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RNS

Final Results

Released 07:00 20-Sep-2018

RNS Number : 2938B
Aberdeen Frontier Mkts Inv Co Ltd
20 September 2018
 

Aberdeen Frontier Markets Investment Company Limited

LEGAL ENTITY IDENTIFIER ('LEI'): 213800X9N731I4IPK361

ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 30 JUNE 2018

Overview

Financial Highlights

 


 

 

Net Asset Value ('NAV') per share total return (in US dollar terms) 1, 3


NAV per share (in US dollars)

 

 

-10.3%



$0.8090


 

 

2017

+13.7%


2017

$0.9295

 

 






 

 

Share price total return (in US dollar terms)  2, 3


Share price (in US dollars)

 

 

-12.0%



$0.7361


 

 

2017

+16.7%


2017

$0.8678

 

 






 

 

Net Assets (in US dollars)


Share price (in GB pounds)

 

 

$68.4million



£0.5575


 

 

2017

$79.4million


2017

£0.6663

 

 






 

1 Total return, NAV to NAV, gross income reinvested.

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

3 These are Alternative Performance Measures ("APMs")

 

Alternative Performance Measures ('APMs')

The disclosures as indicated in footnote 3 above are considered to represent the Company's APMs. In addition to the above APMs, other performance measures have been used by the Company to assess its performance.

 

Dividend (in US dollars)


for the year ended 30 June 2018

for the year ended 30 June 2017

Interim dividend paid

1 cent

1 cent

Final dividend proposed (2017: paid)

1 cent

1 cent

 

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.

Reference Benchmark

MSCI Frontier Markets Index in US dollar terms.

Management

The Company is managed by Aberdeen Fund Managers Limited (the 'Manager'), which is a wholly owned subsidiary of Standard Life Aberdeen 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').

Financial Calendar

12 December 2018

Annual General Meeting ("AGM") in Guernsey

19 December 2018

Final dividend payable for year ended 30 June 2018

February 2019

Announcement of Half-Yearly Financial Report for the six months ending 31 December 2018

June 2019

Interim dividend payable for year ending 30 June 2019

September 2019

Announcement of Annual Report and Accounts for the year ending 30 June 2019

Chairman's Statement


 

On behalf of your Board, I present to you the Annual Report for Aberdeen Frontier Markets Investment Company Limited (the "Company") for the year ended 30 June 2018.

 

Performance

Absolute and relative performance was disappointing during the year, not least following the initial, positive outlook for frontier markets more generally in 2018.

 

During the year under review the Company's NAV per share and share price total returns were -10.3% and -12.0%, respectively. This performance compared to a gain of 1.7% for the MSCI Frontier Markets Index (the reference "Index"), all figures in US Dollar total return terms.

 

The Company's investments in Pakistan, Vietnam and Sri Lanka underperformed while the underweight exposure, relative to the Index, of the Company to stocks in Kuwait was also unhelpful. Limits on foreign ownership in Vietnam and the effect of countries either leaving (Pakistan) or joining (Kuwait) the Index skewed equity flows overtaking the fundamental case supporting particular stocks in which the Company is invested. The Investment Manager's report gives a clearer insight into performance over the year and current positioning for the future.

 

As I have said before, fundamental stock-picking, based on research and a policy of meeting company managements before investment, remains at the core of the Manager's investment value approach and the resulting portfolios will often vary significantly from the Index. Our Investment Manager is index aware but certainly not index driven.

 

Tender Offer

Despite the Company's purchase into treasury of 852,500 Ordinary Shares during the year ended 30 June 2018, the Company's share price discount to NAV has at times traded wider than 10%.

 

In March 2017, the Company adopted a discount control 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 (30 June) exceed 10% then, at the discretion of the Board, the Company would, subject to any legal or regulatory requirements, implement a tender offer. Over the relevant period the average Ordinary Share price discount to the underlying ex income NAV was 10.47%.

 

Despite the Ordinary Share price trading in a relatively tight discount band below 10% prior to the three month period to 30 June 2018, dislocation in markets and negative sentiment in emerging markets generally caused by US tariff threats led to share price weakness and the discount widening through the monitoring period.

