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RNS

Final Results

Released 14:43 18-Sep-2017

RNS Number : 0556R
Aberdeen Frontier Mkts Inv Co Ltd
18 September 2017
 

ABERDEEN FRONTIER MARKETS INVESTMENT COMPANY LIMITED

LEGAL ENTITY IDENTIFIER ('LEI'): 213800X9N731I4IPK361

 

ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 30 JUNE 2017

 

INVESTMENT OBJECTIVE

The investment objective of the Company is to generate long-term capital growth primarily from investment in equity and equity related securities of companies listed in, or operating in, Frontier Markets.

 

Frontier Market countries may include constituents of the MSCI Frontier Markets Index or additional countries that the Investment Manager deems to be, or displays similar characteristics to, Frontier Market countries.

 

MANAGEMENT

The Company is managed by Aberdeen Fund Managers Limited (the 'Manager'), which is a wholly owned subsidiary of Aberdeen Asset Management PLC and is authorised and regulated by the Financial Conduct Authority ('FCA'). The Manager has delegated day-to-day investment management services to Aberdeen Asset Managers Limited ('AAML' or the 'Investment Manager').

 

DIVIDENDS

Interim dividend paid

1.0000c

Final dividend proposed

1.0000c

 

PERFORMANCE

 

For the year ended 30 June 2017

 

 

Net Asset Value ("NAV") per share (in US dollar terms)

Total return, NAV to NAV, gross income reinvested.

13.7%

 

Share price (in US dollar terms)

Share price total  return is on a mid-to-mid basis.

16.7%

 

 

As at 30 June 2017

 

NAV per share

$0.9295

 

 

Share price (in GB pounds)

£0.6663

Share price (in US dollars)

$0.8678

Net Assets

$79.4m

 

 

CHAIRMAN'S STATEMENT

 

A period of change

The year has seen a number of material changes for the Company, a summary of which is set out below.

 

Investment objective and policy

The Directors began the tender process in November 2016 which was subsequently terminated in December 2016. Following further consultation with shareholders on 14 March 2017 shareholders were given the opportunity to vote on the proposed change in Investment Objective and Policy for investment in Frontier Markets using a direct equity investment strategy.  The resolution proposed was duly passed and our revised investment objective is now:

 

-     to generate long-term capital growth primarily from investment in equity and equity related securities of companies listed in, or operating in, Frontier Markets.

 

-     Frontier Market countries may include constituents of the MSCI Frontier Markets Index or additional countries that the Investment Manager deems to be, or displays similar characteristics to, Frontier Market countries.

 

As a result of the change, our portfolio is now managed by Aberdeen's Global Emerging Markets Team overseen by Devan Kaloo with Mark Gordon James and Gabriel Sacks as lead managers. The full text of the new Investment Policy, the new portfolio and further information on our Manager's investment process can be found in the Annual Report.

 

Tender offer

In addition to this change, shareholders were offered the opportunity to tender up to 100% of their holdings in the Company as indicated back in 2012.  This resulted in 97,307,392 Ordinary Shares being tendered.  Of these 13,750,000 Ordinary Shares were sold to Aberdeen Asset Management leaving a balance of 83,557,392 Ordinary Shares being bought back by the Company for cancellation.  The Board were encouraged by the remaining number of shareholders wishing to remain invested in Frontier Markets and Aberdeen's commitment to purchase £10m of shares.

 

Management fees

At the same time as these fundamental changes to the Company, Aberdeen Asset Management agreed to reduce their management fee to 1.0% per annum of the Company's net asset value ('NAV') as well as the removal of the performance fee. The Board is aware of the Company's reduced size, following the tender offer, and the need to carefully manage the Company's expenses to minimise the ongoing charges ratio.

 

Tender Pool

Following shareholder approval the portfolio was split into two separate pools of assets; one for ongoing shareholders in which assets were realigned with the new investment policy ('Continuing Pool') and the other for the realisation of assets to raise cash to pay to those shareholders who elected to tender ('Tender Pool').

 

A first interim distribution of 64.0 pence was paid to exiting holders on 25 April 2017 with a second payment of 6.5 pence made on 30 June 2017.  At the time of writing there remains a very small element of cash and one asset subject to foreign exchange restrictions with a value of approximately 0.6 pence per Ordinary Share which will be distributed as soon as the asset can be realised.

 

Discount control

The discount to NAV at which the Company's shares trade narrowed from 8.9% to 6.8% at year end.  Outside of the tender offer, the Company bought back 450,000 Ordinary Shares over the twelve month period at a cost of $353,000 with those shares placed in treasury.

 

The Board recognises the importance to investors of the Ordinary Shares not trading at a significant discount to the prevailing NAV.  Accordingly, as part of the proposals put to shareholders in February 2017 the Board stated its intention to operate a policy whereby should the average Ordinary Share price discount to the underlying ex-income NAV over the three month period immediately prior to the Company's year-end exceed 10% then, at the discretion of the Board, the Company would, subject to any legal or regulatory requirements, implement a tender offer.  Such tender offer will be for up to 15% of the issued share capital of the Company (excluding Ordinary Shares held in treasury) at a tender price equal to 98% of the prevailing NAV (less the direct costs, including any realisation costs of underlying investments, of implementing such tender offer).

 

Over the three months ended 30 June 2017, the average ex-income discount stood at 7.0%. With effect from the change in investment objective in March 2017, this discount control policy, incorporating a tender offer mechanism, replaced the pre-existing five-yearly return of capital as the Company's primary discount control.

 

Performance

For the year ended 30 June 2017, the Company's NAV per Ordinary Share had risen 13.7% in total return terms with the share price rising 16.7% as the discount narrowed.  This compared to a gain of 19.7% for the MSCI Frontier Markets Index (the "Index"), all figures in US Dollar terms.

 

The positive NAV absolute return over the year was driven by strong performances in certain markets. However, relative performance against the Index was held back by a number of factors including the realignment of the portfolio away from funds to direct equities over the last three months of the financial year and the requirement to hold more liquid assets, such as Frontier Market ETFs, in the period leading up to the tender offer.

 

Dividend

An attractive dividend yield has been a consistent feature of the asset class over time and the Board considers that dividends are an increasing part of the rationale for investing in Frontier Markets.  At today's market levels, the current portfolio is expected to yield approximately 3.3% gross (before expenses).  The Board believes that dividends are an important part of shareholders overall return and intends to continue to pay semi-annual dividends in line with previous guidance.

