TIDMAEMC
RNS Number : 8227C
Aberdeen Emerging Markets Inv Co Ld
13 February 2020
Aberdeen Emerging Markets Investment Company Limited
LEI: 213800RIA1NX8DP4P938
Looking for the best-of-breed emerging market funds
Annual Report and Accounts
For the year ended 31 October 2019
Financial Highlights
Aberdeen Emerging Markets Investment Company Limited ("AEMC" or
the "Company") is a closed-end investment company with its Ordinary
shares listed on the Premium Segment of the London Stock Exchange.
It offers investors exposure to some of the best investment talent
within the global emerging markets of Asia, Eastern Europe, Africa
and Latin America.
The Company is governed by a board of independent directors, and
has no employees. Like most other investment companies, it
outsources its investment management and administration to an
investment management group, the Standard Life Aberdeen Group, and
other third party providers.
Net asset value ("NAV") per Ordinary NAV per Ordinary share(2)
share total return(1, 4)
+14.1% 663.3p
2018 -12.4% 2018 600.6p
-------------------- -------------------- ----------- ------------------------
Ordinary share price total return(1, Ordinary share price - mid market
4)
+13.2% 561.0p
2018 -15.7% 2018 515.0p
-------------------- -------------------- ----------- ------------------------
MSCI Emerging Markets Net Total Return Net Assets
Index in
sterling terms
+10.3% GBP304.9 million
2018 -9.0% 2018 GBP276.6 million
-------------------- -------------------- ----------- ------------------------
Net gearing(4) Ongoing charges ratio ("OCR")(4)
+8.0% 1.07%
2018 +7.0% 2018 1.02%
-------------------- -------------------- ----------- ------------------------
Dividends per Ordinary share(4) Revenue return per Ordinary share
21.0p 2.41p
2018 21.0p 2018 2.03p
-------------------- -------------------- ----------- ------------------------
(1) Performance figures stated above include reinvestment of
dividends on the ex-date
2 See note 14 in the Notes to the Financial Statements for basis
of calculation
3 Dividends declared for the year in which they were earned
4 Definitions of these Alternative Performance Measures ('APMs')
together with how these have been calculated can be found
below.
Investment Objective
The Company's investment objective is to achieve consistent
returns for shareholders in excess of the MSCI Emerging Markets Net
Total Return Index in sterling terms (the "Benchmark").
Investment Policy
The Company's investment policy is included in the Annual Report
and Accounts.
Benchmark
MSCI Emerging Markets Net Total Return Index in sterling
terms.
Management
The Company's Manager is Aberdeen Standard Fund Managers Limited
("ASFML", the "AIFM" or the "Manager") which has delegated the
investment management of the Company to Aberdeen Asset Managers
Limited ("AAML" or the "Investment Manager"). Both companies are
wholly owned subsidiaries of Standard Life Aberdeen plc.
The Company's portfolio is managed by Aberdeen Standard
Investments' highly experienced Closed End Fund Strategies ("CEFS")
team, which is amongst the most experienced of any operating
globally with a similar strategy. Further details of the team and
the investment strategy and process are included in the Annual
Report and Accounts.
Financial Calendar
27 March 2020 First interim dividend payable for year ending 31
October 2020
================= ==============================================================
21 April 2020 Annual General Meeting (Guernsey)
================= ==============================================================
June 2020 Second interim dividend payable for year ending 31
October 2020
================= ==============================================================
June 2020 Announcement of Half-Yearly Financial Report for the
six months ending 30 April 2020
================= ==============================================================
September 2020 Third interim dividend payable for year ending 31
October 2020
================= ==============================================================
December 2020 Fourth interim dividend payable for year ending 31
October 2020
================= ==============================================================
January/February Announcement of Annual Report and Accounts for the
2021 year ending 31 October 2020
================= ==============================================================
Chairman's Statement
Overview
I am pleased to report that over the year to 31 October 2019,
the Company's net asset value ("NAV") total return per ordinary
share was 14.1%. This compares favourably with a total return of
10.3% from the Company's benchmark, the MSCI Emerging Markets Net
Total Return Index (in sterling terms). The ordinary share price
total return was 13.2%, as the discount to NAV at which the
Company's shares trade widened slightly, to 15.4% from 14.3% at the
start of the financial year. As at 7 February 2020, the discount to
NAV is now 12.9%.
Despite periods of volatility, the period under review was
positive for investors in emerging market equities with the asset
class recovering from a poor 2018. While developments around the
US-China trade dispute remained a cause for concern for most of the
year, a backdrop of easier monetary policy globally provided
support for equity markets. It is pleasing that the Company
outperformed the benchmark in both net asset value and share price
total return terms.
Asia was the best performing region during the year, with China,
India and Taiwan all performing strongly. Chinese equities
returned 11.4%, with the market direction unsurprisingly
correlating closely with developments in the trade dispute with the
US. The best performing country during the year was Russia, which
returned over 32%, benefitting from depressed equity valuations and
the country's relative immunity from trade war concerns. On the
other hand, within the Latin American region, the Argentinian
market fell by more than 35% mainly due to opposition leader
Alberto Fernandez's victory in October's presidential election,
which led investors to fear that a return to left wing populist
policies may be imminent.
Fund selection, asset allocation and discount narrowing all made
positive contributions to the performance for the year. Fund
selection was particularly strong in China where a number of
investments performed strongly. Within asset allocation, the
Company benefited from its overweight exposure to Russia and
underweight positioning in South Africa. The Company also benefited
from the discount narrowing of a number of investment trusts, as
well as the impact of fully utilising the Company's loan facility
during a time of rising markets.
A more detailed explanation of the year's performance and
portfolio activity during the year is provided in the
Investment
Manager's Report.
Dividends
The Board believes that one of the attractions of the Company is
its policy of making quarterly distributions by way of dividends to
be funded from a combination of income and capital. This policy has
been adopted by the Board in the belief that the level of dividends
paid by emerging market companies over the long term is an
increasingly important attraction for investors seeking to invest
in the emerging market asset class.
Three interim dividends, each of 5.25p per share, were paid on
29 March, 28 June and 27 September 2019 and, since the year end, a
fourth and final interim dividend in respect of the year of 5.25p
per share was paid on 20 December 2019. This brings the total
dividends for the year to 21p per share.
For future years, the Board intends to continue to pay interim
dividends on a quarterly basis, in March, June, September and
December and it is anticipated that the total dividends for the
year ending 31 October 2020 will be no less than 22.0p per share, a
5% increase on the level of dividends paid last year, representing
a yield of 3.47% based on the share price of 606.0p as at 7
February 2020. Accordingly, the Board declares a first interim
dividend for the current financial year, of 5.5p per share, which
will be paid on 27 March 2020 to shareholders on the register on 28
February 2020.
The Board will put a resolution to shareholders at the AGM in
respect of its policy to declare four interim dividends each year,
and will include this as a resolution at future AGMs. The payment
of any dividends will be subject to compliance with all necessary
regulatory obligations of the Company, including the Guernsey Law
solvency test, compliance with its loan covenants, and will also be
subject to the Company retaining sufficient cash for its working
capital requirements.
Loan Facility and Gearing
During the year, the Board announced the renewal of the
Company's GBP25 million multicurrency revolving loan facility for a
further year to 29 March 2020. The Board believes that the use of
gearing, which is one of the advantages of a closed ended
structure, within pre-determined ranges and at times when the
Investment Manager sees attractive investment opportunities, will
be beneficial to the longer term performance of the Company. At the
end of the year, the full GBP25 million available under the
facility was drawn down, representing gearing, net of cash, of
8.0%.
The Company has commenced discussions with its bankers and the
Board expects to renew the facility on similar terms when it
matures in March this year.
Share Buy Backs
During the year, in accordance with its stated discount
management policy, the Company bought back 81,937 shares
which are in treasury. Shares held in treasury may only be
resold at a price that represents a premium to the prevailing NAV
per share.
The Board's policy in relation to discount control is that it
considers it desirable that the Company's shares do not trade at a
price which, on average, represents a discount that is out of line
with the Company's direct peer group. To assist the Board in taking
action to deal with a material and sustained deviation in the
Company's discount from its peer group it seeks authority from
Shareholders annually to buy back shares. Shares may be repurchased
when, in the opinion of the Board and taking into account factors
such as market conditions and the discounts of comparable
companies, the Company's discount is higher than desired and shares
are available to purchase in the market. The Board is of the view
that the principal purpose of share repurchases is to enhance net
asset value for remaining shareholders, although it may also assist
in addressing the imbalance between the supply of and demand for
the Company's shares and thereby reduce the scale and volatility of
the discount at which the shares trade in relation to the
underlying net asset value.
Shares in Public Hands
During the year, the Board announced that the number of ordinary
shares which are deemed by the Listing Rules to be held in public
hands was below the minimum 25% threshold. The Listing Rules
provide that shares are not considered to be held in public hands
if they are held by persons (or persons in the same group or
persons acting in concert) who have an interest in 5% or more of a
listed company's share capital, as well as shares held by directors
of a listed company.
As at 31 October 2019, the shares in public hands was estimated
to be approximately 17% and is broadly unchanged as at the date of
this Report.
The FCA agreed to modify temporarily the relevant listing rule
to permit this decreased level of shares in public hands for a
period up until 21 August 2020, during which time the Company will
continue to monitor its share register and keep the FCA informed of
any relevant developments as well as working towards restoring the
number of shares in public hands.
The Board is pleased to recognise the increased effort that the
Manager is putting into broadening the Company's shareholder base
and continues to work closely with the Manager in this regard.
Annual General Meeting ("AGM")
The AGM will be held at 12 noon on 21 April 2020 at 11 New
Street, St Peter Port, Guernsey, GY1 2PF.