 

In line with stated policy the Board decided to implement a tender offer and on 2 July 2018 the Company announced its intention to implement a tender to purchase up to 15% of the Ordinary Shares currently in issue.

 

Having triggered the discount target set out above, the Board is aware that there exists appetite for the liquidity that can be provided by such a tender at a price close to NAV. Accordingly, and in line with the current discount control policy, Shareholders are being asked to approve the tender offer 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 the tender offer) on the Calculation Date.

 

The Board believes that the tender offer, despite causing the Company to shrink in net asset terms, strikes a fair balance between those Shareholders who wish to realise part of their investment in the Company at a value close to the NAV per Ordinary Share and those who wish to maintain their investment in the Company.

 

Discount Control Policy

 

As part of its ongoing programme of Shareholder engagement the Board has received feedback suggesting that it would be appropriate to allow the revised direct equity investment policy, which was only adopted in March 2017, a defined period of time to prove itself without being distracted by the potential for additional tenders or other discount control mechanisms. If, however, at the end of that defined period, the Company has failed to outperform its investment benchmark, the Board is mindful that Shareholders should be given the opportunity to fully exit their investment for cash.

 

The Board is very conscious that the revised investment policy saw the Company's portfolio only fully realigned in June 2017. In the light of the above the Board is proposing to adopt a new policy whereby discount triggered tenders or other discount control mechanisms will no longer be proposed. Instead, Shareholders will be given the opportunity to fully exit their investment in the Company for cash at the then prevailing NAV less applicable direct costs, including any realisation costs of underlying investments, in the event that the Share Price Total Return for the two year period from 1 July 2018 to 30 June 2020 fails to exceed the portfolio's reference benchmark, being the MSCI Frontier Markets Index (in sterling terms).

 

The Board also intends to seek annual renewal of the usual authority to buy back Ordinary shares in the market and will exercise such authority where it believes it is in the best interests of Shareholders to do so.

 

Ordinary resolutions seeking Shareholder approval for the proposed tender offer and this new policy, which replaces any previous discount control policy, will be put at an EGM of the Company to be held on 17 October 2018.

 

Ongoing Charges Ratio

 

Following implementation of the tender the size of the Company, in terms of its net assets, will decrease. The Board is of course very mindful of the costs incurred in managing an investment company and the fact that a fall in net assets will lead to a higher overall ongoing charges ratio (''OCR''). To that end, the Board is pleased to report that it has secured agreement from the Manager to seek to limit the Company's OCR to no more than 2% when calculated annually as at 30 June.

 

Until further notice, to the extent that the OCR exceeds 2% in any annual period, the Manager will rebate an equal amount of its management fee to the Company with the objective of bringing the OCR down to 2%. This rebate will, however, be capped such that the Manager, will not rebate more than an amount equal to one third of the Managers management fee for the relevant year in question. There can therefore be no guarantee that the overall OCR of the Company will, even given any rebate by the Manager, be limited to 2% of net assets. However, the Board will continue to monitor all costs on a regular basis and seek to reduce them wherever possible.

 

Dividend

A final dividend for the year ended 30 June 2017 of 1 cent (0.761832 pence) was paid to Ordinary shareholders on 13 December 2017.

 

In relation to the year ended 30 June 2018, an interim dividend of 1 cent (0.749995 pence) per share was paid to Ordinary shareholders on 29 June 2018. The Board is recommending to shareholders the payment of a final dividend for the year end of 1 cent per share. If approved by shareholders at the Annual General Meeting to be held on 12 December 2018, this dividend will be paid on 19 December 2018 to those shareholders who are on the register on 16 November 2018. The ex-dividend date will be 15 November 2018. The final dividend will be paid in sterling and the sterling dividend rate will be announced in due course.

 

The Board considers that a sustainable dividend forms an important part of shareholders' overall return and intends to continue to pay semi-annual dividends in line with previous guidance.

 

Aberdeen Standard Investments savings plans

Aberdeen Standard Investments 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 Standard'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 via our website at: aberdeenfrontiermarkets.co.uk.