 

An interim dividend for the year ended 30 June 2017 of 1 cent (0.766947 pence) was paid to Ordinary shareholders on 11 August 2017.  With the new portfolio providing a decent yield, the Board is recommending to shareholders the payment of a final dividend for the year of 1 cent.  If approved by shareholders at the next Annual General Meeting, this dividend will be paid on 13 December 2017 to those shareholders who are on the register on 17 November 2017. The ex-dividend date will be 16 November 2017. The dividend will be paid in sterling and the sterling dividend rate will be announced in due course.

 

Board composition

We were sad to see Richard Hotchkis retire from the Board on 31 March 2017.  Richard had been on the Board of the Company since its launch and we thank him for his efforts on behalf of shareholders.  We shall miss his wise counsel and enthusiasm for Frontier Markets and wish him well for his retirement.

 

As the Company begins a new chapter, well-positioned for the future but smaller in size, the Board will remain comprised of three non-executive directors until such time as it is deemed prudent to recruit again. The Board considers that, collectively, the current Directors demonstrate a breadth and depth of skills and experience required to steward the Company.

 

Aberdeen Asset Managers Limited

The Investment Manager is a subsidiary of Aberdeen Asset Management PLC which merged with Standard Life plc on 14 August 2017 to form Standard Aberdeen plc. Assets under the management of the combined investment division of Aberdeen Standard Investments were equivalent to £581bn at 31 December 2016. Further information about the Investment Manager can be found in the Annual Report.

 

Aberdeen savings plans

Aberdeen has a long history in managing closed-ended funds and provides a wealth of experience and a wide infrastructure towards their management and promotion.  Investors may access low cost investment in the Company through Aberdeen's Share Plan, Investment Trust ISA and Investment Plan for Children which provide full voting and other rights of share ownership.  Further details may be found on our website at: aberdeenfrontiermarkets.co.uk.

 

Future prospects

There is an increasing recognition by investors of the attractive qualities that Frontier Markets possess as an investment destination.  This follows a period of several years during which the asset class has been comprehensively overlooked.  Valuations of frontier equity markets and currencies are undemanding and the prospect of further gains is supported by an improving global economic outlook, which should provide a supportive backdrop for corporate earnings.

 

From a bottom up perspective, the Company's portfolio, now managed by Aberdeen's well regarded Global Emerging Markets team using their disciplined and meticulous stock-picking approach, is now invested in a high conviction selection of companies that we believe provide diversified exposure to Frontier Markets.  Our Manager believes in the fundamentally sound nature of our investments with healthy cash flows, strong management and promising prospects for sustained long-term growth.

 

 John Whittle

18 September 2017

 

 

INVESTMENT MANAGER'S REPORT

 

Market environment

 

Frontier Markets were swept up in the global equity rally, gaining more than 19% in US dollar terms in the year to the end of June 2017. It was very much a tale of two halves, with several longstanding laggards in Frontier Africa enjoying a rebound in sentiment late in the period. The asset class was relatively range-bound in the final six months of 2016, as investors found plenty of cause for restraint amid a series of political shocks. The UK's vote to leave the EU sparked a widespread, though short-lived, sell-off while Donald Trump's unexpected victory in the US presidential election provoked fears of a new era of protectionism. However, OPEC's December 2016 agreement to cut production, which fuelled the subsequent spike in oil prices, spurred renewed interest in frontier commodity exporters in particular. Investors even shrugged off two, admittedly well-signalled, US interest rate hikes. The oil price rally lost steam toward the end of the period as a ramp up in US shale oil production prompted oversupply concerns. Nonetheless, many Frontier Markets remained in favour, while the weaker US currency also boosted US dollar returns.

 

In Africa, Nigerian equities were subdued for the most part as the economy slipped into recession and ratings firm Fitch downgraded the country's outlook to negative from stable. Investors also grew frustrated at the central bank's continued currency intervention. However, a new foreign exchange window for investors and exporters restored some much needed confidence in the country's markets, while encouraging economic signals suggested a near-term recovery. Against this, equities picked up markedly, gaining just over 14% by the period's end. Kenya also enjoyed a late influx of capital, which boosted markets by more than 17%. This capped a mostly volatile year, in which it grappled with a serious drought as well as the impact of a government cap on bank loan charges.

 

Middle Eastern oil exporters Kuwait and Bahrain posted solid returns, of 23% and 16% respectively, following the much-anticipated agreement between oil producers to cut output. However, both markets relinquished some of their early gains alongside the oil price retreat.

 

In Latin America, Argentine equities climbed by almost 28% buoyed by the country's successful return to international debt markets together with signs that President Macri was making inroads against the national deficit. However, the market suffered a late sell-off after failing to win back its emerging market status in the MSCI's benchmark index review with the next review scheduled for June 2018.

 

Sri Lanka was the top performing market in Asia over the twelve month review period, returning 24%, as investors took advantage of attractive valuations following protracted outflows. The country's equities had previously come under pressure amid economic challenges and a disappointing reform process. Pakistan's stock market also advanced on growing momentum ahead of its upgrade to the MSCI emerging markets index at the end of May. However, it succumbed to some profit-taking in the immediate aftermath of its promotion. Vietnamese equities were the poorest performers over the period, after President Trump abandoned the newly-negotiated Trans-Pacific Partnership trade agreement. While it later recouped the losses, the market failed to keep pace with its peers, finishing up by just 2%.

 

Frontier Europe outperformed all other regions on generally robust economic signals and positive sentiment following Emmanuel Macron's presidential victory in France. Oil exporter Kazakhstan was the asset class' top performer, returning just over 44%, while Romanian equities rose by almost 35%. That said, the latter fared less well late in the period after the prime minister of just six months was ousted in a no-confidence vote by his own political party. The political upheaval came in the wake of one of the country's largest anti-corruption demonstrations since the fall of communism.