For those shareholders unable to attend, we would encourage you
to complete and return the proxy form enclosed with the Annual
Report and Accounts so as to ensure that your votes are represented
at the meeting. If you hold your shares in the Company via a share
plan or a platform and would like to attend and/or vote at the AGM,
then you will need to make arrangements with the administrator of
your share plan or platform. For this purpose, investors who hold
their shares in the Company via the Aberdeen Standard Investments
Plan for Children, Share Plan or ISA will find a Letter of
Direction enclosed. Shareholders are encouraged to complete and
return the Letter of Direction in accordance with the instructions
printed thereon.
The Notice of the Meeting is contained in the Annual Report and
Accounts.
Board Composition
In the light of relatively recent changes to the Board, and
having served as a Director since the Company's reconstruction, the
Directors have asked John Hawkins to continue to serve on the Board
until the AGM in 2021. I am delighted that John has accepted this
offer and will therefore stand for re-election at the AGM.
Outlook
Despite concerns over the outlook for global growth, corporate
earnings, tensions in the Middle East, and trade-war uncertainties,
your Investment Manager remains positive about the prospects for
emerging markets. Although there are signs of the global economy
weakening, growth forecasts remain respectable, and should be
supported by the continued accommodative stance of central banks
and progress in the trade dispute between the US and China. At the
time of writing, the spread of the Coronavirus is causing same
volatility in markets. How long this continues is uncertain, as is
the quantum of its potential knock-on impact.
Your Investment Manager continues to refine the Company's
portfolio towards those markets with the most compelling
fundamentals in terms of value, growth and quality. The Board
believes that this, together with the Company's approach of
investing through a portfolio of specialist funds run by talented
managers with strong investment propositions, provides an
attractive means for investors to benefit from the longer term
investment opportunity in emerging markets.
Mark Hadsley-Chaplin
Chairman
12 February 2020
Investment Manager's Report
During the financial year, the Company's NAV total return per
Ordinary share was 14.1% while the MSCI Emerging Markets Net Total
Return Index (the "Benchmark") rose by 10.3%. The Ordinary share
price total return was 13.2%, as the discount to NAV at which the
Company's Ordinary shares trade widened to 15.4% from 14.3% at the
start of the financial year.
Relative performance over the period was good, with the
Company's NAV outperforming the benchmark index by 3.8%. Fund
selection, asset allocation and discount narrowing all made a
positive contribution, as outlined in the table below. Fund
selection was particularly strong in China, where the Company's
investments in Neuberger Berman China Equity Fund and Aberdeen
Standard China A Share Equity Fund performed strongly, benefitting
in both instances from a high conviction, research intensive stock
picking strategy. Investment trusts with a global emerging markets
or Asian remit also added value (Genesis Emerging Markets Fund, JP
Morgan Emerging Markets Investment Trust, Schroder AsiaPacific
Fund, Asia Dragon Trust). QIC GCC Equity Fund, which invests
primarily in Saudi Arabia, Qatar and the United Arab Emirates, was
purchased in January and delivered healthy gains over the remainder
of the period. It was also pleasing to see a strong year in both
absolute and relative terms from Schroder Taiwanese Equity Fund.
Outside of Asia, the portfolio's investments in Eastern Europe
fared less well in relative terms, largely as a consequence of
investments in Russia failing to match the market's 32.5%
rally.
The primary driver of outperformance from asset allocation was
positioning in the Europe, Middle East and Africa region, with the
overweight in Russia and underweight in South Africa both proving
beneficial. During the period the Company's revolving credit
facility was fully drawn the majority of the time, enhancing
overall performance.
The contribution from narrowing discounts on closed end fund
investments was led by BlackRock Emerging Europe plc, which was
trading on a 5.3% discount at the start of the period but returned
capital at NAV less costs in December 2018, enabling the Company to
fully exit its holding. Other significant contributions were made
by holdings in BlackRock Latin American Investment Trust and
JPMorgan Emerging Markets Investment Trust whose discounts narrowed
alongside strong NAV performance.
NAV performance attribution for the year ended 31 October
2019
Fund Selection 0.8%
========================= ======
Asia 1.7%
EMEA (0.9%)
Latin America (0.0%)
========================= ======
Asset Allocation 1.6%
========================= ======
Asia 0.0%
EMEA 1.1%
Latin America 0.0%
Cash/Gearing (direct and
underlying) 0.5%
========================= ======
Discount Narrowing 2.4%
========================= ======
Fees and Expenses (1.0%)
========================= ======
NAV outperformance* 3.8%
========================= ======
* The above analysis has been prepared on a total return
basis.
Market Environment
The year under review was a positive one for investors in
emerging market equities, with the MSCI Emerging Markets Index
gaining 10.3% in total return terms. Volatility was a regular
feature, with three significant market retractions over the year as
investors reacted to developments in the US-China trade war,
weakening global economic data and the direction of monetary
policy. While emerging markets outperformed developed markets for
much of the year, the overall return was very similar, with the
MSCI World Index up 11.2% over the period.
Asia was the best performing region, gaining 11.2% as China,
India and Taiwan all delivered double digit returns. Chinese
equities gained 11.4%, with market direction correlating closely
with developments in the trade dispute with the US. After several
false dawns, the outline of a "Phase One" deal was agreed in
October 2019. China also benefitted from index provider MSCI's
decision to increase the weighting of domestically traded A-Shares
in local and regional indices during the period. Indian equities
rose by 15.9%. The key event in that market was the general
election, which saw the incumbent BJP deliver a resounding victory
in May that helped the market shrug off a somewhat lacklustre
economic outlook. Taiwan was a prime beneficiary of the improved
news flow on the trade war in the final weeks of the period and a
more optimistic demand outlook for the technology components sector
which dominates that market.
The Europe, Middle East and Africa regional index rose by 9.7%.
Russia was responsible for a significant part of that gain as its
market appreciated by 32.5%, benefitting from its relative immunity
from trade war concerns, depressed valuations and a sharp rally in
Gazprom's share price after a surprise doubling of its dividend in
May. Turkey endured a volatile year with domestic politics and
concerns about the direction of monetary policy impacting the value
of the Turkish Lira. The market declined sharply in the final month
of the period following Turkey's incursion into Syria and the US
imposition of sanctions in response, although it still posted a
gain of 7.9% for the overall period. South African equities rose by
6.9% despite a weak economic picture amidst ongoing electricity
outages and financial uncertainty at power utility Eskom.
Latin America was the weakest region, gaining just 6.3% despite
a strong recovery in Brazil, the largest regional market, which
rose by 11.7%. This was largely a consequence of a change in
political direction as President Bolsonaro took office in January
with a policy agenda pledging to tackle political corruption, clamp
down on crime and deliver social security and tax reform. A
significant pension reform bill was approved by the senate in
October. Mexico delivered a return of 5.7% despite concerns about
the policy direction under President López Obrador's administration
and a somewhat testing relationship with the US over migration.
Elsewhere in the region, Chile fell sharply in the final weeks of
the year to post a return of -16.8% amidst a wave of
anti-government protests over equality, pensions, healthcare and
education. Argentina had an eventful year, rejoining the emerging
markets index at the end of May (alongside Saudi Arabia) but
falling sharply as opposition leader Alberto Fernandez's victory in
October's presidential election led investors to fear that a return
to left wing populist policies may be imminent. Over the year as a
whole the Argentinian market declined 35.2%.
Portfolio
Our portfolio construction process seeks to deliver a focused
list of actively managed holdings run by talented investment teams.
We continually review the list of funds to which we have entrusted
the Company's capital and changes are made when we identify what we
consider to be superior managers, our asset allocation views change
or a discount opportunity in a closed end fund presents itself or
has played out. The period under review was one in which there was
a reasonable amount of activity in the portfolio consistent with
the above themes.
New positions were initiated in several open ended funds to
provide actively managed exposure to Middle Eastern equities (QIC
GCC Equity Fund), the China A Share market (Aberdeen Standard China
A Share Equity Fund) and frontier market debt (Aberdeen Standard
Frontier Markets Bond Fund). QIC GCC Equity Fund is a best in class
gulf-focused vehicle managed by an experienced investment team
based in Qatar which provides significant exposure to Saudi Arabia,
Kuwait and the United Arab Emirates. We believe markets in the
region are attractively valued and are currently largely overlooked
by international investors despite growing relevance within the
Benchmark following recent index inclusions.
The investment in Aberdeen Standard China A Share Equity Fund
was initiated in February, when concerns around US-China trade
tensions were rife and valuations had declined to extreme levels.
This proved a well-timed entry point. The fund invests in a
concentrated portfolio of high quality, reasonably valued A Share
companies with a focus on strong governance.
Frontier markets bonds have many attractions in the current
environment given the uncertainty around global growth and the
potential ongoing "easy" monetary policy in the US and much of the
emerging world. The Aberdeen Standard Frontier Markets Bond Fund is
one of a small number of dedicated vehicles globally and adds to
portfolio diversification at the country level, while potentially
offering equity like returns with bond like volatility. The fund
invests over half its assets in hard currency sovereign bonds with
the remainder allocated to hard currency corporate and local
currency sovereign bonds. The fund's 8.4% yield represents a
significant spread over emerging market debt. While the portfolio
is highly diversified, key country exposures include Egypt,
Nigeria, Ecuador, El Salvador and the Ivory Coast. As with all
investments into "in-house" managed funds, there is no double
charging of fees on the China A Share or Frontier Markets Bond
Fund.
