TIDMALAI
RNS Number : 0508G
abrdn Latin American Income Fund Ld
11 November 2022
ABRDN LATIN AMERICAN INCOME FUND LIMITED
ANNUAL FINANCIAL REPORT FOR THE YEARED 31 AUGUST 2022
Legal Entity Identifier (LEI): 549300DN623WEGE2MY04
Performance Highlights
Ordinary share price total return(A) Earnings per Ordinary share (revenue)
+0.3% 4.84p
2021 +20.9% 2021 2.66p
Net asset value total return(A) Dividends per Ordinary share
+6.8% 3.50p
2021 +17.4% 2021 3.50p
Benchmark total return Discount to net asset value per
Ordinary share(AB)
+11.5% 17.3%
2021 +17.5% 2021(B) 11.4%
(A) Considered to be an Alternative Performance Measure. Further details
can be found below.
(B) At 31 August.
Source: abrdn, Morningstar, Russell Mellon, Lipper & JPMorgan
Financial Calendar, Dividends and Highlights
Annual General Meeting (Jersey) 14 December 2022
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Payment dates of interim dividends 27 January 2023
26 May 2023
28 July 2023
27 October 2023
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Half year end 28 February 2023
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Expected announcement of results April 2023
for
six months ending 28 February 2023
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Financial year end 31 August 2023
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Expected announcement of results November 2023
for year
ending 31 August 2023
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Dividends
Rate xd date Record date Payment date
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1st interim 0.875p 6 January 2022 7 January 2022 28 January 2022
2022
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2nd interim 0.875p 5 May 2022 6 May 2022 26 May 2022
2022
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3rd interim 0.875p 7 July 2022 8 July 2022 29 July 2022
2022
=============== ============= ============== ============== ===============
4th interim 0.875p 6 October 2022 7 October 2022 28 October 2022
2022
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Total dividends 3.500p
2022
--------------- ------------- -------------- -------------- ---------------
=============== ============= ============== ============== ===============
Rate xd date Record date Payment date
=============== ============= ============== ============== ===============
1st interim 0.875p 7 January 2021 8 January 2021 29 January 2021
2021
=============== ============= ============== ============== ===============
2nd interim 0.875p 13 May 2021 14 May 2021 28 May 2021
2021
=============== ============= ============== ============== ===============
3rd interim 0.875p 8 July 2021 9 July 2021 30 July 2021
2021
=============== ============= ============== ============== ===============
4th interim 0.875p 7 October 2021 8 October 2021 29 October 2021
2021
--------------- ------------- -------------- -------------- ---------------
Total dividends 3.500p
2021
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31 August 31 August % change
2022 2021
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Total assets (see definition on page
110 of the 2022 Annual Report) (GBP'000) 41,572 41,419 0.4
=============================================== =========== =========== ========
Total equity shareholders' funds (net
assets) (GBP'000) 36,072 35,919 0.4
=============================================== =========== =========== ========
Market capitalisation (GBP'000) 29,842 31,841 -6.3
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Ordinary share price (mid market) 52.25p 55.75p -6.3
=============================================== =========== =========== ========
Net asset value per Ordinary share 63.16p 62.89p 0.4
=============================================== =========== =========== ========
Discount to net asset value per Ordinary
share(AB) 17.27% 11.35%
=============================================== =========== =========== ========
Net gearing (see definition on page 109
of the 2022 Annual Report)(AB) 14.98% 14.37%
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Dividends and earnings
=============================================== =========== =========== ========
Total return per Ordinary share 3.77p 9.74p
=============================================== =========== =========== ========
Earnings per Ordinary share (revenue) 4.84p 2.66p 82.0
=============================================== =========== =========== ========
Dividends per Ordinary share 3.50p 3.50p
=============================================== =========== =========== ========
Dividend cover(AB) 1.38 times 0.76 times
=============================================== =========== =========== ========
Revenue reserves(B) (GBP'000) 2,248 1,482
=============================================== =========== =========== ========
Operating costs
=============================================== =========== =========== ========
Ongoing charges ratio(AC) 2.00% 2.00%
----------------------------------------------- ----------- ----------- --------
(A) Considered to be an Alternative Performance Measure. Further details
can be found below.
(B) Excludes payment of fourth interim dividend of 0.875p (2021 -
0.875p) per Ordinary share equating to GBP500,000 (2021- GBP500,000)
as this was made after the year end.
(C) Details of a cap on the ongoing charges ratio can be found in
notes 6 and 17 to the financial statements on pages 82 and 98 respectively.
Chairman's Statement
Overview
The last twelve months have been volatile for investors. Not
only have Latin American economies had to deal with the more
inflationary post-Covid environment, as fuel and energy prices
rose, but they have also had to contend with the pressure of an
uncertain political landscape.
For the Company this has led to contrasting fortunes for its two
asset classes over the period. Equities underperformed,
predominantly due to a shift in market focus from growth to value
stocks. At the same time, the fixed income sleeve was more
successful, as the bond investments targeted by your Manager
benefited from the rising yield curve. With inflationary pressures
leading to higher yields, but the same environment punishing
long-term quality growth stocks, overall the Company's net asset
value ("NAV") rose 6.8% in total return terms over the year ended
31 August 2022, compared with an increase of 11.5% for the
benchmark. The share price was broadly flat over the period, ending
the year at 52.25p.
Despite this recent volatility in markets, your Manager is
confident in the region's long-term growth potential and has also
taken steps to ensure the Company is sufficiently defensive in the
current macro environment. You can find out more detail on this
later in this statement and in the Investment Manager's Review on
pages 11 to 14 of the 2022 Annual Report, along with a more
detailed explanation of performance.
Looking over the full year to 31 August 2022, there were three
main themes at play:
1) monetary policy and interest rate increases;
2) domestic politics and a very busy election calendar; and
3) global events, most notably the shockwaves felt worldwide
from Russia's invasion of Ukraine.
Focusing on monetary policy first, central banks in Latin
America moved swiftly to tackle the spiralling post-pandemic
inflation we have witnessed. The Banco Central do Brasil, which has
recently gained full independence, was first to act and has now
taken the base rate from a low of 2% to 13.75%. Chile has raised
rates to 11.25%, while Colombia increased them to 11%. Others are
still likely to climb higher. In August, the Bank of Mexico raised
the base rate to 8.5%, its highest in 16 years.
Looking at the region as a whole, it is clear central banks have
been well ahead of the rate-rising cycles of other emerging and
developed markets with India's rising to 5.4% and the US Federal
Reserve increasing rates six times in 2022 (up to 4% in November),
whilst the European Union only started with a rise to 1.25% in
September, with a further increase to 2% on 27 October 2022.
In terms of the impact of these central bank policies on
markets, the rate rises were particularly painful for the Company's
equity holdings and have penalised some of the more expensive
growth-style stocks favoured by your Manager. On the plus side, the
rate rises were fairly positive for fixed income - in Brazil, for
example, the large rises benefited domestic bond returns in the
medium term.
Political risk has been another important factor, with several
high-profile elections over the year. Colombia elected its
first-ever left-wing president Gustavo Petro, who stood on a
platform of land reform, universal healthcare and promises to
continue his country's commitment to the peace process; and Chile,
meanwhile, voted in the relatively inexperienced 36-year-old
Gabriel Boric (another left-winger) as president. After our year
end, Chile went to the polls again, for a constitutional referendum
which was roundly rejected by voters, seeing it as too radical (the
current constitution dates back to the days of General
Pinochet).
In Peru, asset classes saw significant improvement over the
year. The country had already witnessed a massive sell-off in
equities and bonds in 2021, following the election of left-winger
Pedro Castillo, prior to the start of this reporting period. For
investors, political risk now appears to have somewhat diminished.
One area to note though in Peru, is its approval of early
withdrawals from pension funds, to support the country's recovery
from the pandemic and the impact of surging global prices. While
these actions can help in stabilising the economy, they also fuel
higher inflation and withdrawal of pension savings in previous
years from Peru and Chile resulted in sovereign downgrades.
Naturally, elections in Latin America's largest economy, Brazil,
have been a global talking point, as the incumbent Jair Bolsonaro,
seeking a second term in office, ran against former president Lula.
Even though the election fell outside the year covered by this
report, the atmosphere of uncertainty posed by Brazil's vote -
including doubts cast by Bolsonaro of the legitimacy of the
election process - have been a headwind for Brazil's asset classes.
In the run up to the election, we also saw some fiscal loosening.
This was a concern for investors because it runs the risk of losing
the fiscal anchor (a ceiling on spending, deficit, or debt) that
has played an important role in improving Brazil's balances. Brazil
is running a primary fiscal surplus for the first time in a long
while.
Finally, wider global events have of course had a major impact
on the region's fortunes. Extreme weather events and, most notably,
war in Ukraine have resulted in higher commodity prices and put
pressure on the global supply chain. Economies in Latin America are
highly sensitive to commodity prices. Brazil is a large exporter of
soybean and iron ore, while Chile and Peru are notable exporters of
copper. Oil is a key concern, with Peru and Chile large importers
and countries such as Mexico being large exporters. While some
businesses have seen a positive impact from higher energy prices,
in the long run, higher food and fuel prices add to the
inflationary environment that has led central banks to start
raising policy rates.
At the portfolio level, there were mixed fortunes over the
period. In terms of equities, interest rate rises and the higher
cost of capital have penalised some of the quality growth stocks
favoured by your Manager. The Company's fixed income performance,
on the other hand, has been much better, with the decision not to
take exposure to Chile, one of the worst performers, and a
substantial overweight to Uruguay which has fared well. In terms of
positioning over the period, with the changing macro picture, your
Manager has focussed on ensuring the portfolio is resilient to the
global environment and adopted a slightly more defensive stance.
From an equities perspective, this meant exiting some smaller
growth stocks and those exposed to reducing consumer demand in the
face of inflationary pressures and either reinvesting in companies
where the Manager has higher conviction, or moving into areas like
telecoms which your Manager believes will be more resilient.
Meanwhile, anticipating a moderation in inflation as central banks
in the region near the end of the hiking cycle, your Manager is
moving towards fixed income assets with a longer duration.
For more on portfolio activity and wider performance, read the
Investment Manager review on pages 11 to 14 of the 2022 Annual
Report.
Results and Dividends
The earnings per share for the year ended 31 August 2022 were
4.84p (2021: 2.66p), reflecting an 82% increase over 2021 with a
recovery in dividend pay-outs post-pandemic and importantly
strengthened foreign exchange rates versus sterling. The Company
was able to return to paying a fully covered dividend this year and
has continued to pay four interim dividends of 0.875p per share
(2021: 0.875p) in respect of the financial year, maintaining the
total level of dividends for the year at 3.5p per share (2021:
3.5p). As stated in previous reports, the Board is aware of the
importance of income to the Company's shareholders, particularly
during times of prolonged market stress, and has maintained the
dividend throughout with that in mind, using the revenue reserve
built previously in order to maintain the level of dividend in
difficult times. Following the payment of dividends during the
financial year, the Company has carried forward a healthy GBP2.25
million in its revenue reserve (2021: GBP1.48m), representing 0.9
times the current level of dividend after accounting for the
payment of the fourth interim dividend.
The Board is pleased that the Manager continues to support the
Company to ensure that its ongoing charges ratio ("OCR") does not
exceed 2.0% when calculated annually as at 31 August. To the extent
that the OCR exceeds 2.0%, the Manager continues to rebate part of
its fees in order to reduce the ratio down to 2.0%. Subsequent to
the year end, a sum of GBP132,000 (2021: GBP127,000) had been
repaid by the Manager to the Company in order to maintain the OCR
at 2.0%.
Portfolio
During the year, the allocation between equities and bonds has
remained relatively stable. At the financial year end, the
portfolio comprised 61.9% in equities and 38.1% in bonds (2021:
64.5% equities, 35.5% bonds). The Board and Manager will continue
to keep this portfolio split under review to seek to exploit market
opportunities.
Share Capital
There has been no change to the Company's share capital
structure during the financial year. The Company has not bought
back any shares, or issued any shares, in light of the volatile
markets witnessed. However, the Company will make selective use of
buybacks, subject to prevailing market conditions and having regard
to the size of the Company, where it would be in the best interests
of shareholders to do so. At the time of writing, the Company's
Ordinary share price discount to NAV is 11.2%.
Gearing
The Company has a GBP6 million two year unsecured revolving
multi-currency loan facility with The Bank of Nova Scotia, London
Branch, which expires on 14 August 2023. At the year-end
GBP5,500,000 was drawn down (2021 - GBP5,500,000). The Board
continues to monitor the level of gearing under recommendation from
the Manager and in light of market conditions.
Board Changes
As announced in the Company's Half-Yearly Report, the Directors
were delighted to welcome Michael Gray to the Board on 18 February
2022, following the retirement of Richard Prosser. Michael brings a
wealth of experience as a non-executive director of closed-end
funds and a knowledge of investment management that complements the
balance of skills and experience on the Board as a whole.
Annual General Meeting
This year's Annual General Meeting ("AGM") will be held on
Wednesday, 14 December 2022 at 10:00 a.m. at the offices of abrdn
Capital International Limited, 1st Floor, Sir Walter Raleigh House,
48-50 Esplanade, St Helier, Jersey JE2 3QB. I hope that
shareholders will be able to attend the AGM, following a two year
hiatus owing to the global pandemic, and I look forward to meeting
shareholders on the day.
As usual, the Board encourages all shareholders to exercise
their votes in respect of the meeting in advance to ensure that
votes are registered and counted at the meeting.
The Board welcomes questions from our shareholders and I would
ask that shareholders submit questions to the Board prior to the
AGM, and in any event before Friday, 9 December 2022. The Board or
the Investment Manager will respond to all questions received. You
may submit questions to the Board by email to
latin.american@abrdn.com.
Outlook
My predecessor as Chairman, Richard Prosser, commented last year
that the outlook for Latin America was brighter, although the Board
remained mindful of remaining risks. This remains true. And while
some of these risks have diminished - economies have continued to
reopen post pandemic - others have also emerged.
For now, GDP forecasts for the region, which were downgraded in
the second quarter, appear to be improving. Brazil's economic
ministry has raised expectations for its 2022 growth figure to
2.7%. Central banks have been quick to react to rising inflation
and have made adjustments to weather the environment of rising
prices. In Brazil, inflation has already been falling since July
(as measured by the IPCA benchmark inflation index). If, as is
hoped, the period of interest rate hikes is coming to an end, it
could be expected that inflation rates elsewhere in the region
reach their peak as early as next year.
Furthermore, with the most recent run of elections now out of
the way, I believe we are now moving from what has been an
extremely volatile period over the last 18 months to potentially a
calmer environment, one that should give investors greater
visibility - and make for more stable market conditions.
Looking to the longer term, Latin America continues to be an
appealing investment destination. The region is full of great
promise and is home to assets that are attractively valued compared
with other emerging markets and developed economies. Your Board
remains convinced by your Manager's focus on the wealth of
opportunities that are backed by major structural drivers, such as
the emerging power of middle-class consumers, increased
digitalisation and the growth of green technologies.
The Manager's recent focus has been to tilt the portfolio to a
more defensive positioning but the commitment to quality remains
undiminished. The portfolio still retains its diverse pool of
income-supporting bonds, combined with quality stocks trading at
attractive valuations. With improving results at an individual
company level, we expect to benefit from exposure to
underpenetrated sectors such as financial services, domestic
consumption, healthcare, infrastructure, renewables and
digitalisation trends. Your Manager remains focussed on companies
that are well-run, with solid financials, clear competitive
advantages and that are committed to good environmental, social and
governance ("ESG") practices. The focus on quality is essential to
delivering sustainable long-term returns for all shareholders.
Howard Myles
Chairman
10 November 2022
Investment Manager's Review
Performance Commentary
Latin American markets rallied over the review period, which was
marked by intensifying price pressures as the region, and the
world, began its post-pandemic recovery. Amid economies reopening
and consumers worldwide unleashing their pent-up demand for goods,
services and travel, rising inflation became a key driver of market
events. Steepening inflation, evident since 2021, was exacerbated
in February 2022 by Russia's invasion of Ukraine. The ensuing
sanctions on Russia's export of oil and commodities led to the
prices of these resources skyrocketing. By March, a month into the
invasion, oil prices had soared to their highest levels since 2008.
This turned out to be a boon for resource rich countries in Latin
America, in particular Brazil and Chile, which boasted double-digit
equity returns for the period. At the end of the Company's
financial year, Latin American stocks had outperformed all other
equity markets outside of the Middle East oil-rich region, thanks
to the stellar performances of the region's energy and commodity
companies.
Having said that, while Latin America's miners and energy
producers benefited, spiralling fuel prices hit the everyday
consumer hard, driving food and travel costs too high, too quickly.
The reaction from central banks, was to limit liquidity in the
market by raising interest rates. "Interest rate hiking" almost
became a catchphrase globally for the second half of the Company's
financial year, but we must acknowledge that Latin American central
banks were ahead of their peers in this respect, having begun their
monetary policy tightening towards the end of 2021. This meant that
while most equity markets in recent months were rocked by the US
Federal Reserve's (the "Fed") aggressive rate increases (4% at the
time of writing), Latin American stocks were far more resilient,
having already priced in monetary tightening since late 2021 and
even earlier for Brazilian equities. At the time of writing,
interest rates in Brazil, Chile, Colombia and Mexico stand at
13.75%, 11.25%, 11% and 9.25% respectively, compared to other
emerging markets like India (5.9%), Indonesia (4.75%) or Poland
(6.75%), for example. In the case of Brazil, whose central bank was
earliest to act, the strategy has visibly borne fruit. Despite the
continued interest rate hikes the Brazilian government bond market
outperformed major emerging markets.
On the downside, however, the evolving domestic political
landscape has been somewhat of a drawback for investors. Major
political events in Chile, Colombia, Peru and Argentina led to
investors taking a more cautious approach towards these regional
markets. There has been a palpable change in the political tide, as
dominant right-wing parties were voted out in favour of leftist,
socially-oriented leadership in Chile and Colombia. This led to
capital flight, putting pressure on the currencies and the bond
markets. Meanwhile, Brazil's presidential elections have been
intense and have left investors uncertain. While the polls seemed
to favour former, leftist-president Luis Inacio Lula da Silva over
the incumbent right-winger, President Jair Bolsonaro, the latter
had a surprisingly strong result after the first round of voting on
2 October 2022. Lula won 48% of the votes against Bolsonaro's 43 %
but fell short of the clear majority of over 50% of valid votes
required to prevent a run-off. He eventually secured his lead on 30
October, with 50.9% of the votes against Bolsonaro's 49.1% and the
transition process for the new president-elect has begun. Overall,
despite these bouts of uncertainty and sporadic market weaknesses,
Latin American stocks generally had a robust year and emerged top
of their asset class.
Against this backdrop, the Company's portfolio underperformed
its benchmark over the year, with the net asset value increase of
6.8% lagging the composite benchmark's 11.5% rise. This relatively
weaker overall performance was primarily due to the weaker
performance of the equity sleeve of the portfolio, which returned
3.34% versus the index's 10.79% gain. This underperformance was
attributable to the equity market shift away from growth stocks,
that had proved relatively robust during the pandemic, towards
value. The tighter monetary climate drove investors to rebalance
their portfolios, preferring to invest instead in utilities and
commodity stocks instead of growth-oriented stocks, such as
technology and ecommerce. Unfortunately, this market rotation
undermined the Company's strategic longer-term focus on quality
growth stocks.
In contrast, our fixed income exposure in the portfolio did
better. Our large overweight exposure to Uruguay had a major
positive contribution to relative performance, as did the lack of
any exposure to Chile which, together with Colombia, significantly
underperformed other regional markets. Uruguay's good performance
was attributable to a strong soybean harvest, which is a key export
for the country. Additionally, rising food prices helped the
Uruguayan peso outperform its neighbours over the period due to its
position as a major exporter of beef. Meanwhile, Chile, one of the
world's top copper producers, struggled over the year due to lower
copper prices. A severely weakened Chilean peso alongside a
stronger US dollar also negatively affected the country's
performance, despite a US$25 billion intervention by its central
bank that had aimed to quell exchange-rate volatility. Colombia
also had a difficult year, as the country's July inflation number
was 10.2% year on year, which was its highest reading in over a
decade. The Colombian peso was also weighed down by the
interest-rate hikes from the Fed and the strong US dollar, along
with a growing import bill and profit remittances from commodity
companies operating in the country but actually based outside.
Looking more closely at the performance of your Company's
underlying stock holdings, the exposure to companies linked to
dynamic growth themes which we had considered in our process, such
as ecommerce, digitalisation and renewables were punished by the
steepening of yield curves across the globe. As such, the
portfolio's exposure to XP Investimentos , which is the largest
brokerage firm in Brazil, detracted, as did its exposures to
renewable energy producer Raizen, and software services provider
Totvs . Additionally, Sequoia, which largely benefited from the
increased demand in ecommerce-related logistics, massively
corrected on the back of concerns over slowing global growth and
its impact on this ecommerce demand. Sequoia's share price was also
hurt as its margins were shrinking due to higher-than-expected
operational costs, in particular, from the cost of diesel. Over the
year, we exited XP and Sequoia, but we have kept your Company's
exposure to Raizen and Totvs, which are well thought of stocks,
that we think will benefit returns in the longer term.
