Half Yearly Report

RNS Number : 1921B

Aberdeen Latin American Inc Fd Ltd

28 March 2013

 



28 March 2013

Aberdeen Latin American Income Fund Limited

Interim Results for the

Period to 28 February 2013

Aberdeen Latin American Income Fund Limited aims to provide Ordinary shareholders with a total return, with an above average yield, primarily through investing in Latin America through a diversified portfolio of equities and fixed income investments

Financial Highlights	28 February 2013	31 August 2012	Change %
Total assets (£'000)	86,916	75,234	+15.5
Equity shareholders' funds (£'000)	76,837	65,475	+17.4
Net asset value per Ordinary share	115.42p	98.35p	+17.4
Ordinary share price (mid-market)	112.25p	94.00p	+19.4
Subscription share price (mid-market)	13.00p	6.00p	+116.7
Discount to net asset value on Ordinary shares	2.7%	4.4%

Performance    {total return A}	Six months ended 28 February 2013		Year ended 31 August 2012
Ordinary share net asset value	+19.9%		+0.5%
Ordinary share price	+22.1%		-4.0%
Composite MSCI EM Latin American 10/40 Index/JP Morgan GBI EM Global Diversified Index (Latin America carve out)(sterling adjusted)	+14.1%		-2.3%
{A}        Total return (capital return plus dividends reinvested)
Source: Aberdeen Asset Management, JP Morgan, Lipper and Morningstar

INTERIM BOARD REPORT - CHAIRMAN'S STATEMENT

Performance and Overview

This report covers the six month period ended 28 February 2013. The NAV total return (capital return plus dividends reinvested) in sterling terms was 19.9% compared to our composite benchmark total return for the period of 14.1%, with both the equity and fixed income portfolios outperforming their respective indices. The Ordinary shares continued to trade satisfactorily with a share price total return of 22.1% for the six months and they stood at a discount of 2.7% to the cum income NAV as at 28 February. At the time of writing this report, the shares are trading at a premium to NAV.

Latin American stockmarkets rallied during the six months ended February, lifted by another round of quantitative easing from the US and Europe's bond-buying plan. Furthermore, improved Chinese economic data boosted sentiment. However, lower commodity prices pared gains, and the US budget cuts and the ongoing Eurozone crisis continued to affect sentiment.

The pace of economic activity varied across the region. In particular, data from Brazil appeared contradictory. Although the country's jobs situation improved and consumer spending was robust, GDP growth slowed markedly to less than 1% in 2012, dragged down by weak investments. In response, the government implemented tax breaks, tendered massive infrastructure schemes and reduced energy prices, while the central bank pared interest rates to 7.25%. Outside of Brazil, the central banks of Chile and Colombia also lowered rates during the year, reflecting the weaker global environment.

Brazil's slowdown weighed on Argentina as well, which counts the nation as its largest trading partner. Argentina's reduced agricultural output and ineffective economic policies had also pared growth. On a positive note, Mexico and Chile's economies recorded healthy expansion rates for the full year, driven by ebullient domestic demand and investment. Colombia's growth rate also exceeded policymakers' forecasts, thanks to a rebound in construction activity.

Sovereign credit ratings also came under the spotlight during the review period.  Fitch lowered its credit rating for Argentina on concerns the country may not be able to service its debt obligations, while the International Monetary Fund began formal censure proceedings against the country to take remedial measures to comply with the Fund's rules on reporting of statistics. Conversely, Chile's debt rating was upgraded to AA- by Standard & Poor's, which cited the economy's resilience amid a global slump.

Dividends

Income returns continue to be in line with expectations and we have declared a second interim dividend of 1p per Ordinary share payable on 30 April 2013 to Ordinary shareholders on the register on the record date of 5 April 2013.

It remains the Company's aim to pay a minimum aggregate dividend of 4.25 pence per share for the year ending 31 August 2013 and to grow dividends over time. This remains subject to investee company performance, the level of income from investments, currency movements and possible unforeseen circumstances and does not constitute a profit forecast.

Gearing

As advised in my Statement which accompanied the Annual Report, we took the decision in May 2012 to draw down the balance of our £10 million multi-currency revolving credit facility allocating the proceeds 25% to equity and 75% to fixed income investments. The facility was fully drawn throughout the period under review and as at the period end, represented a net gearing ratio of 11.9%. It remains fully drawn as at the date of this report. The Investment Manager continues to roll the debt on a short-term basis with the current cost of borrowing fixed at 1.4565% until 22 April 2013.