There were also several new additions within the closed end fund
portion of the portfolio. As discussed in the Company's half yearly
report, positions in Aberdeen New India Investment Trust and
JPMorgan Indian Investment Trust were initiated at attractive
discounts following significant underperformance of the Indian
market relative to other emerging markets as pre-election nerves
weighed on sentiment in early 2019. The JPMorgan managed vehicle
had in place a performance driven tender offer for 25% of
outstanding shares that was triggered at the end of September and
we expect the tender to be completed in February.
In July, we initiated a new position in Gulf Investment Fund, a
closed end Middle Eastern equity fund trading in London at a double
digit discount to net asset value. In addition to being supported
by the same top-down case as the QIC GCC Equity Fund investment,
Gulf Investment Fund offers the potential upside of a full exit
opportunity in 2020. We also accumulated a holding in Aberdeen
Asian Income Fund over the year at an average discount of close to
8.0%. We view this as anomalous relative to its peers. Elsewhere,
we made a significant addition to the existing position in Fondul
Proprietatea, a deeply discounted Romanian closed end fund.
Corporate actions in a number of underlying holdings were a
valuable source of funds for these purchases. These included a full
exit from BlackRock Emerging Europe plc and tender offers at China
Fund Inc and Edinburgh Dragon Trust (later renamed Asia Dragon
Trust). In the latter two cases we were able to exit over 40% of
the Company's holdings at a material uplift to the prevailing
price.
Sales of market access products (such as exchanged traded funds)
in Turkey, Saudi Arabia, South Korea and emerging markets debt
provided additional sources of liquidity, the net result being that
more of the portfolio is now managed on an active basis. The most
significant open ended fund sale was the redemption of Steyn
Capital South Africa Equity Fund, based on a deteriorating outlook
for that market combined with a disappointing spell of
performance.
The Company's geographic allocation is shown in the Annual
Report and Accounts. The activity described above resulted in a
meaningful increase in the Chinese and Indian allocations (to 29.6%
and 7.4% respectively) while those of South Korea and Taiwan
declined by several percentage points to 10.7% and 8.8%
respectively. The corporate action in BlackRock Emerging Europe plc
contributed to a decline in Russia's weighting to 6.5%. South
Africa saw a meaningful decrease to just 0.6% while the Middle
Eastern markets of Saudi Arabia, United Arab Emirates and Qatar
rose to 2.4%, 1.2% and 1.0% respectively. In Latin America,
Brazil's allocation increased to 6.6% largely as a consequence of a
rotation in underlying exposure within the portfolio's core Latin
American holding. We continue to believe that many frontier markets
offer compelling valuations as they remain overlooked by mainstream
emerging market investors. At the end of the period 11.8% of NAV
was allocated to frontier markets, including Romania, Nigeria and
Kenya.
The weighted average discount to NAV of the Company's closed end
holdings stood at 10.3% at the end of the period, a level that was
virtually unchanged on the prior period. This reflects the
reinvestment of corporate action proceeds into new ideas at
attractive discounts.
The allocation to funds managed by Aberdeen Standard Investments
increased from 2.9% to 11.9% of net assets over the year. This is a
trend we expect to continue, subject to us identifying in-house
managed strategies that we believe can help us deliver the
Company's investment objective. The lack of double-charging on
in-house managed funds is a potentially valuable tool in making the
Company as cost-effective as possible in an environment where this
is increasingly a concern for investors. All investments in
"in-house" products are subject to the same in-depth diligence as
external funds and a rigorous conflicts of interest procedure.
The overall composition of the portfolio by type of vehicle is
shown below. The allocations to both open and closed ended funds
increased modestly as we exited a number of market access products.
The Company's revolving credit facility was fully drawn at the end
of the period, representing net gearing of 8.0%.
October 2019 October 2018
================================ ============
Closed ended investment
funds 50.1% 48.6%
======================== ====== ============
Open ended investment
funds 56.3% 53.1%
======================== ====== ============
Market access products 1.4% 5.3%
======================== ====== ============
Cash plus other net
current assets (7.8%) (7.0%)
======================== ====== ============
Market Outlook
Despite the emerging markets index posting a gain of 10.3%, the
investment backdrop became more challenging over the course of the
year with investors increasingly focused on concerns about the
outlook for global growth and trade war uncertainties. Corporate
earnings and economic growth forecasts across the emerging world
were generally revised down as the period progressed.
While the global economy is weaker than historical averages,
growth remains respectable, with the IMF, OECD and World Bank
forecasting real growth in 2020 in the range of 2.8% to 3.4% and a
generally improving trend through 2021. Although there are risks to
these forecasts we feel they are reasonable given the accommodative
stance of central banks and signs of a truce in the trade war
between the US and China following the recent signing of the "Phase
one" trade deal and, as a result, the US suspending previously
announced tariff increases. China will significantly increase its
purchase of US agricultural products over the next two years. China
has also indicated that it will accelerate the opening of its
financial sector. Nonetheless, we will need to watch the tone of
further negotiations closely, particularly as the US presidential
election campaign develops and candidates potentially vie to be
"tough on China".
While 2019 was undoubtedly a poor year for corporate earnings in
emerging markets, with persistent downward revisions throughout the
period, the coming year may well offer a better environment.
Consensus expectations of 15.1% growth for 2020 appear somewhat
high but double digit growth may well be achievable if the economic
outlook and trade war truce can be sustained. As for valuations,
while emerging markets are not outstandingly cheap compared with
their history, they are trading on undemanding multiples (12.2
times forward earnings at the time of writing) relative to
developed markets as a whole.
Emerging market equity is an unloved asset class at present,
held back by negative sentiment and low expectations. The average
global investor remains significantly underweight and over the
course of 2019 global and regional emerging market equity funds saw
only modest inflows of US$4.1 billion, much of which came in the
final weeks of the year. Anecdotally, we see a withdrawal by
investors from single country funds and those regions now deemed to
be marginal when compared with Asia, which is perceived as the most
defensive emerging market region. This has been to the detriment of
frontier markets, Latin America and Eastern Europe. We believe the
long term prospects in many of these markets are as good, if not
better, than those of Asia. This is reflected in the Company's
current asset allocation.
A prerequisite for emerging markets to begin delivering relative
outperformance of developed markets again is a weakening, or at
least a consolidation, of the US dollar. The last year has shown
tentative signs that this is possible, although these signs have
not been sufficiently strong to prompt any meaningful rotation in
investor allocations.
At the time of writing, investors remain focused on the
developing Coronavirus situation to the exclusion of other factors.
While the situation is still evolving, our expectation is that it
will be short-lived and the effects of this unfortunate event will
have no lasting impact on either economic activity or stock
markets. We will of course continue to assess the situation as it
develops and remain ready to act as necessary.
As for the portfolio, we continue to refine the Company's
focused list of holdings with a bias towards those markets with the
most compelling fundamentals in terms of value, growth and quality.
The current portfolio provides exposure to some of the most
talented managers operating in emerging markets. Amongst the closed
ended investments we increasingly focus on defined catalysts to
unlock additional value from discounts to net asset value.
Underlying fee levels continue to be an area of focus and we have
endeavoured to lower those where possible in recent years while
maintaining the quality of the portfolio. That focus on costs will
continue. We believe the Company is well placed to benefit from any
recovery in interest in the asset class and its portfolio offers
differentiated and diversified exposure to emerging markets that is
not easily replicated.
Aberdeen Asset Managers Limited
12 February 2020
Principal Risks and Uncertainties
Together with the issues discussed in the Chairman's Statement
and the Investment Manager's Report, the Board considers that the
main risks and uncertainties faced by the Company fall into the
following categories:
(i) General Market Risks Associated with the Company's
Investments
Changes in economic conditions, interest rates, foreign exchange
rates and inflationary pressures, industry conditions, competition,
political and diplomatic events, tax, environmental and other laws
and other factors can substantially and either adversely or
favourably affect the value of the securities in which the Company
invests and, therefore, the Company's performance and
prospects.
The Company's investments are subject to normal market
fluctuations and the risks inherent in the purchase, holding or
selling of securities, and there can be no assurance that
appreciation in the value of those investments will occur. There
can be no guarantee that any realisation of an investment will be
on a basis which necessarily reflects the Company's valuation of
that investment for the purposes of calculating the NAV.
The Company's investments, although not made into developed
economies, are not entirely sheltered from the negative impact of
economic slowdowns, decreasing consumer demands and credit
shortages in such developed economies which, amongst other things,
affects the demand for the products and services offered by the
companies in which the Company directly or indirectly invests.
A proportion of the Company's portfolio may be held in cash or
cash equivalent investments from time to time. Such proportion of
the Company's assets will be out of the market and will not benefit
from positive stock market movements, but may give some protection
against negative stock market movements.
(ii) Emerging Markets
The funds selected by the Investment Manager invest in emerging
markets. Investing in emerging markets involves certain risks and
special considerations not typically associated with investing in
other more established economies or securities markets. In
particular there may be: (a) the risk of nationalisation or
expropriation of assets or confiscatory taxation; (b) social,
economic and political uncertainty including war and revolution;
(c) dependence on exports and the corresponding importance of
international trade and commodities prices; (d) less liquidity of
securities markets; (e) currency exchange rate fluctuations; (f)
potentially higher rates of inflation (including hyper- inflation);
(g) controls on foreign investment and limitations on repatriation
of invested capital and a fund manager's ability to exchange local
currencies for pounds sterling; (h) a higher degree of governmental
involvement and control over the economies; (i) government
decisions to discontinue support for economic reform programmes and
imposition of centrally planned economies; (j) differences in
auditing and financial reporting standards which may result in the
unavailability of material information about economies and issuers;
(k) less extensive regulatory oversight of securities markets; (l)
longer settlement periods for securities transactions; (m) less
stringent laws regarding the fiduciary duties of officers and
directors and protection of investors; and (n) certain consequences
regarding the maintenance of portfolio securities and cash with
sub-custodians and securities depositories in developing
markets.