 

 

Performance

 

During the half year to December 2016, and prior to the transition to direct equity investment, the Company saw increased net asset value ('NAV') per Ordinary Share and share price total returns, all in US dollar terms, of 3.7% and 6.3%, respectively. This compared to the MSCI Frontier Markets Net Total Return Index's 3.2% gain. The Company's outperformance over the six month period was due to the solid performance of certain underlying managers, as well as discount narrowing. In particular, the managers in Vietnam, Argentina and Kazakhstan did well, while individual funds in Romania and Vietnam also contributed to relative returns following a narrowing of their discounts. In particular, the managers in Vietnam all enjoyed significant outperformance over the MSCI Vietnam Index (which comprised just 9 companies), with VinaCapital Vietnam Opportunity Fund the best performer (NAV +10.0%). Strong relative performance was also delivered by the Company's managers in Argentina (Copernico) and Kazakhstan (Sturgeon). Asset allocation was a detractor during the period, with low levels of exposure to Morocco, where the market rose by 20.1% and Kuwait which posted a 12.9% gain, accounting for much of this. In terms of discount movement, VinaCapital Vietnam Opportunity Fund and our core Romanian holding Fondul Proprietatea, contributed to relative performance as their discounts narrowed in absolute terms by 4.5% and 2.8% respectively.

 

With regard to the management of the portfolio during the transitional period, the period from January to March saw the sale of certain closed-ended holdings and redemptions of open-ended funds rotated into more liquid market proxies, including the MSCI Frontier Markets ETF, in anticipation of the upcoming tender offer, following which the remaining portfolio would migrate to a direct equity approach.

 

By the end of April the Company was 52% invested in direct equities, rising to 66% by the end of May and 94% by the end of June. Liquidity did not prove to be an issue, but opening domestic share dealing accounts in certain countries such as Egypt, Bangladesh, Romania and Vietnam did take longer than expected. During this period, market exposure was retained through the use of legacy third-party funds and ETFs.

 

Aberdeen Frontier Markets Investment Company

USD for periods ended 30 June 2017









Cumulative performance









6 months

1 year

3 years

5 years





%

%

%

%




Share Price

9.9

16.7

-12.7

33.2




NAV

9.8

13.7

-12.8

28.6




MSCI Frontier Markets

15.9

19.7

-8.6

54.0




 

Notes:

Total return; NAV to NAV, gross income reinvested, USD.

Share price total return is on a mid-to-mid basis.

Dividends are reinvested as at the ex-dividend date.

NAV returns based on NAVs with debt valued at fair value.

Source: Aberdeen Asset Managers Limited and Morningstar




 

The period between January and June 2017 was a strong one for Frontier Markets, with the MSCI Frontier Markets Index rising 15.9% in US dollar terms. Given the restructuring of the portfolio and higher cash levels up until mid-March, performance lagged the benchmark. Nevertheless, the Company still reported a 9.8% increase in NAV and 9.9% share price return for the 6-month period, buoyed by some of the portfolio's new largest direct equity holdings, including conglomerate John Keells in Sri Lanka, Kenyan mobile-operator Safaricom and Coca-Cola Icecek, a Turkish-based bottler with a significant presence in Pakistan, Iraq and Kazakhstan. The key detractor to performance was the portfolio's underweight position to Argentina, which notably rallied on hopes that MSCI would announce its upgrade to emerging market status following its review in June; although this was ultimately not the outcome. It is also worth highlighting that we deemed it prudent to value our Nigerian holdings using NAFEX, a new exchange rate in Nigeria, which was roughly 20% lower than the official rate at the end of the period, but one that we believe reflects the currency's true market-determined value. MSCI continued to use the official exchange rate, which also negatively impacted the portfolio's relative performance.

 

Fund positioning

 

As at the end of June 2017 the portfolio had largely transitioned to a direct equity strategy, in line with the new investment policy, holding 48 assets with the following country allocations relative to the MSCI Frontier Markets Index:

 

Relative country positions




Country

Fund
%

Benchmark
%

Difference
%

Africa and Middle East

39.5

55.9

-16.4

Bahrain

-

4.0

-4.0

Egypt

2.9

-

+2.9

Ghana

1.6

-

+1.6

Ivory Coast

-

0.2

-0.2

Jordan

2.2

1.3

+0.9

Kenya

13.3

4.9

+8.4

Kuwait

-

17.3

-17.3

Lebanon

1.4

2.7

-1.3

Mauritius

-

3.9

-3.9

Morocco

2.0

8.2

-6.2

Nigeria

5.6

8.6

-3.0

Oman

2.0

3.3

-1.3

Senegal

-

0.9

-0.9

South Africa

3.3

-

+3.3

Tanzania

1.5

-

+1.5

Tunisia

-

0.5

-0.5

Turkey

3.7

-

+3.7

Asia Pacific ex Japan

43.6

14.2

+29.4

Bangladesh

8.5

2.5

+6.0

Myanmar

2.4

-

+2.4

Pakistan

12.1

-

+12.1

Sri Lanka

10.5

1.6

+8.9

Thailand

2.1

-

+2.1

Vietnam

8.0

10.1

-2.1

Europe ex UK

9.4

9.7

-0.3

Belarus

3.3

-

+3.3

Croatia

-

1.5

-1.5

Estonia

-

0.4

-0.4

Georgia

2.9

-

+2.9

Kazakhstan

-

2.0

-2.0

Lithuania

-

0.1

-0.1

Romania

3.2

3.9

-0.7

Serbia

-

0.2

-0.2

Slovenia

-

1.6

-0.3

Latin America

4.8

20.2

-15.4

Argentina

2.4

20.2

-17.8

Panama

2.4

-

+2.4

North America

1.5

-

+1.5

United States

1.5

-

+1.5

Total

100.0

100.0


 

At 30 June 2017, the benchmark index had an adjusted market cap of US$111.6bn and was composed of 116 companies across 23 countries (source MSCI).

 

Shareholders will be aware of the new investment objective and policy, resulting in a portfolio that will likely diverge significantly from the benchmark as we look to invest in a relatively concentrated portfolio of quality companies across a diverse set of markets. Some of the largest differences relative to the benchmark relate to the portfolio's underweight position in Argentina (-17.8%) and Kuwait (-17.3%) and an overweight allocation in frontier Asian markets (+29.4%), with countries such as Pakistan (+12.1%) and Sri Lanka (+8.9%) featuring prominently.

 

We continue to seek new opportunities to invest and are encouraged by the pick-up in corporate activity in local equity markets in countries such as Argentina and Vietnam. We see limited investable opportunities in Kuwait, however, and will continue to invest in Pakistan as a Frontier Market - despite the country's upgrade to the MSCI Emerging Markets Index - given its attractive prospects and, as yet, insignificant representation in the emerging markets universe.

ABERDEEN FRONTIER MARKETS INVESTMENT COMPANY LIMITED
Top 10 holdings as at 30 June 2017


Company

Country

Market cap

Description

Value
$'000

Percentage of net assets

John Keells

Sri Lanka

$1.3bn

Sri Lanka's Largest listed conglomerate with a diverse portfolio of interests ranging from container ports, hotels, property development and food & retail.