Outlook

Global markets have remained on tenterhooks following the crisis in Cyprus. Latin American stockmarkets are not immune to such developments, given that the Euro currency bloc is one of its major trading partners. Even though growth is slowing, policymakers have hinted at their inflation worries and the need to hike interest rates. Any monetary tightening is likely to weigh on regional markets and currencies. 

Looking at the region's economic health, structural economic adjustments are needed to address the deterioration in fiscal accounts, particularly in Argentina. Extensive reforms are also necessary in Brazil, though the government's planned round of infrastructure investments is an encouraging start. These measures should boost the sector and help reach the government's target GDP growth rate of 4% this year, while Mexico's efforts to implement fiscal and economic reforms also bode well for its growth outlook. Manufacturing activity in the region's larger nations, Argentina, Brazil and Mexico, is also expected to show an uptick. Notably, the Brazilian government's tax breaks should spur demand, which would in turn, stimulate industrial activity in Argentina.

In terms of valuations, Latin American equities are not as cheap when compared to the broader emerging markets asset class. Nevertheless, your Manager's preference for well-managed consumer-oriented companies is reassuring, as these companies are poised to profit from the continued strength in domestic consumption in Latin America over the longer term.

Richard Prosser

Chairman

28 March 2013

INVESTMENT MANAGER'S REVIEW

Performance and Overview

During the period under review, the value of the equity portfolio rose by 21.57% in sterling terms, outperforming the benchmark MSCI EM Latin America 10/40 Index's total return of 14.79%.

Stock selection in Mexico contributed the most to relative return. Our decision to sell telecommunication services provider America Movil, amid concerns over its recent investments in developed markets, proved particularly beneficial. After the divestment, the stock price fell sharply on the back of disappointing quarterly results, which saw profits depressed by the weakening US dollar and Brazilian real against the Mexican peso. Among our holdings, airport operator OMA's shares rose on increased passenger traffic and solid earnings, while lender Banorte rallied after announcing its acquisition of Bancomer's domestic pension business and robust results driven by solid loan growth.

Conversely, our holding in Argentine specialist pipe maker Tenaris detracted from performance as its shares corrected after outperforming in the previous six months. This was despite healthy quarterly profits. The lack of exposure to miner Grupo Mexico and cement company Cemex also hurt performance. Both their shares rallied strongly but we remain cautious about their aggressive investment strategies.

The fixed income portfolio returned 15.97% compared to the 13.04% total return of the JP Morgan GBI-EM Global Diversified Latin America Index in sterling terms. The outperformance in the main, was the result of the allocation to Uruguay which is non-benchmark weighted but which both outperformed the index and delivered strong currency appreciation.

Portfolio Activity

During the period to 28 February 2013, we introduced Brazilian beer and beverage producer AmBev because of attractive valuations and improvements in its corporate governance. Against this, we sold America Movil. We also divested Brazilian health care insurer Amil after its acquisition by US health insurance company UnitedHealth Group. Elsewhere, we switched our holding in Chilean beverage company Andina's B shares for the more attractively valued A shares.  In the fixed income portfolio, the duration in Brazil was extended.

Country Overview

In Brazil, 2012 fiscal performance was slightly weaker than the government had targeted with the primary balance reaching 1.95% of Gross Domestic Product (GDP), lower than the 2.2% initial aim. The government had to rely on some extraordinary measures including dividends from its state-owned enterprises and a transfer from the country's sovereign wealth fund, but this was not enough to offset weak revenue performance on the back of a slowing economy. Industrial production also declined by 2.7% year on year in 2012, the worst decline since 2009. The central bank of Brazil, having cut its benchmark SELIC rate twice by 50 basis points in July and August and 25 basis points in October 2012 to 7.25%, ended its easing cycle in November ushering in a lower-for-longer era with a statement declaring a "sufficiently long period of time" for stable monetary conditions. The Brazilian Monetary Policy Committee has reduced the rate by a total of 5.25% since the easing cycle started in August 2011.