(iii) Other Portfolio Specific Risks
(a) Small cap stocks
The underlying investee funds selected by the Investment Manager
may have significant investments in smaller to medium sized
companies of a less seasoned nature whose securities are traded in
an "over-the-counter" market. These "secondary" securities often
involve significantly greater risks than the securities of larger,
better-known companies, due to shorter operating histories,
potentially lower credit ratings and, if they are not listed
companies, a potential lack of liquidity in their securities. As a
result of lower liquidity and greater share price volatility of
these "secondary" securities, there may be a disproportionate
effect on the value of the investee funds and, indirectly, on the
value of the Company's portfolio.
(b) Liquidity of the portfolio
The fact that a share is traded does not guarantee its liquidity
and the Company's investments may be less liquid than other listed
and publicly traded securities. The Company may invest in
securities that are not readily tradable or may accumulate
investment positions that represent a significant multiple of the
normal trading volumes of an investment, which may make it
difficult for the Company to sell its investments. Investors should
not expect that the Company will necessarily be able to realise its
investments within a period which they would otherwise regard as
reasonable, and any such realisations that may be achieved may be
at a considerably lower price than prevailing indicative market
prices. The Company has a borrowing facility in place which may be
utilised to assist in the management of liquidity. The borrowing
facility is described later in this Directors' Report.
Liquidity of the portfolio is further discussed in note 17 of
the Annual Report and Accounts.
(c) Foreign exchange risks
It is not the Company's present policy to engage in currency
hedging. Accordingly, the movement of exchange rates between
sterling and the other currencies in which the Company's
investments are denominated or its borrowings are drawn down may
have a material effect, unfavourable or favourable, on the returns
otherwise experienced on the investments made by the Company.
Movements in the foreign exchange rate between sterling and the
currency applicable to a particular shareholder may have an impact
upon that shareholder's returns in their own currency of
account.
Management or mitigation of the above risks
Risk Management or mitigation
of risk
General market risks associated These risks are largely a
with the Company's investments consequence of the Company's
investment strategy but the
Investment Manager attempts
to mitigate such risks by
maintaining an appropriately
diversified portfolio by
number of holdings, fund
structure, geographic focus,
investment style and market
capitalisation focus.
Liquidity, risk and exposure
measures are produced on
a monthly basis by the Investment
Manager and monitored against
internal limits.
-----------------------------------
Emerging markets
-----------------------------------
Other portfolio specific
risks
(a) Small cap stock
(b) Liquidity of the portfolio
(c) Foreign exchange
-----------------------------------
The investment management of the Company has been delegated to
the Company's Investment Manager. The Investment Manager's
investment process takes into account the material risks associated
with the Company's portfolio and the markets and holdings in which
the Company is invested. The Board monitors the portfolio and the
performance of the Investment Manager at regular Board
meetings.
(iv) Internal Risks
Poor allocation of the Company's assets to both markets and
investee funds by the Investment Manager, poor governance,
compliance or administration, including poor controls over cyber
security, could result in shareholders not making acceptable
returns on their investment in the Company.
Management or mitigation of internal risks
The Board monitors the performance of the Manager and the other
key service providers at regular Board meetings. The Manager
provides reports to the Board on compliance matters and the
Administrator provides reports to the Board on compliance and other
administrative matters. The Board has established various
committees to ensure that relevant governance matters are addressed
by the Board.
The management or mitigation of internal risks is described in
detail in the Corporate Governance Statement in the Annual Report
and Accounts.
Statement of Directors' Responsibilities in Respect of the
Annual Report and Accounts
The Directors are responsible for preparing the Annual Report
and Accounts in accordance with applicable law and regulations.
Guernsey company law requires the Directors to prepare financial
statements for each financial year. The Directors have elected to
prepare the financial statements in accordance with International
Financial Reporting Standards as issued by the IASB and applicable
law.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of its profit or
loss for that period. In preparing these financial statements, the
directors are required to:
-- select suitable accounting policies and then apply them
consistently;
-- make judgements and estimates that are reasonable, relevant
and reliable;
-- state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements;
-- assess the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern;
and
-- use the going concern basis of accounting unless they either
intend to liquidate the Company or to cease operations, or have no
realistic alternative but to do so.
The Directors are responsible for keeping proper accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
its financial statements comply with the Companies (Guernsey) Law,
2008. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the
Company and to prevent and detect fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website, but not for the content of any information
included on the website that has been prepared or issued by third
parties. Legislation in Guernsey governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
Disclosure of Information to the Auditor
The Directors who held office at the date of approval of this
Directors' Report confirm that, so far as they are each aware,
there is no relevant audit information of which the Company's
auditor is unaware; and each Director has taken all the steps that
they ought to have taken as a Director to make themselves aware of
any relevant audit information and to establish that the Company's
auditor is aware of that information.
Responsibility Statement of the Directors in Respect of the
Annual Financial Report
We confirm that to the best of our knowledge:
the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company; and the Management Report (comprising the
Chairman's Statement, the Investment Manager's Report and the
Directors' Report) includes 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 it faces.
The Board considers that the Annual Report and Accounts, taken
as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company's
position and performance, business model and strategy.
Helen Green
Director
William Collins
Director
12 February 2020
Statement of Comprehensive Income
Year ended 31 October Year ended 31 October
2019 2018
======================================= ================================ ================================
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
====================================== ======== ======== ============ ======== ========== ==========
Gains/(losses) on investments
at fair value
======== ======== ============ ======== ========== ==========
through profit or loss - 37,730 37,730 - (41,807) (41,807)
======================================= ======== ======== ============ ======== ========== ==========
Losses on currency movements - (392) (392) - (157) (157)
======================================= ======== ======== ============ ======== ========== ==========
Net investment gains/(losses) - 37,338 37,338 - (41,964) (41,964)
======================================= ======== ======== ============ ======== ========== ==========
Investment income 4,861 - 4,861 5,019 - 5,019
======================================= ======== ======== ============ ======== ========== ==========
4,861 37,338 42,199 5,019 (41,964) (36,945)
======================================= ======== ======== ============ ======== ========== ==========
Investment management fee (2,331) - (2,331) (2,515) - (2,515)
======================================= ======== ======== ============ ======== ========== ==========
Other expenses (883) - (883) (886) - (886)
======================================= ======== ======== ============ ======== ========== ==========
Operating profit/(losses) before
finance costs and taxation 1,647 37,338 38,985 1,618 (41,964) (40,346)
======================================= ======== ======== ============ ======== ========== ==========
Finance costs (315) - (315) (312) - (312)
======================================= ======== ======== ============ ======== ========== ==========
Operating profit/(losses) before
taxation 1,332 37,338 38,670 1,306 (41,964) (40,658)
======================================= ======== ======== ============ ======== ========== ==========
Withholding tax expense (223) - (223) (326) - (326)
======================================= ======== ======== ============ ======== ========== ==========
Profit/(loss) and total comprehensive
income for the year 1,109 37,338 38,447 980 (41,964) (40,984)
======================================= ======== ======== ============ ======== ========== ==========
Earnings per Ordinary share 2.41p 81.17p 83.58p 2.03p (86.83p) (84.80p)
======================================= ======== ======== ============ ======== ========== ==========
The total column of this statement represents the Company's
Statement of Comprehensive Income, prepared under IFRS. The revenue
and capital columns, including the revenue and capital earnings per
share data, are supplementary information prepared under guidance
published by the Association of Investment Companies.
All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued
during the year.
The notes form part of these financial statements.
Statement of Financial Position
As at 31 As at 31
October October
2019 2018
GBP'000 GBP'000
======================================= ================ ================
Non-current assets
Investments at fair value through
profit or loss 328,713 295,601
======================================= ================ ================
Current assets
Cash and cash equivalents 1,190 1,037
Sales for future settlement 72 -
Other receivables 350 297
======================================= ================ ================
1,612 1,334
======================================= ================ ================
Total assets 330,325 296,935
======================================= ================ ================
Current liabilities
Purchases for future settlement (104) -
Other payables (344) (351)
Finance costs payable - (28)
Bank loan payable (25,000) (20,000)
======================================= ================ ================
Total liabilities (25,448) (20,379)
======================================= ================ ================
Net assets 304,877 276,556
======================================= ================ ================
Equity
Share capital 149,616 150,082
Capital reserve 161,204 132,546
Revenue reserve (5,943) (6,072)
======================================= ================ ================
Total equity 304,877 276,556
======================================= ================ ================
Net assets per Ordinary share 663.28p 600.59p
======================================= ================ ================
Approved by the Board of Directors and authorised for issue on
12 February 2020.
Helen Green - Director
William Collins - Director
The notes form part of these financial statements.
Statement of Changes in Equity
Revenue
Share capital Capital reserve reserve Total
For the year ended 31 October GBP'000 GBP'000 GBP'000 GBP'000
2019
================================ ================ ================= ======== =========
Balance at 1 November 2018 150,082 132,546 (6,072) 276,556
Profit for the year - 37,338 1,109 38,447
Dividends paid - (8,680) (980) (9,660)
Share buybacks (466) - - (466)
================================= ================ ================= ======== =========
Balance at 31 October 2019 149,616 161,204 (5,943) 304,877
================================= ================ ================= ======== =========
Revenue
Share capital Capital reserve reserve Total
For the year ended 31 October GBP'000 GBP'000 GBP'000 GBP'000
2018
================================ ================ ================= ======== =========
Balance at 1 November 2017 183,930 184,593 (7,052) 361,471
Loss for the year - (41,964) 980 (40,984)
Dividends paid - (10,083) - (10,083)
Tender offer (33,413) - - (33,413)
Tender offer costs (254) - - (254)
Share buybacks (181) - - (181)
================================== ================ ================= ======== =========
Balance at 31 October 2018 150,082 132,546 (6,072) 276,556
================================== ================ ================= ======== =========
The Company's distributable reserves comprise; the Capital
reserve attributable to realised profits and the Revenue
reserve.