 

Regulatory Changes

There have been a number of regulatory changes implemented or announced, recently. Investors should be aware that the Packaged Retail and Insurance-based Investment Products (PRIIPS) Regulation requires the Manager, as the Company's PRIIP "manufacturer," to prepare a key information document ("KID") in respect of the Company. This KID must be made available by the Manager to retail investors prior to a prospective investor making any investment decision and is available via the Company's website. The Company is not responsible for the information contained in the KID and investors should note that the procedures for calculating the risks, costs and potential returns are prescribed by regulation. We recommend that all investors should note that the figures in the KID may not reflect returns expected of the Company and that anticipated performance returns cannot be guaranteed.

 

The Criminal Finances Act 2017 introduced a new corporate criminal offence of "failing to take reasonable steps to prevent the facilitation of tax evasion".  The Board has confirmed that it is the Company's policy to conduct all of its business in an honest and ethical manner.  The Board takes a zero-tolerance approach to facilitation of tax evasion, whether under UK law or under the law of any foreign country.

 

Data protection rights were harmonised across the European Union following the implementation of the General Data Protection Regulation ("GDPR") on 25 May 2018.  The Board is taking the necessary steps to seek the appropriate assurances from its third party service providers to ensure compliance with the new regulations.

 

Future prospects

The Investment Manager continues to follow its fundamental stock-picking approach, focused on quality and involving considerable interaction with the management of potential and current investee companies. Aberdeen Standard Investments has a large dedicated emerging markets equity team which strongly believes that better returns can be seen over the longer term though investment in companies that it fully understands and visits on a regular basis.

 

As I explained in my interim report, certain of the larger weightings within the portfolio are in markets which offer limited market depth, resulting in the portfolio diverging, often markedly at times, from the reference Index and its returns.

 

Strong earnings growth is anticipated in key frontier markets in which the Company is invested, which should drive equity returns over the longer term, with lower overall volatility. The Board continues to remain convinced as to the merits of investing into frontier markets over the longer term and supports the Investment Manager in its efforts. The equity investing process has only been in place for what is effectively a short time period and a longer period to assess performance returns is required.

 

Both the Board and the Manager continue to seek ways to enhance liquidity in the shares through improving performance and a clear and focused marketing strategy.

 

John Whittle

19 September 2018

 

Investment Manager's Report


Market environment

Global equity market sentiment was constructive through most of the financial year under review, supported by firming global growth and hopes that the passage of US tax legislation would give a boost to the world's largest economy. Towards the end of the period, however, there was a marked return of volatility and renewed US dollar strength, stoked by raised expectations in respect of the Fed's withdrawal of monetary stimulus, as well as heighted risk aversion over trade tensions between the US and China. Risk assets thus witnessed a broad sell-off during the final quarter of the period, which was compounded by weakness witnessed in many frontier market currencies. The Argentinian Peso bore the brunt of the turn in market sentiment, declining 42.5% against the dollar during the reporting period, with the bulk of losses occurring in May and June.

Net fund flows into the frontier market asset class saw a stabilisation in 2017 after two years of significant outflows. Initially the outlook for 2018 was very promising, given the brighter macroeconomic backdrop globally. That outlook reverted somewhat during the first half of 2018, but in our opinion, a revival of investor interest in the asset class remains very likely once market jitters over monetary tightening in the US recede. After all, the fundamentals on the ground remain highly supportive, namely a clear improvement in macroeconomic stability and growth across most of our markets, and a visible cyclical improvement in corporate earnings, particularly in Africa.

The Company's three key exposures in Frontier Africa are Egypt, Kenya, and Nigeria. Egypt is implementing an IMF-supported structural adjustment programme that to date has delivered in-line with expectations, so business and consumer confidence is returning. Our investments in Egypt are making good operational progress, albeit the recovery remains fairly early stage and there is much further to go. Juhayna Food Industries, for instance, delivered 22% revenue growth and a 49% rise in operating profit during the first half of the current year. The positive trajectory is likely to be maintained, not least because the company's sales volumes remain materially below peak levels achieved in 2016. Meanwhile Commercial International Bank, another of the portfolio's holdings in Egypt, is on track to deliver its target of 25% earnings growth in 2018, supported by a robust recovery in lending and widening net interest margins.