In terms of the portfolio's performance by sector, the lower
exposure to the energy sector detracted the most. While your
Company's exposure to Brazilian state-owned petroleum producer
Petrobras added to overall returns as prices soared, the
underweight exposure compared to the benchmark once again hurt
relative returns. Petrobras rallied amid the surge in crude oil
prices, and investors were doubly enthusiastic when the company
announced record dividends. Investors were also optimistic about
the talk of possible privatisation of the company following a new
business plan that stressed capital discipline and a commitment to
dividends. Although we gradually increased our exposure to this
stock over the second half of the year, our underweight exposure
negatively impacted the portfolio's relative performance. More
positively, the exposure to Geopark, which is not in the benchmark,
helped. The Colombian oil and gas explorer did well over the period
and lifted performance. The company also cheered investors by
increasing its quarterly dividends for the third time in a
year.
Elsewhere, the exposure to materials stocks was mixed. Brazilian
miner Vale was the top contributor, as the company's shares
recovered from the weakness in iron ore prices seen at the start of
the year and rose in tandem with other commodity producers in the
region. Our lack of exposure to Mexican building materials company
Cemex was also a positive with the company lagging the benchmark
over the period. Having said that, not holding Chilean miner and
fertiliser producer SQM proved costly, as investors remained
bullish on the prospects for lithium prices due to rising demand
levels. Ultimately, as bottom-up stock pickers, our investment
decisions are driven by company fundamentals rather than short-term
market trends, and with that in mind, we will continue with our due
diligence and keep a close eye on the company's progress.
What did help were our decisions on holdings in the consumer
sector. Your Company benefited from not holding cosmetics group
Natura & Co. and from the underweight to Magazine Luiza as we
exited the stock during the year. The exposure to footwear retailer
Arezzo also proved beneficial.
Portfolio Activity
The key portfolio changes on the equity side centred around the
holdings in Brazil, and our attempt to reposition the portfolio
against the downside risks of shrinking domestic consumer demand
due to the inflationary pressures mentioned above. To this end, we
sold several consumer discretionary holdings, such as fast food
franchise BK Brasil, clothing department store Lojas Renner, retail
chain Magazine Luiza and ecommerce retailer Mobly. We also exited
Chilean shopping malls' operator Parque Arauco on the back of the
more challenging outlook for discretionary spending. Instead, we
took advantage of attractive valuations to take a position in
Assai, a leading cash and carry Brazilian retailer that we think is
well-positioned to capture consumers' changing habits.
Additionally, we also sought to reduce exposure to growth stocks
that were punished by the market rotation brought about by steeper
borrowing prices. We therefore exited growth names such as
education software firm Arco and online services platform GetNinjas
in favour of better opportunities elsewhere, as well as selling
Sequoia and XP, as mentioned earlier.
While there has been a traditional focus on high-quality growth
stocks as we sought to tap into the demographics of the region with
its large and growing middle class base, we have simultaneously
kept a watchful eye on high-quality value stocks. For example,
Telefonica Brasil, which we introduced during the year, is the
leading telecommunications company in Brazil. We had been cautious
about the sector due to its capital intensity and a stringent
regulatory environment, but we continued to do our due diligence
and decided to introduce the holding as we believe that the
Brazilian telecommunications will benefit from an improving
competitive and regulatory environment. Earlier in the year, we had
introduced three other value stocks, including junior exploration
and production company 3R Petroleum, Peru's leading banking
franchise Credicorp, and vertically integrated pulp and paper
producer Klabin . We funded these new acquisitions through the sale
of our sub-scale positions in renewable energy holdings, Omega and
Weg.
Meanwhile, on the fixed income side, in the first half of the
year, we had taken a more defensive approach in the face of rising
inflation, reducing our duration exposure in Brazil, Mexico, Peru
and Uruguay. Towards the end of the Company's financial year, we
cautiously started adding back longer-duration bonds to the
portfolio as the monetary policy tightening cycles matured and we
observed what we considered to be the peak of the inflationary
pressures.
ESG Engagement
During the year we continued our engagement with companies on
various ESG matters, with a focus as always on collaboratively
improving long-term quality for investors.
For example, in line with promoting good governance, we
continued our efforts with Assai to help strengthen the group's
corporate governance credentials. Elsewhere, we communicated with
the Board of Vale with feedback regarding its board refreshment
program, in view of the 2023 board election. We also met with the
management of Raizen and Klabin's board members to discuss various
governance topics, and we collaborated with the Brazilian
stock-exchange, B3 , to discuss issues around diversity at the
board level. We are in the process of formulating suggestions to
contribute to the public hearing on ESG enhancements, and diversity
and integration requirements for listed companies.
In the area of sustainability, we engaged with Arezzo in order
to get a detailed view on some aspects of the company's operations,
as well as to suggest some improvements in disclosure and
practices, particularly regarding raw material sourcing, carbon
footprint and chemical safety. Lastly, we engaged with 3R's new
chairman to discuss board functioning, strategy and risk
management, including the company's offshore operations.
Outlook
With the region's clamorous election season gradually drawing to
a close, we expect foreign capital to return to Latin America as
investors start to regain confidence in the respective new
administrations. Brazil remains a country to watch, at least until
the end of the year, with the transition of the president-elect
ongoing.
As a result, we are cautiously optimistic about the near-term
outlook for your Company's equity and bond investments in Latin
America. Amid changing governments and political alliances, we have
observed that fiscal policies in the region have been disciplined,
and we believe this will continue. On that front, if inflation
continues to stabilise, and we are seeing signs of that now, we
expect that by early next year, Latin American central banks should
gradually begin loosening interest rates. This will be a challenge
for the region, as it will be for central banks around the world -
to manage the fine line between keeping inflation in check whilst,
at the same time, not holding back economic growth.
We also expect the demand for energy and commodities to remain
strong, especially if the Russia-Ukraine conflict remains
unresolved. However, we are cognisant of the headwinds, such as
slowing demand from China, which has already weighed on GDP growth
forecasts for the region, as well as supply chain bottlenecks due
to geopolitical uncertainties.
At the individual stock level, while we have begun investing in
holdings that we had traditionally avoided due to the stringent
regulatory environment or due to the cyclical nature of these
businesses, we have done this now after rigorous due diligence, and
with confidence that these new additions to the portfolio will
serve to enhance the value of your Company. We will also continue
to position the Company's portfolio around the dynamic structural
growth themes in the region, which we feel will allow it to deliver
sustainable returns for shareholders in the longer term. With this
is mind, we remain committed to seeking out fundamentally strong,
quality companies that can stand the test of time and periods of
upheaval, and will ultimately benefit shareholders for several
years to come.
Brunella Isper and Viktor Szabó
Aberdeen Asset Managers Limited
10 November 2022
Overview of Strategy
Investment Objective and Business Model
The Company aims to provide private and institutional investors
with exposure to the above average long-term capital growth
prospects of Latin America combined with an attractive yield.
The business of the Company is that of an investment company and
the Directors do not envisage any change in this activity in the
foreseeable future.
Investment Policy and Approach
The Company invests in:
- companies listed on stock exchanges in the Latin American region;
- Latin American securities (such as American Depository
Receipts and Global Depositary Receipts) listed on international
stock exchanges;
- companies listed on international exchanges that derive
significant revenues or profits from the Latin American region;
and
- debt issued by governments and companies in the Latin American region.
The Company has a diversified portfolio consisting primarily of
equities, equity-related and fixed income investments, with at
least 25% of its gross assets invested in equity and equity-related
investments and at least 25% of its gross assets invested in fixed
income investments. The Company's investment policy is flexible,
enabling it to invest in all types of securities, including (but
not limited to) equities, preference shares, debt, convertible
securities, warrants, depositary receipts and other equity-related
securities.
Whilst the Board has provided the Investment Manager with broad
investment guidelines in order to ensure a spread of risk, the
Company's portfolio is not managed by reference to any benchmark
and, therefore, the composition of its portfolio is not restricted
by minimum or maximum country, market capitalisation or sector
weightings. The Manager follows a bottom-up investment process
based on its conviction in individual stocks. Top-down factors are
secondary in portfolio construction, with diversification rather
than formal controls guiding geographical and sector weights.
The Company may invest, where appropriate, in open-ended
collective investment schemes and closed-ended funds that invest in
the Latin American region.
Derivative investments may be used for efficient portfolio
management and hedging and may also be used in order to achieve the
investment objective and to enhance portfolio performance. The
Company may purchase and sell derivative investments such as
exchange-listed and over-the-counter put and call options on
currencies, securities, fixed income, currency and interest rate
indices and other financial instruments, purchase and sell
financial futures contracts and options thereon and enter into
various interest rate and currency transactions such as swaps,
caps, floors or collars or credit transactions and credit
derivative instruments. The Company may also purchase derivative
instruments that combine features of these instruments. The Manager
employs a risk management process to oversee and manage the
Company's exposure to derivatives. The Manager may use one or more
separate counterparties to undertake derivative transactions on
behalf of the Company, and may be required to pledge collateral in
order to secure the Company's obligations under such contracts. The
Manager will assess on a continuing basis the creditworthiness of
counterparties as part of its risk management process.
The Company may underwrite or sub-underwrite any issue or offer
for sale of investments.
The Board considers that returns to Ordinary Shareholders can be
enhanced by the judicious use of borrowing. The Board is
responsible for the level of gearing in the Company and reviews the
position on a regular basis. Pursuant to the level of gearing set
by the Board, the Company may borrow up to an amount equal to 20%
of its net assets calculated at the time of drawing. The Company
will not have any fixed, long-term borrowings.
The Company may also use derivative instruments for gearing
purposes, in which case the investment restrictions will be
calculated on the basis that the Company has acquired the
securities to which the derivatives are providing exposure.
The Company will normally be fully invested. However, during
periods in which economic conditions or other factors warrant, the
Company may reduce its exposure to securities and increase its
position in cash and money market instruments.
The Company invests and manages its assets, including its
exposure to derivatives, with the objective of spreading risk in
line with the Company's investment policy.
The Company may only make material changes to its investment
policy with the approval of Ordinary Shareholders (in the form of
an ordinary resolution).
Investment Restrictions
The minimum and maximum percentage limits set out under
"Investment Policy and Approach" and "Investment Restrictions" will
only be applied at the time of the relevant acquisition, trade or
borrowing. No more than 15% of the Company's gross assets will be
invested in any one company.
The Company will not invest more than 10%, in aggregate, of the
value of its gross assets in other investment companies admitted to
the Official List of the Financial Conduct Authority, provided that
this restriction does not apply to investments in any such
investment companies which themselves have stated investment
policies to invest no more than 15% of their gross assets in other
listed investment companies admitted to the Official List of the
Financial Conduct Authority.
The Company may invest up to 25% of its gross assets in
non-investment grade government debt issues (being debt issues
rated BB+/Ba1 or lower).
The Company's aggregate gross exposure to derivative instruments
will not exceed 50% of its gross assets.
The Company will not acquire securities that are unlisted or
unquoted at the time of investment (with the exception of
securities which are about to be listed or traded on a stock
exchange). However, the Company may continue to hold securities
that cease to be listed or quoted if the Investment Manager
considers this to be appropriate.
No underwriting or sub-underwriting commitment will be entered
into if the aggregate of such investments would exceed 10% of the
Company's net assets and no such individual investment would exceed
5% of the Company's net assets.
The Board has adopted a policy that the value of the Company's
borrowings or derivatives (but excluding collateral held in respect
of any such derivatives) will not exceed 30% of the Company's net
assets.
Duration
The Company does not have a fixed life or continuation vote.
Benchmark
The Company measures its performance against a composite
benchmark index weighted as to 60% MSCI EM Latin America 10/40
Index and 40% JP Morgan GBI-EM Global Diversified (Latin America
Carve Out) (both in sterling terms) (the "Benchmark"). The Company
does not seek to replicate the Benchmark index in constructing its
portfolio and the portfolio is not managed by reference to any
index. It is likely, therefore, that there will be periods when the
Company's performance will be uncorrelated to any index or
benchmark.
Promoting the Company's Success
In accordance with corporate governance best practice, the Board
is required to describe to the Company's shareholders how the
Directors have discharged their duties and responsibilities over
the course of the financial year following the guidelines set out
in the UK under section 172 (1) of the Companies Act 2006 (the
"s172 Statement"). This Statement, from "Promoting the Success of
the Company" to "Long Term Investment" on page 18 of the 2022
Annual Report , provides an explanation of how the Directors have
promoted the success of the Company for the benefit of its members
as a whole, taking into account the likely long term consequences
of decisions, the need to foster relationships with all
stakeholders and the impact of the Company's operations on the
environment.
The purpose of the Company is to provide private and
institutional investors with exposure to the above average
long-term capital growth prospects of Latin America combined with
an attractive yield. The Company's Investment Objective is
disclosed on page 15 of the 2022 Annual Report . The activities of
the Company are overseen by the Board of Directors of the
Company.
The Board's philosophy is that the Company should operate in a
transparent culture where all parties are treated with respect and
provided with the opportunity to offer practical challenge and
participate in positive debate which is focused on the aim of
achieving the expectations of shareholders and other stakeholders
alike. The Board reviews the culture and manner in which the
Manager operates at its regular meetings and receives regular
reporting and feedback from the other key service providers.
Investment trusts, such as the Company, are long-term investment
vehicles, with a recommended holding period of five or more years.
Typically, investment trusts are externally managed, have no
employees, and are overseen by an independent non-executive board
of directors. Your Company's Board of Directors sets the investment
mandate, monitors the performance of all service providers
(including the Manager) and is responsible for reviewing strategy
on a regular basis. All this is done with the aim of preserving and
enhancing shareholder value over the longer term.
Shareholder Engagement
The following table describes some of the ways we engage with
our shareholders
AGM The AGM ordinarily provides an opportunity for the
Directors to engage with shareholders, answer their
questions and meet them informally. The next AGM will
take place on 14 December 2022 in Jersey. The Board
encourages shareholders to attend or to lodge their
vote by proxy on all the resolutions put forward and
to email any questions in advance to Latin.American@abrdn.com.
====================== ================================================================
Annual Report We publish a full annual report each year that contains
a strategic report, governance section, financial
statements and additional information. The report
is available online and in paper format.
====================== ================================================================
Company Announcements We issue announcements for all substantive news relating
to the Company. You can find these announcements on
the website.
====================== ================================================================
Results Announcements We release a full set of financial results at the
half year and full year stage. Updated net asset value
figures are announced on a daily basis.
====================== ================================================================
Monthly Factsheets The Manager publishes monthly factsheets on the Company's
website including commentary on portfolio and market
performance.
====================== ================================================================
Website Our website contains a range of information on the
Company and includes a full monthly portfolio listing
of our investments as well as podcasts by the Investment
Manager. Details of financial results, the investment
process and Investment Manager together with Company
announcements and contact details can be found here
: latamincome.co.uk
====================== ================================================================
Investor Relations The Company subscribes to the Manager's Investor Relations
programme (further details are on page 105 of the
2022 Annual Report).
====================== ================================================================
Other Service Providers
The other key stakeholder group is that of the Company's third
party service providers. The Board is responsible for selecting the
most appropriate outsourced service providers and monitoring the
relationships with these suppliers regularly in order to ensure a
constructive working relationship. Our service providers look to
the Company to provide them with a clear understanding of the
Company's needs in order that those requirements can be delivered
efficiently and fairly. The Board, via the Management Engagement
Committee, ensures that the arrangements with service providers are
reviewed at least annually in detail. The aim is to ensure that
contractual arrangements remain in line with best practice,
services being offered meet the requirements and needs of the
Company and performance is in line with the expectations of the
Board, Manager, Investment Manager and other relevant stakeholders.
Reviews include those of the Company's custodian, registrar, broker
and auditor.
Principal Decisions
Pursuant to the Board's aim of promoting the long term success
of the Company, the following principal decisions have been taken
during the year:
Continuing Appointment of the Manager It is the Board's duty to
shareholders to ensure that the Investment Manager delivers on the
investment objective. The Investment Manager has continued to
manage the investment portfolio throughout the year under the
supervision of the Board. The Investment Manager's Review on pages
11 to 14 of the 2022 Annual Report details the key investment
decisions taken during the year. The Board continues to support the
Company's mandate and has reviewed and challenged the decisions
made by the Manager during the year. The Management Engagement
Committee, on behalf of the Board, has undertaken its annual review
of the Manager's performance, and the terms of the Management
Agreement, and believes that its continued appointment is in the
best interests of shareholders.
Board Appointment The Board continued to progress its succession
plans during the year, resulting in the appointment of Michael Gray
as an independent Non-Executive Director with effect from 28
February 2022. Further details are provided in the Chairman's
Statement. The Board believes that the appointment of Michael Gray
benefits shareholders by ensuring an orderly refreshment of the
Board, which serves to provide continuity and maintain the Board's
independent oversight of the Manager.
Dividend The Board has maintained the level of the Company's
dividend, supplemented at times by revenue reserves, despite the
lingering impact of the Covid-19 pandemic and the difficult
economic backdrop. The Board regularly reviews revenue forecasts,
together with the Manager, and places great emphasis on exercising
prudence, particularly in these uncertain times, to ensure that the
robustness of the Company's balance sheet is maintained, and
continues to keep its distribution policy under review.
ESG The Board is responsible for overseeing the work of the
Manager and this is not limited solely to the investment
performance of the portfolio companies. The Board also has regard
for environmental (including climate change), social and governance
matters that subsist within the portfolio companies. The Board has
met with the Manager to gain an improved understanding of its
approach to ESG engagement with investee companies, including
review of their reporting, and how it meets its reporting
requirements on ESG; the Board is supportive of the Manager's
pro-active approach and the Manager will continue to evolve the
quality and content of its reporting to the Board. The Manager
produces a half yearly report which looks at ESG characteristics of
the equity holdings within the portfolio, including carbon
emissions. Discussions have taken place on how to improve
communication in this area to shareholders and the wider public,
given its increasing importance, particularly with respect to
climate change. More information on the Manager's approach to ESG
can be found on pages 36 to 41 of the 2022 Annual Report.
Long Term Investment
The Investment Manager's investment process seeks to outperform
over the longer term. The Board has in place the necessary
procedures and processes to continue to promote the long term
success of the Company. The Board will continue to monitor,
evaluate and seek to improve these processes as the Company
continues to grow over time, seeking to ensure that the investment
proposition is delivered to shareholders and other stakeholders in
line with their expectations.
Key Performance Indicators ("KPIs")
The Board uses a number of financial performance measures to
assess the Company's success in achieving its objective and
determine the progress of the Company in pursuing its investment
policy. The main KPIs identified by the Board in relation to the
Company which are considered at each Board meeting are as
follows:
KPI Description
============================= ==========================================================
Net Asset Value The Board considers the Company's NAV total return
("NAV") Total Return figures versus the Benchmark to be the best indicator
Performance versus of performance over time and is therefore the main
Benchmark Index indicator of performance used by the Board. The figures
Total Return for this year, three years, five years and since
launch are set out on page 24 of the 2022 Annual
Report.
============================= ==========================================================
Share Price Discount/Premium The discount/premium relative to the NAV per share
to NAV per Ordinary represented by the share price is closely monitored
Share by the Board. The objective is to minimise fluctuations
in the discount relative to similar investment companies
investing in the region by the use of share buy backs
subject to market conditions. A graph showing the
share price discount/premium relative to the NAV
is shown on page 25 of the 2022 Annual Report.
============================= ==========================================================
Ordinary Share Price The Board also monitors the price at which the Company's
Total Return Performance shares trade relative to the Benchmark on a total
return basis over time. A graph showing the total
NAV return and the share price performance against
the comparative index is shown on page 25 of the
2022 Annual Report.
============================= ==========================================================
Dividends per Ordinary The Board's aim is to provide shareholders with an
Share attractive yield. Dividends paid in 2021 and 2022
are set out on page 5 of the 2022 Annual Report.
============================= ==========================================================
Further commentary on the Company's performance is contained in
the Chairman's Statement and Investment Manager's Review and
further explanation of the terms is provided in the Glossary on
pages 108 to 110 of the 2022 Annual Report.
Principal Risks and Uncertainties
There are a number of risks which, if realised, could have a
material adverse effect on the Company and its financial condition,
performance and prospects. The Board has carried out a robust
assessment of the risks and uncertainties facing the Company at the
current time together with a description of the mitigating actions
taken by the Board. This process is supported by use of a risk
matrix and heat map which describes the principal risks set out in
the table on pages 20 to 21 of the 2022 Annual Report. The Board
also has a process for identifying newly emerging risks, including
geopolitical developments.
The principal risks associated with an investment in the
Company's shares are published monthly on the Company's factsheet
and they can be found in the Pre-Investment Disclosure Document
published by the Manager, both of which are on the Company's
website.
The principal uncertainty for the Company during the financial
year was the continuing impact of the global pandemic and
geopolitical developments following Russia's invasion of Ukraine in
February 2022. These events have caused significant economic
disruption and contributed to global stock market volatility; their
longer-term effects on the Latin American region are as yet unknown
and the likelihood of a global recession in 2023 has increased. The
Manager has sought assurances from, and reported to the Audit
Committee on, the Company's key service providers, as well as its
own operations, business continuity and contingency arrangements.
Other than these global developments, the Audit Committee does not
consider the principal risks and uncertainties of the Company to
have changed materially during the year ended 31 August 2022.
The Board also regularly considers the increasing risk of
ESG-related matters, particularly regarding the impact of climate
change on financial performance of companies and the monitoring of
developments in ESG reporting requirements, including how the
Manager seeks to address them.
Description Mitigating Action
======================================= =============================================
Investment Management - Investment The Board sets, and monitors, its
risk arises from the Company's investment restrictions and guidelines,
exposure to both macro and and receives regular reports which
portfolio specific factors. include performance reporting on
The financial and economic the implementation of the investment
risks associated with the policy, the investment process
Company include foreign exchange and application of the guidelines.
risk, market risk, liquidity The Board relies on the Investment
risk and credit risk. Other Manager's skills and judgment to
macro risks include geo-political manage risk and make investment
developments, pandemic and decisions based on research and
climate change, for example. analysis of stocks and sectors.