The notes form part of these financial statements.
Statement of Cash Flow
Year ended Year ended
31 October 31 October
2019 2018
GBP'000 GBP'000
====================================================== =========== ===========
Operating activities cash flows
Cash inflow from investment income and other
income 4,830 4,908
Cash outflow from management expenses (3,243) (3,407)
Cash inflow from disposal of investments* 110,609 73,523
Cash outflow from purchase of investments* (105,959) (27,668)
Cash outflow from withholding tax (223) (326)
====================================================== =========== ===========
Net cash flow from operating activities 6,014 47,030
====================================================== =========== ===========
Financing activities cash flows
Proceeds from/(repayment of) bank borrowings 5,000 (5,000)
Borrowing commitment fee and interest
charges (343) (319)
Dividend paid (9,660) (10,083)
Tender offer and associated costs - (33,667)
Share buybacks (466) (181)
====================================================== =========== ===========
Net cash flow used in financing activities (5,469) (49,250)
====================================================== =========== ===========
Net increase/(decrease) in cash and cash equivalents 545 (2,220)
====================================================== =========== ===========
Effect of foreign exchange (392) (157)
Cash and cash equivalents at start of the
year 1,037 3,414
====================================================== =========== ===========
Cash and cash equivalents at end of the year 1,190 1,037
====================================================== =========== ===========
* Receipts from the disposal and purchase of investments have
been classified as components of cash flow from/(used in) operating
activities because they form part of the Company's operating
activities.
The notes form part of these financial statements.
Notes to the Financial Statements For the Year Ended 31 October
2019
1. Reporting entity
Aberdeen Emerging Markets Investment Company Limited (the
"Company") is a closed-ended investment company, registered in
Guernsey on 16 September 2009. The Company's registered office is
11 New Street, St Peter Port, Guernsey, GY1 2PF. The Company's
shares have a premium listing on the London Stock Exchange and
commenced trading on 10 November 2009. The Company changed its name
to Aberdeen Emerging Markets Investment Company Limited on 14 April
2016. The financial statements of the Company are presented for the
year ended 31 October 2019.
The Company invests in a portfolio of funds and products which
give diversified exposure to developing and emerging markets
economies with the objective of achieving consistent returns for
shareholders in excess of the MSCI Emerging Markets Net Total
Return Index in sterling terms.
Manager
The investment activities of the Company were managed by
Aberdeen Standard Fund Managers Limited ("ASFML") during the year
ended 31 October 2019.
Non-mainstream pooled investments ("NMPIs")
The Company currently conducts its affairs so that the shares
issued by the Company can be recommended by Independent Financial
Advisers to ordinary retail investors in accordance with the
Financial Conduct Authority's rules in relation to NMPIs and
intends to continue to do so for the foreseeable future.
2. Basis of preparation
(a) Statement of compliance
The financial statements, which give a true and fair view, have
been prepared in accordance with International Financial Reporting
Standards ("IFRS") and are in compliance with the Companies
(Guernsey) Law, 2008. There were no changes in the accounting
policies of the Company in the year to 31 October 2019.
Where presentational guidance set out in the Statement of
Recommended Practice ("SORP") for Investment Companies issued by
the Association of Investment Companies ("AIC") in October 2019 is
consistent with the requirements of IFRS, the directors have sought
early adoption of the SORP and to prepare the financial statements
on a basis compliant with the recommendations of the SORP.
The total column of the Statement of Comprehensive Income is the
profits or loss account of the Company. The "Capital" and "Revenue"
columns provide supplementary information.
The financial statements were approved and authorised for issue
by the Board on 12 February 2020.
This report will be sent to shareholders and copies will be made
available to the public at the Company's registered office It will
also be made available on the Company's website:
aberdeenemergingmarkets.co.uk.
(b) Going concern
The Directors have adopted the going concern basis in preparing
the financial statements. The Board formally considered the
Company's going concern status at the time of the publication of
these financial statements and a summary of the assessment is
provided below.
At the AGM held in April 2018, a resolution was approved by
shareholders that the Company will continue in existence in its
current form until the AGM to be held in 2023.
The Directors believe that the Company has adequate resources to
continue in operational existence for at least 12 months from the
date of approval of this document. In reaching this conclusion, the
Directors have considered the liquidity of the Company's portfolio
of investments as well as its cash position, income and expense
flows.
As at 31 October 2019, the Company held GBP1.2 million in cash
and GBP328.7 million in investments. It is estimated that
approximately 75% of the investments held at the year end could be
realised in one month. The total operating expenses for
the year ended 31 October 2019 were GBP3.2 million, which
represented approximately 1.07% of average net assets during
the
year. The Company also incurred GBP0.3 million of finance costs.
At the date of approval of this report, based on the aggregate of
investments and cash held, the Company has substantial operating
expenses cover.
The Company has a GBP25 million revolving loan facility with
RBSI, maturing on 29 March 2020. The Company has commenced
discussions with RBSI and the Board expects to renew the facility
on similar terms when it matures. As at 31 October 2019, GBP25
million was drawn down from the RBSI facility. The liquidity of the
Company's portfolio, as mentioned above, sufficiently supports the
Company's ability to repay its borrowings at short notice.
The Directors are satisfied that it is appropriate to adopt the
going concern basis in preparing the financial statements and,
after due consideration, that the Company is able to continue in
operation for a period of at least 12 months from the date of
approval of these financial statements.
(c) Basis of measurement
The financial statements have been prepared on the historical
cost basis except for investments held at fair value through profit
or loss which are measured at fair value.
(d) Functional and presentation currency
The Company's investments are denominated in multiple
currencies. However, the Company's shares are issued in GBP
sterling and the majority of its investors are UK based. Therefore,
the financial statements are presented in sterling, which is the
Company's functional currency. All financial information presented
in sterling has been rounded to the nearest thousand pounds.
(e) Capital reserve
Profits achieved by selling investments and changes in fair
value arising upon the revaluation of investments that remain in
the portfolio are all charged to profits or loss in the capital
column of the Statement of Comprehensive Income and allocated to
the capital reserve. The Capital reserve is also used to fund
dividend distributions.
(f) Revenue reserve
The balance of all items allocated to the revenue column of the
Statement of Comprehensive Income in each year is transferred to
the Company's revenue reserve. The revenue reserve is also used to
fund dividend distributions.
(g) Use of estimates, assumptions and judgements
The preparation of the financial statements in conformity with
IFRS requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
Use of estimates and assumptions
Estimates and underlying assumptions are reviewed on an on-going
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in future periods
affected.
Information about significant areas of estimation uncertainty
and critical judgements in applying accounting policies that have
the most significant effect on the amounts recognised in the
financial statements are described below.
Classification and valuation of investments
Investments are designated as fair value through profit or loss
on initial recognition and are subsequently measured at fair value.
The valuation of such investments requires estimates and
assumptions made by the management of the Company depending on the
nature of the investments as described in note 3 (a) and fair value
may not represent actual realisable value for those
investments.
Allocation of investments to fair value hierarchy
IFRS requires the Company to measure fair value using the
following fair value hierarchy that reflects the significance of
the inputs used in making the measurements. IFRS establishes a fair
value hierarchy that prioritises the inputs to valuation techniques
used to measure fair value. The hierarchy gives the highest
priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements). The
three levels of fair value hierarchy under IFRS are as follows:
Level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities;
Level 2 - inputs other than quoted prices included within level
1 that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from prices);
and
Level 3 - inputs for the asset or liability that are not based
on observable market data (that is, unobservable inputs).
The level in the fair value hierarchy within which the fair
value measurement is categorised in its entirety is determined on
the basis of the lowest level input that is significant to the fair
value measurement in its entirety. For this purpose, the
significance of an input is assessed against the fair value
measurement in its entirety. If a fair value measurement uses
observable inputs that require significant adjustment based on
unobservable inputs, that measurement is a Level 3 measurement.
Assessing the significance of a particular input to the fair value
measurement in its entirety requires judgement, considering factors
specific to the asset or liability.
Use of judgements
The determination of what constitutes 'observable' requires
significant judgement by the Company. The Company considers
observable data to be that market data that is readily available,
regularly distributed or updated, reliable and verifiable not
proprietary and provided by independent sources that are actively
involved in the relevant market.
3. Significant accounting policies
(a) Investments
As the Company's business is investing in financial assets with
a view to profit from their total return in the form of increases
in fair value, financial assets are designated as fair value
through profit or loss on initial recognition. These investments
are recognised on the trade date of their acquisition at which the
Company becomes a party to the contractual provisions of the
instrument. At this time, the best evidence of the fair value of
the financial assets is the transaction price. Transaction costs
that are directly attributable to the acquisition or issue of the
financial assets are charged to profit or loss in the Statement of
Comprehensive Income as a capital item. Subsequent to initial
recognition, investments designated as fair value through profit or
loss are measured at fair value with changes in their fair value
recognised in profit or loss in the Statement of Comprehensive
Income and determined by reference to:
i) investments quoted or dealt on recognised stock exchanges in
an active market are valued by reference to their market bid
prices;
ii) investments other than those in i) above which are dealt on
a trading facility in an active market are valued by reference to
broker bid price quotations, if available, for those
investments;
iii) investments in underlying funds, which are not quoted or
dealt on a recognised stock exchange or other trading facility or
in an active market, are valued at the net asset values provided by
such entities or their administrators. These values may be
unaudited or may themselves be estimates and may not be produced in
a timely manner. If such information is not provided, or is
insufficiently timely, the Investment Manager uses appropriate
valuation techniques to estimate the value of investments. In
determining fair value of such investments, the Investment Manager
takes into consideration the relevant issues, which may include the
impact of suspension, redemptions, liquidation proceedings and
other significant factors. Any such valuations are assessed and
approved by the Directors. The estimates may differ from actual
realisable values;
iv) investments which are in liquidation are valued at the
estimate of their remaining realisable value; and
v) any other investments are valued at the directors' best estimate of fair value.
