Final Results
F&C Latin American Inv Trust PLC
1 March 2002
Date: Embargoed for 7.00am Friday 1 March 2002
Contact: Simon Cordery, Investor Relations Manager, F&C Emerging Markets, tel:
020 7628 8000/Emma Chilvers, Lansons Communications, tel: 020 7294 3606
F&C LATIN AMERICAN INVESTMENT TRUST PLC
Unaudited Preliminary Statement of Results
for the year ended 31 December 2001
HIGHLIGHTS
• The net asset value (NAV) per share was 232.18 cents, which represented a
fall of 5.5% over the year. This compares with the IFCG Latin American US$
Total Return Index which fell 2.1%. The share price fell 1.5% over the year.
• Shares in the Company traded on a discount of 22.8% at the year end, down
from 25.8% the previous year. Since the year end the discount has narrowed
further to 20.7%.
• Since the year end, the NAV performance of the Company has risen 5.7%
against a rise in the index of 3.5% (27 February 2002). The share price has
risen from 166.50 cents to 176.00 cents or 5.7%.
• The Latin American stock markets proved to be fairly resilient during a
tumultuous year, with Mexico's strong market performance particularly
standing out.
SUMMARY OF RESULTS
31 December 2001 31 December 2000 % Change
Restated*
Net assets attributable to US$ 173.0m US$ 183.1m -5.5%
equity shareholders
Net assets per share - basic 232.18 cents 245.74 cents -5.5%
Net assets per share - diluted 215.67 cents 227.90 cents -5.4%
Share price 166.50 cents 169.00 cents -1.5%
Warrant price 70.50 cents 95.50 cents -26.2%
* Restated to comply with FRS 19 'Deferred Tax' (see notes).
Chairman's Statement
Dear Shareholder
Latin American stock markets performed surprisingly well during a tumultuous
year which encompassed a dramatic deceleration of the US economy, the terrorist
atrocities in the US and a chaotic Argentine default and devaluation. It is
gratifying to note the increasing differentiation on investors' part between the
economies of the region based on domestic strengths and weaknesses rather than
solely on external factors, as has often happened in the past. In recognition of
its strong economic management, Mexico's strong market performance stands out in
this regard, particularly given the US economic weakness and fall in the oil
price. The Brazilian market suffered the contagion effects from Argentina for
most of the year, but uncoupled decisively in the last quarter to stage a
powerful rally as Argentina descended into economic chaos.
At the year end your Company's undiluted net assets amounted to US$173.0 million
and the net asset value (NAV) per share was 232.18 cents, which represented a
fall of 5.5% over the year. This compares with the IFCG Latin American US$ Total
Return Index which fell 2.1%. The NAV performance compares with a share price
fall of 1.5% over the year. Shares in the Company traded on a discount of 22.8%
at the year end, down from 25.8% the previous year.
Since the year end, the NAV performance of the Company has risen 5.7% against a
rise in the index of 3.5% (27 February 2002). The share price has risen from
166.50 cents to 176.00 cents or 5.7% (27 February 2002), and the warrants have
risen from 70.50 cents to 83.00 cents, a rise of 17.7% (27 February 2002). The
discount has narrowed to 20.7% (27 February 2002).
The Company avoided the worst effects of the Argentine crisis, having sold its
few Argentine investments, half in May and the remaining positions in October.
During a period of the year, the Company held a higher cash balance than normal,
with the cash earmarked for investment into the volatile Brazilian market which
had been undermined by fears over Argentina. In addition, the Company drew down
a further US$1.5 million under its committed loan facility, which was drip-fed
into Brazil in the fourth quarter, leaving the Company with gearing of 17% on a
fully invested basis at the year end.
Previous periods of falling US interest rates have produced strong Latin
American market performance. However, in 2001 the magnitude of economic
deterioration in the developed economies and the uncertainties attached to the
terrorist atrocities in the US further undermined global confidence. For the
Latin American equity markets the most important indicator of a sustained
recovery is an upturn in the global economy. The global background of high
liquidity accompanied by the expected global economic rebound and rising
commodity prices should presage a sustained recovery in Latin American equity
prices. The correlation between emerging markets performance and the G7 leading
indicators is compelling, and it is instructive to note that the first tentative
signs of a turn in the series may have come in November. Latin American markets
trade at a multiple of 9.4x forward earnings, an undemanding level which can
support higher valuations.
We remain positive for the region. Debt markets have stabilised, global
contagion has been minimal, and the achievements of the Mexican and Brazilian
economies in particular to extend and complete the processes of fundamental
reform, merit optimism.
Future of your Company
The over capacity in the Latin American closed end fund sector has now largely
been removed over the past two years by a series of fund liquidations. The
market capitalisation of the sector has fallen from £365 million in 1999 to £171
million at the end of 2001 (UBS Warburg), predominantly through fund
liquidations. Restrictions on direct investment in Latin America have eased in
recent years and many of the large companies now also have ADR issues, but
regular communications with our major shareholders continue to lead us to
believe there is a significant ongoing demand for the diversified, closed ended
structure given the nature of volatility of the region's markets. The F&C Latin
American Investment Trust was the first trust to be launched in this sector in
1990. Amongst its peers it boasts the best performance record over one, three
and five years (AITC data). Moreover, the Company benefits from the knowledge
and experience of its dedicated management team at F&C. Your Company is the
largest and most liquid of this group and has made more active use of gearing
than the others. Based on the expected global economic rebound and its impact on
the Latin American markets, and the Company's record, the Board recommends a
continuation of the Company in its current form. Your Board is very much aware
of the continuing problem of the discount and regularly reviews possible means
of addressing this issue in relation to which the reduced capacity amongst our
peer group should be beneficial. In addition to enhancing the NAV, given the
shrinkage in the sector, a buy back program should be more effective now in
maintaining the lower level of discount with a reduced level of volatility.