Inappropriate investment decisions The Board regularly monitors the
may result in the Company's investment performance of the portfolio
underperformance against the and reviews holdings, purchases
benchmark index and peer group and sales on a monthly basis, as
as well as a widening of the well as with the Manager at Board
Company's discount. meetings. The Board also reviews
performance data and attribution
analysis and other relevant factors
(such as ESG engagement) and, were
any underperformance seen as likely
to be sustained, would be able
to take remedial action.
The Board considers the increasing
complexity of the macro environment
(including recent geo-political
developments) to increase the likelihood
of this risk.
======================================= =============================================
Share Price and Discount -The The price of the Company's shares
principal risks described and its discount to NAV are not
in this table, including lack wholly within the Board's control,
of demand for Ordinary Shares, as both are subject to market volatility.
can affect the movement of The Board keeps the level of discount
the Company's share price at which the Company's Ordinary
and in some cases have the shares trade under review. The
potential to increase the Board has limited influence through
discount in the market value its ability to authorise the buyback
of the Company compared with of existing shares, when deemed
the NAV. to be in the best interest of shareholders.
The share price, NAV and discount
are monitored daily by the Manager
and are regularly reviewed by the
Board.
======================================= =============================================
Investment Strategy and Objectives The Board considers the Company's
- the setting of an unattractive strategy regularly and its attractiveness
strategic proposition for to shareholders. The Board regularly
the Company and the failure reviews the income generated by
to adapt to changes in investor the underlying portfolio and has
demand may lead to the Company the ability to supplement the dividend
becoming unattractive to investors. with revenue reserves previously
generated by the Company. The Board
is updated at each Board meeting
on the make up of, and any movements
in, the Shareholder register as
well as the recent and planned
promotional and investor relations
activity.
======================================= =============================================
Operational - the Company The Board receives reports from
does not have its own employees the Manager on internal controls
so is dependent on third parties and risk management at each Board
for the provision of all systems meeting and receives assurances
and services (in particular, from its significant service providers
those of the Manager). Those with regard to their compliance
third parties are responsible monitoring and control and risk
for operating in compliance management systems. The Board considers
with relevant laws and regulations. the increasing complexity of the
There is a risk that any control risk environment (including the
failures, cyber crime or deficiencies potential of increasingly sophisticated
in these systems and services cyber crime events) to increase
could result in a loss or the likelihood of this risk. Further
damage to the Company. details of the internal controls
which are in place are set out
in the Directors' Report on page
51 of the 2022 Annual Report.
======================================= =============================================
Gearing - the ability of the The Board sets a gearing limit
Company to meet its financial to ensure that covenant restrictions
obligations, or increasing in the Company's loan facility
the level of gearing, could are not breached and the Board
result in the Company becoming receives regular updates on the
over-geared and therefore actual gearing levels the Company
unable to take advantage of has reached from the Investment
potential opportunities. Being Manager together with the assets
geared in negative markets and liabilities of the Company
may lead to a loss of value. and reviews these at each Board
There is also a risk of a meeting. The Board considers renewal
borrowing facility not being of borrowing sufficiently in advance
renewed. of the renewal date to explore
various lending options. The Board
considers the likelihood of this
risk to increase as the Company's
loan reaches maturity as well as
with rising inflation rates.
======================================= =============================================
An explanation of other risks relating to the Company's
investment activities, specifically market risk including interest
rate risk, foreign currency risk and other price risk, liquidity
risk, credit risk and a note of how these risks are managed, is
contained in note 15 to the financial statements on pages 88 to 97
of the 2022 Annual Report.
Viability Statement
The Company does not have a formal fixed period strategic plan
but the Board formally considers risks and strategy at least
annually. The Board considers the Company, with no fixed life, to
be a long term investment vehicle, but for the purposes of this
viability statement has decided that a period of three years is an
appropriate period over which to report. The Board considers that
this period reflects an appropriate balance between looking out
over a long term horizon and the inherent uncertainties of looking
out further than three years.
In assessing the viability of the Company over the review period
the Directors have carried out a robust assessment of the principal
risks detailed in the Strategic Report focussing upon the following
factors:
- The ongoing relevance of the Company's investment objective in the current environment;
- The demand for the Company's shares evidenced by the
historical level of premium and or discount;
- The level of income generated by the Company;
- The liquidity of the Company's portfolio; and,
- The flexibility of the Company's multi-currency loan facility
which matures in August 2023 including the financial covenants of
the loans. The Directors will aim to agree a new facility upon the
expiry of the current one in 2023 and in the event that
satisfactory renewal terms are not available at that time the
facility will be repaid from portfolio sales.
Accordingly, taking into account the Company's current position,
the fact that abrdn has agreed to reduce the fees payable to the
Manager to the extent necessary to ensure that the Ongoing Charges
Ratio does not exceed 2.0%, the fact that the Company's investments
are mostly liquid and the potential impact of its principal risks
and uncertainties, the Board has a reasonable expectation that the
Company will be able to continue in operation and meet its
liabilities as they fall due for a period of three years from the
date of this Report. In making this assessment, the Board has
considered that matters such as the ongoing Covid-19 pandemic,
significant economic or stock market volatility, significant
discount to NAV, a substantial reduction in the liquidity of the
portfolio, or changes in investor sentiment could have an impact on
its assessment of the Company's prospects and viability in the
future.
Promoting the Company
The Board recognises the importance of promoting the Company to
prospective investors both for improving liquidity and enhancing
the value and rating of the Company's shares. The Board believes an
effective way to achieve this is through subscription to and
participation in the promotional programme run by abrdn on behalf
of a number of investment companies under its management. The
Company's financial contribution to the programme is matched by
abrdn. abrdn's promotional team reports quarterly to the Board
giving analysis of the promotional activities as well as updates on
the shareholder register and any changes in the make-up of that
register.
The purpose of the programme is both to communicate effectively
with existing shareholders and to gain new shareholders with the
aim of improving liquidity and enhancing the value and rating of
the Company's shares. Communicating the long-term attractions of
your Company is key and therefore the Company also supports the
abrdn investor relations programme which involves regional
roadshows, promotional and public relations campaigns.
Board Diversity
The Board recognises the importance of having a range of
skilled, experienced individuals with the right knowledge
represented on the Board in order to allow the Board to fulfil its
obligations. The Board also recognises the benefits and is
supportive of the principle of diversity in its recruitment of new
Board members. The Board will not display any bias for age, gender,
race, sexual orientation, religion, ethnic or national origins, or
disability in considering the appointment of its Directors.
However, the Board will continue to ensure that all appointments
are made on the basis of merit against the specification prepared
for each appointment and, therefore, the Company does not consider
it appropriate to set diversity targets. At 31 August 2022, there
were two male and two female Directors on the Board.
Environmental, Social and Human Rights Issues
The Company has no employees as it is managed by abrdn Capital
International Limited ("aCIL") and ordinarily all activities are
contracted out to third party service providers. There are
therefore no disclosures to be made in respect of employees. The
Company's socially responsible investment policy is outlined on
page 15 of the 2022 Annual Report. The Board has appointed Hazel
Adam as the director responsible for ESG matters and she helps
promote close monitoring and further development in this area for
the Company.
Due to the nature of the Company's business, being a company
that does not offer goods and services to customers, the Board
considers that it is not within the scope of the Modern Slavery Act
2015 because it has no turnover. The Company is therefore not
required to make a slavery and human trafficking statement. In any
event, the Board considers the Company's supply chains, dealing
predominantly with professional advisers and service providers in
the financial services industry, to be low risk in relation to this
matter. Through the Manager and its engagement with investee
companies, the Company has oversight over supply chains within the
portfolio. The Board encourages the Manager to engage with investee
companies on all ESG matters, which could include modern slavery
and human rights issues in investment portfolio companies. More
information can be found on the Investment Manager's approach to
ESG engagement on pages 36 to 41 of the 2022 Annual Report.
The Company's Manager has confirmed that it complies with the
Modern Slavery Act 2015.
Global Greenhouse Gas Emissions and Streamlined Energy and
Carbon Reporting ("SECR")
All of the Company's activities are outsourced to third parties.
The Company therefore has no greenhouse gas emissions to report
from the operations of its business, nor does it have
responsibility for any other emissions producing sources under the
Companies Act 2006 (Strategic Report and Directors' Reports)
Regulations 2013. For the same reason as set out above, the Company
considers itself to be a low energy user under the SECR and
therefore is not required to disclose energy and carbon
information.
Future
Many of the non-performance related trends likely to affect the
Company in the future are common across all closed-ended investment
companies, such as the attractiveness of investment companies as
investment vehicles and the impact of regulatory changes. These
factors need to be viewed alongside the outlook for the Company,
both generally and specifically, in relation to the portfolio. The
Board's views on the general outlook for the Company can be found
in the Chairman's Statement on page 10, whilst the Investment
Manager's views on the outlook for the portfolio are included on
pages 13 to 14 of the 2022 Annual Report.
For and on behalf of the Board
Howard Myles,
Chairman
10 November 2022
Results
Performance (total return)
1 year 3 year 5 year Since launch(A)
% return % return % return % return
==================================== ======== ======== ======== ===============
Ordinary share price(B) +0.28% -8.40% -10.46% +0.20%
==================================== ======== ======== ======== ===============
Net asset value(B) +6.82% -9.11% -9.63% +15.03%
==================================== ======== ======== ======== ===============
Benchmark +11.50% +1.04% +5.67% +30.95%
------------------------------------ -------- -------- -------- ---------------
(A) Launch date 16 August 2010.
(B) Considered to be an Alternative Performance Measure. Further details
can be found below.
Total return represents the capital
return plus dividends reinvested.
Ten Year Financial Record
Year to 31 August 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
============================= ====== ====== ======= ====== ====== ======= ====== ======= ====== ======
Total revenue (GBP'000) 3,914 3,600 3,170 3,544 3,772 3,095 3,230 1,896 2,101 3,372
----------------------------- ------ ------ ------- ------ ------ ------- ------ ------- ------ ------
Per Ordinary share (p)
============================= ====== ====== ======= ====== ====== ======= ====== ======= ====== ======
Net revenue return 4.43 4.11 3.85 4.60 4.77 3.78 4.27 2.21 2.66 4.84
============================= ====== ====== ======= ====== ====== ======= ====== ======= ====== ======
Total return/(loss) (6.06) 8.65 (33.22) 24.04 18.00 (16.84) 15.20 (22.26) 9.74 3.77
============================= ====== ====== ======= ====== ====== ======= ====== ======= ====== ======
Net dividends payable 4.25 4.25 4.25 3.50 3.50 3.50 3.50 3.50 3.50 3.50
----------------------------- ------ ------ ------- ------ ------ ------- ------ ------- ------ ------
Net asset value per Ordinary
share (p)
============================= ====== ====== ======= ====== ====== ======= ====== ======= ====== ======
Basic & diluted 88.04 92.60 55.17 75.54 90.40 70.34 82.34 56.65 62.89 63.16
----------------------------- ------ ------ ------- ------ ------ ------- ------ ------- ------ ------
Equity shareholders'
funds (GBP'000) 58,610 60,729 35,872 48,463 56,170 42,325 47,755 32,355 35,919 36,072
----------------------------- ------ ------ ------- ------ ------ ------- ------ ------- ------ ------
Ten Largest Investments
As at 31 August 2022
Petrobras Banco Bradesco
Brazilian state owned oil & A leading privately-owned Brazilian
gas company primarily engaged bank with a well-recognised brand,
in exploration and production, robust loan portfolio and experienced
refining, energy generation, management team.
trading and distribution of
oil products.
Wal-Mart De Mexico Vale
The largest food and general Vale is a leading producer of iron
retailer in Mexico with an ore and pellets. Vale also produces
established presence across nickel, copper and coal. It operates
a number of smaller Central large logistics systems, including
American markets. railroads and maritime terminals
which are integrated with its' mining
operations.
Grupo Financiero Banorte Telefonica Brasil
Mexico's leading privately-owned Leading mobile and fibre provider
bank with a well-recognised in Brazil with growing exposure
nationwide brand, sizeable into
pension business and proven digital services.
track record in conservative
lending.
Arezzo Industria e Comercio Raia Drogasil
Arezzo is Brazil's largest Raia Drogasil is the largest operator
women's footwear retailer and of pharmaceutical stores in Brazil,
has been expanding into apparel offering over the counter medicines,
more recently. skin care, personal care, and cosmetics
products across a large network
of physical stores and online.
Arca Continental TOTVS
Latin America's second largest Leading enterprise resource planning
Coke bottler with the majority software business in Brazil with
of its volumes sold in Mexico strong growth prospects given its
but also in the US and some focus on the underpenetrated SME
countries in South America segment .
including Peru and Argentina.
Investment Portfolio - Equities
As at 31 August 2022
==================================================================================================
Valuation Total Valuation
2022 assets 2021
Company Sector Country GBP'000 %(A) GBP'000
============================== ======================= ========== ========= ======= =========
Petrobras(B) Energy Brazil 2,050 4.9 1,027
============================== ======================= ========== ========= ======= =========
Banco Bradesco(C) Financials Brazil 1,855 4.5 1,451
============================== ======================= ========== ========= ======= =========
Wal-Mart De Mexico Consumer Staples Mexico 1,513 3.6 1,403
============================== ======================= ========== ========= ======= =========
Vale (C) Materials Brazil 1,403 3.4 1,385
============================== ======================= ========== ========= ======= =========
Grupo Financiero Banorte Financials Mexico 1,363 3.3 1,214
============================== ======================= ========== ========= ======= =========
Telefonica Brasil(B) Telecommunications Brazil 1,135 2.7 -
============================== ======================= ========== ========= ======= =========
Arezzo Industria e Comercio
(B) Consumer Discretionary Brazil 1,078 2.6 405
============================== ======================= ========== ========= ======= =========
Raia Drogasil(B) Consumer Staples Brazil 1,018 2.5 815
============================== ======================= ========== ========= ======= =========
Arca Continental Consumer Staples Mexico 930 2.2 503
============================== ======================= ========== ========= ======= =========
Information
TOTVS(B) Technology Brazil 904 2.2 914
------------------------------ ----------------------- ---------- --------- ------- ---------
Top ten equity investments 13,249 31.9
------------------------------ ----------------------- ---------- --------- ------- ---------
Itausa Investimentos Itau
(B) Financials Brazil 879 2.1 686
============================== ======================= ========== ========= ======= =========
Grupo Mexico SAB de CV Materials Mexico 804 1.9 1,025
============================== ======================= ========== ========= ======= =========
Grupo Aeroportuario Centro
Norte Industrials Mexico 757 1.8 662
============================== ======================= ========== ========= ======= =========
Corporacion Inmobilaria
Vesta SAB de CV Real Estate Mexico 753 1.8 502
============================== ======================= ========== ========= ======= =========
Banco Santander-Chile
ADR Financials Chile 733 1.8 258
============================== ======================= ========== ========= ======= =========
Multiplan Empreendimentos
NPB (B) Real Estate Brazil 727 1.7 399
============================== ======================= ========== ========= ======= =========
Fomento Economico Mexicano
ADR Consumer Discretionary Mexico 692 1.7 1,283
============================== ======================= ========== ========= ======= =========
Hapvida Participacoes
e Investimentos(B) Health Care Brazil 656 1.6 -
============================== ======================= ========== ========= ======= =========
Sendas Distribution(B) Consumer Discretionary Brazil 633 1.5 -
============================== ======================= ========== ========= ======= =========
Rumo(B) Industrials Brazil 558 1.4 991
------------------------------ ----------------------- ---------- --------- ------- ---------
Top twenty equity investments 20,441 49.2
------------------------------ ----------------------- ---------- --------- ------- ---------
Klabin (B) Materials Brazil 498 1.2 -
============================== ======================= ========== ========= ======= =========
B3 Brasil Bolsa Balco(B) Financials Brazil 414 1.0 1,390
============================== ======================= ========== ========= ======= =========
Geopark Energy Colombia 391 1.0 544
============================== ======================= ========== ========= ======= =========
Falabella (B) Consumer Discretionary Chile 385 0.9 673
============================== ======================= ========== ========= ======= =========
Bradespar(B) Materials Brazil 371 0.9 1,419
============================== ======================= ========== ========= ======= =========
Regional SAB de CV Financials Mexico 362 0.9 278
============================== ======================= ========== ========= ======= =========
Raizen(B) Energy Brazil 356 0.9 524
============================== ======================= ========== ========= ======= =========
Localiza Rent A Car (B) Industrials Brazil 347 0.8 270
============================== ======================= ========== ========= ======= =========
Credicorp Financials Peru 342 0.7 -
============================== ======================= ========== ========= ======= =========
3R Petroleum(B) Energy Brazil 305 0.7 -
------------------------------ ----------------------- ---------- --------- ------- ---------
Top thirty equity investments 24,212 58.2
------------------------------ ----------------------- ---------- --------- ------- ---------
Wilson, Sons (B) Industrials Brazil 269 0.7 272
============================== ======================= ========== ========= ======= =========
Information
Globant Technology Argentina 268 0.6 908
============================== ======================= ========== ========= ======= =========
Mercado Libre Consumer Discretionary Brazil 230 0.6 762
============================== ======================= ========== ========= ======= =========
Itau Unibanco Holdings
(B) Financials Brazil 207 0.5 230
============================== ======================= ========== ========= ======= =========
Fossal Materials Peru 1 - -
------------------------------ ----------------------- ---------- --------- ------- ---------
Total equity investments 25,187 60.6
------------------------------ ----------------------- ---------- --------- ------- ---------
(A) See definition on page 110 of the 2022 Annual Report.
(B) Held in Subsidiary.
(C) Holding includes investment in ADR (held by the Company) and equity
(held by the Subsidiary).
Portfolio investments reflect consolidated investee holdings of the
Company and its Subsidiary. Values for 2022 and 2021 may not be directly
comparable due to purchases and sales made during the year.
Investment Portfolio - Bonds
As at 31 August 2022
=============================================================================================
Valuation Total Valuation
2022 assets 2021
Issue Sector Country GBP'000 %(A) GBP'000
================================ ================= ========= ========= ======= =========
Brazil (Fed Rep of) 10%
01/01/25(B) Government Bonds Brazil 2,482 6.0 2,240
================================ ================= ========= ========= ======= =========
Colombia (Rep of) 9.85%
28/06/27 Government Bonds Colombia 1,472 3.5 2,187
================================ ================= ========= ========= ======= =========
Uruguay (Rep of) 4.375%
15/12/28 Government Bonds Uruguay 1,278 3.1 1,624
================================ ================= ========= ========= ======= =========
Mex Bonos Desarr Fix Rt
10% 20/11/36 Government Bonds Mexico 1,141 2.7 1,113
================================ ================= ========= ========= ======= =========
Mex Bonos Desarr Fix Rt
10% 18/11/38 Government Bonds Mexico 1,113 2.7 1,082
================================ ================= ========= ========= ======= =========
Brazil (Fed Rep of) 10%
01/01/23(B) Government Bonds Brazil 953 2.3 695
================================ ================= ========= ========= ======= =========
Uruguay (Rep of) 4.25%
05/04/27 Government Bonds Uruguay 947 2.3 754
================================ ================= ========= ========= ======= =========
Secretaria Tesouro 10%
01/01/31(B) Government Bonds Brazil 879 2.1 616
================================ ================= ========= ========= ======= =========
Petroleos Mexicanos 7.47%
12/11/26 Government Bonds Mexico 866 2.1 744
================================ ================= ========= ========= ======= =========
Titulos de Tesoreria 7%
26/03/31 Government Bonds Colombia 605 1.4 -
-------------------------------- ----------------- --------- --------- ------- ---------
Top ten bond investments 11,736 28.2
-------------------------------- ----------------- --------- --------- ------- ---------
Peru (Rep of) 6.85% 12/02/42 Government Bonds Peru 579 1.4 301
================================ ================= ========= ========= ======= =========
Mex Bonos Desarr Fix Rt
10% 05/12/24 Government Bonds Mexico 495 1.2 581
================================ ================= ========= ========= ======= =========
Brazil (Fed Rep of) 10%
01/01/29(B) Government Bonds Brazil 439 1.1 408
================================ ================= ========= ========= ======= =========
Peru (Rep of) 6.15% 12/08/32 Government Bonds Peru 388 0.9 -
================================ ================= ========= ========= ======= =========
Colombia (Rep of) 7% 30/06/32 Government Bonds Colombia 385 0.9 513
================================ ================= ========= ========= ======= =========
Brazil (Fed Rep of) 10%
01/01/27(B) Government Bonds Brazil 381 0.9 694
================================ ================= ========= ========= ======= =========
Mex Bonos Desarr Fix Rt
7.75% 29/05/31 Government Bonds Mexico 374 0.9 363
================================ ================= ========= ========= ======= =========
Uruguay (Rep of) 8.25%
21/05/31 Government Bonds Uruguay 299 0.7 -
================================ ================= ========= ========= ======= =========
Mexico (United Mexican
States) 7.75% 13/11/42 Government Bonds Mexico 203 0.5 -
================================ ================= ========= ========= ======= =========
Peru (Rep of) 6.95% 12/08/31 Government Bonds Peru 145 0.4 306
-------------------------------- ----------------- --------- --------- ------- ---------
Top twenty bond investments 15,424 37.1
-------------------------------- ----------------- --------- --------- ------- ---------
Peru (Rep of) 6.95% 12/08/31 Government Bonds Peru 65 0.1 238
================================ ================= ========= ========= ======= =========
Total value of bond investments 15,489 37.2
================================ ================= ========= ========= ======= =========
Total value of equity
investments 25,187 60.6
================================ ================= ========= ========= ======= =========
Total value of portfolio
investments 40,676 97.8
================================ ================= ========= ========= ======= =========
Other net assets held
in subsidiary 660 1.6
-------------------------------- ----------------- --------- --------- ------- ---------
Total investments 41,336 99.4
-------------------------------- ----------------- --------- --------- ------- ---------
Net current assets(C) 236 0.6
-------------------------------- ----------------- --------- --------- ------- ---------
Total assets(A) 41,572 100.0
-------------------------------- ----------------- --------- --------- ------- ---------
(A) See definition on page 110 of the 2022 Annual Report.