Transfers between levels of the fair value hierarchy are
recognised as at the end of the reporting period during which the
change has occurred.
Investments are derecognised on the trade date of their
disposal, which is the point where the Company transfers
substantially all the risks and rewards of the ownership of the
financial asset. Gains or losses are recognised in profit or loss
in the capital column of the Statement of Comprehensive Income. The
Company uses the weighted average cost method to determine realised
gains and losses on disposal of investments.
(b) Foreign currency
Transactions in foreign currencies are translated into sterling
at the exchange rate at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the
reporting date are retranslated into sterling at the spot exchange
rate at that date. Non-monetary assets and liabilities denominated
in foreign currencies that are measured at fair value through
profit or loss are retranslated into sterling at the exchange rate
at the date that the fair value was determined. Non-monetary assets
and liabilities that are measured in terms of historical cost in a
foreign currency are translated into sterling using the exchange
rate at the date of the transaction.
Foreign currency differences arising on retranslation are
recognised in profit or loss and, depending on the nature of the
gain or loss, are allocated to the revenue or capital column of the
Statement of Comprehensive Income. Foreign currency differences on
retranslation of financial instruments designated as fair value
through profit or loss are shown in the "Losses on currency
movements" line.
(c) Income from investments
Dividend income is recognised when the right to receive it is
established and is reflected in the Statement of Comprehensive
Income as Investment Income in the revenue column. For quoted
equity securities this is usually on the basis of ex-dividend
dates. For unquoted investments this is usually on the entitlement
date confirmed by the relevant holding. Income from bonds is
accounted for using the effective interest rate method.
Special dividends and distributions described as capital
distributions are assessed on their individual merits and may be
credited to the capital reserve if considered to be closely linked
to reconstructions of the investee company or other capital
transactions. Bank interest receivable is accounted for on a time
apportionment basis and is based on the prevailing variable
interest rates for the Company's bank accounts.
(d) Treasury shares
Where the Company purchases its own share capital, the
consideration paid, which includes any directly attributable costs,
is recognised as a deduction from equity shareholders' funds
through the Company's reserves. When such shares are subsequently
sold or re-issued to the market any consideration received, net of
any directly attributable incremental transaction costs, is
recognised as an increase in equity shareholders' funds through the
share capital account. Shares held in treasury are excluded from
calculations when determining NAV per share.
(e) Cash and cash equivalents
Cash comprises cash and demand deposits. Cash equivalents, which
include bank overdrafts, are short term, highly liquid investments
that are readily convertible to known amounts of cash, are subject
to insignificant risks of changes in value, and are held for the
purpose of meeting short-term cash commitments rather than for
investment or other purposes.
(f) Investment management fees and finance costs
Investment management fees and finance costs are charged to the
Statement of Comprehensive Income as a revenue item and are accrued
monthly in arrears. Finance costs include interest payable and
direct loan costs. Performance-related fees, if any, are payable
directly by reference to the capital performance of the Company and
are therefore charged to profit or loss in the Statement of
Comprehensive Income as a capital item.
(g) Financial liabilities
Financial liabilities (including bank loans) are classified
according to the substance of the contractual arrangements entered
into. Financial liabilities held at fair value through profit or
loss are measured initially at fair value, with transaction costs
recognised in profit or loss in the Statement of Comprehensive
Income.
(h) Taxation
The Company has exempt status under the Income Tax (Exempt
Bodies) (Guernsey) Ordinance 1989 and is charged an annual
exemption fee of GBP1,200 (2018: GBP1,200).
Dividend and interest income received by the Company may be
subject to withholding tax imposed in the country of origin. The
tax charges shown in profit or loss in the Statement of
Comprehensive Income relate to overseas withholding tax on dividend
income.
(i) Operating segments
IFRS 8, 'Operating segments' requires a 'management approach',
under which segment information is presented on the same basis as
that used for internal reporting purposes. The Board, as a whole,
has been determined as constituting the chief operating decision
maker of the Company. The Board has considered the requirements of
the standard and is of the view that the Company is engaged in a
single segment of business, which is investing in a portfolio of
funds and products which give exposure to developing and emerging
market economies. The key measure of performance used by the Board
is the Net Asset Value of the Company (which is calculated under
IFRS). Therefore no reconciliation is required between the measure
of profit or loss used by the Board and that contained in the
financial statements.
Further information on the Company's operating segment is
provided in note 19 of the Annual Report and Accounts.
(j) Offsetting
Financial assets and liabilities are offset and the net amount
presented in the Statement of Financial Position when, and only
when, the Company has a legal right to set off the recognised
amounts and it intends to either settle on a net basis or to
realise the asset and settle the liability simultaneously.
Income and expenses are only presented on a net basis when
permitted under IFRS.
(k) Structured entities
A structured entity is an entity that has been designed so that
voting or similar rights are not the dominant factor in deciding
who controls the entity, such as when any voting rights relate to
administrative tasks only and the relevant activities are directed
by means of contractual arrangements. A structured entity often has
some or all of the following features or attributes; (a) restricted
activities, (b) a narrow and well-defined objective, such as to
provide investment opportunities for investors by passing on risks
and rewards associated with the assets of the structured entity to
investors, (c) insufficient equity to permit the structured entity
to finance its activities without subordinated financial support
and (d) financing in the form of multiple contractually linked
instruments to investors that create concentrations of credit or
other risks.
The Company holds shares, units or partnership interests in the
funds or investment products presented on the Company's portfolio.
The Company does not consider its investments in listed funds to be
structured entities but does consider its investments in unlisted
funds to be investments in structured entities because the voting
rights in such entities are limited to administrative tasks and are
not the dominant factor in deciding who controls those
entities.
Changes in fair value of investments, including structured
entities, are included in profit or loss in the Statement of
Comprehensive Income.
(l) Dividend payable
Final dividends payable to equity shareholders are recognised in
the financial statements when they have been approved by
shareholders and become a liability of the Company. Interim
dividends payable are recognised in the period in which they are
paid. The capital and revenue reserve may be used to fund dividend
distributions.
(m) New standards and interpretations effective in the current
financial year
There are no new standards, interpretations or amendments, which
became effective during the year that have had a material impact on
the Company.
At the date of approval of these financial statements, the
following interpretations was in issue but not yet effective:
-- IFRIC 23 (effective for periods beginning on or after 1
January 2019), clarifies the accounting for uncertainties in income
taxes. An entity is required to use judgement to determine whether
each tax treatment should be considered independently or whether
some tax treatments should be considered together. The decision
should be based on which approach provides better predictions of
the resolution of the uncertainty. An entity has to consider
whether it is probable that the relevant authority will accept each
tax treatment, or group of tax treatments, that it used or plans to
use in its income tax filing.
4. Investments at fair value through profit or loss and classification of financial instruments
2019 2018
GBP'000 GBP'000
========================================================== =================== =================
Quoted and listed closed end fund investments 157,004 172,449
Open ended fund and limited liability partnership
investments 171,709 123,152
========================================================== =================== =================
Total investments at fair value at 31 October 328,713 295,601
========================================================== =================== =================
2019 2018
Investments held at fair value through GBP'000 GBP'000
profit or loss
========================================================== =================== =================
Opening book cost 246,718 278,903
Opening investment holding gains 48,883 104,360
========================================================== =================== =================
Opening fair value 295,601 383,263
Analysis of transactions made during the
year
Purchases at cost 106,064 27,668
Sales proceeds received (110,682) (73,523)
Gains/(losses) on investments 37,730 (41,807)
========================================================== =================== =================
Closing fair value 328,713 295,601
========================================================== =================== =================
Closing book cost 259,025 246,718
Closing investment holding gains 69,688 48,883
========================================================== =================== =================
Closing fair value 328,713 295,601
========================================================== =================== =================
The company received GBP110,682,000 (2018: GBP73,523,000) from
investments sold in the year. The book cost of these investments
when they were purchased was GBP93,757,000 (2018: GBP59,853,000).
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.
The table below sets out the classifications of the carrying amounts
of the Company's financial assets and financial liabilities into
categories of financial instruments.