4,432

Vinamilk

Vietnam

$9.1bn

Biggest dairy company in Vietnam, manufacturing and distributing products derived from milk, and also coffee and fruit.

4,219

Safaricom

Kenya

$7.0bn

The Leading mobile network operator in Kenya, with an innovative alternative payments platform called M-Pesa.

4,093

Habib Bank

Pakistan

$3.8bn

Largest private sector bank in Pakistan with a global presence in over 25 countries.

3,307

Coca-Cola Icecek

Turkey

$2.5bn

The fifth-largest bottler in the Coca-Cola System in terms of sales volume, with operations in Pakistan, Kazakhstan, Azerbaijan, Iraq and Libya, as well as their home market, Turkey.

2,740

Epam Systems

Belarus

$4.2bn

Global provider of software engineering and IT consulting services out of Belarus, Ukraine and Russia.

2,480

Guaranty Trust Bank

Nigeria

$2.3bn

One of the leading private sector banks in Nigeria.

2,455

BRD

Romania

$2.0bn

Private sector bank in Romania: subsidiary of Societe Generale.

2,393

Commercial International Bank

Egypt

$4.9bn

Leading private-sector bank in Egypt with a universal banking model.

2,165

BGEO Group

Georgia

$4.6bn

Diversified group in Georgia with the leading private sector bank and a healthcare / hospitals business.

2,137

Top ten holdings



30,421

38.4%

Other holdings



44,451

55.9%

Total holdings




74,872

94.3%

Cash and other net assets


4,554

5.7%

Net assets




79,426

100.0%

 

Outlook

 

Frontier equities had a good year to June 2017. Structural improvements in specific markets have been well-received, including further steps towards currency liberalisation in Nigeria. A more encouraging global growth environment, alongside improving corporate earnings and better sentiment towards Frontier Markets more broadly, have all contributed to slowing outflows to the asset class. We believe this is set to continue over the next few months.

 

We are particularly excited about Asia, which represents more than 40% of the portfolio, given robust growth, modest inflation and attractive stock-picking opportunities; while Africa is well-positioned for a recovery on the back of significant currency adjustment and a return to growth. Although upcoming elections in Kenya could bring some volatility in the coming months we remain upbeat about the outlook for our Kenyan corporates and valuations remain undemanding.

 

By their very nature Frontier Markets represent a riskier investment proposition than more developed markets. Resource-rich countries' markets remain heavily influenced by fluctuating commodity prices, while liquidity issues are prevalent across the board. However, even with the recent rally, frontier equities still represent an attractive risk-reward opportunity for investors given their lower correlation to mainstream asset classes, as well as a discounted valuation of roughly 30% to developed market equities. Frontier Markets tend to be under-researched and we see compelling opportunities to find new investment prospects. At the portfolio level, the Company offers exposure to a diverse range of markets and is invested in companies that we believe to be of a high-quality, given their lower debt to equity ratios, higher levels of return on equity (ROE), higher dividend yields and stronger balance sheets than their emerging market counterparts and the MSCI Frontier Markets Index. Whilst volatility can be a feature of these markets we are positive about the prospects for the asset class over the long term.

 

Aberdeen Fund Managers Limited

18 September 2017

 

PRINCIPAL RISKS AND UNCERTAINTIES

There are a number of risks which, if realised, could have a material adverse effect on the Company and its financial condition, performance and prospects. The Board has identified the principal risks and uncertainties facing the Company at the current time in the table below together with a description of the mitigating actions taken by the Board. The principal risks associated with an investment in the Company's shares are published monthly on the Company's factsheet or they can be found in the pre-investment disclosure document published by the Manager, both of which are on the Company's website. The Board reviews the risks and uncertainties faced by the Company in the form of a risk matrix and heat map which is reviewed regularly by the Audit and Risk Committee and a summary of the principal risks are set out below.

 

An explanation of other risks relating to the Company's investment activities, specifically market risk including interest rate risk, foreign currency risk and other price risk, liquidity risk, credit risk, gearing risk and a note of how these risks are managed, is contained in the Annual Report and Financial Statements.

 

Description                                                       Mitigating action

Investment strategy and objectives - the setting of an unattractive strategic proposition to the market and the failure to adapt to changes in investor demand may lead to the Company becoming unattractive to investors, a decreased demand for Ordinary shares and a widening discount at which the Ordinary shares trade relative to their NAV.

 

The Board keeps the level of discount at which the Company's Ordinary shares trade as well as the investment objective and policy under review and the Board is updated at each Board meeting on the makeup of, and any movements in, the Shareholder register.

Investment portfolio, investment management -

investing outside of the investment restrictions and guidelines set by the Board could result in poor performance and inability to meet the Company's objectives.

 

 

The Board sets, and monitors, its investment restrictions and guidelines, and receives regular reports which include performance reporting on the implementation of the investment policy, the investment process and application of the guidelines.

Financial obligations - the ability of the Company to meet its financial obligations, or increasing the level of gearing, could result in the Company becoming over-geared and therefore unable to take advantage of potential opportunities and result in a loss of value of the Company's Shares.

 

The Board sets a gearing limit and receives regular updates on the actual gearing levels the Company has reached from the Investment Manager together with the assets and liabilities of the Company and reviews these at each Board meeting.

Financial and regulatory - the financial risks associated with the portfolio could result in losses to the Company. In addition, failure to comply with relevant regulation (including the Companies (Guernsey) Law, the Financial Services and Markets Act, the Alternative Investment Fund Managers Directive, Accounting Standards and the AIM listing rules, disclosure and prospectus rules) may have a negative impact on the Company.

 

 

The financial risks associated with the Company include market risk, liquidity risk and credit risk, all of which are managed by the Investment Manager. Further details of the steps taken to mitigate the financial risks associated with the portfolio are set out in note xx to the financial statements. The Board relies upon Aberdeen to ensure the Company's compliance with applicable regulations and from time to time employs external advisers to advise on specific concerns.

Operational - the Company is dependent on third parties for the provision of all systems and services (in particular, those of the Manager) and any control failures and gaps in these systems and services could result in a loss or damage to the Company.

 

 

Discount - factors which affect the discount to NAV at which the Ordinary shares of the Company trade. These may include the popularity of the investment objective of the Company, the popularity of investment trust shares in general and the ease with which the Company's Ordinary shares can be traded on the London Stock Exchange.