In Mexico, labour reforms were enacted by the parliament in December 2012 which should provide additional support to the country's competitiveness as further improvements should be seen in formal sector employment.  This paves the way for the possibility of energy reform later in 2013, with the gas sector seen as the easiest area to make progress on. In January, the central bank of Mexico released the minutes from its meeting and surprised the market with a tone which confirmed the bank's willingness to carry out a one-off interest rate cut. Timing will depend on the direction of inflation, growth and the currency. The country's trade balance was in surplus for 2012 at US$163 billion, which was the largest positive balance since 1997, and points to the good performance of manufacturing exports.

In Uruguay, inflation continued to surprise on the upside, with the non-tradables sector being the primary driver. This has a large effect on wage settlements, and with over half the workforce on three year wage agreements which finish in the first half of 2013, expectations will be much higher when negotiations begin. The country's fiscal deficit widened to 2.8% of GDP in 2012, up from 0.8% of GDP in 2011, due to higher fuel purchases by the state-owned petroleum company and increased government transfers.

Outlook

Market uncertainty is likely to persist in the year ahead. Europe's ongoing debt problems could weigh on investors' risk appetite. China's recovery will be closely watched as any slowdown will hurt Latin American commodity exports. The sequester in the US could be a further dampener, particularly for Mexico, which exports a significant amount to its northern neighbour. Much hinges on whether new president Enrique Pena Nieto will be able to carry out the reforms necessary to aid private investments. The region's largest economy Brazil is gaining traction although growth will likely be sluggish, delaying the possibility of aggressive monetary tightening despite rising inflation. Nevertheless, lower borrowing costs and tax cuts should provide Brazilian businesses some respite. Meanwhile, Chile, which faces a presidential election in November, continues to see strong internal demand amid a tight labour market, bolstering the potential for rate hikes this year. Over in Colombia, where GDP remains above the regional average, an anticipated end to the long-running conflict with rebel group FARC will provide a welcome boost to political stability.

Against this backdrop, we will continue to focus on quality and value in our bottom-up, stock-picking approach. This means investing in reasonably priced companies with the balance sheet strength and market leadership to tap the long-term growth potential in Latin America, supported by expanding middle classes and rising domestic consumption.

Aberdeen Asset Managers Limited

Going Concern

The Directors believe that it is appropriate to adopt the going concern basis in preparing the financial statements. The assets of the Group consist mainly of securities that are readily realisable and, accordingly, the Group has adequate financial resources to continue in operational existence for the foreseeable future.

Related Party Transactions

The related party transactions during the period are disclosed in the notes to the accounts. There have been no related party transactions that have had a material effect on the financial position of the Group during the period.

Directors' Responsibility Statement

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

•      the condensed set of interim financial statements contained within the financial report which have been prepared in accordance with the Accounting Standards Board's statement "Half-Yearly Financial Reports" give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and,

•      the Interim Board Report includes a fair review of the information required by 4.2.7R and 4.2.8R of the FSA's Disclosure and Transparency Rules.

The interim financial 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 of Aberdeen Latin American Income Fund Limited

Richard Prosser

Chairman

28 March 2013

PRINCIPAL RISK FACTORS

The following risks could have a material adverse effect on the Company's financial condition, performance and prospects, the NAV of the Ordinary shares, the dividends payable per Ordinary share, the share price or liquidity of the Ordinary shares of the Company's ability to achieve its investment objective.

Ordinary Shares

The value of the Ordinary shares, and the income derived from them, can fluctuate and may go down as well as up and investors may not be able to realise the full amount of their original investment. An investment in Ordinary shares should be regarded, therefore, as medium to long term in nature and may not be suitable as a short-term investment.  Notwithstanding the Board's discount management policy in respect of the Ordinary shares, the share price of the Ordinary shares may vary considerably from the NAV per Ordinary share (representing either a discount or premium to that NAV) and may fall when the NAV per Ordinary share is rising, or vice versa. The exercise of the conversion rights conferred by the Subscription shares will result in a dilution in the NAV per Ordinary share if the NAV per Ordinary share exceeds the price payable on the conversion of a Subscription share at the relevant time.

Subscription Shares

Subscription shares represent a geared investment, so a relatively small movement in the market price of the Ordinary shares may result in a disproportionately large movement, unfavourable as well as favourable, in the market price of the Subscription shares. The market price of the Subscription shares may therefore be volatile. Although Subscription shares are tradable securities, market liquidity in the Subscription shares may be less than that of the Ordinary shares.