While we have not judged it advantageous to make use of the buy back facility
over the past year, we shall be asking shareholders to renew the relevant
authority at the year end. Finally, the Board would like to thank both the
Manager and the Company Secretary.
Annual General Meeting
The AGM will be held on 15 May 2002 at the offices of F&C Emerging Markets
Limited. We hope that as many shareholders as possible will attend. Following
the AGM, Emily McLaughlin will again give a brief presentation following which
shareholders are invited to join the Board and Managers at a buffet lunch.
P C D Burnell
28 February 2002
Balance Sheet at 31 December
2001 2000
restated*
US$'000s US$'000s
Fixed assets
Investments 195,735 210,250
Current assets
Debtors 975 1,340
Taxation recoverable 109 182
Short-term deposits 6,500 -
Cash at bank 614 1,227
8,198 2,749
Current liabilities
Creditors: amounts falling due within one year
Bank loans (29,500) (28,000)
Other (952) (780)
(30,452) (28,780)
Net current liabilities (22,254) (26,031)
Total assets less current liabilities 173,481 184,219
Creditors: amounts falling due after more than one year
Provision for liabilities and charges (448) (1,083)
Net assets 173,033 183,136
Capital and Reserves
Called up share capital:
including non-equity share capital 7,475 7,475
Share premium 61,544 61,544
Capital redemption reserve 238 238
Warrant reserve 4,797 4,797
Capital reserves 101,207 113,220
Revenue reserve (2,228) (4,138)
Total shareholders' funds 173,033 183,136
Equity interests 173,009 183,112
Non-equity interests 24 24
Total shareholders' funds 173,033 183,136
Net asset value per ordinary share
Basic - cents 232.18 245.74
Diluted - cents 215.67 227.90
* Restated to comply with FRS 19 'Deferred Tax' (see notes).
The geographical distribution of investments at 31 December 2001 was: Brazil -
45.1%; Mexico - 44.3; Chile - 7.4%; Peru - 2.7%; Colombia - 0.5%.
Statement of Total Return (incorporating the Revenue Account*) for
the year ended 31 December
2001 2000
restated# restated#
Revenue Capital Total Revenue Capital Total
US$'000s US$'000s
US$'000s US$'000s US$'000s US$'000s
Losses on investments - (11,871) (11,871) - (41,550) (41,550)
Exchange losses (3) (592) (595) (38) (28) (66)
Income 7,582 - 7,582 4,227 - 4,227
Management fee (2,973) - (2,973) (3,512) - (3,512)
Other expenses (650) (62) (712) (789) (86) (875)
Net return before finance costs 3,956 (12,525) (8,569) (112) (41,664) (41,776)
and taxation
Interest payable and similar (1,551) - (1,551) (1,794) - (1,794)
charges
Return on ordinary activities 2,405 (12,525) (10,120) (1,906) (41,664) (43,570)
before taxation
Taxation on ordinary activities (495) 512 17 (361) (279) (640)
Return on ordinary activities 1,910 (12,013) (10,103) (2,267) (41,943) (44,210)
after taxation
Dividend on ordinary shares - - - - - -
Amount transferred 1,910 (12,013) (10,103) (2,267) (41,943) (44,210)
to/(from) reserves
Return per ordinary share (basic) 2.56 (16.12) (13.56) (3.10) (57.27) (60.37)
- cents
Return per ordinary share 2.37 + + + + +
(diluted) - cents
* The revenue column of this statement is the profit and loss account of the
Company.
# Restated to comply with FRS 19 'Deferred Tax' (see notes).
+ There is no dilution.
All revenue and capital items in the above statement derive from continuing
operations.
Cash Flow Statement for
the year ended 31 December
2001 2000
US$'000s US$'000s
Net cash inflow/(outflow) from operating activities 4,106 (599)
Interest paid (1,528) (1,710)
Taxation (paid)/recovered (545) 68
Net cash inflow/(outflow) from financial investment 2,949 (9,512)
Net cash inflow/(outflow) before use of liquid resources 4,982 (11,753)
and financing
(Increase)/decrease in short-term deposits (6,500) 3,054
Net cash inflow from financing 1,500 7,875
Decrease in cash (18) (824)
Notes
The Company has changed its accounting policy to reflect the adoption of
Financial Reporting Standard 19 (FRS 19) 'Deferred Tax'. Prior year figures have
been restated. The effect of this change in accounting policy is to decrease the
capital taxation charge on ordinary activities for the year by US$24,000 (2000:
US$586,000 increase). The effect on the Balance Sheet is to decrease the
provision for liabilities and charges and to increase capital reserves by
US$24,000 (2000: US$142,000). This increase in the prior year capital reserves
of US$142,000 is made up of an increase in capital reserves brought forward at 1
January 2000 of US$728,000 less the above increase in the capital taxation
charge of US$586,000.
No dividend will be paid on the ordinary shares.
The above financial information comprises non-statutory accounts within the
meaning of section 240 of the Companies Act 1985. The financial information for
the year ended 31 December 2000 has been extracted from published accounts for
the year ended 31 December 2000 that have been delivered to the Registrar of
Companies and on which the report of the auditors has been unqualified.
The Report and Accounts will be posted to shareholders around 27 March 2002.
Copies may be obtained during normal business hours from the Company's
Registered Office.
The Annual General Meeting will be held at the Company's Registered Office,
Exchange House, Primrose Street, London EC2A 2NY, on Wednesday 15 May 2002, at
12:15 p.m.
By order of the Board
F&C Emerging Markets Limited, Secretary
28 February 2002
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