 

The Board receives regular reports from the Manager on internal controls and risk management and receives assurances from its significant service providers. Further details of the internal controls which are in place are set out in the Directors' Report in the Annual Report and Financial Statements.

 

 

The Board keeps under review the discount and may consider selective buyback of shares where to do so would be in the best interests of shareholders, balanced against reducing the overall size of the Company. Any shares bought back would be either cancelled or held in treasury.

Political risk and exchange controls - investments in less developed markets are subject to a greater degree of political risk than that with which investors might be familiar.

 

In addition, investments purchased by the Company may be subject, in the future, to exchange controls or withholding taxes. In the event that exchange controls or withholding taxes are imposed with respect to any of the Company's investments, the effect will generally be to reduce both the income received by the Company from its investments and/or the capital value of the affected investments.

 

 

 

Given the nature of the risks to which the Company's investments are subject, which are those inherently associated with less developed markets, there are limited options available to the Board for mitigating these risks. The Board believes that mitigation is best effected by careful selection of the constituents of the Company's portfolio with high-calibre, financially-sound companies, with good management and excellent growth potential.

 

Investment in Frontier Markets involves a greater degree of risk than that usually associated with investment in major securities markets. Through regular interaction with the Manager and other commentators, the Board stays up-to-date with the latest political and economic news in these markets.

 

Market risk - being the risk that the portfolio, managed by the Investment Manager, suffers a fall in its market value which would have an adverse effect on shareholders' funds. The Company's investments are subject to normal market fluctuations and the risks inherent in the purchase, holding or selling of equity securities and there can be no assurance that appreciation in the value of those investments will occur.

 

The Investment Manager's investment process concentrates on a company's business strategy, management, financial strength, ownership structure as well as corporate governance, with a view to seeking companies that it can invest in for the long term. This quality test means that there may be stocks which the Investment Manager will not invest in due to a perceived lack of transparency or poor corporate governance.

 

The Investment Manager seeks to diversify market risk by investing in a wide variety of companies with strong balance sheets and the earnings power to pay increasing dividends. In addition, investments are made across various countries in order to reduce the risk of a single concentrated exposure; at present the Investment Manager may not invest more than 10% of the Company's total assets in any single stock at the time of investment and the Company will invest in between 30 to 80 holdings.

 

The Investment Manager believes that diversification should be looked at in absolute terms rather than relative to an index. The performance of the portfolio relative to the MSCI Frontier Markets Index and the underlying stock weightings in the portfolio against their index weightings are monitored closely by the Board.

Liquidity risk - the Company, and/or its Investment Manager may accumulate investment positions which represent more than normal daily trading volumes which may make it difficult to realise investments quickly.

 

 

 

 

Liquidity risk is not considered to be significant as, whilst liquidity is limited in certain stocks which the Company holds, the majority of the Company's assets comprise readily realisable securities which can be sold to meet funding requirements if necessary.

 

The Board reviews the liquidity profile of the Company's investment portfolio at each quarterly Board meeting.

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

 

The directors are responsible for preparing financial statements for each financial year which give a true and fair view of the state of affairs of the Company as at the end of the year and of the profit or loss for the year and are in accordance with The Companies (Guernsey) Law, 2008. In preparing these accounts, the directors are required to:

 

·     Select suitable accounting policies and then apply them consistently;

·     Make judgements and estimates which are reasonable and prudent;

·     State whether applicable International Financial Reporting Standards ('IFRS') as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements; and

·     Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

 

The directors are responsible for ensuring that proper accounting records are kept which disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the accounts have been properly prepared in accordance with The Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

In accordance with The Companies (Guernsey) Law, 2008, there is no relevant audit information of which the Company's auditor is unaware.  The directors also confirm that they have taken all steps they ought to have taken as directors to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

 

The financial statements are published on the Company's website (website address: www.aberdeenfrontiermarkets.co.uk) and on the Investment Manager's website (website address: www.aberdeen-asset.com). The maintenance and integrity of the Investment Manager's website, so far as it relates to the Company, is the responsibility of the Investment Manager. The work carried out by the auditor does not involve consideration of the maintenance and integrity of these websites and accordingly, the auditor accepts no responsibility for any changes that have occurred to the financial statements since they were initially presented on these websites. Visitors to the websites need to be aware that legislation in Guernsey governing the preparation and dissemination of the financial statements may differ from legislation in their jurisdiction.

 

The directors confirm that to the best of their knowledge and belief the annual report and accounts taken as a whole, is fair, balanced and understandable and provides the information necessary to assess the Company's position and performance, business model and strategy.

 

 

STATEMENT OF COMPREHENSIVE INCOME

 



Year ended 30 June 2017

Year ended 30 June 2016



Revenue

Capital

Total

Revenue

Capital

Total



$'000

$'000

$'000

$'000

$'000

$'000









Gains/(losses) on investments


-

16,695

16,695

-

(20,189)

(20,189)

Capital gains/(losses) on currency movements


-

1,973

1,973

-

(38)

(38)

Net investment gains/(losses)


-

18,668

18,668

-

(20,227)

(20,227)

Investment income


1,573

-

1,573

915

-

915

Total income/(loss)


1,573

18,668

20,241

915

(20,227)

(19,312)

Investment management fees


(476)

(952)

(1,428)

(554)

(1,107)

(1,661)

Other expenses


(754)

-

(754)

(771)

-

(771)

Net profit/(loss) from operations before finance costs and taxation


343

17,716

18,059

(410)

(21,334)

(21,744)

Finance costs


(47)

(94)

(141)

(119)

(227)

(346)

Net profit/(loss) before taxation


296

17,622

17,918

(529)

(21,561)

(22,090)

Taxation


(91)

-

(91)

(61)

-

(61)

Net profit/(loss) after taxation


205

17,622

17,827

(590)

(21,561)

(22,151)









Earnings/(loss) per Ordinary Share


0.14c

12.16c

12.30c

(0.35c)

(12.72c)

(13.07c)

 

 

The total column of this statement represents the Company's Statement of Comprehensive Income, prepared under IFRS as adopted by the European Union.  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. The Company does not have any income or expenses that are not included in the profit/(loss) for the year and therefore the "Net profit/(loss) after taxation" is also the total comprehensive income for the year.