(B) Held in Subsidiary.
(C) Excluding bank loans of GBP5,500,000.
Portfolio investments reflect consolidated investee holdings of the
Company and its Subsidiary. Values for 2022 and 2021 may not be directly
comparable due to purchases and sales made during the year.
Directors' Report
The Directors present their Report and the audited financial
statements for the year ended 31 August 2022.
Status
The Company is registered with limited liability in Jersey as a
closed-ended investment company under the Companies (Jersey) Law
1991 with registered number 106012. In addition, the Company is
constituted and regulated as a collective investment fund under the
Collective Investments Funds (Jersey) Law 1988. The Company has no
employees and makes no political or charitable donations. The
Company has a wholly owned subsidiary, abrdn Latin American Income
Fund LLC, registered in Delaware. The subsidiary is used to hold
certain investments as part of the efficient management of the
group.
The Company intends to continue to manage its affairs so as to
be a qualifying investment for inclusion in the stocks and shares
component of an Individual Savings Account and it is the Directors'
intention that the Company should continue to be a qualifying
investment.
Results and Dividends
Details of the Company's results and dividends are shown above.
The Company's dividend policy is to pay interim dividends on a
quarterly basis and for the year to 31 August 2022 dividends have
been paid in January, May, August and October 2022.
Management Arrangements
The Company has an agreement (the "Management Agreement") with
aCIL for the provision of management, company secretarial and
promotional services, details of which are shown in notes 5, 6 and
17 to the financial statements.
Under the Management Agreement, the Manager is entitled to both
a management fee and a company secretarial and administration fee.
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%. In relation to the year ended 31
August 2022 an OCR rebate of GBP132,000 (2021: GBP127,000) was
payable by the Manager in order to ensure that the OCR did not
exceed 2.0%.
The Directors review the terms of the Management Agreement on a
regular basis and have confirmed that, due to the investment
skills, experience and commitment of the Management team, in their
opinion the continuing appointment of aCIL on the terms agreed, is
in the interests of Shareholders as a whole.
Share Capital
As at 31 August 2022 there were 57,113,324 Ordinary shares in
issue and 6,107,500 Ordinary shares held in treasury. There were no
changes to the Company's shares in issue during the year.
Ordinary shareholders are entitled to vote on all resolutions
which are proposed at general meetings of the Company. The Ordinary
shares carry a right to receive dividends. On a winding up, after
meeting the liabilities of the Company, the surplus assets will be
paid to Ordinary shareholders in proportion to their
shareholdings.
Risk Management
Details of the principal risks and uncertainties and KPIs are
disclosed on pages 19 to 21 of the 2022 Annual Report. Details of
the financial risk management policies and objectives relative to
the use of financial instruments by the Company are set out in note
15 to the financial statements.
Directors
Hazel Adam, Michael Gray, Heather MacCallum, Howard Myles and
Richard Prosser were the only Directors in office during the
financial year. As part of an agreed succession plan, Richard
Prosser retired as a director of the Company in February 2022 and
Michael Gray was appointed on 18 February 2022.
The Directors' beneficial holdings are disclosed in the
Directors' Remuneration Report. No Director has a service contract
with the Company. The Directors' interests in contractual
arrangements with the Company are as shown in note 6 to the
financial statements. All of the Directors are retiring and seeking
re-election at the AGM on 14 December 2022, with the exception of
Michael Gray who will be seeking election by shareholders for the
first time.
Corporate Governance
The Company is committed to high standards of corporate
governance. The Board is accountable to the Company's Shareholders
for good governance.
The Company is a member of the Association of Investment
Companies ("AIC"). The Board has considered the principles and
provisions of the AIC Code of Corporate Governance as published in
February 2019 ("AIC Code"). The AIC Code addresses the principles
and provisions set out in the UK Corporate Governance Code ("UK
Code"), as well as setting out provisions on issues which are of
specific relevance to the Company.
The AIC Code is available on the AIC's website:
theaic.co.uk.
The Board considers that reporting against the provisions of the
AIC Code which has been endorsed by the FRC provides more relevant
information to shareholders.
The Board confirms that, during the year, the Company complied
with the principles and provisions of the AIC, and the relevant
provisions of the UK Code, except as set out below:
- The UK Corporate Governance Code includes provisions relating to:
- interaction with the workforce (provisions 2, 5 and 6);
- the role and responsibility of the chief executive (provisions 9 and 14);
- appointment of a senior independent director (provision 12);
- previous experience of the chairman of a remuneration committee (provision 32); and
- executive directors' remuneration (provisions 33 and 36 to 40).
The Board considers that these provisions are not relevant to
the position of the Company, being an externally-managed investment
company, with four Directors. In particular, all of the Company's
day-to-day management and administrative functions are outsourced
to third parties. As a result, the Company has no executive
directors, employees or internal operations. The Company has
therefore not reported further in respect of these provisions. The
full text of the Company's Corporate Governance Statement can be
found on the Company's website, latamincome.co.uk.
The Directors attended scheduled Board and Committee meetings
during the year ended 31 August 2022 as follows (with their
eligibility to attend the relevant meeting in brackets):
Audit Nomination
Board Committee MEC Committee
================== ===== ========== ===== ==========
Richard Prosser
(1) 2 (2) 1 (1) 1 (1) 1 (1)
================== ===== ========== ===== ==========
Hazel Adam 5 (5) 2 (2) 1 (1) 1 (1)
================== ===== ========== ===== ==========
Michael Gray
(1) 3 (3) 2 (2) 1 (1) 1 (1)
================== ===== ========== ===== ==========
Howard Myles 5 (5) 2 (2) 1 (1) 1 (1)
================== ===== ========== ===== ==========
Heather MacCallum 5 (5) 2 (2) 1 (1) 1 (1)
================== ===== ========== ===== ==========
(1) Richard Prosser retired and Michael Gray was appointed on 18
February 2022.
In addition to scheduled meetings, additional meetings of the
Board and its Committees were held on an ad hoc basis throughout
the year to deal with business outside of normal reporting
cycles.
Policy on Tenure
In normal circumstances, it is the Board's expectation that
Directors will not serve beyond the AGM following the ninth
anniversary of their appointment. However, the Board takes the view
that independence of individual Directors is not necessarily
compromised by length of tenure on the Board and that continuity
and experience can add significantly to the Board's strength. The
Board believes that recommendation for re-election should be on an
individual basis following a rigorous review which assesses the
contribution made by the Director concerned, but also considering
the need for managed succession and diversity.
It is also the Board's policy that the Chair of the Board will
not serve as a Director beyond the AGM following the ninth
anniversary of their appointment to the Board. However, this may be
extended in exceptional circumstances or to facilitate effective
succession planning and the development of a diverse Board. In such
a situation the reasons for the extension will be fully explained
to shareholders.
The Board has a schedule of matters reserved to it for decision
and the requirement for Board approval on these matters is
communicated directly to the senior staff at abrdn. Such matters
include strategy, gearing, treasury and dividend policy. Full and
timely information is provided to the Board to enable the Directors
to function effectively and to discharge their responsibilities.
The Board also reviews the financial statements, performance and
revenue budgets.
There is an agreed procedure for Directors to take independent
professional advice if necessary and at the Company's expense. This
is in addition to the access which every Director has to the advice
and services of the Company Secretary, which is responsible to the
Board for ensuring that Board procedures are followed and that
applicable rules and regulations are complied with.
Board Committees
As the Company has no employees and the Board is comprised
wholly of non-executive Directors and given the size and nature of
the Company, the Board has not established a separate remuneration
committee. Directors' remuneration is determined by the Board as a
whole. The remuneration of the Directors has been set in order to
attract individuals of a calibre appropriate to the future
development of the Company. The Company's policy on Directors'
remuneration, together with details of the remuneration of each
Director, is detailed in the Directors' Remuneration Report on
pages 59 to 61 of the 2022 Annual Report.
Audit Committee
The Report of the Audit Committee is on pages 56 to 58 of the
2022 Annual Report.
Management Engagement Committee
The Board has appointed a Management Engagement Committee which
comprises the entire Board. The Company Chairman is also Chairman
of the committee. It has defined terms of reference which are
reviewed on an annual basis. Copies of the terms of reference are
published on the Company's website: latamincome.co.uk.
The function of this committee is to review performance of the
Company's service providers and to ensure that the Manager and the
Investment Manager comply with the terms of the Management
Agreement and that the provisions of the agreement follow industry
practice, and remain competitive and in the best interest of
Shareholders as a whole. The committee remains satisfied that the
continuing appointment of the Investment Manager and Manager on the
terms agreed is in the interests of Shareholders as a whole. The
key factors considered in reaching this decision were the
investment skills, experience and commitment and performance record
of abrdn. The Management Agreement may be terminated by either
party by giving not less than twelve months' notice in writing. The
committee has also considered the performance of the Company's
other service providers and remains satisfied that they support the
Company effectively on reasonable commercial terms.
Nomination Committee
The Board has established a Nomination Committee, comprising all
of the Directors, with Howard Myles as Chairman. Appointments to
the Board of Directors are considered by the Nomination Committee.
The committee has defined terms of reference which are reviewed on
an annual basis. Copies of the terms of reference are published on
the Company's website: latamincome.co.uk.
The committee reviews the effectiveness of the Board, succession
planning, Board appointments, inductions and training, and
determines the Directors' remuneration policy and level of
remuneration.
During the year, the committee also undertook an annual
appraisal of the performance of the Chairman, the individual
Directors, the Board as a whole and the Board's committees. The
process involved the completion of questionnaires by each Director.
The results of the process were discussed by the Nomination
Committee following its completion. The outcome of the appraisal
process was considered to be satisfactory with all Directors having
contributed effectively at the meetings that they had attended
during the year. The Chairman's and Directors' other commitments
were also reviewed and it was concluded that each Director is
capable of devoting sufficient time to the Company.
The Company is not required to do an external evaluation of the
effectiveness of the Board as it is not a constituent of the FTSE
350. No external evaluation was conducted during the year as the
Board concluded that it would not add value at this time. This
approach will be kept under review.
At the AGM on 14 December 2022, Hazel Adam, Heather MacCallum
and Howard Myles will offer themselves for re-election as Directors
of the Company. Michael Gray will offer himself for election by
shareholders for the first time.
The Board has considered the contribution of each Director, as
set out on pages 46 and 47 of the 2022 Annual Report, and considers
that there is a balance of skills and experience within the Board
to lead the Company and that all Directors contribute effectively.
The Chairman's performance appraisal is led by the Chair of the
Audit Committee.
Accordingly, the Board has reviewed, and unanimously supports,
the proposed re-election of Hazel Adams, Heather MacCallum and
Howard Myles and the election of Michael Gray.
The Board's policy on diversity is disclosed in the Strategic
Report on page 22 of the 2022 Annual Report.
The Role of the Chairman
The Chairman is responsible for providing effective leadership
to the Board, by setting the tone of the Company, demonstrating
objective judgement and promoting a culture of openness and debate.
The Chairman facilitates the effective contribution, and encourages
active engagement, by each Director. In conjunction with the
Company Secretary, the Chairman ensures that Directors receive
accurate, timely and clear information to assist them with
effective decision-making. The Chairman leads the evaluation of the
Board and individual Directors, and acts upon the results of the
evaluation process by recognising strengths and addressing any
weaknesses. The Chairman also engages with major shareholders and
ensures that all Directors understand shareholder views.
Going Concern
In accordance with the FRC's guidance the Board has undertaken a
rigorous review of the Company's ability to continue as a going
concern. The Company's assets including those of its wholly owned
subsidiary, abrdn Latin American Income Fund LLC, consist of a
diverse portfolio of listed equities, equity-related investments
and fixed income investments exposed to the Latin American market
which in most circumstances are realisable within a very short
timescale.
The Company has considerable financial resources and, as a
consequence, the Board believes that the Company is well placed to
manage its business risks successfully despite uncertainties in the
economic outlook.
The Board is mindful of the principal risks and uncertainties
disclosed on pages 20 to 21 of the 2022 Annual Report, including
gearing, the ongoing impact of Covid-19 as well as geopolitical
developments and their impact on the economic outlook for the Latin
American region. It has reviewed forecasts detailing revenue and
liabilities and believes that the Company has adequate financial
resources to continue its operational existence for the foreseeable
future and at least twelve months from the date of this Annual
Report. Accordingly, the Board continues to adopt the going concern
basis in preparing the financial statements of the Company as at
the date of the approval of this Report.
Internal Controls and Risk Management
The design, implementation and maintenance of controls and
procedures to safeguard the assets of the Company and to manage its
affairs properly extends to operational and compliance controls and
risk management. The Board has prepared its own risk register which
identifies potential risks both major and minor relating to:
strategy; investment management; Shareholders; marketing; gearing;
regulatory and financial obligations; third party service providers
and the Board. The Board considers the potential cause and possible
impact of these risks as well as reviewing the controls in place to
mitigate these potential risks. A risk is rated by having a
likelihood and an impact rating and the residual risk is plotted on
a "heat map" and is reviewed regularly.
The Board is ultimately responsible for the Company's system of
internal control and for reviewing its effectiveness. The Board
confirms that there is an ongoing process for identifying,
evaluating and managing the principal risks faced by the Company.
This process has been in place for the period under review and up
to the date of approval of this Annual Report and financial
statements, and is regularly reviewed by the Board and accords with
the FRC's guidance on internal controls. The Board has reviewed the
effectiveness of the system of internal control. In particular, it
has reviewed and updated the process for identifying and evaluating
the principal risks affecting the Company and policies by which
these risks are managed. The principal risks and uncertainties
faced by the Company are detailed in the Strategic Report.
The key components designed to provide effective internal
control are outlined below:
- the Manager prepares monthly forecasts and management accounts
which allow the Board to assess the Company's activities and review
its performance;
- the Board and the Manager have agreed clearly defined
investment criteria, specified levels of authority and exposure
limits; reports on these issues, including performance statistics
and investment valuations, are regularly submitted to the Board and
there are meetings with the Manager as appropriate;
- as a matter of course the Manager's compliance department
continually reviews its operations;
- written agreements are in place which specifically define the
roles and responsibilities of the Manager and other third-party
service providers and the Audit Committee reviews, where relevant,
periodic ISAE3402 Reports, a global assurance standard for
reporting on internal controls for service organisations; the Board
is made aware by the Manager of relevant exceptions in ISAE3402
reporting from key third party service providers as part of the
Manager's third party service provider oversight regime;
- at its November 2022 meeting, the Audit Committee members
carried out an annual assessment of internal controls for the year
ended 31 August 2022 by considering documentation from abrdn,
including the internal audit and compliance functions and taking
account of events since 31 August 2022. The results of the
assessment were then reported to the Directors at the Board meeting
which followed; and,
- the Board has considered the need for an internal audit
function but, because of the compliance and internal control
systems in place at the Manager, has decided to place reliance on
the Manager's systems and internal audit procedures.
Internal control systems are designed to meet the Company's
particular needs and the risks to which it is exposed. Accordingly,
the internal control systems are designed to manage rather than
eliminate the risk of failure to achieve business objectives and by
their nature can only provide reasonable and not absolute assurance
against misstatement and loss.
Management of Conflicts of Interest
The Board has a procedure in place to deal with a situation
where a Director has a conflict of interest. As part of this
process, the Directors prepare a list of other positions held and
all other conflict situations that may need to be authorised either
in relation to the Director themselves or their connected persons.
The Board considers each Director's situation and decides whether
to approve any conflict, taking into consideration what is in the
best interests of the Company and whether the Director's ability to
act in accordance with their wider duties is affected. Each
Director is required to notify the Company Secretary of any
potential, or actual, conflict situations that will need
authorising by the Board. Authorisations given by the Board are
reviewed at each Board meeting.
No Director has a service contract with the Company although
each Director is issued with a letter of appointment when appointed
to the Board. The Directors' interests in contractual arrangements
with the Company are as shown in note 6 to the financial
statements. No Director had any interest in contracts with the
Company during the period or subsequently.
The Board has adopted appropriate procedures designed to prevent
bribery. The Company receives periodic reports from its service
providers on the anti-bribery policies of these third parties. It
also receives regular compliance reports from the Manager.
In the UK the Criminal Finances Act 2017 introduced a new
corporate criminal offence of "failing to take reasonable steps to
prevent the facilitation of tax evasion". The Board has confirmed
that it is the Company's policy to conduct all of its business in
an honest and ethical manner. The Board takes a zero-tolerance
approach to facilitation of tax evasion, whether under UK law or
under the law of any foreign country.
Substantial Interests
The Company has been advised that the following Shareholders
owned 3% or more of the issued Ordinary share capital of the
Company at 31 August 2022:
Number
Of shares
Shareholder held % held
========================== ========== ======
City of London Investment
Management Company 11,371,659 19.9
========================== ========== ======
abrdn Retail Plans 7,959,233 13.9
========================== ========== ======
Hargreaves Lansdown 5,825,379 10.2
========================== ========== ======
1607 Capital Partners 5,779,779 10.1
========================== ========== ======
Philip J Milton 4,664,858 8.2
========================== ========== ======
Interactive Investor 4,076,698 7.1
========================== ========== ======
AJ Bell 2,467,390 4.3
========================== ========== ======
On 30 September 2022, 1607 Capital Partners notified the Company
that it had sold shares in the Company and now holds 9.4% of the
issued Ordinary share capital. On 28 September 2022 and 13 October
2022, City of London Investment Management Company notified the
Company that it had bought Ordinary shares in the Company resulting
in a holding of 20.8% and then 21.85% respectively.
There have been no other significant changes notified to the
Company in respect of the above holdings between 31 August 2022 and
10 November 2022.
Alternative Investment Fund Managers Directive ("AIFMD")
On 14 July 2014, the Jersey Financial Services Commission
granted the Company a certificate of exemption from the application
of the Alternative Investment Funds (Jersey) Regulations 2012 to
any marketing it may carry out within any EU member state. aCIL, as
the Company's non-EEA alternative investment fund manager, also
notified the FCA in accordance with the requirements of the UK
National Private Placement Regime for inclusion of the Company on
the UK register as a non-EEA alternative investment fund being
marketed in the UK.
In addition, in accordance with Article 23 of the AIFMD and Rule
3.2.2 of the FCA FUND Sourcebook, aCIL is required to make
available certain disclosures for potential investors in the
Company and these are available on the Company's website:
latamincome.co.uk.
Annual General Meeting
The AGM will be held at 10:00am on Wednesday, 14 December 2022
at the Company's registered office, Sir Walter Raleigh House, 48 -
50 Esplanade, St Helier, Jersey JE2 3QB. Resolutions including the
following business will be proposed:
Dividend Policy
As a result of the timing of the payment of the Company's
quarterly dividends, the Company's Shareholders are unable to
approve a final dividend each year. In line with good corporate
governance, the Board therefore proposes to put the Company's
dividend policy to Shareholders for approval at the AGM and on an
annual basis thereafter.
The Company's dividend policy is that interim dividends on the
Ordinary Shares are payable quarterly in relation to periods ending
November, February, May and August. It is intended that, over the
long term, the Company will pay quarterly dividends consistent with
the expected annual underlying portfolio yield. Resolution 3 will
seek shareholder approval for the dividend policy.
Appointment of Independent Auditor
The Directors will put a resolution before the AGM to re-appoint
PricewaterhouseCoopers CI LLP ("PwC") as independent auditor for
the ensuing year, and to authorise the Directors to determine their
remuneration.
Authority to Purchase the Company's Shares
In the past the Company has quoted that the aim of its discount
management policy has been to try to maintain the price at which
the Ordinary shares trade relative to the Company's NAV at a
discount of no more that 5%. The Company's discount to NAV was
-17.3% at 31 August 2022. As set out in the Chairman's Statement on
page 9 of the 2022 Annual Report, in light of ongoing market
volatility, the size of the company, the adverse effect on market
liquidity if the number of shares in issue reduced and the lack of
meaningful impact on the discount, the Board decided not to buy
back any shares during the financial year. No shares have been
bought back since the financial year end.
Purchases of Ordinary shares will only be made through the
market for cash at prices below the prevailing exclusive of income
NAV per Ordinary share (as last calculated), subject to prevailing
market conditions and having regard to the size of the Company,
where the Directors believe it is in the best interest of
shareholders to do so.
Resolution 10, a special resolution, will be proposed to renew
the Directors' authority to make market purchases of the Ordinary
shares in accordance with the provisions of the FCA's Listing
Rules. The Company will seek authority to purchase up to a maximum
of 8,561,287 Ordinary shares (representing 14.99% of the current
issued Ordinary share capital excluding treasury shares as at the
date of publication of this Annual Report). The authority being
sought shall expire at the conclusion of the AGM in 2023 unless
such authority is renewed prior to that time. Any Ordinary shares
purchased in this way will either be cancelled and the number of
Ordinary shares will be reduced accordingly, or the Ordinary shares
will be held in treasury, in accordance with the authority
previously conferred by Shareholders.
The Companies (Jersey) Law 1991 allows companies to either
cancel shares or hold them in treasury following a buy-back. These
powers give Directors additional flexibility and the Board
considers that it is in the interest of the Company that such
powers be available, including the power to hold treasury shares.