====
Held at Loans and Other financial
fair value receivables liabilities Total
Financial instruments as at GBP'000 GBP'000 GBP'000 GBP'000
31 October 2019
===================================== ==== =========== ============ ================= ===========
Investments at fair value through
profit and loss 328,713 - - 328,713
Cash and cash equivalents - 1,190 - 1,190
Sales for future settlement
and other receivables - 422 - 422
Purchases for future settlement
and other payables - - (448) (448)
Bank loan payable - - (25,000) (25,000)
Total 328,713 1,612 (25,448) 304,877
============================================ =========== ============ ================= ===========
Held at Loans and Other financial
fair value receivables liabilities Total
Financial instruments as at GBP'000 GBP'000 GBP'000 GBP'000
31 October 2018
================================== =========== ============ =============== =========
Investments at fair value through
profit and loss 295,601 - - 295,601
Cash and cash equivalents - 1,037 - 1,037
Sales for future settlement
and other receivables - 297 - 297
Purchases for future settlement
and other payables - - (379) (379)
Bank loan payable - - (20,000) (20,000)
Total 295,601 1,334 (20,379) 276,556
==================================== =========== ============ =============== =========
5. Investment income
2019 2018
GBP'000 GBP'000
==================================== ======== ========
Dividends from UK Investments 2,585 2,388
Dividends from Overseas Investments 2,270 2,626
Other income 6 5
==================================== ======== ========
Total income 4,861 5,019
==================================== ======== ========
6. Management fee and other expenses
2019 2018
===============================
GBP'000 GBP'000
=============================== ======= =======
Management fee 2,331 2,515
================================= ======= =======
Administration fees 200 200
Depositary and custody service
fees 150 130
Registration fees 33 31
Directors' fees 142 140
Auditor's fees:
Audit services 39 39
Non-audit services 15 15
Promotional fees 158 187
Broker fees 57 36
Miscellaneous expenses 89 108
================================= ======= =======
Total other expenses 883 886
================================= ======= =======
Total expenses 3,214 3,401
================================= ======= =======
Management fee
Management services are provided by Aberdeen Standard Fund
Managers Limited ("ASFML"). The management fee is payable monthly
in arrears (and pro rata for part of any month during which the
management agreement is in force) at an annualized rate of 0.8% of
net assets, reduced by the proportion of the Company's net assets
invested in funds which are managed by Aberdeen Standard
Investments ("Aberdeen Standard Funds"), other than the investments
in Aberdeen Standard SICAV I - China A Share Equity Fund and
Aberdeen Standard SICAV I - Frontier Markets Bond Fund, which are
held in share classes not subject to management charges at a fund
level and the Manager is therefore entitled to a fee on the value
of those investments.
The Management Agreement is terminable by either party on not
less than six months' written notice at any time, subject to
earlier termination in certain circumstances including certain
breaches or the insolvency of either party.
Promotional fee
The Company has agreed to pay a fee to ASFML for the provision
of promotional activities at an annual rate of GBP160,000 with
effect from 1 July 2018 and GBP154,000 with effect from 1 July
2019.
Company Secretary and Administrator fees
Vistra Fund Services (Guernsey) Limited ("Vistra") is appointed
as Administrator and Secretary to the Company. Vistra is appointed
under a contract subject to ninety days' written notice and
receives a fee at a rate of GBP40,000 per annum plus certain
additional fees (during the year ended 31 October 2019, Vistra's
fee for ad hoc meetings held amounted to GBP11,000 (2018:
GBP16,500)). Vistra also receives the fees payable to the UK
Administration Agent.
UK Administration agent fees
PraxisIFM Fund Services (UK) Limited ("PraxisIFM") is appointed
by Vistra to act as administration agent in the United Kingdom.
PraxisIFM is appointed under a contract subject to not less than
ninety days' notice. The UK Administration Agent receives from the
Administrator a monthly fee equal to one twelfth of 0.1% of Net
Asset Value subject to a maximum fee for the year ended 31 October
2019 of GBP148,653 (2018: GBP143,846 ) per annum. The maximum fee
is increased annually, in November, by the change in the UK Retail
Price Index (all items) over the preceding 12 months.
Depositary services and custodian fees
Northern Trust (Guernsey) Limited, receives fees for Depositary
services calculated at the rate of 2.95 basis points per annum
subject to a minimum annual fee of GBP20,000, effective 1 August
2018. Northern Trust (Guernsey) Limited also receives a fee for
custody services. It receives an asset based fee equal to between
1.00 basis points and 60.00 basis points of the value of the assets
of the Company. Transaction based fees are also payable of between
GBP10 and GBP140 per transaction. The variable fees are dependent
on the countries in which the individual holdings are
registered.
7. Directors' fees
The fees payable for the year were GBP142,200 (2018:
GBP140,300). There were no other emoluments.
8. Transaction charges
2019 2018
GBP'000 GBP'000
============================================== ======== ========
Transaction costs on purchases of investments 58 5
Transaction costs on sales of investments 29 6
============================================== ======== ========
Total transaction costs included in gains on
investments 87 11
============================================== ======== ========
9. Bank loan payable and finance costs
On 29 March 2018, the Company entered into an unsecured 12 month
revolving credit facility with The Royal Bank of Scotland plc,
under which loans with a maximum aggregate value of GBP25 million
may be drawn. The facility was renewed with The Royal Bank of
Scotland International Limited (London Branch) ("RBSI") on 29 March
2019 for a further 12 month period, with a termination date of 29
March 2020. The Company has commenced discussions with RBSI and the
Board expects to renew the facility on similar terms when it
matures. As at 31 October 2019, GBP25 million (2018: GBP20 million)
was drawn down at an all-in rate of 1.26413% (2018: 1.275%).
2019 2018
GBP'000 GBP'000
============================================= ======== ========
Interest payable 303 273
Facility arrangement fees and other charges 12 39
============================================= ======== ========
Total finance costs 315 312
============================================= ======== ========
At 31 October 2019, interest payable of nil (2018: GBP28,000)
was accrued in the Statement of Financial Position.
10. Earnings per Ordinary share
Earnings per Ordinary share is based on the total comprehensive
income for the year ended 31 October 2019, being a profit of
GBP38,447,000 (2018: loss of GBP40,984,000) attributable to the
weighted average of 46,000,304 (2018: 48,331,919) Ordinary shares
in issue (excluding shares held in treasury) during the year ended
31 October 2019.
Supplementary information is provided as follows: revenue per
share is based on the net revenue profit of GBP1,109,000 (2018:
profit of GBP980,000) and capital earnings per share is based on
the net capital profit of GBP37,338,000 (2018: loss of
GBP41,964,000) attributable to the above Ordinary shares.
11. Dividends paid
Dividends paid during the year ended 31 October 2019
Pence per Capital Revenue
Ordinary reserve reserve
Dividend type (in respect of the year) share GBP'000 GBP'000
- Pay date
========================================= ========= ======== ========
Fourth interim (2018) - paid 21 December
2018 5.25 1,437 980*
First interim (2019) - paid 29 March
2019 5.25 2,417 -
Second interim (2019) - paid 28 June
2019 5.25 2,413 -
Third interim (2019) - paid 27 September
2019 5.25 2,413 -
========================================= ========= ======== ========
Total dividend 21.00 8,680 980
========================================= ========= ======== ========
* The revenue reserve element of the Fourth interim dividend
paid for the year ended 31 October 2018 was partly funded from the
revenue profit for the year ended 31 October 2018.
On 3 October 2019, the Board declared a fourth interim dividend
in respect of the year of 5.25p per Ordinary share, payable on 20
December 2019 to those shareholders on the register on 29 November
2019.
The Board declares a first interim dividend for the financial
year ending 31 October 2020, of 5.5p per Ordinary share, which will
be paid on 27 March 2020 to shareholders on the register on 28
February 2020.
Dividends paid during the year ended 31 October 2018
Pence per Capital Revenue
Ordinary reserve reserve
Dividend type (in respect of the year) share GBP'000 GBP'000
- Pay date
========================================= ========= ======== ========
Second interim (2017) - paid 29 December
2017 5.00 2,560 -
First interim (2018) - paid 29 March
2018 5.25 2,689 -
Second interim (2018) - paid 29 June
2018 5.25 2,417 -
Third interim (2018) - paid 28 September
2018 5.25 2,417 -
========================================= ========= ======== ========
Total dividend 20.75 10,083 -
========================================= ========= ======== ========
12. Share capital
Ordinary
shares with
Ordinary voting rights
shares of Allotted, (excluding
For the year ended 31 October 1 p nominal issued and treasury Treasury
2019 Authorised value GBP'000 fully paid shares) shares
------------------------------- ------------ --------------- ------------ --------------- ----------
Opening number of shares Unlimited 546 54,618,507 46,047,096 8,571,411
Purchase of own shares - - - (81,937) 81,937
------------------------------- ------------ --------------- ------------ --------------- ----------
Closing number of shares Unlimited 546 54,618,507 46,965,159 8,653,348
------------------------------- ------------ --------------- ------------ --------------- ----------
Ordinary
shares with
Ordinary voting rights
shares of Allotted, (excluding
For the year ended 31 October 1 p nominal issued and treasury Treasury
2018 Authorised value GBP'000 fully paid shares) shares
------------------------------- ------------ --------------- ------------ --------------- ----------
Opening number of shares Unlimited 546 54,618,507 51,196,729 3,421,778
Tender offer - - - (5,119,633) 5,119,633
Purchase of own shares - - - (30,000) 30,000
------------------------------- ------------ --------------- ------------ --------------- ----------
Closing number of shares Unlimited 546 54,618,507 46,047,096 8,571,411
------------------------------- ------------ --------------- ------------ --------------- ----------
Purchases of own shares
There were 81,937 (2018: 30,000) Ordinary shares purchased
during the year at an aggregate cost to the Company of GBP466,000
(2018: GBP181,000), all of which are held in treasury.
Tender offer
2019
There were no tender offers during the year ended 31 October
2019.
2018
As described in the circular to shareholders dated 13 March
2018, the Company put forward proposals for a tender offer under
which shareholders had the ability to tender up to 10% of their
Ordinary shares held.
A total of 5,119,633 Ordinary shares were repurchased by the
Company on 17 April 2018 under the terms of the Tender Offer and
placed in treasury. The Tender Price of 652.6487p per share
reflected a discount of 3.5% to the prevailing NAV per Ordinary
share. Payments with an aggregate value of GBP33,413,000 were made
to shareholders in respect of validly tendered Ordinary shares
during the week commencing 23 April 2018.