 

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 an integral part of these financial statements

 

STATEMENT OF FINANCIAL POSITION



As at 30 June 2017


As at 30 June 2016



$'000


$'000

Non-current assets





Investments at fair value through profit or loss


    74,872


     142,990






Current assets





Cash and cash equivalents


       4,847


         1,524

Sales for future settlement


       7,313


           -

Receivables


       390


           758



    12,550


        2,282






Total assets


     87,422


    145,272






Current liabilities





Purchases for future settlement


       7,112


           -

Loans payable


               -  


         4,500

Other payables


       158


            298

Tender offer liabilities


          726


                 -  



        7,996


         4,798






Total assets less current liabilities


      79,426


    140,474






Capital and reserves attributable to equity holders





Share premium account


      12,254


       88,788

Capital reserve


      66,135


        50,854

Revenue reserve


        1,037


            832






Total equity


      79,426


     140,474






Net assets per Ordinary Share (US cents)


      92.95c


        82.90c

Exchange rate GBP/USD (mid market)


      0.7678


       0.7512

Net assets per Ordinary Share (pence)


      71.37p


       62.27p

 

The notes form an integral part of these financial statements

 

STATEMENT OF CHANGES IN EQUITY

 

For the year ended 30 June 2017


Share premium account
$'000

Share purchase reserve
$'000

 

Capital reserve
$'000

 

Revenue reserve
$'000

 

 

Total
$'000








Opening equity


   88,788

           -  

    50,854

         832

  140,474

Tender offer


 (76,534)

           -  

            -  

            -  

(76,534)

Purchase of own shares


-

-

     (310)

-

      (310)

Profit for the year


-

-

    17,622

         205

   17,827

Equity dividends paid


-

-

   (2,031)

-

   (2,031)

Closing equity


  12,254

            -  

   66,135

     1,037

  79,426































Share premium account

Share purchase reserve

 

Capital reserve

 

Revenue reserve

 

 

Total

For the year ended 30 June 2016


$'000

$'000

$'000

$'000

$'000








Opening equity


   88,788

   82,319

  (9,904)

     1,422

 162,625

Transfer between reserves


-

(82,319)

    82,319

-

-

Loss for the year


-

-

(21,561)

     (590)

(22,151)

Closing equity


  88,788

-

  50,854

        832

140,474

The notes form an integral part of these financial statements

 

STATEMENT OF CASH FLOW

 



Year ended 30 June 2017
$'000

Year ended 30 June 2016
$'000

Operating activities




Cash inflow from investment income and bank interest


1,900

953

Cash outflow from management expenses


(2,273)

(2,437)

Cash inflow from disposal of investments


176,972

40,807

Cash outflow from purchase of investments


(89,796)

(38,433)

Cash outflow from foreign exchange costs


(363)

(37)

Cash outflow from taxation


(91)

(61)

Net cash flow from operating activities


86,349

792





Financing activities




Repayments of bank borrowings


(4,500)

(4,500)

Finance charges and interest paid


(150)

(341)

Equity dividends paid


(2,031)

-

Purchase of own shares


(310)

-

Proceeds from on-sale shares


12,129

-

Tender offer costs


(228)

-

Tender offer distributions paid


(87,936)

-

Net cash flow from financing activities


(83,026)

(4,841)





Net increase/(decrease) in cash and cash equivalents


3,323

(4,049)





Cash and cash equivalents opening balance


1,524

5,573

Cash inflow/(outflow)


3,323

(4,049)

Cash and cash equivalents balance as at 30 June


4,847

1,524

 

The notes form an integral part of these financial statements

 

 

NOTES

 

1.     ACCOUNTING POLICIES

 

Basis of Preparation

The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards ('IFRS'), approved by the International Accounting Standards Board and as adopted by the European Union. 

 

The financial statements give a true and fair view of the state of affairs of the Company as at the end of the year and of the profit or loss for the year and are in accordance with The Companies (Guernsey) Law, 2008.

 

Under IFRS, the Statement of Recommended Practice ('SORP') issued by the Association of Investment Companies has no formal status, but the Company has taken the guidance of the SORP into account to the extent that it is deemed appropriate and compatible with IFRS and the Company's circumstances.  

 

The particular accounting policies adopted are described below:

 

(a)            Accounting convention

The accounts are prepared under the historical cost convention, except for the measurement of investments at fair value.

 

(b)            Investments

As the Company's business is investing in financial assets with a view to profiting 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 in accordance with International Accounting Standard ('IAS') 39.  These investments are recognised on the trade date of their acquisition.  At this time, fair value is the cost of investment. 

 

After initial recognition such investments are valued at fair value which is determined by reference to:

 

(i)      primarily market bid price for investments quoted on recognised stock exchanges (market mid or last trade price will be used where deemed to more appropriately reflect fair value);

(ii)     net asset value per individual investee funds' administrators for unquoted open-ended funds; and

(iii)    by using other valuation techniques to establish fair value for any other unquoted investments.

 

Investments are derecognised on the trade date of their disposal.  Gains or losses are recognised in the capital column of the Statement of Comprehensive Income.  

 

Transaction costs incurred on the acquisition and disposal of investments are charged to capital and included in the 'Gains/(losses) on investments' on the Statement of Comprehensive Income.

 

(c)            Income from Investments

Dividend income from Ordinary Shares and units in open-ended funds deemed equivalent to Ordinary Shares is accounted for on the basis of ex-dividend dates.  Income from fixed interest shares and securities is accounted for on an accruals basis using the effective interest method. Special dividends are assessed on their individual merits and are credited to the capital column of the Statement of Comprehensive Income if the substance of the payment is a return of capital; with this exception all other investment income is taken to the revenue column of the Statement of Comprehensive Income.   Bank interest receivable is accounted for on a time apportionment basis.

 

(d)            Capital Reserves

Profits and losses on disposals of investments and gains and losses on revaluation of investments held are allocated to the capital reserve via the capital column of the Statement of Comprehensive Income. Dividends may be distributed from Capital Reserves.

 

(e)            Revenue Reserves

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 reserves. Dividends may be distributed from Revenue Reserves.

 

(f)             Investment Management Fees

Two thirds of the basic investment management fee is allocated to the capital column of the Statement of Comprehensive Income. The entirety of any performance fee is allocated to the capital column of the Statement of Comprehensive Income. Fees allocated to the capital column are taken to the capital reserve.   

 

(g)          Foreign Currency

The Company's shares were issued in US dollars and the majority of the Company's investments are priced in US dollars and this is considered to be the functional currency of the Company.  Therefore, it is the Company's policy to present the accounts in US dollars. The Company's shares are traded in sterling on AIM.