Any future sales of Ordinary shares from treasury will only be
undertaken at a premium to the prevailing NAV per Ordinary share
for the benefit of all Shareholders. The Directors monitor the
level of shares held in treasury and whilst there are no upper
limits on the number of shares that can be held in treasury
consideration will be given to cancelling treasury shares if the
number becomes excessively high compared to the issued share
capital.
Directors' Authority to Allot Relevant Securities
There are no provisions under Jersey law which confer rights of
pre-emption upon the issue or sale of any class of shares in the
Company. However, as the Ordinary shares are traded on the main
market of the London Stock Exchange and have a premium listing, the
Company is required to offer pre-emption rights to its Shareholders
and the Articles of Association reflect this. Ordinary shares will
only be issued at a premium to the prevailing NAV per Ordinary
share and, therefore, any issue will not be dilutive to existing
Ordinary Shareholders.
Unless previously disapplied by special resolution, in
accordance with the FCA's Listing Rules, the Company is required to
first offer any new shares or securities (or rights to subscribe
for, or to convert or exchange into, shares) proposed to be issued
for cash to Shareholders in proportion to their holdings in the
Company. In order to provide for such share issues, your Board is
therefore also proposing that an annual disapplication of the
pre-emption rights is given to the Directors so that they may issue
shares as and when appropriate. Accordingly, resolution 11, a
special resolution, proposes a disapplication of the pre-emption
rights in respect of 10% of the shares in issue, set to expire on
the earlier of eighteen months from the date of the resolution or
at the conclusion of the AGM to be held in 2023.
Recommendation
Your Board considers all resolutions to be in the best interests
of the Company and its members as a whole. Accordingly, your Board
recommends that Ordinary Shareholders should vote in favour of all
resolutions to be proposed at the AGM.
Directors' & Officers Liability Insurance
Directors' & Officers' liability insurance cover has been
maintained throughout the period at the expense of the Company.
Relations with Shareholders
The Directors place a great deal of importance on communication
with Shareholders and welcome feedback from all Shareholders. The
Chairman meets periodically with the largest Shareholders to
discuss the Company. The Annual Report and financial statements are
widely distributed to other parties who have an interest in the
Company's performance. Shareholders and investors may obtain up to
date information on the Company through the Manager's freephone
information service and the Company's website:
latamincome.co.uk.
The Board's policy is to communicate directly with Shareholders
and their representative bodies without the involvement of the
management group (either the Company Secretary or the Manager) in
situations where direct communication is required.
The Notice of the AGM, included within the Annual Report and
financial statements, is ordinarily sent out at least 20 working
days in advance of the meeting. All Shareholders have the
opportunity to put questions to the Board or Manager, either
formally at the Company's AGM or informally following the meeting.
The Company Secretary is available to answer general Shareholder
queries at any time throughout the year. The Directors are keen to
encourage dialogue with Shareholders and the Chairman welcomes
direct contact from Shareholders. You may submit questions to the
Board by email to latin.american@abrdn.com.
Responsible Investment
The Board is aware of its duty to act in the best interests of
the Company. The Board acknowledges that there are risks associated
with investment in companies which fail to conduct business in a
socially responsible manner. The Manager considers social,
environmental and ethical factors which may affect the performance
or value of the Company's investments. The Directors, through the
Company's Manager, encourage companies in which investments are
made to adhere to best practice in the area of Corporate
Governance. They believe that this can best be achieved by entering
into a dialogue with company management to encourage them, where
necessary, to improve their policies in this area. The Company's
ultimate objective, however, is to deliver superior investment
returns for its shareholders. Accordingly, whilst the Manager will
seek to favour investment in companies which pursue best practice
in ESG matters, this is always considered in the context of return
on the investment portfolio.
UK Stewardship Code and Proxy Voting as an Institutional
Shareholder
Responsibility for actively monitoring the activities of
portfolio companies has been delegated by the Board to the Manager
which has sub-delegated that authority to the Investment
Manager.
The full text of the Company's response to the Stewardship Code
may be found on the Company's website: latamincome.co.uk.
ESG Policy
As an investment company, the Company has no direct social,
environmental or community responsibilities. However, the Board
acknowledges that there are risks associated with investment in
companies which fail to conduct business in a socially responsible
manner and the Board, therefore, challenges the Investment Manager
as to whether decisions take appropriate account of the social,
environment and ethical factors, which may affect the performance
or value of the Company's investments, including climate change.
More details on the Investment Manager's approach to ESG engagement
can be found on pages 36 to 41 of the 2022 Annual Report.
For and on behalf of the Board
abrdn Capital International Limited,
Secretary
10 November 2022
1st Floor, Sir Walter Raleigh House
48 - 50 Esplanade,
St Helier
Jersey JE2 3QB
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
The Companies (Jersey) Law 1991 requires the Directors to
prepare financial statements for each financial period in
accordance with any generally accepted accounting principles. The
financial statements of the Company are required by law to give a
true and fair view of the state of affairs of the Company and of
the profit or loss of the Company for that period. In preparing
these financial statements, the Directors should:
- select suitable accounting policies and then apply them consistently;
- make judgments and estimates that are reasonable;
- specify which generally accepted accounting principles have
been adopted in their preparation;
- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business; and
- assess whether the Annual Report and financial statements,
taken as a whole, is 'fair, balanced and understandable'.
The Directors are responsible for keeping accounting records
which are sufficient to show and explain its transactions and are
such as to disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements prepared by the Company comply with the
requirements of the Companies (Jersey) Law 1991. They are also
responsible for safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for ensuring that the Company complies with the
provisions of the Listing Rules and the Disclosure, Guidance &
Transparency Rules of the Financial Conduct Authority which, with
regard to corporate governance, require disclosure of how the Board
has applied the principles, and complied with the provisions, of
the UK Corporate Governance Code as applicable to the Company.
Declaration
The Directors listed on pages 46 and 47 of the 2022 Annual
Report, being the persons responsible, hereby confirm to the best
of their knowledge:
- that the financial statements have been prepared in accordance
with International Financial Reporting Standards ("IFRS"), as
issued by the International Accounting Standards Board, give a true
and fair view of the assets, liabilities, financial position and
profit or loss of the Company;
- that in the opinion of the Directors, the Annual Report and
financial statements taken as a whole, is fair, balanced and
understandable and it provides the information necessary to assess
the Company's position and performance, business model and
strategy; and
- the Strategic Report, including the Chairman's Statement and
the Investment Manager's Review, include a fair review of the
development and performance of the business and the position of the
Company together with a description of the principal risks and
uncertainties that the Company faces.
For and on behalf of the Board
Howard Myles,
Chairman
10 November 2022
1st Floor, Sir Walter Raleigh House
48 - 50 Esplanade,
St Helier
Jersey JE2 3QB
The Manager is responsible for the maintenance and integrity of
the corporate and financial information included on the Company's
website. Legislation in Jersey governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
Statement of Comprehensive Income
Year ended 31 August Year ended 31 August
2022 2021
==================================== ========== ============================ ============================
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
==================================== ========== ======== ======== ======== ======== ======== ========
Income
==================================== ========== ======== ======== ======== ======== ======== ========
Income 4 3,372 - 3,372 2,101 - 2,101
==================================== ========== ======== ======== ======== ======== ======== ========
Realised losses on financial
assets held at fair value
through profit or loss 10 - (178) (178) - (290) (290)
==================================== ========== ======== ======== ======== ======== ======== ========
Unrealised (losses)/gains
on financial assets held at
fair value through profit
or loss 10 - (497) (497) - 4,334 4,334
==================================== ========== ======== ======== ======== ======== ======== ========
Realised currency losses - (78) (78) - (67) (67)
==================================== ========== ======== ======== ======== ======== ======== ========
Unrealised currency gains/(losses) - 153 153 - (6) (6)
==================================== ========== ======== ======== ======== ======== ======== ========
Realised gains on forward
foreign currency contracts - 131 131 - 482 482
==================================== ========== ======== ======== ======== ======== ======== ========
Unrealised gains/(losses)
on forward foreign currency
contracts - 47 47 - (7) (7)
------------------------------------ ---------- -------- -------- -------- -------- -------- --------
3,372 (422) 2,950 2,101 4,446 6,547
------------------------------------ ---------- -------- -------- -------- -------- -------- --------
Expenses
==================================== ========== ======== ======== ======== ======== ======== ========
Investment management fee 5 (135) (202) (337) (154) (232) (386)
==================================== ========== ======== ======== ======== ======== ======== ========
Other operating expenses 6 (368) - (368) (340) - (340)
------------------------------------ ---------- -------- -------- -------- -------- -------- --------
Profit/(loss) before finance
costs and taxation 2,869 (624) 2,245 1,607 4,214 5,821
==================================== ========== ======== ======== ======== ======== ======== ========
==================================== ========== ======== ======== ======== ======== ======== ========
Finance costs (43) (65) (108) (34) (51) (85)
------------------------------------ ---------- -------- -------- -------- -------- -------- --------
Profit/(loss) before taxation 2,826 (689) 2,137 1,573 4,163 5,736
==================================== ========== ======== ======== ======== ======== ======== ========
==================================== ========== ======== ======== ======== ======== ======== ========
Taxation 7 (60) 76 16 (53) (119) (172)
------------------------------------ ---------- -------- -------- -------- -------- -------- --------
Profit/(loss) for the year 2,766 (613) 2,153 1,520 4,044 5,564
------------------------------------ ---------- -------- -------- -------- -------- -------- --------
Earnings per Ordinary share
(pence) 9 4.84 (1.07) 3.77 2.66 7.08 9.74
------------------------------------ ---------- -------- -------- -------- -------- -------- --------
The profit/(loss) for the year is also the comprehensive income for the
year.
The total column of this statement represents the Statement of Comprehensive
Income, prepared in accordance with IFRS. The revenue and capital columns
are supplementary to this and are prepared under guidance published by
the Association of Investment Companies.
All items in the above statement derive from continuing operations.
The accompanying notes are an integral part of these financial statements.
Statement of Financial Position
As at As at
31 August 31 August
2022 2021
Notes GBP'000 GBP'000
============================================= ======= ========== ==========
Non-current assets
============================================= ======= ========== ==========
Investments held at fair value through
profit or loss 10 41,336 41,240
--------------------------------------------- ------- ---------- ----------
Current assets
============================================= ======= ========== ==========
Cash 117 333
============================================= ======= ========== ==========
Forward foreign currency contracts 123 33
============================================= ======= ========== ==========
Other receivables 243 178
--------------------------------------------- ------- ---------- ----------
483 544
--------------------------------------------- ------- ---------- ----------
Current liabilities
============================================= ======= ========== ==========
Bank loan 11 (5,500) (5,500)
============================================= ======= ========== ==========
Forward foreign currency contracts (76) (40)
============================================= ======= ========== ==========
Other payables (128) (206)
--------------------------------------------- ------- ---------- ----------
(5,704) (5,746)
--------------------------------------------- ------- ---------- ----------
Net current liabilities (5,221) (5,202)
--------------------------------------------- ------- ---------- ----------
Non-current liabilities
============================================= ======= ========== ==========
Deferred tax liability 7 (43) (119)
--------------------------------------------- ------- ---------- ----------
Net assets 36,072 35,919
--------------------------------------------- ------- ---------- ----------
Equity capital and reserves
============================================= ======= ========== ==========
Equity capital 12 65,936 65,936
============================================= ======= ========== ==========
Capital reserve 13 (32,112) (31,499)
============================================= ======= ========== ==========
Revenue reserve 2,248 1,482
--------------------------------------------- ------- ---------- ----------
Equity Shareholders' funds 36,072 35,919
--------------------------------------------- ------- ---------- ----------
Net asset value per Ordinary share (pence) 14 63.16 62.89
--------------------------------------------- ------- ---------- ----------
The financial statements were approved by the Board of Directors and
authorised for issue on 10 November 2022 and were signed on its behalf
by:
Howard Myles
Chairman
The accompanying notes are an integral
part of the financial statements.
Statement of Changes in Equity
Year ended 31 August 2022
====================================================================================
Stated Capital Revenue
capital reserve reserve Total
Notes GBP'000 GBP'000 GBP'000 GBP'000
============================= ============= ======== ======== ======== ========
Balance at 1 September 2021 65,936 (31,499) 1,482 35,919
============================= ============= ======== ======== ======== ========
(Loss)/profit for the year - (613) 2,766 2,153
============================= ============= ======== ======== ======== ========
Dividends paid 8 - - (2,000) (2,000)
----------------------------- ------------- -------- -------- -------- --------
Balance at 31 August 2022 65,936 (32,112) 2,248 36,072
----------------------------- ------------- -------- -------- -------- --------
Year ended 31 August 2021
Stated Capital Revenue
capital reserve reserve Total
Notes GBP'000 GBP'000 GBP'000 GBP'000
============================= ============= ======== ======== ======== ========
Balance at 1 September 2020 65,936 (35,543) 1,962 32,355
============================= ============= ======== ======== ======== ========
Profit for the year - 4,044 1,520 5,564
============================= ============= ======== ======== ======== ========
Dividends paid 8 - - (2,000) (2,000)
----------------------------- ------------- -------- -------- -------- --------
Balance at 31 August 2021 65,936 (31,499) 1,482 35,919
----------------------------- ------------- -------- -------- -------- --------
The accompanying notes are an integral part of the financial statements.
Statement of Cash Flows
Year ended Year ended
31 August 2022 31 August 2021
GBP'000 GBP'000
==================================================== ============== ==============
Net cash inflow from operating activities
==================================================== ============== ==============
Dividend income 607 529
==================================================== ============== ==============
Fixed interest income 720 696
==================================================== ============== ==============
Income from Subsidiary 1,545 785
==================================================== ============== ==============
Interest income 2 -
==================================================== ============== ==============
Investment management fee paid (403) (406)
==================================================== ============== ==============
Other paid expenses (447) (233)
---------------------------------------------------- -------------- --------------
Cash generated from operations 2,024 1,371
==================================================== ============== ==============
==================================================== ============== ==============
Interest paid (103) (86)
==================================================== ============== ==============
Withholding taxes paid (58) (53)
---------------------------------------------------- -------------- --------------
Net cash inflow from operating activities 1,863 1,232
==================================================== ============== ==============
Cash flows from investing activities
==================================================== ============== ==============
Purchases of investments (6,467) (6,549)
==================================================== ============== ==============
Proceeds from sales of investments 8,118 9,403
==================================================== ============== ==============
Payments to Subsidiary (1,975) (2,463)
---------------------------------------------------- -------------- --------------
Net cash (outflow)/inflow from investing activities (324) 391
==================================================== ============== ==============
Cash flows from financing activities
==================================================== ============== ==============
Equity dividends paid (2,000) (2,000)
---------------------------------------------------- -------------- --------------
Net cash outflow from financing activities (2,000) (2,000)
---------------------------------------------------- -------------- --------------
Net decrease in cash (461) (377)
==================================================== ============== ==============
Reconciliation of net cash flow to movements
in cash
==================================================== ============== ==============
Net decrease in cash as above (461) (377)
==================================================== ============== ==============
Foreign exchange 245 404
==================================================== ============== ==============
Cash at start of year 333 306
==================================================== ============== ==============
Cash and cash equivalents at end of year 117 333
---------------------------------------------------- -------------- --------------
---------------------------------------------------- -------------- --------------
The accompanying notes are an integral part of the financial statements.
Notes to the Financial Statements
For the year ended 31 August 2022
1. Principal activity
The Company is a closed-end investment company incorporated in
Jersey, and its shares are traded on the London Stock Exchange
and are listed in the premium segment of the Financial Conduct
Authority's Official List. The Company's principal activity is
investing in Latin American securities.
The principal activity of its Delaware incorporated wholly owned
subsidiary, abrdn Latin American Income Fund LLC, is similar in
all relevant respects to that of its parent.
2. Accounting policies
(a) Basis of preparation . The accounting policies which follow
set out those policies which apply in preparing the financial
statements for the year ended 31 August 2022.
The financial statements of the Company have been prepared
in accordance with International Financial Reporting Standards
(IFRS) as issued by International Accounting Standards Board
(IASB). The financial statements have been prepared on a historical-cost
basis, except for financial assets and financial liabilities
held at fair value through profit or loss.
In accordance with the FRC's guidance the Board has undertaken
a rigorous review of the Company's ability to continue as a
going concern. The Company's assets including those of its
wholly owned subsidiary, abrdn Latin American Income Fund LLC,
consist of a diverse portfolio of listed equities, equity-related
investments and fixed income investments exposed to the Latin
American market which in most circumstances are realisable
within a very short timescale.
The Company has considerable financial resources and, as a
consequence, the Board believes that the Company is well placed
to manage its business risks successfully despite uncertainties
in the economic outlook.
The Board is mindful of the principal risks and uncertainties
disclosed on pages 19 to 21 of the 2022 Annual Report, including
the ongoing impact of Covid-19 as well as geopolitical developments
and their impact on the economic outlook for the Latin American
region. It has reviewed forecasts detailing revenue and liabilities
and believes that the Company has adequate financial resources
to continue its operational existence for the foreseeable future
and at least twelve months from the date of this Annual Report.
Accordingly, the Board continues to adopt the going concern
basis in preparing the financial statements of the Company
as at the date of the approval of this Report.
The Company's financial statements are presented in sterling,
which is also the functional currency as it is the currency
in which shares are issued and expenses are generally paid.
All values are rounded to the nearest thousand pounds (GBP'000)
except when otherwise indicated.
Where presentational guidance set out in the Statement of Recommended
Practice ("SORP"): 'Financial Statements of Investment Trust
Companies and Venture Capital Trusts' issued by the Association
of Investment Companies ("AIC"), is consistent with the requirements
of IFRS, the Directors have sought to prepare the financial
statements on a basis compliant with the recommendations of
the SORP issued in April 2021.
Significant accounting judgements, estimates and assumptions
. The preparation of financial statements in conformity with
IFRS requires the use of certain significant accounting judgements,
estimates and assumptions which requires management to exercise
its judgement in the process of applying the accounting policies.
Management have identified two such judgements in preparing
the financial statements.
Accounting judgement - Application of IFRS 10: Assessment of
investment entity. One of the key areas for consideration has
been the application of IFRS 10 'Consolidated Financial Statements'
including the Amendments, 'Investment entities (Amendments
to IFRS 10, IFRS 12 and IAS 27) (Investment Entity Amendments)'.
The standard requires entities that meet the definition of
an investment entity to fair value certain subsidiaries through
profit or loss in accordance with IFRS 9 'Financial Instruments',
rather than consolidate their results. However, entities which
are not themselves investment entities and provide investment
related services to the Company will continue to be consolidated.
An investment entity meets the definition of an investment
entity if it satisfies the following three criteria:
(i) an entity obtains funds from one or more investors for
the purpose of providing those investors with investment services;
the Company provides investment services and has several investors
who pool funds to gain access to these services and investment
opportunities which they might not be able to as individuals.
(ii) an entity commits to its investors that its business purpose
is the investment in its subsidiary solely for capital appreciation,
investment income, or both; the Company's investment objective
is to provide Ordinary Shareholders with a total return, with
an above average yield, primarily through investing in Latin
American securities.
(iii) an entity measures and evaluates the performance of substantially
all of its investments on a fair value basis; the Company has
elected to measure and evaluate the performance of all of its
investments on a fair value basis. The fair value basis is
used to present the Company's performance in its communication
with the market and the primary measurement attribute to evaluate
performance of all of its investments and to make investment
decisions.
Accounting judgement - Fair value of the Subsidiary . The Directors
conclude that the net asset value of the wholly owned Subsidiary
is considered to be its fair value for financial reporting
purposes based on the Subsidiary's portfolio of investments
being liquid and there being no significant restrictions on
the transfer of funds to the parent company.
New and amended standards and interpretations . The Company
applied, for the first time, certain standards and amendments,
which are effective for annual periods beginning on or after
1 January 2021. The nature and impact is described below:
- IFRS 4, 7, 9 and 16 Amendments Interest Rate Benchmark Reform
(Phase 2)
At the date of authorisation of these financial statements,
the following Standards and Interpretations were assessed to
be relevant and are effective for annual periods beginning on
or after 1 January 2022:
- IAS 41, IFRS 1, 9, and 16 Amendments (Annual Improvements
2018-2020)
- IFRS 3 Amendments (Conceptual Framework)
- IFRS 4 Amendments (Deferral of effective date of IFRS 9)
At the date of authorisation of these financial statements,
the following Standards and Interpretations were assessed to
be relevant and are effective for annual periods beginning on
or after 1 January 2023:
- IAS 1 Amendments (Disclosure of Accounting Policies)
- IAS 8 Amendments (Definition of Accounting Estimates)
- IAS 12 Amendments (Deferred Tax related to Assets and Liabilities
arising from a Single Transaction)
At the date of authorisation of these financial statements,
the following Standards and Interpretations were assessed to
be relevant and are effective for annual periods beginning on
or after 1 January 2024:
- IAS 1 Amendments (Classification of Liabilities as Current
or Non-Current)
The Company intends to adopt the Standards and Interpretations
in the reporting period when they become effective and the Board
does not anticipate that the adoption of these Standards and
Interpretations in future periods will materially impact the
Company's financial results in the period of initial application
although there may be revised presentations to the Financial
Statements and additional disclosures.
(b) Income . Dividend income from equity investments is recognised
on the ex-dividend date. Dividend income from equity investments
where no ex-dividend date is quoted are recognised when the
Company's right to receive payment is established. Where the
Company has elected to receive dividends in the form of additional
shares rather than in cash, the amount of the cash dividend
foregone is recognised as income. Special dividends are recognised
as capital or revenue according to their circumstances.