Dividends

The Company will only pay dividends on the Ordinary shares to the extent that it has sufficient financial resources available for the purpose in accordance with Jersey Company Law. Accordingly, there is no guarantee that the Company's dividend objective will be met and the amount of dividends paid to Ordinary shareholders may fluctuate.

Borrowings

Whilst the use of borrowings should generally enhance the total return on the Ordinary shares where the return on the Company's underlying assets is rising and exceeds the cost of borrowing, it will have the opposite effect where the underlying return is falling, further reducing the total return on the Ordinary shares. The use of borrowing may increase the volatility of the NAV of the Ordinary shares and the share price of the Ordinary shares and/or the Subscription shares.

Market Risks

Stockmarket movements and changes in economic conditions (including, for example, interest rates, currency rates and rates of inflation), changes in industry conditions, competition, political and diplomatic events, natural disasters, changes in laws (including  taxation and regulation) investors' perceptions and other factors can substantially either adversely or favourably affect the value of the securities in which the Company invests and, therefore, the Company's financial condition, performance and prospects. Investing in the Latin American region involves greater risks and other considerations not typically associated with investment in more developed markets or economies. Such risks can generally be expected to result in increased volatility in the shares of Latin American companies and portfolios which invest in them when compared to their counterparts in developed markets. Accordingly, investment companies investing in Latin America, such as the Company, can generally be expected to display greater share price and NAV volatility than those investing in developed markets. Whilst the Company's investment policy permits it to invest across the Latin American region, investment opportunities in the region are such that the geographic exposure of the Group's portfolio may be concentrated on a relatively small number of countries from time to time.

Currency Risks

The Company accounts for its activities, reports its results and pays dividends in sterling while investments are made and realised in other currencies. Debt through a revolving credit facility may be drawn in currencies other than sterling. The movement of exchange rates between sterling and such other currencies may have a material effect, unfavourable or favourable, on the returns otherwise experienced on the Company's investments. Currency risk may increase the volatility of the NAV and share price of the Ordinary shares.

Taxation

Any change in the Company's tax status, in tax treaty rates, in taxation legislation or in the interpretation of taxation legislation or the tax treatment of dividends, interest or other investment income received by the Company could affect the value of the investments held by the Company, affect the Company's ability to provide returns to Ordinary shareholders or alter the post-tax returns to Ordinary shareholders.

Alternative Investment Fund Managers Directive

The European Commission published the Alternative Investment Fund Managers Directive (the "AIFM Directive") on 1 July 2011. The AIFM Directive, which came into force on 21 July 2011, may have significant consequences for the Company (and all similar investment companies) which might materially increase compliance and regulatory costs. Whilst the AIFM Directive itself is now in force, the deadline for its transportation into national laws is July 2013. The so-called "third country" provisions may materially affect the Company as it is incorporated in Jersey, which is not part of the EU. As a result, the Company may be restricted from marketing to certain investors in the EU. The Board and the Investment Manager will continue to monitor developments and likely implications of the AIFM Directive and the progress of its transposition into national law.

General

Past performance is not, and should not be relied upon as a guide to future performance.

Distribution of Investments

As at 28 February 2013

Country	Equity %	Bonds %	Total %
Argentina	2.0	-	2.0
Brazil	39.1	18.3	57.4
Chile	3.9	-	3.9
Colombia	1.6	-	1.6
Mexico	11.6	13.1	24.7
Peru	-	2.1	2.1
Uruguay	-	8.3	8.3
	_________	_________	_________
	58.2	41.8	100.0
	_________	_________	_________

Condensed Consolidated Statement of Comprehensive Income  

		Six months ended
		28 February 2013
		(unaudited)
		Revenue	Capital	Total
	Notes	£'000	£'000	£'000
Income	3
Income from investments		1,911	-	1,911
Interest income		3	-	3
		_________	_________	_________
Total income		1,914	-	1,914
Gains/(losses) on financial assets held at fair value through profit or loss		-	12,004	12,004
Currency (losses)/gains		-	(320)	(320)
		_________	_________	_________
		1,914	11,684	13,598
		_________	_________	_________
Expenses
Investment management fee		(161)	(240)	(401)
Other operating expenses	4	(232)	-	(232)
		_________	_________	_________
Profit / (loss) before finance costs and taxation		1,521	11,444	12,965
Finance costs		(30)	(44)	(74)
Gain on conversion of C shares		-	-	-
		_________	_________	_________
Profit / (loss) before taxation		1,491	11,400	12,891
Taxation		(31)	-	(31)
		_________	_________	_________
Profit / (loss) for the period	5	1,460	11,400	12,860
		_________	_________	_________
Earnings per Ordinary share (pence):	5
Basic		2.19	17.13	19.32
Earnings per C share (pence)	5	n/a	n/a	n/a
The Company does not have any income or expense that is not included in profit/(loss) for the period, and therefore the "Profit/(loss) for the period" is also the "Total comprehensive income for the period", as defined in International Accounting Standard 1 (revised).
All of the profit/(loss) and total comprehensive income is attributable to the equity holders of the parent company.​
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 Consolidated Statement of Comprehensive Income (Cont'd)

