equity dividends paid	(1,119)	(1,380)	(2,505)
Repurchase of own shares	(555)	(190)	(441)
Loan drawn down	-	6,000	7,500
Loan repaid	(1,000)	(9,157)	(9,157)
	_________	_________	_________
Net cash outflow from financing activities	(2,674)	(4,727)	(4,603)
	_________	_________	_________
Net increase/(decrease) in cash	332	(490)	398
	_________	_________	_________
Analysis of changes in cash during the period
Cash at start of period	524	838	838
Increase/(decrease) in cash as above	332	(490)	398
Effect of foreign exchange rate changes	(506)	(102)	(712)
	_________	_________	_________
Cash at end of period	350	246	524
	_________	_________	_________

Notes to the Financial Statements

For the six month period ended 28 February 2017

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 subsidiary, Aberdeen Latin American Income Fund LLC, is similar in all material respects to that of its Jersey 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 2016 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 2017	29 February 2016	31 August 2016
3.	Income from investments	£'000	£'000	£'000
	Dividend income	219	164	356
	Fixed interest income	873	653	1,654
	Income from Subsidiary	847	601	1,534
		_________	_________	_________
		1,939	1,418	3,544
		_________	_________	_________

		Six months ended	Six months ended	Year ended
		28 February 2017	29 February 2016	31 August 2016
4.	Other operating expenses - revenue	£'000	£'000	£'000
	Directors' fees	38	38	71
	Secretarial and administration fees	57	-	-
	Promotional activities	18	16	32
	Auditor's remuneration
	- fees payable for the audit of the annual accounts	18	14	30
	Legal and advisory fees	4	2	14
	Custodian and overseas agents' charges	21	34	61
	Broker fees	15	15	30
	Stock exchange fees	9	10	17
	Registrar's fees	14	13	17
	Printing	8	10	15
	Other	14	16	35
		_________	_________	_________
		216	168	322
		_________	_________	_________

		Six months ended	Six months ended	Year ended
		28 February 2017	29 February 2016	31 August 2016
5.	Earnings per share	p	p	p
	Ordinary share - basic
	Revenue return	2.46	1.78	4.60
	Capital return	7.17	(1.96)	19.44
		_________	_________	_________
	Total return	9.63	(0.18)	24.04
		_________	_________	_________
	The figures above are based on the following:
		£'000	£'000	£'000
	Revenue return	1,568	1,152	2,974
	Capital return	4,568	(1,274)	12,563
		_________	_________	_________
	Total return	6,136	(122)	15,537
		_________	_________	_________
	Weighted average number of Ordinary shares in issue	63,744,620	64,888,044	64,626,472
		___________	___________	___________

		Six months ended	Six months ended	Year ended
		28 February 2017	29 February 2016	31 August 2016
6.	Dividends on Ordinary shares	£'000	£'000	£'000
	Distributions to equity holders in the period:
	First interim dividend for 2017 - 0.875p (2016 - 1.00p)	558	568	812
	Second interim dividend for 2016 - 0.875p	-	-	567
	Third interim dividend for 2016 - 0.875p	-	-	564
	Fourth interim dividend for 2016 - 0.875p (2015 - 1.25p)	561	812	562
		_________	_________	_________
		1,119	1,380	2,505
		_________	_________	_________

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 Statement of Comprehensive Income, included within gains/(losses) on investment held at fair value through profit or loss. The total costs were as follows:
		Six months ended	Six months ended	Year ended
		28 February 2017	29 February 2016	31 August 2016
		£'000	£'000	£'000
	Purchases	1	2	4
	Sales	1	3	4
		_________	_________	_________
		2	5	8
		_________	_________	_________

8.	Bank loan
	The Company has a £10 million revolving multi-currency facility with Scotiabank Europe plc. At the period end, £6,500,000 (29 February 2016 - £6,000,000); (31 August 2016 - £7,500,000) had been drawn down under the facility, fixed to 20 March 2017 at an all-in rate of 1.218610% (29 February 2016 - 1.46436%; 31 August 2016 - 1.23238%).
	At the date of this Report, £6,500,000 remains drawn down, fixed to 19 May 2017 at an all-in rate of 1.21029%.

		28 February 2017		29 February 2016		31 August 2016
9.	Stated capital	Number	£'000	Number	£'000	Number	£'000
	Issued and fully paid
	Ordinary shares in issue	63,368,824	65,936	64,602,824	65,936	64,152,824	65,936
	Ordinary shares held in Treasury	3,204,000	-	1,970,000	-	2,420,000	-
			______		______		______
			65,936		65,936		65,936
			______		______		______
	The Company's Ordinary shares have no par value.
	During the period ended 28 February 2017, 784,000 (29 February 2016 - 420,000, 31 August 2016 - 870,000) Ordinary shares were bought back at a total cost of £555,000 (29 February 2016 - £190,000, 31 August 2016 - £441,000) including expenses, all of which were placed in treasury. At 28 February 2017 there were 3,204,000 (29 February 2016 - 1,970,000, 31 August 2016 - 2,420,000) Ordinary shares held in treasury, which represented 4.81% (29 February 2016 - 2.96%, 31 August 2016 - 3.64%) of the Company's total issued share capital on those dates.
	Following the period end a further 491,000 Ordinary shares have been bought back for treasury at a total cost of £362,000 resulting in there being 62,877,824 Ordinary shares in issue and 3,695,000 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
	Ordinary 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 2017	29 February 2016	31 August 2016
	Attributable net assets to Ordinary shareholders (£'000)	52,925	34,180	48,463
	Number of Ordinary shares in issue	63,368,824	64,602,824	64,152,824
	Net asset value per Ordinary share (p)	83.52	52.91	75.54

11.	Related party transactions and transactions with the Manager
	Mr Gilbert is a director of Aberdeen Asset Management PLC, of which Aberdeen Private Wealth Management Limited ('APWML') is a subsidiary. Management, secretarial and administration services are provided by APWML. Mr Gilbert does 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 £285,000 (29 February 2016 - £200,000; 31 August 2016 - £452,000) of management fees were payable, of which £142,000 (29 February 2016 - £33,000 31 August 2016 - £47,000) was outstanding at the period end.
	During the period fees in respect of promotional activities of £18,000 (29 February 2016 - £16,000; 31 August 2016 - £32,000) were payable with £6,000 (29 February 2016 - £5,000; 31 August 2016 - £5,000) outstanding at the period end.
	Under the terms of the management agreement with the Company, APWML is entitled to receive both a management fee and a company secretarial and administration fee.  The company secretarial and administration fee is based on an annual amount of £114,000 (29 February 2016 - waived; 31 August 2016 - waived), increasing annually in line with any increases in the UK Retail Prices Index, payable quarterly in arrears. During the period £57,000 (29 February 2016 - N/A; 31 August 2016 - N/A) were payable with £57,000 (29 February 2016 - N/A; 31 August 2016 - N/A) outstanding at the period end.  APWML agreed to waive its company secretarial and administration fee of £114,000, for the year ended 31 August 2016 and also for the six month period ended 29 February 2016. This waiver constitutes a smaller related party transaction for the purpose of LR 11.1.10 R of the Financial Conduct Authority's Listing Rules.

12.	Half-Yearly Financial Report
	The financial information for the six months ended 28 February 2017 and for the six months ended 29 February 2016 has not been audited.
	This Half-Yearly Financial Report was approved by the Board on 27 April 2017.

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 2017 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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