Tender offer costs amounted to GBP254,000.
Share capital account
The aggregate balance (including share premium) standing to the
credit of the share capital account at 31 October 2019 was
GBP149,616,000 (2018: GBP150,082,000).
Ordinary shares
Voting rights
Holders of Ordinary shares are entitled to attend, speak and
vote at general meetings of the Company. Each Ordinary share
(excluding shares in treasury) carries one vote. Treasury shares do
not carry voting rights.
Dividends
The holders of Ordinary shares are entitled to such dividend as
may be declared by the Company from time to time. Shares held in
treasury do not receive dividends.
Capital entitlement
On a winding up, the Ordinary shares (excluding treasury shares)
shall rank pari passu for the nominal capital paid up thereon and
in respect of any surplus. Shares held in treasury have no capital
entitlement on a winding up of the Company.
13. Capital reserve
2019 2018
GBP'000 GBP'000
================================================ ======== ========
Realised gains on investments and other capital
reserve movements
Opening balance 83,663 80,233
Dividends paid from capital reserves (8,680) (10,083)
Gains from disposal of investments* 19,216 15,748
Losses from disposal of investments* (2,292) (2,078)
Foreign exchange losses (392) (157)
================================================ ======== ========
Balance at 31 October 91,515 83,663
================================================ ======== ========
Investments held
Opening balance 48,883 104,360
Movement in unrealised gain on revaluation of
investments held* 31,218 3,657
Movement in unrealised loss on revaluation of
investments held* (10,412) (59,134)
================================================ ======== ========
Balance at 31 October 69,689 48,883
================================================ ======== ========
Capital reserve balance at 31 October 161,204 132,546
================================================ ======== ========
* Net gains on investments held at fair value through profit or
loss figure for the year ended 31 October 2019 totalled
GBP37,730,000 (2018: net losses of GBP41,807,000).
14. Net asset value ("NAV") per Ordinary share
The NAV per Ordinary share is based on net assets of
GBP304,877,000 (2018: GBP276,556,000) divided by 45,965,159 (2018:
46,047,096) Ordinary shares in issue (excluding shares held in
treasury) at the year end.
The below table is a reconciliation between the NAV per share
announced on the London Stock Exchange and the NAV per share
disclosed in these financial statements.
As at As at
31 October 2019 31 October 2018
========================================= =========================== ===========================
NAV per NAV per
Net assets Ordinary Net assets Ordinary
(GBP'millions) share(p) (GBP'millions) share(p)
600.46 600.46
========================================= ================ ========= ================ =========
NAV as published on 1 November 2019
and 1 November 2018 respectively 304.5 662.42 276.5 600.46
Revaluation adjustments - delayed prices 0.4 0.86 0.1 0.13
========================================= ================ ========= ================ =========
NAV as disclosed in these Financial
Statements 304.9 663.28 276.6 600.59
========================================= ================ ========= ================ =========
15. Reconciliation of operating gains/(losses) to net cash flow
from operating activities
2019 2018
GBP'000 GBP'000
======================================================== ========= ========
Operating profit/(loss) before finance costs
and taxation 38,985 (40,346)
Less: Tax deducted at source on income from investments (223) (326)
Add: Realisation of investments at book cost 93,757 59,853
Less: Purchase of investments (106,063) (27,668)
Less: Adjustment for unrealised (gains)/losses (20,806) 55,477
Effect of foreign exchange 392 157
Increase in debtors (125) (111)
Increase/(decrease) in creditors 97 (6)
======================================================== ========= ========
Net cash flow from operating activities 6,014 47,030
======================================================== ========= ========
16. Related party disclosures
Manager
Management fees payable are shown in profit or loss in the
Statement of Comprehensive Income and Note 6. At 31 October 2019,
management fees of GBP199,000 (2018: GBP199,000) were accrued in
the Statement of Financial Position. Total management fees for the
year were GBP2,331,000 (2018: GBP2,515,000).
Details of promotional fees payable can be found in Note 6. The
balance outstanding at the year end was GBP51,000 (2018:
GBP53,000).
Investments held by the Company which are managed by the
Standard Life Aberdeen plc group
As at 31 October 2019, the Company held the following
investments managed by the Standard Life Aberdeen Group;
As at As at
31 October 31 October 2018
2019 GBP'000
GBP'000
============================================= =========== ================
Aberdeen Standard Asia Focus PLC - 1,260
Aberdeen Asian Income Fund Limited 6,187 -
Aberdeen New India Investment Trust PLC 3,592 -
Aberdeen Standard SICAV I - Frontier Markets
Bond Fund Z Acc USD 7,571 -
Aberdeen Standard SICAV I - China A Share
Equity Fund Z Acc USD 14,929 -
Asia Dragon Trust PLC 4,099 6,767
Total 36,378 8,027
============================================= =========== ================
Directors
Total fees for the Directors in the year ended 31 October 2019
were GBP142,200 (2018: GBP140,300). There were no outstanding fees
due to the Directors at the year end (2018: nil). Details of
Directors' share holdings in the Company can be found the Annual
Report and Accounts.
17. ANNUAL GENERAL MEETING
The Company's Annual General Meeting will be held at the
Company's registered office on 21 April 2020.
18. FINANCIAL INFORMATION
The Annual Report and Accounts was approved by the Board of
directors on 12 February 2020. The information in this announcement
has been extracted from the Annual Report and Accounts on which the
Company's auditors have given an unqualified report. The Annual
Report and Accounts will be posted to shareholders and will be made
available on the Company's website at
aberdeenemergingmarkets.co.uk. It will also be available from the
registered office of Company and the UK Administration Agent.
This announcement contains regulated information under the
Disclosure Guidance and Transparency Rules of the FCA.
A copy of the Annual Report and Accounts will be submitted to
the National Storage Mechanism and will shortly be available at:
morningstar.co.uk/uk/NSM
Alternative Performance Measures ("APMs")
Discount
The amount, expressed as a percentage, by which the share price is less
that the NAV per Ordinary Share.
----------------------------------------------------------------------------------------------
As at
31 October
2019
------------------------------------------ --- -------------- --------- ------------------
NAV per Ordinary share (in pence) a 663.28
Ordinary share price (in pence) b 561.00
----------------------------------------------- ------------- --------- ------------------
Discount (b÷a)-1 15.4%
----------------------------------------------- ------------- --------- ------------------
Gearing
A way to magnify income and capital returns, but which can also magnify
losses. The revolving loan facility with RBSI is a common method of
gearing.
----------------------------------------------------------------------------------------------
As at
31 October
2019
------------------------------------------ --- -------------- --------- ------------------
Total assets less cash/cash equivalents
(GBP'000) a 329,135
Net assets (GBP'000) b 304,877
----------------------------------------------- ------------- --------- ------------------
Gearing (net) (a÷b)-1 7.96%
----------------------------------------------- ------------- --------- ------------------
Leverage
Under the Alternative Investment Fund Managers Directive ("AIFMD"),
leverage is any method by which the exposure of an Alternative Investment
Fund ("AIF") is increased through borrowing of cash or securities or
leverage embedded in derivative positions.
Under AIFMD, leverage is broadly similar to gearing, but is expressed
as a ratio between the assets (excluding borrowings) and the net assets
(after taking account of borrowing). Under the gross method, exposure
represents the sum of the Company's positions after deduction of cash
balances, without taking account of any hedging or netting arrangements.
Under the commitment method, exposure is calculated without the deduction
of cash balances and after certain hedging and netting positions are
offset against each other.
Further details on the Company's leverage is provided in the Annual
Report and Accounts.
Ongoing charges
A measure, expressed as a percentage of average NAV, of the regular,
recurring annual costs of running an investment company.
----------------------------------------------------------------------------------------------
Year end 31 October 2019
------------------------------------------ --- -------------- --------- ------------------
Average NAV a 300,880,000
Operating expenses b 3,214,000
----------------------------------------------- ------------- --------- ------------------
Ongoing charges figure (calculated using
the AIC methodology) b÷a 1.07%
----------------------------------------------- ------------- --------- ------------------
Total return
A measure of performance that includes both income and capital returns.
This takes into account capital gains and reinvestment of dividends
paid out by the Company into its Ordinary Shares on the ex-dividend
date.
----------------------------------------------------------------------------------------------
Ordinary NAV
Share
Year end 31 October 2019 price
------------------------------------------ --- -------------- --------- ------------------
Opening at 1 November 2018 (in pence) a 515.0 600.6
Closing at 31 October 2019 (in pence) b 561.0 663.3
Price movement (b ÷ a) - 1 c 8.9% 10.4%
Dividend reinvestment d 4.3% 3.7%
------------------------------------------ ------------------- --------- ------------------
Total return (c+d) 13.2% 14.1%
--------------------------------------------------------------- --------- ------------------
Registered office
11 New Street
St Peter Port
Guernsey GY1 2PF
Enquiries:
Aberdeen Standard Fund Managers Limited (Investment Manager to
Aberdeen Emerging Markets Investment Company Limited)
William Hemmings Tel: +44 (0)207 463 5881
Shore Capital Markets Limited (Financial adviser and
stockbroker)
Robert Finlay Tel: +44 (0)20 7601 6115
Vistra Fund Services (Guernsey) Limited (Company Secretary)
Patrick Farncombe Tel: +44 (0)1481 732152
PraxisIFM Fund Services (UK) Limited (UK Administration
Agent)
Brian Smith Tel: +44 (0)20 7653 9690
Ordinary Shares - Listing Category: Premium - Equity
Closed-ended Investment Funds
12 February 2020
END
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR SFWFAEESSESE
(END) Dow Jones Newswires
February 13, 2020 02:00 ET (07:00 GMT)
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