The Company owns 100% of the share capital of its Subsidiary
and has the ability to control the Subsidiary's operations.
There are no significant restrictions on the transfer of funds
to or from the Subsidiary and accordingly income is recognised
by the Company in the same period as received by the Subsidiary.
The fixed returns on debt instruments are recognised using the
time apportioned accruals basis.
(c) Expenses and interest payable . All expenses, with the exception
of interest, which is recognised using the effective interest
method, are recognised on an accruals basis. Expenses are charged
to the revenue column of the Statement of Comprehensive Income
except as follows:
- costs incidental to the issue of new shares as defined in
the Prospectus are charged to capital;
- expenses resulting from the acquisition or disposal of an
investment are charged to the capital column of the Statement
of Comprehensive Income; and
- expenses are charged to the capital column of the Statement
of Comprehensive Income where a connection with the maintenance
or enhancement of the value of the investments can be demonstrated.
The Company charges 60% of investment management fees and finance
costs to capital, in accordance with the Board's estimate of
expected long-term return in the form of capital gains and income
respectively from the investment portfolio of the Company.
(d) Taxation. Profits arising in the Company for the year ended
31 August 2022 will be subject to Jersey income tax at the rate
of 0% (2021 - 0%).
Investment income and capital gains are subject to withholding
tax deducted at the source of the income. The Company presents
the withholding tax separately from the gross investment income
in the Statement of Comprehensive Income under taxation.
Deferred tax is recognised in respect of all temporary differences
at the Statement of Financial Position date, where transactions
or events that result in an obligation to pay more tax in the
future or right to pay less tax in the future have occurred
at the Statement of Financial Position date. This is subject
to deferred tax assets only being recognised if it is considered
more likely than not that there will be suitable profits from
which the future reversal of the temporary differences can be
deducted. Deferred tax assets and liabilities are measured at
the rates applicable to the legal jurisdictions in which they
arise, using enacted tax rates that are expected to apply at
the date the deferred tax position is unwound.
(e) I nvestments held at fair value through profit or loss . The
Company has adopted the classification and measurement provisions
of IFRS 9 'Financial Instruments'.
The Company classifies its investments based on their contractual
cash flow characteristics and the Company's business model for
managing the assets. The business model, which is the determining
feature for debt instruments, is such that the portfolio of
investments is managed, and performance is evaluated, on a fair
value through profit or loss ("FVTPL") basis. The Manager is
also compensated based on the fair value of the Company's assets.
Equity instruments are classified as FVTPL because cash flows
resulting from such instruments do not represent payments of
principal and interest on the principal outstanding, and therefore
they fail the contractual cash flows test. Consequently, all
investments are measured at FVTPL.
Changes in the value of investments held at fair value through
profit or loss and gains and losses on disposal are recognised
in the Statement of Comprehensive Income as "Gains/(losses)
on investments held at fair value through profit or loss". Also
included within this caption are transaction costs in relation
to the purchase or sale of investments, including the difference
between the purchase price of an investment and its bid price
at the date of purchase.
Fair value measurement. Fair value is the price that would be
received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement
date. The fair value is derived from unadjusted quoted bid prices
in active markets, with the exception of inflation-linked bonds
whose quoted bid prices are adjusted for indexation arising
from the movement of the consumer prices index for the relevant
country of issue of the bond. The fair value of forward currency
contracts is calculated by reference to current forward exchange
rates for contracts with similar maturity profiles. An active
market is a market in which transactions for the asset or liability
take place with sufficient frequency and volume to provide pricing
information on an ongoing basis.
(f) Cash and cash equivalents . Cash comprises cash at banks and
short-term deposits.
(g) Other receivables. Other receivables are held to collect contractual
cash flows and give rise to cash flows representing solely payments
of principal and interest. As such they are measured at amortised
cost. Other receivables do not carry any interest and they have
been assessed for any expected credit losses over their lifetime
due to their short-term nature.
(h) Other payables. Other payables are non interest bearing and
are stated at amortised cost.
(i) Nature and purpose of reserves
Capital reserve. This reserve reflects any gains or losses on
investments realised in the period along with any movement in
the fair value of investments held that have been recognised
in the Statement of Comprehensive Income. These include gains
and losses from foreign currency exchange differences.
Additionally, expenses, including finance costs, are charged
to this reserve in accordance with note 2(c) above.
When the Company purchases its Ordinary shares to be held in
treasury and for cancellation, the amount of the consideration
paid, which includes directly attributable costs, is net of
any tax effect, and is recognised as a deduction from the capital
reserve. Should these shares be sold subsequently, the amount
received is recognised as an increase in equity, and the resulting
surplus or deficit on the transaction is transferred to or from
the capital reserve.
Revenue reserve. This reserve reflects all income and costs
which are recognised in the revenue column of the Statement
of Comprehensive Income less dividends which have been paid.
(j) Foreign currency. Monetary assets and liabilities denominated
in foreign currencies are converted into sterling at the rate
of exchange ruling at the reporting date. The financial statements
are presented in sterling, which is the Company's functional
and presentation currency. The Company's performance is evaluated
and its liquidity is managed in sterling. Therefore sterling
is considered as the currency that most faithfully represents
the economic effects of the underlying transactions, events
and conditions. Transactions during the year involving foreign
currencies are converted at the rate of exchange ruling at the
transaction date. Gains or losses arising from a change in exchange
rates subsequent to the date of a transaction are included as
a currency gain or loss in revenue or capital in the Statement
of Comprehensive Income, depending on whether the gain or loss
is of a revenue or capital nature.
(k) Bank loans. The Company has adopted the classification and measurement
provisions of IFRS 9 'Financial Instruments'. Borrowings are
measured at amortised cost using the effective interest rate
method. No impact on the classification or measurement of borrowings
has arisen due to the adoption of IFRS 9.
Borrowings are stated at the amount of the net proceeds immediately
after draw down plus cumulative finance costs less cumulative
payments. The finance cost of borrowings is allocated over the
term of the debt at a constant rate on the carrying amount and
charged 40% to revenue and 60% to capital to reflect the Company's
investment policy and prospective revenue and capital growth.
(l) Derivative financial instruments. The Company may use forward
foreign exchange contracts to manage currency risk arising from
investment activity.
Derivatives are measured at fair value calculated by reference
to forward exchange rates for contracts with similar maturity
profiles.
Changes in the fair value of derivatives are recognised in the
Statement of Comprehensive Income as revenue or capital depending
on their nature.
(m) Dividends payable. Interim dividends payable are recognised
in the financial statements in the period in which they are
paid.
3. Segmental reporting
The Company is engaged in a single segment of business. For management
purposes, the Company is organised into one main operating segment,
which invests in equity securities, debt instruments and related
derivatives. All of the Company's activities are viewed on a portfolio
wide basis and are interrelated, with each activity dependent on
the others. Accordingly, all significant operating decisions are
based on the Company as one segment.
The following table analyses the Company's income, including income
derived from the Subsidiary's investments, by geographical location.
The basis for attributing the income is the place of incorporation
of the instrument's investment, however, where the Company invests
in American Depositary Receipts ("ADRs") designated securities
the underlying geographic location is considered to be the basis.
=============================================== ============= ============
2022 2021
GBP'000 GBP'000
=============================================== ============= ============
Brazil 1,976 1,045
=============================================== ============= ============
Chile 69 62
=============================================== ============= ============
Columbia 177 180
=============================================== ============= ============
Mexico 756 498
=============================================== ============= ============
Peru 80 131
=============================================== ============= ============
Uruguay 312 185
=============================================== ============= ============
United Kingdom 2 -
----------------------------------------------- ------------- ------------
3,372 2,101
----------------------------------------------- ------------- ------------
The Company's income (including that generated by its Subsidiary's
investments) comprises 59% (2021 - 45%) from equities and 41% (2021
- 55%) from fixed income securities.
4. Income
============================================ ============ ============
2022 2021
GBP'000 GBP'000
============================================ ============ ============
Income from investments
============================================ ============ ============
Dividend income 637 532
============================================ ============ ============
Fixed interest income 902 762
============================================ ============ ============
Income from Subsidiary 1,831 807
-------------------------------------------- ------------ ------------
3,370 2,101
-------------------------------------------- ------------ ------------
Other income
============================================ ============ ============
Deposit interest 2 -
-------------------------------------------- ------------ ------------
3,372 2,101
-------------------------------------------- ------------ ------------
The Company owns 100% of the share capital of its Subsidiary and
has the ability to control the Subsidiary's operations. There are
no significant restrictions on the transfer of funds to or from
the Subsidiary and accordingly income is recognised by the Company
in the same period as received by the Subsidiary. During the year
net revenue of GBP1,831,000 (2021 - GBP807,000) was generated by
the Subsidiary.
5. Investment management fee
The Company had an agreement with aCIL for the provision of management
services during the year. Portfolio management services have been
delegated by aCIL to AAML during the year.
The management fee is based on an annual rate of 1% of the NAV
of the Company, valued monthly. The agreement is terminable on
one year's notice. The balance due to aCIL at the year end was
GBP35,000 (2021 - GBP46,000). Investment management fees are charged
40% to revenue and 60% to capital.
6. Other operating expenses
================================================ ============ ============
2022 2021
GBP'000 GBP'000
================================================ ============ ============
Directors' fees 103 101
================================================ ============ ============
Promotional activities 24 24
================================================ ============ ============
Secretarial and administration fee - -
================================================ ============ ============
Auditor's remuneration:
================================================ ============ ============
- fees payable for the audit of the annual
accounts 37 36
================================================ ============ ============
Legal and advisory fees 35 14
================================================ ============ ============
Custodian and overseas agents' charges 37 47
================================================ ============ ============
Broker fees 30 30
================================================ ============ ============
Stock exchange fees 24 23
================================================ ============ ============
Registrar's fees 30 23
================================================ ============ ============
Printing 20 20
================================================ ============ ============
Other 28 22
------------------------------------------------ ------------ ------------
368 340
------------------------------------------------ ------------ ------------
The Company has an agreement with abrdn Fund Managers Limited ("AFML")
for the provision of promotional activities. The total fees incurred
under the agreement during the year were GBP24,000 (2021 - GBP24,000),
of which GBP10,000 (2021 - GBP4,000) was due to AFML at the year
end.
The Company's management agreement with aCIL provides for the provision
of company secretarial and administration services. This agreement
has been sub-delegated to abrdn Fund Managers Limited. aCIL is
entitled to an annual fee of GBP132,000 (2021 - GBP127,000) which
increases annually in line with any increase in the UK Retail Price
Index. A balance of GBPnil (2021 - GBPnil) was due to aCIL at the
year 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. As the OCR exceeded 2.0% for the year ended 31 August
2022, the Manager has agreed to rebate GBP132,000 (2021 - GBP127,000)
of the secretarial and administration fee and GBP55,000 (2021 -
GBP24,000) of the management fee in order to bring the OCR down
to 2.0%.
No fees were paid to the auditor for services other than in respect
of the audit of the Company's annual accounts.
7. Taxation
=================================== ======= ======= ======= ======= ======= =======
2022 2021
=================================== ========================= =========================
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=================================== ======= ======= ======= ======= ======= =======
Analysis of charge for the
year
=================================== ======= ======= ======= ======= ======= =======
Overseas tax suffered 60 - 60 53 - 53
----------------------------------- ------- ------- ------- ------- ------- -------
Total current tax charge for
the year 60 - 60 53 - 53
=================================== ======= ======= ======= ======= ======= =======
Deferred tax liability on Mexican
capital gains - (76) (76) - 119 119
----------------------------------- ------- ------- ------- ------- ------- -------
Total tax charge for the year 60 (76) (16) 53 119 172
----------------------------------- ------- ------- ------- ------- ------- -------
The Company has provided for a deferred tax liability on Mexican
capital gains at 31 August 2022 of GBP43,000 (2021 - GBP119,000),
the reduction in the liability resulting in an overall tax credit
balance of GBP16,000.
Factors affecting the tax charge for the year. The tax charged
for the year can be reconciled to the profit/(loss) per the Statement
of Comprehensive Income as follows:
=================================== ======= ======= ======= ======= ======= =======
2022 2021
=================================== ======= ======= ======= ======= ======= =======
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=================================== ======= ======= ======= ======= ======= =======
Profit/(loss) before taxation 2,826 (689) 2,137 1,573 4,163 5,736
=================================== ======= ======= ======= ======= ======= =======
=================================== ======= ======= ======= ======= ======= =======
Tax on profit/(loss) at the - - - - - -
standard rate of nil% (2021
- nil%)
=================================== ======= ======= ======= ======= ======= =======
Effects of: - -
=================================== ======= ======= ======= ======= ======= =======
Losses on investments held - - - - - -
at fair value through profit
or loss not taxable
=================================== ======= ======= ======= ======= ======= =======
Currency gains not taxable - - - - - -
=================================== ======= ======= ======= ======= ======= =======
Movement in excess expenses - - - - - -
=================================== ======= ======= ======= ======= ======= =======
Expenses not deductible for - - - - - -
tax purposes
=================================== ======= ======= ======= ======= ======= =======
Movement in deferred tax liability
on Mexican capital gains - (76) (76) - 119 119
=================================== ======= ======= ======= ======= ======= =======
Irrecoverable overseas withholding
tax 60 - 60 53 - 53
=================================== ======= ======= ======= ======= ======= =======
Non-taxable dividend income - - - - - -
----------------------------------- ------- ------- ------- ------- ------- -------
Total tax charge 60 (76) (16) 53 119 172
----------------------------------- ------- ------- ------- ------- ------- -------
The effective rate of tax of the Company is 0% (2021 - 0%) and
the amounts in the table are reconciling items between tax at the
effective rate and the taxation charge in the Statement of Comprehensive
Income.
8. Dividends on equity shares
================================================= ============= ============
2022 2021
GBP'000 GBP'000
================================================= ============= ============
Distributions to equity holders in the
year:
================================================= ============= ============
Fourth interim dividend for 2021 - 0.875p
(2020 - 0.875p) per Ordinary share 500 500
================================================= ============= ============
First interim dividend for 2022 - 0.875p
(2021 - 0.875p) per Ordinary share 500 500
================================================= ============= ============
Second interim dividend for 2022 - 0.875p
(2021 - 0.875p) per Ordinary share 500 500
================================================= ============= ============
Third interim dividend for 2022 - 0.875p
(2021 - 0.875p) per Ordinary share 500 500
------------------------------------------------- ------------- ------------
2,000 2,000
------------------------------------------------- ------------- ------------
The fourth interim dividend for the year of 0.875p per Ordinary
share has not been included as a liability in these financial statements
as it was announced and paid after 31 August 2022.
9. Earnings per Ordinary share
Earnings or loss per Ordinary share is based on the profit for
the year of GBP2,153,000 (2021 profit - GBP5,564,000) and on 57,113,324
(2021 - 57,113,324) Ordinary shares, being the weighted average
number of Ordinary shares in issue during the year.
The earnings per Ordinary share detailed above can be further analysed
between revenue return and capital return as follows:
================================== ======= ======= ====== ======= ======= ======
2022 2021
================================== ======================== ========================
Revenue Capital Total Revenue Capital Total
================================== ======= ======= ====== ======= ======= ======
Profit/(loss) (GBP'000) 2,766 (613) 2,153 1,520 4,044 5,564
================================== ======= ======= ====== ======= ======= ======
Weighted average number of
Ordinary shares in issue ('000) 57,113 57,113
================================== ======= ======= ====== ======= ======= ======
Return per Ordinary share (pence) 4.84 (1.07) 3.77 2.66 7.08 9.74
---------------------------------- ------- ------- ------ ------- ------- ------
10. Investments held at fair value
(a) Year ended Year ended
31 August 2022 31 August 2021
=========================== ================================== ===================================
Quoted Investment Quoted Investment
bonds bonds
& Equities in Subsidiary Total & Equities in Subsidiary Total
Fair value through GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
profit or loss
=========================== ========== ============= ======= ========== ============= ========
Opening book cost 22,285 14,904 37,189 25,366 13,226 38,592
=========================== ========== ============= ======= ========== ============= ========
Opening investment
holdings (losses)/gains (150) 4,201 4,051 (4,092) 3,004 (1,088)
--------------------------- ---------- ------------- ------- ---------- ------------- --------
Opening fair value 22,135 19,105 41,240 21,274 16,230 37,504
=========================== ========== ============= ======= ========== ============= ========
Movements in the
year:
=========================== ========== ============= ===== ========== ============= ========
Purchases 6,600 - 6,600 6,611 - 6,611
=========================== ========== ============= ======= ========== ============= ========
Sales proceeds (8,090) - (8,090) (9,404) - (9,404)
=========================== ========== ============= ======= ========== ============= ========
Payments to/(receipts
from) Subsidiary by
Company - 1,975 1,975 - 2,463 2,463
=========================== ========== ============= ======= ========== ============= ========
Realised losses on
financial assets held
at fair value through
profit or loss (178) - (178) (290) - (290)
=========================== ========== ============= ======= ========== ============= ========
(Decrease)/increase
in investment holdings
fair value gains/(losses) 79 (576) (497) 3,944 390 4,334
=========================== ========== ============= ======= ========== ============= ========
Net income generated
in Subsidiary - 1,831 1,831 - 807 807
=========================== ========== ============= ======= ========== ============= ========
Cash transfer to/(from)
Subsidiary to Parent
(Income from Subsidiary) - (1,545) (1,545) - (785) (785)
--------------------------- ---------- ------------- ------- ---------- ------------- --------
Closing fair value 20,546 20,790 41,336 22,135 19,105 41,240
--------------------------- ---------- ------------- ------- ---------- ------------- --------
=========================== ========== ============= ===== ========== ============= ========
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=========================== ========== ============= ======= ========== ============= ========
Closing book cost 20,617 15,334 35,951 22,285 14,904 37,189
=========================== ========== ============= ======= ========== ============= ========
Closing investment
holdings (losses)/gains (71) 3,625 3,554 (150) 3,394 3,244
=========================== ========== ============= ======= ========== ============= ========
Net income generated
in Subsidiary - 1,831 1,831 - 807 807
--------------------------- ---------- ------------- ------- ---------- ------------- --------
Closing fair value 20,546 20,790 41,336 22,135 19,105 41,240
--------------------------- ---------- ------------- ------- ---------- ------------- --------
The Company received GBP8,090,000 (31 August 2021 - GBP9,404,000)
from investments sold in the period. The book cost of these
investments when they were purchased was GBP8,268,000 (31 August
2021 - GBP9,694,000). These investments have been revalued over
time and until they were sold any unrealised gains/losses were
included in the fair value of the investments.
(b) Investment in Subsidiary. The Company holds 100% of the share
capital of its Subsidiary. The Company meets the definition
of an investment entity, therefore it does not consolidate its
Subsidiary but recognises it as an investment at fair value
through profit or loss. The fair value of the Subsidiary is
based on its net assets which comprises investments held at
fair value, cash, income receivable and other receivables/payables.
The Company receives income from its Subsidiary and there are
no significant restrictions on the transfer of funds to or from
the Subsidiary. During the year the Company paid a net transfer
to the Subsidiary of GBP1,975,000 (2021 - GBP2,463,000).
(c) Transaction costs. During the year, expenses were incurred in
acquiring or disposing of investments classified as fair value
through profit or loss. The total costs were as follows:
=========================== ========== ============= ===== ========== ============= ========
Year ended Year ended
31 August 31 August
2022 2021
GBP'000 GBP'000
=========================== ========== ============= ================= =======================
Purchases 11 10
=========================== ========== ============= ================= =======================
Sales 10 12
--------------------------- ---------- ------------- ----------------- -----------------------
21 22
--------------------------- ---------- ------------- ----------------- -----------------------
The above transaction costs are calculated in line with the
AIC SORP. The transaction costs in the Company's Key Information
Document are calculated on a different basis and in line with
the PRIIPs regulations.
11. Creditors: amounts falling due within one year
Bank loan. On 13 August 2021 the Company entered a GBP6 million
two year unsecured revolving multi-currency loan facility with
The Bank of Nova Scotia, London Branch, expiring on 14 August 2023.
This replaced the existing GBP6m loan facility agreement with Scotiabank
Europe plc. At the year end GBP5,500,000 was drawn down (2021 -
GBP5,500,000) under the facility, fixed to 8 September 2022 at
an all-in rate of 2.561%.
At the date this Report was approved, GBP5,500,000 was drawn down
under this facility and fixed to 7 December 2022 at an all-in rate
of 3.5559%.
Under the terms of the loan facility the Company's borrowings must
not exceed 25% of adjusted NAV. Adjusted NAV is defined as total
net assets less, inter alia, the aggregate of all excluded assets,
excluded assets being, without double counting, the value of any
unquoted assets, all investments issued by a single issuer in excess
of 15% of total NAV, all Brazilian and Mexican bonds in excess
of 30%, any MSCI Industry category in excess of 25%, and cash along
with any shortfall in cash, equities and investment Grade bonds
below 70%. All covenants have been complied with throughout the
year and up to the date of this Annual Report.
The Directors are of the opinion that there is no significant difference
between the carrying value and fair value of the bank loan due
to its short term nature.
12. Equity capital
===============================================================================
2022 2021
Number GBP'000 Number GBP'000
===================================== ========== ======= ========== =======
Issued and fully paid - Ordinary
shares
===================================== ========== ======= ========== =======
Balance brought and carried forward 57,113,324 65,936 57,113,324 65,936
===================================== ========== ======= ========== =======
===================================== ========== ======= ========== =======
2022 2021
===================================== =================== ===================
Number GBP'000 Number GBP'000
===================================== ========== ======= ========== =======
Issued and fully paid - Treasury
shares
===================================== ========== ======= ========== =======
Balance brought and carried forward 6,107,500 - 6,107,500 -
===================================== ========== ======= ========== =======
Stated capital 63,220,824 65,936 63,220,824 65,936
------------------------------------- ---------- ------- ---------- -------
For each Ordinary share issued GBP1 is allocated to stated capital,
with the balance taken to the capital reserve. The number of Ordinary
shares authorised for issue is unlimited. The Ordinary shares in
issue have no par value.