 

Assets and liabilities held in currencies other than US dollars are translated into US dollars at the official market rates of exchange prevailing at the reporting date apart from Nigerian Naira where the index window rate was used due to the restrictions applied to the currency and consequential illiquidity. Currency gains and losses arising on retranslating investments are allocated to the capital column of the Statement of Comprehensive Income.  All other currency gains and losses are allocated to the capital or revenue columns of the Statement of Comprehensive Income depending on the nature of the transaction.

 

(h)            Finance costs

Finance costs include interest payable and direct loan costs.  In line with the Company's policy for investment management fees, two thirds of finance costs are allocated to the capital column of the Statement of Comprehensive Income. Fees allocated to the capital column are taken to the capital reserve. Loan arrangement costs are amortised over the term of the loan on an effective interest rate basis. 

 

(i)             Financial liabilities

The Company's financial liabilities include borrowings and other payables. Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the financial instrument, and are measured initially at fair value adjusted for transaction costs. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires. Financial liabilities are measured subsequently at amortised cost using the effective interest method. At the year end, the Company do not have any borrowings.

 

(j)          Cash and Cash Equivalents

Cash and Cash Equivalents in the Statement of Cash Flows comprise cash held at the bank or by the custodian.

 

(k)           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 to generate long-term capital growth for its shareholders by investing in a diversified portfolio of funds and other investment products which derive their value from Frontier Markets.

 

The Board of directors is responsible for ensuring that the Company's investment objective is followed.  The day-to-day implementation of this has been delegated to the Investment Manager but the Board retains responsibility for the overall direction of the Company.  The Board reviews the investment decisions of the Investment Manager at regular Board meetings.  The Investment Manager has been given full authority to make investment decisions on behalf of the Company in accordance with the investment objective.

 

(l)             Unconsolidated 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 held in 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 the Statement of Comprehensive Income.

 

(m)           New standards, Interpretations and amendments

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 standard, which has not been applied in these financial statements, was in issue but not yet effective:

 

• IFRS 9, 'Financial instruments', effective for annual periods beginning on or after 1 January 2018, specifies how an entity should classify and measure financial assets and liabilities, including some hybrid contracts. The standard improves and simplifies the approach for classification and measurement of financial assets compared with the requirements of IAS 39. Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged. The standard applies a consistent approach to classifying financial assets and replaces the numerous categories of financial assets in IAS 39, each of which had its own classification criteria.

 

The Board is currently considering the impact of the above standard.

 

(n) Critical accounting estimates and judgements in applying accounting policies

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results could differ from such estimates. These financial statements have been prepared on a going concern basis which the directors of the Company believe to be appropriate.

 

The most critical judgements and estimates that management have made in the process of applying the Company's accounting policies and that have the most significant effect on the amounts recognised in the financial statements are the functional currency of the Company (see note 1(g)) and the fair value estimation of financial assets designated as at fair value through profit or loss (see note 1(b) ).

 

(o) Going concern

The directors have adopted the going-concern basis in preparing the financial statements.

 

2.    

Investments at fair value through profit or loss

 


2017
$'000

2016
$'000

Quoted closed-end fund shares and warrants

1,699

36,467

Quoted direct equity investments

69,900

7,440

Quoted open-ended fund holdings

1,624

7,108

Open-ended fund and limited liability partnership investments

1,649

91,975

Total fixed asset investments at fair value

74,872

142,990

Investments at cost



Opening balance of investments at cost

149,508

155,606

Additions at cost

96,909

38,433

Disposals at cost

(170,097)

(44,531)

Cost of investments at 30 June

76,320

149,508

Revaluation of investments to fair value



Opening balance

(6,518)

9,376

Unrealised gains / (losses) taken to Capital reserve

5,070

(15,894)

Balance at 30 June

(1,448)

(6,518)

Fair value of investments at 30 June

74,872

142,990

 

Gains/(losses) on investments per Statement of Comprehensive Income

                                                

Gains/(losses) on disposal of investments

11,625


(4,295)

Movement on valuation of investments held

5,070


(15,894)


16,695


(20,189)

 

 

3.     Investment income


 

 

2017

$'000

2016

$'000



Dividends from investments

1,573

915



Total investment income

1,573

915


                                                                                                                     

4.     Investment management fees and other expenses

 



2017



2016



Revenue
$'000

Capital
$'000

Total
$'000

Revenue
$'000

Capital
$'000

Total
$'000

Investment management fees                                            

476

952

1,428

554

1,107

1,661

Total investment management fees

476

952

1,428

554

1,107

1,661

Administration fees

198

-  

198

164

-

164

Directors' fees

162

-  

162

177

-

177

Depository and custody fees

172

-  

172

129

-

129

Legal fees

2

-  

2

42

-

42

Broker fees

32

-  

32

37

-

37

Registrar's fees

32

-  

32

39

-

39

Auditor's fees

27

-  

27

28

-

28

Nominated adviser fees

26

-  

26

30

-

30

Promotion

56

-  

56

14

-

14

Other expenses

47

-  

47

111

-

111

Total other expenses

754

-

754

771

-

771

Total expenses

1,230

952

2,182

1,325

1,107

2,432

 

Further details on the management agreement are provided in the Director's Report in the Annual Report. The Company has agreed to pay a fee to Aberdeen Asset Managers Limited for the provision of promotional activities at an annual rate of £43,000 with effect from April 2016 and an annual rate of £43,000 with effect from April 2017. The $14,000 for 30 June 2016 relates to the period from 1 April 2016 to 30 June 2016.

 

The Company's ongoing charges for the year ended 30 June 2017 calculated in accordance with the AIC methodology were 1.66% (2016: 1.67%).  The ongoing charges figure does not include performance fees or finance costs.

 

5.     Finance costs

In accordance with directors' expectations of the split of future returns being mostly of a capital nature, two thirds of finance costs are charged as capital items in the Statement of Comprehensive Income.

 



2017



2016



Revenue
$'000

Capital
$'000

Total
$'000

Revenue
$'000

Capital
$'000

Total
$'000

Facility costs and arrangement fees

15

30

45

97

45

142

Interest charges

32

64

96

22

182

204

Total finance costs

47

94

141

119

227

346

 

 

6.     Directors' fees

The fees paid or accrued were $161,910 (2016: $176,868). There were no other emoluments.  Full details of the fees of each director are given in the Directors' Remuneration Report in the Annual Report and Financial Statements.  