		Six months ended
		29 February 2012
		(unaudited)
		Revenue	Capital	Total
	Notes	£'000	£'000	£'000
Income	3
Income from investments		1,399	-	1,399
Interest income		(12)	-	(12)
		_________	_________	_________
Total income		1,387	-	1,387
Gains/(losses) on financial assets held at fair value through profit or loss		-	1,830	1,830
Currency (losses)/gains		-	(230)	(230)
		_________	_________	_________
		1,387	1,600	2,987
		_________	_________	_________
Expenses
Investment management fee		(115)	(174)	(289)
Other operating expenses	4	(240)	(175)	(415)
		_________	_________	_________
Profit / (loss) before finance costs and taxation		1,032	1,251	2,283
Finance costs		(20)	(29)	(49)
Gain on conversion of C shares		-	-	-
		_________	_________	_________
Profit / (loss) before taxation		1,012	1,222	2,234
Taxation		(24)	-	(24)
		_________	_________	_________
Profit / (loss) for the period	5	988	1,222	2,210
		_________	_________	_________
Earnings per Ordinary share (pence):	5
Basic		1.77	2.91	4.68
Earnings per C share (pence)	5	0.42	(1.87)	(1.45)

Condensed Consolidated Statement of Comprehensive Income (Cont'd)

		Year ended
		31 August  2012
		(audited)
		Revenue	Capital	Total
	Notes	£'000	£'000	£'000
Income	3
Income from investments		3,176	-	3,176
Interest income		2	-	2
		_________	_________	_________
Total income		3,178	-	3,178
Gains/(losses) on financial assets held at fair value through profit or loss		-	(2,532)	(2,532)
Currency (losses)/gains		-	130	130
		_________	_________	_________
		3,178	(2,402)	776
		_________	_________	_________
Expenses
Investment management fee		(262)	(394)	(656)
Other operating expenses	4	(472)	(175)	(647)
		_________	_________	_________
Profit / (loss) before finance costs and taxation		2,444	(2,971)	(527)
Finance costs		(48)	(73)	(121)
Gain on conversion of C shares		-	841	841
		_________	_________	_________
Profit / (loss) before taxation		2,396	(2,203)	193
Taxation		(89)	-	(89)
		_________	_________	_________
Profit / (loss) for the period	5	2,307	(2,203)	104
		_________	_________	_________
Earnings per Ordinary share (pence):	5
Basic		4.00	(3.82)	0.18
Earnings per C share (pence):	5	n/a	n/a	n/a

Condensed Consolidated Balance Sheet

		As at	As at	As at
		28 February 2013	29 February 2012	31 August 2012
		(unaudited)	(unaudited)	(audited)
	Notes	£'000	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss		85,690	73,324	73,937
		_________	_________	_________
Current assets
Cash		967	617	1,018
Other receivables		752	910	529
		_________	_________	_________
		1,719	1,527	1,547
		_________	_________	_________
Total assets		87,409	74,851	75,484
Current liabilities
Bank loan	8	(10,079)	(5,008)	(9,759)
Forward foreign currency contracts		(80)	(7)	(73)
Other payables		(413)	(215)	(177)
C shares		-	(15,043)
		_________	_________	_________
Total current liabilities		(10,572)	(20,273)	(10,009)
		_________	_________	_________
Net assets		76,837	54,578	65,475
		_________	_________	_________
Equity capital and reserves
Equity capital	9	65,936	51,515	65,936
Capital reserve		10,041	2,362	(1,359)
Revenue reserve		860	701	898
		_________	_________	_________
Equity shareholders' funds		76,837	54,578	65,475
		_________	_________	_________
Net asset value per Ordinary share (pence):	10
Basic		115.42	104.74	98.35
		_________	_________	_________
Net asset value per C share (pence)	10	n/a	96.45	n/a
		_________	_________	_________