During the year there were no share buybacks or issues (2021 -
same).
Shares held in treasury consisting of 6,107,500 (2021 - 6,107,500)
Ordinary shares represent 9.66% (2021 - 9.66%) of the Company's
total issued share capital at 31 August 2022.
The Ordinary shares are entitled to all of the capital growth in
the Company's assets and to all the income from the Company that
is resolved to be distributed.
13. Capital reserve
=========================================== =========== ===========
2022 2021
GBP'000 GBP'000
=========================================== =========== ===========
At beginning of year (31,499) (35,543)
=========================================== =========== ===========
Net currency gains/(losses) 75 (73)
=========================================== =========== ===========
Forward foreign currency contracts gains 178 475
=========================================== =========== ===========
Movement in investment holdings fair value
(losses)/gains (497) 4,334
=========================================== =========== ===========
Loss on sales of investments (178) (290)
=========================================== =========== ===========
Capitalised expenses (191) (402)
------------------------------------------- ----------- -----------
At end of year (32,112) (31,499)
------------------------------------------- ----------- -----------
14 Net asset value per Ordinary share
Net asset value per Ordinary share is based on a net asset value
of GBP36,072,000 (2021 - GBP35,919,000) and on 57,113,324 (2021
- 57,113,324) Ordinary shares, being the number of Ordinary shares
issued and outstanding at the year end excluding shares held in
treasury.
15. Risk management policies and procedures
The Company, and through its Subsidiary, invests in equities and
sovereign bonds for the long term so as to achieve its objective
as stated on page 15 of the 2022 Annual Report. In pursuing its
investment objective, the Company is exposed to a variety of financial
risks that could result in a reduction in the Company's net assets
and a reduction in the revenue available for distribution by way
of dividends. The Company entered into forward foreign currency
contracts for the purpose of hedging short term foreign currency
cash flows consistent with its investment policy. As at 31 August
2022 there were 10 open positions in derivatives transactions (2021
- 19) details of which can be found on page 92 of the 2022 Annual
Report. The Company has not entered into forward foreign currency
contracts for the purpose of hedging fair values as at each reporting
date.
The Directors conclude that it is appropriate to present the financial
risk disclosures of the Company and its wholly owned Subsidiary
in combination as this accurately reflects how the Company uses
its Subsidiary to carry out its investment activities, including
those relating to portfolio allocation and risk management.
These financial risks of the Company and its Subsidiary are market
risk (comprising market price risk, currency risk and interest
rate risk), liquidity risk and credit risk, and the Directors'
approach to the management of these risks, are set out below. The
Board of Directors is responsible for the Company's risk management.
The overall risk management programme focuses on the unpredictability
of financial markets and seeks to minimise potential adverse effects
on the Company's financial performance.
The Board determines the objectives, policies and processes for
managing the risks that are set out below, under the relevant risk
category and relies upon AFML's system of internal controls. The
policies for the management of each risk are unchanged from the
previous accounting period.
(a) Market risk . The fair value of a financial instrument held
by the Company and its Subsidiary may fluctuate due to changes
in market prices. Market risk comprises - market price risk
(see note 15(b)), currency risk (see note 15(c)) and interest
rate risk (see note 15(d)). The Investment Manager assesses
the exposure to market risk when making each investment decision,
and monitors the overall level of market risk on the whole of
the investment portfolio on an ongoing basis.
(b) Market price risk . Market price risks (i.e. changes in market
prices other than those arising from interest rate risk or currency
risk) may affect the value of the quoted investments.
Management of the risk . The Board monitors the risks inherent
in the investment portfolio by ensuring full and timely access
to relevant information from the Investment Manager. The Board
meets regularly and at each meeting reviews investment performance.
The Board and Manager monitor the Investment Manager's compliance
with the Company's objectives, and is directly responsible for
oversight of the investment strategy and asset allocation.
Concentration of exposure to market price risk . A geographical
analysis of the Company's and Subsidiary's combined investment
portfolio is shown on pages 29 to 34 of the 2022 Annual Report.
This shows the amounts invested in Argentina, Brazil, Chile,
Colombia, Mexico, Peru and Uruguay. Accordingly, there is a
concentration of exposure to those countries, though it is recognised
that an investment's country of domicile or of listing does
not necessarily equate to its exposure to the economic conditions
in that country.
Market price sensitivity . The following table illustrates the
sensitivity of the return after taxation for the year and equity
to an increase or decrease of 20% (2021 - 20%) in the fair value
of the Company's and its Subsidiary's investments. This level
of change is considered to be reasonably possible based on observation
of past and current market conditions. The sensitivity analysis
is based on the Company's and its Subsidiary's investments at
each balance sheet date and the investment management fees for
the year ended 31 August 2022, with all other variables held
constant.
================== ========= ==== ============ ======== ======== ======== ========
2022 2022 2021 2021
Increase Decrease Increase Decrease
in fair in fair in fair in fair
value value value value
GBP'000 GBP'000 GBP'000 GBP'000
================== ======== ==== ============= ======== ======== ======== ========
Statement of Comprehensive Income
- return after tax
================================================== ======== ======== ======== ========
Revenue return (33) 33 (33) 33
================== ========= ==== ============ ======== ======== ======== ========
Capital return 8,110 (8,110) 8,197 (8,197)
------------------ --------- ---- ------------ -------- -------- -------- --------
Impact on total return after tax
for the year and net assets 8,077 (8,077) 8,164 (8,164)
-------------------------------------------------- -------- -------- -------- --------
(c) Currency risk . Most of the Company's assets (including indirectly
through its investment in its Subsidiary), liabilities and income
are denominated in currencies other than sterling (the Company's
functional currency, and the currency in which it reports its
results). As a result, movements in exchange rates may affect
the sterling value of those items.
Management of the risk . The Investment Manager manages the
Company's exposure to foreign currencies and reports to the
Board on a regular basis.
The Investment Manager also manages the risk to the Company
and its Subsidiary of the foreign currency exposure by considering
the effect on the Company's NAV and income of a movement in
the exchange rates to which the Company's and Subsidiary's assets,
liabilities, income and expenses are exposed.
Income denominated in foreign currencies is converted into sterling
on receipt. The Company and its Subsidiary do not use financial
instruments to mitigate currency exposure in the period between
the time that income is accrued in the financial statements
and its receipt.
Foreign currency exposure . The table below shows, by currency,
the split of the Company and Subsidiary's non-sterling monetary
assets and investments that are denominated in currencies other
than sterling. The exposure is shown on an aggregated basis
and excludes forward currency contracts which are used for the
purpose of ensuring the Company's foreign currency exposure
is appropriately hedged.
=========== ===== ===== ========= ========= ======= ======= ======= ======= === ====== ==== === ======= ==========
ARS BRL CLP COP MXN PEN UYU USD
2022 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=============================================== ======= ======= ======= ======= =========== ========= ======= ==========
Debtors (due from brokers,
dividends and other receivables) - 402 - 84 169 24 35 31
=============================================== ======= ======= ======= ======= =========== ========= ======= ==========
Cash - 221 - - - - - 6
=============================================== ======= ======= ======= ======= =========== ========= ======= ==========
Creditors (due to brokers,
accruals and other creditors) - (3) - - (65) (18) - (53)
----------------------------------------------- ------- ------- ------- ------- ----------- --------- ------- ----------
Total foreign currency
exposure on net monetary
items - 620 - 84 104 6 35 (16)
=============================================== ======= ======= ======= ======= =========== ========= ======= ==========
Investments at fair value 2,4
through profit or loss 498 19,745 776 63 9,919 1.518 2,524 3,234
----------------------------------------------- ------- ------- ------- ------- ----------- --------- ------- ----------
Total net foreign currency 20,
exposure 498 365 776 2,547 10,023 1,524 2,559 3,218
----------------------------------------------- ------- ------- ------- ------- ----------- --------- ------- ----------
=========== ===== ===== ========= ========= ======= ======= ======= ======= === ====== ==== === ======= ==========
ARS BRL CLP COP MXN PEN UYU USD
2021 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=============================================== ======= ======= ======= ======= =========== ========= ======= ==========
Debtors (due from brokers,
dividends and other receivables) - 96 - 39 87 13 25 15
=============================================== ======= ======= ======= ======= =========== ========= ======= ==========
Cash - 29 2 - 17 13 - 13
=============================================== ======= ======= ======= ======= =========== ========= ======= ==========
Creditors (due to brokers,
accruals and other creditors) - (2) - (22) (6) - - (10)
----------------------------------------------- ------- ------- ------- ------- ----------- --------- ------- ----------
Total foreign currency
exposure on net monetary
items - 123 2 17 98 26 25 18
=============================================== ======= ======= ======= ======= =========== ========= ======= ==========
Investments at fair value
through profit or loss 1,670 20,568 2,018 2,699 9,227 890 2,407 1,634
----------------------------------------------- ------- ------- ------- ------- ----------- --------- ------- ----------
Total net foreign currency
exposure 1,670 20,691 2,020 2,716 9,325 916 2,432 1,652
----------------------------------------------- ------- ------- ------- ------- ----------- --------- ------- ----------
Foreign currency sensitivity . The sensitivity of the total
return after tax for the year and the net assets in regard to
the movements in the Company's and its Subsidiary's foreign
currency financial assets and financial liabilities and the
exchange rates for the GBP/Argentine Peso (ARS), GBP/Brazilian
Real (BRL), GBP/Chilean Peso (CLP), GBP/Colombian Peso (COP),
GBP/Mexican Peso (MXN), GBP/Peruvian Nuevo Sol (PEN), GBP/Uruguayan
Peso (UYU) and GBP/US Dollar (USD) are set out below. This sensitivity
excludes forward currency contracts entered into for hedging
short term cash flows.
It assumes the following changes in exchange rates:
GBP/Argentine Peso (ARS) +/-124% (2021 +/-172%) (maximum downside
risk 100%)
GBP/Brazilian Real( BRL) +/-20% (2021 +/-32%)
GBP/Chilean Peso (CLP) +/-19% (2021 +/-21%)
GBP/Columbian Peso (COP) +/-23% (2021 +/-30%)
GBP/Mexican Peso (MXN) +/-4% (2021 +/-11%)
GBP/Peruvian Nuevo Sol (PEN) +/-8% (2021 +/-31%)
GBP/Uruguayan Peso (UYU) +/-6% (2021 +/-40%)
GBP/US Dollar (USD) +/-4% (2021 +/-6%)
These percentages have been determined based on the average
market volatility in exchange rates in the previous 3 years
and using the Company's and its Subsidiary's foreign currency
financial assets and financial liabilities held at each balance
sheet date.
For 2022, if sterling had strengthened against the currencies
shown, this would have had the following effect, with a weakening
of sterling having an equal and opposite effect with the exception
of the Argentine Peso which is capped at 100% on the downside
amounting to GBPnil for revenue returns and GBP617,000 for capital
returns but on the upside revenue returns would increase by
GBPnil and capital returns by GBP617,000:
=========== ===== ===== ========= ========= ======= ======= ======= ======= === ====== ==== === ======= ==========
ARS BRL CLP COP MXN PEN UYU USD
2022 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=============================================== ======= ======= ======= ======= =========== ========= ======= ==========
Statement of Comprehensive
Income - return after
tax
=============================================== ======= ======= ======= ======= === ====== ==== === ======= ==========
Revenue return - 125 - 14 (4) - 2 (1)
=============================================== ======= ======= ======= ======= =========== ========= ======= ==========
Capital return (617) (4,072) (147) (586) (401) (122) (153) (129)
----------------------------------------------- ------- ------- ------- ------- ----------- --------- ------- ----------
Impact on total return
after tax for the year
and net assets (617) (3,947) (147) (572) (405) (122) (151) (130)
----------------------------------------------- ------- ------- ------- ------- ----------- --------- ------- ----------
For 2021, if sterling had strengthened against the currencies
shown, this would have had the following effect, with a weakening
of sterling having an equal and opposite effect with the exception
of the Argentine Peso which is capped at 100% on the downside
amounting to GBPnil for revenue returns and GBP1,670,000 for
capital returns but on the upside revenue returns would increase
by GBPnil and capital returns by GBP2,873,000:
=========== ===== ===== ========= ========= ======= ======= ======= ======= === ====== ==== === ======= ==========
ARS BRL CLP COP MXN PEN UYU USD
2021 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=============================================== ======= ======= ======= ======= =========== ========= ======= ==========
Statement of Comprehensive
Income - return after
tax
=============================================== ======= ======= ======= ======= === ====== ==== === ======= ==========
Revenue return - (40) - (12) (10) (5) (10) (1)
=============================================== ======= ======= ======= ======= =========== ========= ======= ==========
Capital return (1,670) (6,621) (424) (815) (1,026) (284) (973) (99)
----------------------------------------------- ------- ------- ------- ------- ----------- --------- ------- ----------
Impact on total return
after tax for the year
and net assets (1,670) (6,661) (424) (827) (1,036) (289) (983) (100)
----------------------------------------------- ------- ------- ------- ------- ----------- --------- ------- ----------
Foreign exchange contracts . The Company has entered into derivative
transactions, in the form of forward exchange contracts, to
ensure that exposure to foreign denominated cash flows is appropriately
hedged. The following forward contracts were outstanding at
the Statement of Financial Position date:
=========== ===== ===== ========= ========= ======= ======= ======= ======= === ====== ==== === ======= ==========
Local currency Unrealised
gain/(loss)
Buy Sell Settlement Amount Contracted 31 August
2022
Date of Currency Currency date '000 rate GBP'000
contract
=========== ===== ===== ========= ========= ========================= ============ ============ ========================
18 October
7 July 2022 GBP USD 2022 53 1.1647 (1)
========================= ========= ======= ========================= ============ ============ ========================
18 October
7 July 2022 GBP USD 2022 999 1.1647 (33)
========================= ========= ======= ========================= ============ ============ ========================
18 October
7 July 2022 MXN GBP 2022 1,164 23.6381 76
========================= ========= ======= ========================= ============ ============ ========================
18 October
25 July 2022 GBP USD 2022 542 1.1647 (21)
========================= ========= ======= ========================= ============ ============ ========================
10 August 22 November
2022 BRL USD 2022 162 0.1623 (3)
========================= ========= ======= ========================= ============ ============ ========================
10 August 22 November
2022 PEN GBP 2022 252 0.2213 20
========================= ========= ======= ========================= ============ ============ ========================
10 August 22 November
2022 USD COP 2022 810 1.1654 24
========================= ========= ======= ========================= ============ ============ ========================
10 August 22 November
2022 USD PEN 2022 858 1.1654 (18)
========================= ========= ======= ========================= ============ ============ ========================
18 August 18 October
2022 USD GBP 2022 66 1.1647 2
========================= ========= ======= ========================= ============ ============ ========================
23 August 18 October
2022 MXN GBP 2022 126 23.6381 1
------------------------- --------- ------- ------------------------- ------------ ------------ ------------------------
========================= ========= ======= ======= ======= ======= ======= === ====== ==== === ======= ==========
========================= ========= ======= ======= ======= ======= ======= === ====== ==== === ======= ==========
Local currency Unrealised
gain/(loss)
==========================
Buy Sell Settlement Amount Contracted 31 August
2021
Date of Currency Currency date '000 rate GBP'000
contract
=========== ===== ===== ========= ========= ========================= ============ ============ ========================
1 September
1 June 2021 GBP USD 2021 146 1.3764 (4)
========================= ========= ======= ========================= ============ ============ ========================
1 September
1 June 2021 USD BRL 2021 148 1.3763 (2)
========================= ========= ======= ========================= ============ ============ ========================
13 October
8 July 2021 GBP USD 2021 1,088 1.3764 (2)
========================= ========= ======= ========================= ============ ============ ========================
13 October
8 July 2021 GBP USD 2021 53 1.3764 0
========================= ========= ======= ========================= ============ ============ ========================
13 October
8 July 2021 MXN GBP 2021 1,622 27.7401 12
========================= ========= ======= ========================= ============ ============ ========================
13 October
12 July 2021 GBP USD 2021 149 1.3764 (1)
========================= ========= ======= ========================= ============ ============ ========================
13 October
27 July 2021 GBP MXN 2021 148 27.7401 (1)
========================= ========= ======= ========================= ============ ============ ========================
13 October
28 July 2021 USD GBP 2021 68 1.3764 1
========================= ========= ======= ========================= ============ ============ ========================
13 October
30 July 2021 GBP MXN 2021 267 27.7401 (3)
========================= ========= ======= ========================= ============ ============ ========================
13 October
30 July 2021 GBP USD 2021 70 1.3764 (1)
========================= ========= ======= ========================= ============ ============ ========================
12 August 13 October
2021 USD GBP 2021 228 1.3764 2
========================= ========= ======= ========================= ============ ============ ========================
16 August 24 November
2021 BRL USD 2021 540 0.1401 14
========================= ========= ======= ========================= ============ ============ ========================
17 August 24 November
2021 USD COP 2021 808 1.3765 (22)
========================= ========= ======= ========================= ============ ============ ========================
17 August 24 November
2021 USD PEN 2021 740 1.3765 1
========================= ========= ======= ========================= ============ ============ ========================
23 August 13 October
2021 USD GBP 2021 86 1.3764 (1)
========================= ========= ======= ========================= ============ ============ ========================
26 August 1 September
2021 BRL USD 2021 152 0.1419 3
========================= ========= ======= ========================= ============ ============ ========================
26 August 13 October
2021 GBP USD 2021 151 1.3764 0
========================= ========= ======= ========================= ============ ============ ========================
26 August 1 September
2021 USD GBP 2021 151 1.3763 0
========================= ========= ======= ========================= ============ ============ ========================
26 August 24 November
2021 USD BRL 2021 149 1.3765 (3)
------------------------- --------- ------- ------------------------- ------------ ------------ ------------------------
The fair value of forward exchange contracts is based on forward
exchange rates at the Balance Sheet date.
A sensitivity analysis of foreign currency contracts is not
presented as the Directors consider that these are not significant
given the short duration of the contracts and expected volatility
of the respective foreign exchange rates over the term of the
contracts.
(d) Interest rate risk. Interest rate risk is the risk that arises
from fluctuating interest rates. Interest rate movements may
affect:
- the fair value of the investments in fixed interest rate securities;
- the level of income receivable on cash deposits;
- interest payable on the Company's variable interest rate borrowings.
The interest rate risk applicable to a bond is dependent on
the sensitivity of its price to interest rate changes in the
market. The sensitivity depends on the bond's time to maturity,
and the coupon rate of the bond.
Management of the risk . The possible effects on fair value
and cash flows that could arise as a result of changes in interest
rates are taken into account when making investment decisions.
Financial assets . The Company and its Subsidiary hold fixed
rate government bonds with prices determined by market perception
as to the appropriate level of yields given the economic background.
Key determinants of market quoted prices include economic growth
prospects, inflation, the relevant government's fiscal position,
short-term interest rates and international market comparisons.
The Investment Manager considers all these factors when making
investment decisions. Each quarter the Board reviews the decisions
made by the Investment Manager and receives reports on each
market in which the Company and its Subsidiary invest together
with economic updates.
Returns from bonds are fixed at the time of purchase, as the
fixed coupon payments are known, as are the final redemption
proceeds. This means that if a bond is held until its redemption
date, the total return achieved is unaltered from its purchase
date. However, over the life of a bond the market price at any
given time will depend on the market environment at that time.
Therefore, a bond sold before its redemption date is likely
to have a different price to its purchase price and a profit
or loss may result.
Financial liabilities. The Company primarily finances its operations
through use of equity and bank borrowings.
The Company has a revolving multi-currency facility, details
of which are disclosed in note 11 on page 86 of the 2022 Annual
Report.
The Board actively monitors its bank borrowings. A decision
on whether to roll over its existing borrowings will be made
prior to their maturity dates, taking into account the Company's
policy of not having any fixed, long-term borrowings.
Interest rate exposure . The exposure at 31 August of financial
assets and financial liabilities to interest rate risk is shown
by reference to floating interest rates - when the interest
rate is due to be re-set.
================== ========= ========= ======== ======== ======= ======== =======
2022 2021
================== ========= ========= ======== ================= =================
Within Within
one year Total one year Total
GBP'000 GBP'000 GBP'000 GBP'000
================== ========= ========= ======== ======== ======= ======== =======
Exposure to floating interest rates
================================================== ======== ======= ======== =======
Cash 117 117 333 333
================== ========= ========= ======== ======== ======= ======== =======
Borrowings under loan facility (5,500) (5,500) (5,500) (5,500)
-------------------------------------------------- -------- ------- -------- -------
Total net exposure to interest rates (5,383) (5,383) (5,167) (5,167)
-------------------------------------------------- -------- ------- -------- -------
The Company does not have any fixed interest rate exposure to
cash or bank borrowings at 31 August 2022 (2021 - nil). Interest
receivable and finance costs are at the following rates:
- interest received on cash balances, or paid on bank overdrafts,
is at a margin below SONIA or its foreign currency equivalent
(2021 - same).
- interest paid on borrowings under the loan facility was at
a margin above LIBOR to 13 August 2022 and at a margin above
SONIA from 13 August 2022 to the Company's year end. The weighted
average interest rate of these at 31 August 2022 was 2.561%
(2021- 1.49053%).