 

7.     Taxation

The Company is resident for tax purposes in Guernsey.

 

The Company is exempt from Guernsey income tax under the Income Tax (Exempt Bodies) (Guernsey) Ordinances 1989 and 1992 and was charged an annual exemption fee of £1,200 (2016: £1,200) during the year.

 

During the year, the Company suffered foreign withholding tax on income from investments totalling in aggregate $91,256 (2016: $61,271).

 

8.     Earnings per Ordinary Share

Earnings per share is based on the net profit of $17,827,000 (2016: loss of $22,151,000) attributable to the weighted average of 144,898,182 (2016: 169,460,000) Ordinary Shares of no par value in issue during the year to 30 June 2017.

 

Supplementary information is provided as follows: revenue per share is based on the net revenue profit of $205,000 (2016: loss of $590,000) and capital profit per share is based on the net capital profit of $17,622,000 (2016: net capital loss of $21,561,000) attributable to the Ordinary Shares.

 

 

9. 

Loans payable

During the period, the Company had a $6,000,000 revolving loan facility with Investec Bank Plc. The facility was fully repaid and the agreement terminated in January 2017.

 

The Company had a $5,000,000  temporary overdraft facility with Northern Trust (Guernsey) Limited ('NT') from 17 March 2017 to 6 July 2017. As at 30 June 2017, the 'Cash and cash equivalents' figure of £4,847,000 credit position shown on the Statement of Financial Position, includes an overdraft position of $438,205 on the NT USD bank account.

 

 

10.  

Share capital







 

Movement in Ordinary Shares of no par value

 

For the year ended 30 June 2017

Authorised

Allotted, issued and fully paid

Treasury shares

Opening number of shares

Unlimited

169,460,000

-

Purchase of own shares

-

(450,000)

450,000

Validly tendered shares for cancellation

-

(97,307,392)

-

On-sale shares

-

13,750,000

-

Closing number of shares

Unlimited

85,452,608

450,000













For the year ended 30 June 2016

Authorised

Allotted, issued and fully paid

Treasury shares

Opening number of shares

Unlimited

169,460,000

-

Closing number of shares

Unlimited

169,460,000

-

 

Voting rights

At General Meetings of the Company, every member present in person or proxy shall have one vote for every Ordinary Share of which they are the registered holder.

 

Tender offer

On 14 March 2017 the Company received valid tender acceptances of 97,307,392 Ordinary Shares. Aberdeen Asset Management bought 13,750,000 of such tendered Ordinary Shares ('On-sale Shares') at the Investment Price of 72.5748 pence per Ordinary Share and therefore the number of Exit Shares which have been repurchased for cancellation by the Company was 83,557,392.

 

Following the Tender Offer the Company has 85,452,608 Ordinary Shares in issue (excluding shares held in treasury) attributable to the continuing shareholders.

 

Proceeds equivalent to $12,129,000 were received from the On-sale Shares and two tender offer distributions were made returning an aggregate amount equivalent to $87,937,000 in respect of validly tendered shares resulting in a net cost to the Company equivalent to $75,808,000.  The residual value of the tender pool as at 30 June 2017 was $726,000.

 

Other purchases of own shares

There were 450,000 Ordinary Shares re-purchased during the year at an aggregate cost to the Company of $310,000, all of which are held in treasury.

 

11.   Net assets per Ordinary Share

Net assets per Ordinary Share of $0.9295 (2016: $0.8290) is based on net assets of $79,426,000 (2016: $140,474,000) divided by 85,452,608 (2016: 169,460,000) Ordinary Shares in issue (excluding shares held in treasury) as at the year end date.

 

12.   Related party transactions   

Details of the management contract can be found in the Directors' Report contained in the Annual Report and Financial Statements.  Fees payable to the Investment Manager are detailed in note 4.  Other payables include accruals of basic management fees of $66,284 (2016: $136,707) and a performance fee provision of $nil (2016: $nil).  

 

On 16 March 2017, Aberdeen Asset Management bought 13,750,000 of the validly tendered Ordinary Shares (On-sale Shares) at the Investment Price of 72.5748 pence per Ordinary Share.

 

The Director's fees are disclosed in note 4 and the Director's Remuneration Report of the Annual Report and Financial Statements.

 

13.   Dividends

In June 2016 the Company announced the introduction of a dividend with the base level of dividend set with reference to the Investment Manager's calculation of the yield on the underlying portfolio, less relevant costs.

 

A final dividend for the year ended 30 June 2016 of 1.2 cents (sterling equivalent is 0.96432 pence) per Ordinary Share was paid out of the Capital Reserve on 19 December 2016.

 

An interim dividend for the year ended 30 June 2017 of 1 cent (sterling equivalent is 0.766947 pence) per Ordinary Share was paid out of the Capital Reserve on 11 August 2017.

 

The Board is recommending to shareholders the payment of a final dividend of 1 cent in respect of the year ended 30 June 2017. If approved by shareholders at the next Annual General Meeting, this dividend will be paid on 13 December 2017 to those shareholders who are on the register on 17 November 2017. The ex-dividend date will be 16 November 2017.

 

Dividends are paid in sterling.

 

14.   Post balance sheet events

There have been no post balance sheet events other than as disclosed in this report.

 

15.   Financial information

The financial information in this announcement is derived from the audited financial statements for the year ended 30 June 2017.

 

The Annual Report for the year ended 30 June 2017 was approved by the Board of directors on 18 September 2017.  It is available on the Company's website www.aberdeenfrontiermarkets.co.uk and will be posted to shareholders. It will also be available from the registered office of the Company.

 

16.   Annual General Meeting

The Annual General Meeting of Aberdeen Frontier Markets Investment Company Limited will be held at 11 New Street, St Peter Port, Guernsey at 11:00 a.m. on 6 December 2017.

 

 

Registered office

11 New Street

St Peter Port

Guernsey

GY1 2PF

 

 

Enquiries:                                                                                                                        

 

Aberdeen Fund Managers Limited (Investment Manager to Aberdeen Frontier Markets Investment Company Limited)

William Hemmings / Gary Jones

Tel: +44 (0)20 7463 6000

 

Grant Thornton UK LLP (Nominated Adviser)

Philip Secrett

Tel: +44 (0)20 7383 5100

 

Numis Securities Limited (Nominated Broker)

David Benda

Tel: +44 (0) 20 7260 1275

 

18 September 2017

 

END       


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