The accompanying notes are an integral part of the financial statements

Condensed Consolidated Statement of Changes in Equity

Six months ended 28 February 2013 (unaudited)
			Equity	Capital	Revenue
			capital	reserve	reserve	Total
	Notes		£'000	£'000	£'000	£'000
Balance at 31 August 2012			65,936	(1,359)	898	65,475
Profit for the period (A)			-	11,400	1,460	12,860
Dividends paid	6		-	-	(1,498)	(1,498)
			______	______	______	______
Balance at 28 February 2013			65,936	10,041	860	76,837
			______	______	______	______
Six months ended 29 February 2012 (unaudited)
			Equity	Capital	Revenue
			capital	reserve	reserve	Total
	Notes		£'000	£'000	£'000	£'000
Balance at 31 August 2011			51,515	844	950	53,309
Profit for the period  (A)			-	1,518	923	2,441
Dividends paid	6		-	-	(1,172)	(1,172)
			______	______	______	______
Balance at 29 February 2012			51,515	2,362	701	54,578
			______	______	______	______
Year ended 31 August 2012 (audited)
			Equity	Capital	Revenue
			capital	reserve	reserve	Total
	Notes		£'000	£'000	£'000	£'000
Balance at 31 August 2011			51,515	844	950	53,309
Issue of equity capital on conversion of C shares	9		14,756	-	-	14,756
Issue expenses			(335)	-	-	(335)
(Loss) /profit for the period			-	(2,203)	2,307	104
Dividends paid	6		-	-	(2,359)	(2,359)
			______	______	______	______
Balance at 31 August 2012			65,936	(1,359)	898	65,475
			______	______	______	______
(A)  Represents the profit attributable to equity shareholders per note 5
The accompanying notes are an integral part of the financial statements.

Condensed Consolidated Cash Flow Statement

	Six months ended	Six months ended	Year ended
	28 February 2013	29 February 2012	31 August 2012
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Operating activities
Dividend income	326	378	1,248
Fixed interest income	1,158	918	2,032
Deposit interest	3	(13)	2
Investment management fee paid	(255)	(326)	(692)
Other cash expenses	(207)	(407)	(666)
	_________	_________	_________
Cash generated from operating activities before finance costs and taxation	1,025	550	1,924
Interest paid	(77)	(47)	(121)
Withholding taxes paid	(21)	(24)	(89)
	_________	_________	_________
Net cash inflow from operating activities	927	479	1,714
Cash flows from investing activities
Purchases of investments	(11,020)	(16,783)	(37,880)
Sales of investments	11,540	2,543	18,839
	_________	_________	_________
Net cash inflow / (outflow) from investing activities	520	(14,240)	(19,041)
	_________	_________	_________
Cash flows from financing activities
Proceeds from issue of C shares	-	15,274	15,262
Equity dividends paid	(1,498)	(1,172)	(2,359)
Movement in loan balance	320	-	4,845
	_________	_________	_________
Net cash (outflow) / inflow from financing activities	(1,178)	14,102	17,748
	_________	_________	_________
Net increase in cash	269	341	421
	_________	_________	_________
Analysis of changes in cash during the period
Opening balance	1,018	403	403
Increase in cash above	269	341	421
Effect of foreign exchange rate changes	(320)	(127)	194
	_________	_________	_________
Cash at end of period	967	617	1,018
	_________	_________	_________

Notes to the Financial Statements

For the six month period ended 28 February 2013

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

2.

Accounting policies - basis of preparation

The Annual Report is prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB), and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB (IFRIC). The condensed Half-Yearly Report has been prepared in accordance with International Accounting Standards (IAS) 34 - 'Interim Financial Reporting'. They have also been prepared using the same accounting policies applied for the year ended 31 August 2012 financial statements, which were prepared in accordance with IFRS, and which received an unqualified audit report. ​ 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' issued in October 2009 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. ​ In accordance with paragraph 11 of IAS 32 (Financial Instruments: Presentation), C shares are classified as a liability prior to conversion, due to the inherent variability of the number of Ordinary shares attributable to C shareholders on conversion. We have therefore amended the Balance Sheet as at 29 February 2012 to reflect the assets attributable to the C shares as a liability and not, as previously disclosed, as equity shareholders' funds. All other disclosures have also been amended to reflect this change. ​