Interest rate sensitivity. A sensitivity analysis demonstrates
the sensitivity of the Company's results for the year to a reasonably
possible change in interest rates, with all other variables
held constant.
The sensitivity of the profit/(loss) for the year is the effect
of the assumed change in interest rates on:
- the net interest income for the year, based on the floating
rate financial assets held at the Statement of Financial Position
date; and
- changes in fair value of investments for the year, based on
revaluing fixed rate financial assets and liabilities at the
Statement of Financial Position date.
If interest rates had been 50 basis points higher or lower and
all other variables were held constant, the Company's net interest
for the year ended 31 August 2022 would decrease/increase by
GBP27,000 (2021 - GBP26,000). This is attributable to the Company's
exposure to interest rates on its floating rate cash balances
and bank loan.
If interest rates had been 200 basis points (2021 - 50 basis
points) higher and all other variables were held constant, a
change in fair value of the Company's fixed income financial
assets at the year ended 31 August 2022 of GBP15,489,000 (2021
- GBP14,489,000) would result in a decrease of GBP570,000 (2021
- GBP380,000). If interest rates had been 200 basis points (2021
- 50 basis points) lower and all other variables were held constant,
a change in fair value of the Company's fixed rate financial
assets at the year ended 31 August 2022 would result in an increase
of GBP570,000 (2021 - GBP396,000).
(e) Liquidity risk. This is the risk that the Company will encounter
difficulty in meeting obligations associated with financial
liabilities.
Management of the risk. All of the Company's and its Subsidiary's
portfolios are investments in quoted bonds and equities that
are actively traded. The Company's level of borrowings is subject
to regular review.
The Company's investment policy allows the Investment Manager
to determine the maximum amount of the Company's resources that
should be invested in any one company.
Liquidity risk exposure. The remaining contractual maturities
of the financial liabilities at 31 August 2022, based on the
earliest date on which payment can be required are as follows
(borrowings under the loan facility are subject to a resetting
of the interest rate upon maturity):
========================================== ======== ======== ======= ========
Due
Due between Due
within 3 months after
3 months and 1 1 year Total
year
31 August 2022 GBP'000 GBP'000 GBP'000 GBP'000
========================================== ======== ======== ======= ========
Creditors: amounts falling due within
one year
========================================== ======== ======== ======= ========
Borrowings under the loan facility
(including interest) (5,510) - - (5,510)
========================================== ======== ======== ======= ========
Amounts due on forward foreign currency
contracts (76) - - (76)
========================================== ======== ======== ======= ========
Amounts due to brokers and accruals (118) - - (118)
------------------------------------------ -------- -------- ------- --------
(5,704) - - (5,704)
------------------------------------------ -------- -------- ------- --------
========================================== ======== ======== ======= ========
Due
Due between Due
within 3 months after
3 months and 1 1 year Total
year
31 August 2021 GBP'000 GBP'000 GBP'000 GBP'000
========================================== ======== ======== ======= ========
Creditors: amounts falling due within
one year
========================================== ======== ======== ======= ========
Borrowings under the loan facility
(including interest) (5,504) - - (5,504)
========================================== ======== ======== ======= ========
Amounts due on forward foreign currency
contracts (40) - - (40)
========================================== ======== ======== ======= ========
Amounts due to brokers and accruals (202) - - (202)
------------------------------------------ -------- -------- ------- --------
(5,746) - - (5,746)
------------------------------------------ -------- -------- ------- --------
(f) Credit risk. The failure of the counterparty to a transaction
to discharge its obligations under that transaction could result
in the Company or its Subsidiary suffering a loss. The Company
is exposed to credit risk on debt instruments. These classes
of financial assets are not subject to IFRS 9's impairment requirements
as they are measured at FVTPL. The carrying value of these assets,
under IFRS 9 represents the Company's maximum exposure to credit
risk on financial instruments not subject to the IFRS 9 impairment
requirements on the respective reporting dates (see table below
"Credit Risk Exposure").
The Company's only financial assets subject to the expected
credit loss model within IFRS 9 are cash and short-term other
receivables. At 31 August 2022 the total of cash and short-term
other receivables was GBP360,000 (2021 - GBP511,000).
As cash and short-term other receivables are impacted by the
IFRS 9 model, the Company has adopted an approach similar to
the simplified approach.
Management of the risk . Where the investment manager makes
an investment in a bond, corporate or otherwise, where available,
the credit rating of the issuer is taken into account so as
to minimise the risk to the Company of default. Investment transactions
are carried out with a number of brokers, whose credit-standing
is reviewed regularly by AFML, and limits are set on the amount
that may be due from any one broker; the risk of counterparty
exposure due to failed trades causing a loss to the Company
or its Subsidiary is mitigated by the review of failed trade
reports on a daily basis. In addition, the administrator carries
out both cash and stock reconciliations to the custodians' records
on a daily basis to ensure discrepancies are detected on a timely
basis.
Cash is held only with reputable banks with high quality external
credit ratings. None of the Company's or its Subsidiary's financial
assets have been pledged as collateral.
Credit risk exposure. In summary, compared to the amounts included
in the Balance Sheet, the maximum exposure to credit risk at
31 August was as follows:
===================================== ======== ======== ======= ========
2022 2021
===================================== ================== =================
Balance Maximum Balance Maximum
Sheet exposure Sheet exposure
GBP'000 GBP'000 GBP'000 GBP'000
===================================== ======== ======== ======= ========
Non-current assets
===================================== ======== ======== ======= ========
Bonds at fair value through profit
or loss(A) 15,489 15,489 14,489 14,489
------------------------------------- -------- -------- ------- --------
Current assets
===================================== ======== ======== ======= ========
Cash 117 117 333 333
===================================== ======== ======== ======= ========
Other receivables 243 243 178 178
===================================== ======== ======== ======= ========
Forward foreign currency contracts 123 123 33 33
------------------------------------- -------- -------- ------- --------
15,972 15,972 15,033 15,033
------------------------------------- -------- -------- ------- --------
(A) Includes quoted bonds held by the Company and its Subsidiary
on an aggregated basis. For more detail on these bonds refer
to page 31 of the 2022 Annual Report.
None of the Company's and Subsidiary's financial assets are
secured by collateral or other credit enhancements and none
are past their due date or impaired.
Credit ratings . The table below provides a credit rating profile
using Standard and Poor's credit ratings for the bond portfolio
at 31 August 2022 and 31 August 2021:
===================================== ======== ======== ======= ========
2022 2021
GBP'000 GBP'000
===================================== ======== ======== ======= ========
A- - 544
===================================== ======== ======== ======= ========
BBB+ 866 3,883
===================================== ======== ======== ======= ========
BBB 7,027 2,378
===================================== ======== ======== ======= ========
BB+ 2,462 2,187
===================================== ======== ======== ======= ========
BB- 5,134 4,037
===================================== ======== ======== ======= ========
Non-rated - 1,460
------------------------------------- -------- -------- ------- --------
15,489 14,489
------------------------------------- -------- -------- ------- --------
At 31 August 2021 the Standard and Poor's credit ratings agency
did not provide a rating for a Brazilian bond, a Colombian bond,
a Peruvian bond and an Uruguayan bond held by the Company and
were accordingly categorised as non-rated in the table above.
It was however noted that Fitch's credit rating agency did provide
a BB- rating for the Brazilian bond valued at GBP616,000, a
BB+ rating for the Colombian bond valued at GBP513,000 and a
BBB- rating for the Uruguayan bond valued at GBP30,000. Moody's
credit ratings agency provided a Baa1 rating for the Peruvian
bond valued at GBP301,000.
At 31 August 2022 the Company held cash of GBP117,000 (2021
- GBP333,000) with BNP Paribas SA, which has a credit rating
of A-1 (2021 - A-1) with Standard and Poor's. No ECL adjustments
have been made since the risk is considered negligible.
16. Capital management policies and procedures
The Company's capital management objectives are:
- to ensure that it will be able to continue as a going concern;
and
- to maximise the income and capital return to its Equity Shareholders
through equity capital and debt.
The Company's capital at 31 August 2022 comprises its equity capital
and reserves that are shown in the Balance Sheet at a total of
GBP36,072,000 (2021 - GBP35,919,000). As at 31 August 2022 gross
debt as a percentage of net assets stood at 15.3% (2021 - 15.3%).
The Board, with the assistance of abrdn, monitors and reviews the
broad structure of the Company's capital on an ongoing basis. This
review includes:
- the planned level of gearing, which takes account of abrdn's
views on the market;
- the need to buy back Ordinary shares for cancellation or treasury,
which takes account of the difference between the net asset value
per share and the share price (i.e. the level of share price discount);
- the need for new issues of Ordinary shares, including issues
from treasury; and
- the extent to which distributions from reserves may be made.
The Company's objectives, policies and processes for managing capital
are unchanged from the preceding accounting period.
17. Related party transactions
Directors' interests. Fees payable during the year to the Directors
are disclosed within the Directors' Remuneration Report on page
61 and in note 6 on page 82 of the 2022 Annual Report.
Transactions with the Manager. Under the terms of the management
agreement with the Company, aCIL is entitled to receive both a
management fee and a company secretarial and administration fee.
Details of the management fee arrangements are presented in note
5 on page 81 of the 2022 Annual Report. The company secretarial
and administration fee is based on an annual amount of GBP132,000
(2021 - GBP127,000), increasing annually in line with any increases
in the UK Retail Prices Index, payable quarterly in arrears. During
the year no fee (2021 - GBPnil) was payable after the deduction
of a rebate GBP132,000 (2021 - GBP127,000) to bring the OCR down
to 2.0%, with GBPnil (2021 - GBPnil) outstanding at the period
end.
The Manager has agreed to ensure that the Company's 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%.
Subsidiary. The Company owns 100% of the share capital of the Subsidiary.
Details of the movements in the investment are presented in note
10 on page 85 of the 2022 Annual Report.
18. Controlling party
The Company has no immediate or ultimate controlling party.
19. Fair value hierarchy
IFRS 13 requires an entity to classify fair value measurements
using a fair value hierarchy that reflects the significance of
the inputs used in making the measurements.
The Company has classified fair value measurements using a fair
value hierarchy that reflects the significance of the inputs used
in making the measurements. The fair value hierarchy has the following
levels:
Level quoted prices (unadjusted) in active markets for identical
1: assets or liabilities;
Level inputs other than quoted prices included within Level 1
2: that are observable for the assets or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from
prices); and
Level inputs for the asset or liability that are not based on
3: observable market data (unobservable inputs).
Financial assets and financial liabilities are either carried in
the balance sheet at their fair value (investments and forward
currency contracts) or the balance sheet amount is a reasonable
approximation of fair value (due from brokers, dividends and interest
receivable, due to brokers, accruals, cash at bank and amounts
due under the loan facility).
The financial assets and liabilities measured at fair value in
the Balance Sheet grouped into the fair value hierarchy at 31 August
2022 are as follows:
===== ======= =================================== ======= ======= ======= =========
Level Level Total
1 2
Note GBP'000 GBP'000 GBP'000
===== ======= =================================== ======= ======= ======= =========
Financial assets/(liabilities) at fair
value through profit or loss
=================================================== ======= ======= ======= =========
Quoted equities a) 10,191 - 10,191
=================================================== ======= ======= ======= =========
Quoted bonds b) - 10,355 10,355
=================================================== ======= ======= ======= =========
Investment in Subsidiary c) - 20,790 20,790
--------------------------------------------------- ------- ------- ------- ---------
10,191 31,145 41,336
===== ======= =================================== ======= ======= ======= =========
Forward foreign currency contracts
gains d) - 123 123
=================================================== ======= ======= ======= =========
Forward foreign currency contracts
(losses) d) - (76) (76)
--------------------------------------------------- ------- ------- ------- ---------
Net fair value 10,191 31,192 41,383
--------------------------------------------------- ------- ------- ------- ---------
===== ======= =================================== ======= ======= ======= =========
Level Level Total
1 2
As at 31 August 2021 Note GBP'000 GBP'000 GBP'000
=================================================== ======= ======= ======= =========
Financial assets/(liabilities) at fair
value through profit or loss
=================================================== ======= ======= ======= =========
Quoted equities a) 12,301 - 12,301
=================================================== ======= ======= ======= =========
Quoted bonds b) - 9,835 9,835
=================================================== ======= ======= ======= =========
Investment in Subsidiary c) - 19,104 19,104
=================================================== ------- ------- ------- ---------
12,301 28,939 41,240
===== ======= =================================== ======= ======= ======= =========
Forward foreign currency contracts
gains d) - 33 33
=================================================== ======= ======= ======= =========
Forward foreign currency contracts
(losses) d) - (40) (40)
--------------------------------------------------- ------- ------- ------- ---------
Net fair value 12,301 28,932 41,233
--------------------------------------------------- ------- ------- ------- ---------
There were no assets for which significant unobservable inputs
(Level 3) were used in determining fair value during the years
ended 31 August 2022 and 31 August 2021. For the years ended 31
August 2022 and 31 August 2021 there were no transfers between
any levels.
a) Quoted equities . The fair value of the Company's investments
in quoted equities has been determined by reference to their
quoted bid prices at the reporting date. Quoted equities included
in Fair Value Level 1 are actively traded on recognised stock
exchanges.
b) Quoted bonds . The fair value of Level 2 quoted bonds has been
determined by reference to their quoted bid prices within markets
not considered to be active. Index linked bonds are adjusted
for indexation arising from the movement of the consumer prices
index within the country of their incorporation.
c) Investment in Subsidiary . The Company's investment in its Subsidiary
is categorised in Fair Value Level 2 as its fair value has been
calculated with reference to its unadjusted net asset value.
The net asset value is primarily driven by the value of underlying
investments, which are all valued using unadjusted quoted prices,
and other net assets held at amortised cost, including cash.
There are no significant inputs used for the valuation that are
not observable to the Directors.
d) Forward foreign currency contracts. The fair value of forward
currency contracts is calculated by reference to current forward
exchange rates for contracts with similar maturity profiles.
20. Analysis of changes in financial liabilities during the year
The following tables show the movements of financial liabilities
in the Statement of Financial Position during the years ended 31
August 2022 and 31 August 2021 :
======================= ============ =========== ============ =========
At Other At
1 September Cash flows movements(A) 31 August
2021 2022
GBP000 GBP000 GBP000 GBP000
======================= ============ =========== ============ =========
Financing activities
======================= ============ =========== ============ =========
Bank loan (5,500) - - (5,500)
----------------------- ------------ ----------- ------------ ---------
Total (5,500) - - (5,500)
----------------------- ------------ ----------- ------------ ---------
======================= ============ =========== ============ =========
At Other At
1 September Cash flows movements(A) 31 August
2020 2021
GBP000 GBP000 GBP000 GBP000
======================= ============ =========== ============ =========
Financing activities
======================= ============ =========== ============ =========
Bank loan (5,500) - - (5,500)
----------------------- ------------ ----------- ------------ ---------
Total (5,500) - - (5,500)
----------------------- ------------ ----------- ------------ ---------
(A) The other movements column represents the cost of repurchasing
own shares as disclosed in the Statement of Changes in Equity.
21. Subsequent events
With the exception of the dividend paid on 28 October 2022, there
have been no events subsequent to the year end, which the Directors
consider would have a material impact on the financial statements.
The Annual General Meeting will be held at 10.00 a.m. on 14
December 2022 at 1(st) Floor, Sir Walter Raleigh House, 48 - 50
Esplanade, St Helier, Jersey JE2 3QB.
Please note that past performance is not necessarily a guide to
the future and that the value of investments and the income from
them may fall as well as rise and may be affected by exchange rate
movements. Investors may not get back the amount they originally
invested.
The Annual Financial Report Announcement is not the Company's
statutory accounts. The above results for the year ended 31 August
2022 are an abridged version of the Company's full financial
statements, which have been approved and audited with an
unqualified report. The Annual Report and Accounts will be
delivered to the Jersey Financial Services Commission in due
course.
The audited Annual Report and Accounts will be posted in
November 2022. Copies may be obtained during normal business hours
from the Company's Registered Office, abrdn Capital International
Limited, 1(st) Floor, Sir Walter Raleigh House, 48 - 50 Esplanade,
St Helier, Jersey JE2 3QB or from the Company's website,
latamincome.co.uk*.
* Neither the content of the Company's website nor the content
of any website accessible from hyperlinks on the Company's website
(or any other website) is (or is deemed to be) incorporated into,
or forms (or is deemed to form) part of this announcement.
By Order of the Board
abrdn Capital International Limited
Secretary
10 November 2022
Alternative Performance Measures
Alternative performance measures are numerical measures of the Company's
current, historical or future performance, financial position or cash
flows, other than financial measures defined or specified in the applicable
financial framework. The Company's applicable financial framework includes
IFRS and the AIC SORP. The Directors assess the Company's performance
against a range of criteria which are viewed as particularly relevant
for closed-end investment companies.
Discount to net asset value per Ordinary share
The discount is the amount by which the share price is lower than the
net asset value per Ordinary share, expressed as a percentage of the
net asset value per Ordinary share.
============================================= ============== ============ ===========
31 August 31 August
2022 2021
============================================= ============== ============ ===========
NAV per Ordinary share (p) a 63.16 62.89
============================================= ============== ============ ===========
Share price (p) b 52.25 55.75
============================================= ============== ============ ===========
Discount (a-b)/a 17.3% 11.4%
--------------------------------------------- -------------- ------------ -----------
Dividend cover
Revenue return per Ordinary share divided by dividends per Ordinary
share, expressed as a ratio.
============================================= ============== ============ ===========
31 August 31 August
2022 2021
============================================= ============== ============ ===========
Revenue return per Ordinary share
(p) a 4.84 2.66
============================================= ============== ============ ===========
Dividends declared (p) b 3.50 3.50
============================================= ============== ============ ===========
Dividend cover a/b 1.38 0.76
--------------------------------------------- -------------- ------------ -----------
Net gearing
Net gearing measures the total borrowings less cash and cash equivalents
divided by shareholders' funds, expressed as a percentage. Under AIC
reporting guidance cash and cash equivalents includes net amounts due
to and from brokers at the year end as well as cash at bank and in
hand.
============================================= ============== ============ ===========
31 August 31 August
2022 2021
============================================= ============== ============ ===========
Borrowings (GBP'000) a 5,500 5,500
============================================= ============== ============ ===========
Cash (GBP'000) b 117 333
============================================= ============== ============ ===========
Amounts due to brokers (GBP'000) c 22 6
============================================= ============== ============ ===========
Amounts due from brokers (GBP'000) d - 10
============================================= ============== ============ ===========
Shareholders' funds (GBP'000) e 36,072 35,919
--------------------------------------------- -------------- ------------ -----------
Net gearing (a-b+c-d)/e 15.0% 14.4%
--------------------------------------------- -------------- ------------ -----------
Ongoing charges
The ongoing charges ratio has been calculated in accordance with guidance
issued by the AIC as the total of investment management fees and administrative
expenses and expressed as a percentage of the average published daily
net asset values with debt at fair value published throughout the year.
============================================= ============== ============ ===========
2022 2021
============================================= ============== ============ ===========
Investment management fees (GBP'000) 337 386
============================================= ============== ============ ===========
Administrative expenses (GBP'000) 368 340
============================================= ============== ============ ===========
Less: non-recurring charges (GBP'000) (33) (6)
--------------------------------------------- -------------- ------------ -----------
Ongoing charges (GBP'000) 672 720
--------------------------------------------- -------------- ------------ -----------
Average net assets (GBP'000) 33,593 35,952
--------------------------------------------- -------------- ------------ -----------
Ongoing charges ratio 2.00% 2.00%
--------------------------------------------- -------------- ------------ -----------
The ongoing charges ratio provided in the Company's Key Information
Document is calculated in line with the PRIIPs regulations which amongst
other things, includes the cost of borrowings and transaction costs.
Total return
NAV and share price total returns show how the NAV and share price
has performed over a period of time in percentage terms, taking into
account both capital returns and dividends paid to shareholders. Share
price and NAV total returns are monitored against open-ended and closed-ended
competitors, and the Benchmark Index, respectively.
============================================= ============== ============ ===========
Share
Year ended 31 August 2022 NAV Price
============================================= ============== ============ ===========
Opening at 1 September 2021 a 62.89p 55.75p
============================================= ============== ============ ===========
Closing at 31 August 2022 b 63.16p 52.25p
============================================= ============== ============ ===========
Price movements c=(b/a)-1 0.4% -6.3%
============================================= ============== ============ ===========
Dividend reinvestment(A) d 6.4% 6.6%
--------------------------------------------- -------------- ------------ -----------
Total return c+d +6.8% +0.3%
--------------------------------------------- -------------- ------------ -----------
============================================= ============== ============ ===========
Share
Year ended 30 August 2021 NAV Price
============================================= ============== ============ ===========
Opening at 1 September 2020 a 56.65p 49.15p
============================================= ============== ============ ===========
Closing at 31 August 2021 b 62.89p 55.75p
============================================= ============== ============ ===========
Price movements c=(b/a)-1 +11.0% +13.4%
============================================= ============== ============ ===========
Dividend reinvestment(A) d 6.4% 7.5%
--------------------------------------------- -------------- ------------ -----------
Total return c+d +17.4% +20.9%
--------------------------------------------- -------------- ------------ -----------
(A) NAV total return involves investing the net dividend in the NAV
of the Company with debt at fair value on the date on which that dividend
goes ex-dividend. Share price total return involves reinvesting the
net dividend in the share price of the Company on the date on which
that dividend goes ex-dividend.
This information is provided by RNS, the news service of the
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END
FR FLFIDLSLILIF
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November 11, 2022 02:00 ET (07:00 GMT)
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