		Six months ended	Six months ended	Year ended
		28 February 2013	29 February 2012	31 August 2012
3.	Income	£'000	£'000	£'000
	Income from investments
	Dividend income	511	445	1,127
	Fixed interest income	1,400	954	2,049
		_________	_________	_________
		1,911	1,399	3,176
	Deposit interest	3	(12)	2
		_________	_________	_________
	Total income	1,914	1,387	3,178
		_________	_________	_________

		Six months ended	Six months ended	Year ended
		28 February 2013	29 February 2012	31 August 2012
4.	Other operating expenses - revenue	£'000	£'000	£'000
	Directors' fees	42	40	80
	Secretarial and administration fees	54	53	105
	Marketing contribution	27	19	39
	Auditor's remuneration	12	13	27
	Custodian and overseas agents' charges	48	31	74
	Other	49	84	147
		_________	_________	_________
		232	240	472
		_________	_________	_________
		Six months ended	Six months ended	Year ended
		28 February 2013	29 February 2012	31 August 2012
	Other operating expenses - capital	£'000	£'000	£'000
	Brazil IOF Tax - incurred relating to the purchase of investments in the Brazilian market	-	175	175
			_________	_________

		Six months ended	Six months ended	Year ended
		28 February 2013	29 February 2012	31 August 2012
5.	Earnings per share	p	p	p
	Ordinary share - Basic
	Revenue return	2.19	1.77	4.00
	Capital return	17.13	2.91	(3.82)
		_________	_________	_________
	Total return	19.32	4.68	0.18
		_________	_________	_________
	The figures above are based on the following:
		£'000	£'000	£'000
	Revenue return	1,460	923	2,307
	Capital return	11,400	1,514	(2,203)
		_________	_________	_________
	Total return	12,860	2,437	104
		_________	_________	_________
	Weighted average number of Ordinary shares in issue	66,572,574	52,106,185	57,718,828
		_________	_________	_________
	There is no dilutive effect on the returns per Ordinary share in either period, arising from the exercise of the Subscription shares, as the average Ordinary share price over each period was less than the 120p price at which shares may be subscribed for.
	C share	p	p	p
	Revenue return	n/a	0.42	n/a
	Capital return	n/a	(1.87)	n/a
		_________	_________	_________
	Total return	n/a	(1.45)	n/a
		_________	_________	_________
		£'000	£'000	£'000
	Revenue return	n/a	65	n/a
	Capital return	n/a	(292)	n/a
		_________	_________	_________
	Total return	n/a	(227)	n/a
		_________	_________	_________
	Weighted average number of C shares in issue	n/a	15,597,185	n/a
		_________	_________	_________

		Six months ended	Six months ended	Year ended
		28 February 2013	29 February 2012	31 August 2012
6.	Dividends on equity shares	£'000	£'000	£'000
	Distributions to equity holders in the period:
	First interim dividend for 2013 - 1.00p (2012 - 1.00p)	666	521	521
	Second interim dividend for 2012 - 1.00p	-	-	521
	Third interim dividend for 2012 - 1.00p	-	-	666
	Fourth interim dividend for 2012 - 1.25p (2011 - 1.25p)	832	651	651
		_________	_________	_________
		1,498	1,172	2,359
		_________	_________	_________

7.	Transaction costs
	During the period expenses incurred in acquiring or disposing of investments classified as fair value though profit or loss have been expensed through the capital column of the Condensed Consolidated Statement of Comprehensive Income, included within gains/(losses) on investments held at fair value through profit and loss. The total costs were as follows:
		Six months ended	Six months ended	Year ended
		28 February 2013	29 February 2012	31 August 2012
		£'000	£'000	£'000
	Purchases	5	1	15
	Sales	6	7	9
		_________	_________	_________
		11	8	24
		_________	_________	_________

8.

Bank loan

The Company has a £10 million revolving multi-currency facility with Scotiabank Europe plc. At the period end, US$15,300,000 (29 February 2012 - US$8,000,000; 31 August 2012 - US$15,500,000), equivalent to £10,079,000 (29 February 2012 - £5,008,000; 31 August 2012 - £9,759,000) had been drawn down under the facility, fixed to 22 March 2013 at an all-in rate of 1.4535% (29 February 2012 - 1.5969%; 31 August 2012 - 1.4898%). At the date of this report, US$14,800,000 remains drawn down, fixed to 22 April 2013 at an all-in rate of 1.4565%.

		28 February 2013				29 February 2012			31 August 2012
9.	Equity capital and C shares	Number		£'000		Number	£'000		Number	£'000
	Equity capital
	Issued and fully paid
	Ordinary shares	66,572,574		65,389		52,106,185	50,968		66,572,574	65,389
	Subscription shares	10,421,236		547		10,421,236	547		10,421,236	547
				______			______			______
				65,936			51,515			65,936
				______			______			______
	The Company's Ordinary shares have no par value.
		28 February 2013				29 February 2012			31 August 2012
	C shares	Number		£'000		Number	£'000		Number	£'000
	Shares issued in the period	-		-		15,597,185	15,597		-	-
	Issue expenses	-		-		-	(323)		-	-
							______
							15,274
							______
	Following the issue of a Placing and Offer for Subscription Prospectus in January 2012, 15,597,185 C shares were allotted and issued to investors at a price of 100p per share in February 2012. Trading commenced on 3 February 2012.
	Under the terms of the C share Prospectus, the C shares would be converted to Ordinary shares once 80% of the issue proceeds had been invested. The Directors' determined that the conversion ratio would be calculated on 29 February 2012 with the conversion date of 11 April 2012. On the basis of the conversion ratio, 0.9275 Ordinary shares were issued for each C share. As a result, 14,466,389 Ordinary shares were issued on 11 April 2012.
	The Ordinary shares give shareholders the entitlement to all of the capital growth in the Company's assets and to all of the income from the Company that is resolved to be distributed.
	Each Subscription share confers the right to convert such share into one Ordinary share on 31 December in any of the years 2013 to 2015 (inclusive) at a price of 120p per share.

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 2013	29 February 2012	31 August 2012
	Attributable net assets to Ordinary shareholders (£'000)	76,837	54,578	65,475
	Number of Ordinary shares in issue	66,572,574	52,106,185	66,572,574
	Net asset value per Ordinary share (p)	115.42	104.74	98.35

	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 in either period as the basic net asset value is less than the price at which shares may be subscribed for.
	C shares
	The net asset value per C share and the net asset values attributable to C shareholders at the period end calculated in accordance with the Articles of Association were as follows:

		As at	As at	As at
		28 February 2013	29 February 2012	31 August 2012
	Attributable net assets to C shareholders (£'000)	n/a	15,043	n/a
	Number of C shares in issue	n/a	15,597,185	n/a
	Net asset value per C share (p)	n/a	96.45	n/a

11.	Related party transactions
	Martin Gilbert is a director of Aberdeen Asset Management PLC, of which Aberdeen Private Wealth Management Limited is a subsidiary. Management, secretarial and administration services are provided by Aberdeen Private Wealth Management Limited. Mr Gilbert does not draw a fee for providing his services as a director of the Company.
	The management fee is payable monthly in arrears based on an annual amount of 1% of the net asset value of the Company valued monthly. During the period £401,000 (29 February 2012 - £289,000; 31 August 2012 - £656,000) of management fees were payable, of which £208,000 (29 February 2012 - £61,000; 31 August 2012 - £63,000) was outstanding at the period end.
	The marketing fee is based on an annual amount of £58,000 (29 February 2012 - £39,000; 31 August 2012 - £39,000). During the period £27,000 (29 February 2012 - £19,000; 31 August 2012 - £39,000) of fees were payable with £9,000 (29 February 2012 - £19,000; 31 August 2012 - £7,000) outstanding at the period end.
	The company secretarial and administration fee is based on an annual amount of £108,000 (29 February 2012 - £104,000; 31 August 2012 - £105,000), increased annually in line with any increases in the UK Retail Prices Index, payable quarterly in arrears. During the period £54,000 (29 February 2012 - £53,000; 31 August 2012 - £105,000) of fees were payable, with £45,000 (29 February 2012 - £17,000; 31 August 2012 - £17,000) being outstanding at the period end.

12.	Half-Yearly Financial Report
	The financial information for the period ended 28 February 2013 has not been audited. This Half-Yearly Financial Report was approved by the Board on 28 March 2013.

 13.     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 April 2012 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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