Nigeria has also undergone a difficult period of transition post its series of currency devaluations, albeit without the support of the IMF. The firming oil price and more consistent oil production has brought the country's current account back into surplus and allowed the central bank to rebuild currency reserves, which reached US$48bn by the end of the period. While the economy remains sluggish in many respects (the IMF forecasts real GDP growth of just 2.1% in 2018), GDP acceleration and declining inflation has been supportive of domestic demand and corporate earnings. By way of example, Nestle Nigeria, achieved top-line growth of 12% and margin recovery (profit-after-tax expanded 30%) during the first half of 2018, and prospects are excellent for further improvement as consumer spending gathers pace next year. Zenith Bank reported a 9% improvement in profit-after-tax, despite regulatory one-off costs and a shrinkage of its loan book. The bank's annualised return on equity ("ROE") of 21.2% suggests that its valuation of 0.9x book is very attractive in the context of current returns and longer term growth prospects. Our other bank holding in Nigeria, Guaranty Trust Bank, delivered 14% growth in profit-after-tax with an annualised-ROE of 34.1%.

In Frontier Asia, Vietnam outperformed all other markets by a large margin, rising 41.3% in US dollar terms despite a pullback in April and May. The economic backdrop was highly supportive, with GDP growth accelerating to 6.8%, its fastest annual pace in a decade, supported by sustained export growth and foreign direct investment. The pace of urbanisation and rising incomes in the cities has been a boon for corporates in the country, hence most listed companies have been delivering impressive numbers. That said, there has been a violent divergence in equity performance between those listed companies with foreign-ownership headroom available, versus those without. Those companies without foreign-ownership headroom are impractical for foreign investors to trade and are excluded from the MSCI Vietnam index. As a result, foreign investor inflows to Vietnam have been, primarily, funnelled into a narrow band of MSCI index constituents, with local investors supporting the momentum of those particular names. As a consequence, this band of stocks has been squeezed higher and are, in our view, overvalued, while the remainder of the market has floundered. This dislocation of fundamentals from valuations has resulted in two of the portfolio's high-quality holdings, FPT Corp (FPT) and Mobile World Investment Corp (MWIC) trailing the market very significantly, despite excellent operational delivery. The portfolio held a position of 4.7% in FPT and 4.4% in MWIC at the close of the reporting period. FPT delivered 19.0% growth in profit-after-tax during the first half of the year, while MWIC grew its bottom line by 44.0%. Despite such excellent earnings results, both names currently stand at a P/E multiple discount of 50% to the that of the index. We believe that, in time, consistent earnings delivery by these two companies will entice back domestic investor interest, driving a convergence of valuations once more. It is also worth noting that, since both names are at their foreign-ownership limit, there is material hidden value to realise in the instance that the Company sells the holdings to another foreign investor.

Pakistan was a marked laggard over the period (the MSCI Pakistan index fell 33.6% in US dollar terms), despite annual GDP growth reaching a decade high as a result of the improved security situation and substantial government-backed investments in infrastructure. However, political disruption and a worsening trade balance weighed on the currency as well as equity market sentiment. The equity market retreated in anticipation of the inevitable; namely currency devaluation, monetary tightening and an external refinancing agreement. The success of Imran Khan and his Pakistan Tehreek-e-Insaf (PTI) party at the ballot box in July bodes well for Pakistan, but there will be further volatility leading up to either an IMF or other foreign funding package.

 

Aberdeen Frontier Markets Investment Company cumulative performance in USD for periods ended 30 June 2018


6 months

1 year

3 years

5 years

 


%

%

%

%

 

Share Price

-4.1

-12.0

-5.7

-1.7

 

NAV

-11.9

-10.3

-12.0

-4.0

 

MSCI Frontier Markets

-10.9

+1.7

+6.6

+24.9

 

 

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 Fund Managers Limited, Bloomberg

 

Performance review

During the twelve months to 30 June 2018 the Company's NAV per share and share price total returns were -10.3% and

-12.0% respectively. As a point of reference, the MSCI Frontier Markets index gained 1.7% over the same period. The discount to NAV at which the Company's shares trade stood at 9.0% at the end of the year as compared from 8.0% at 30 June 2017.

The benchmark held onto material gains for most of the reporting period, before losing ground during the final quarter to finish marginally above where the reporting year started. Heightened risk aversion globally weighed on our markets, but the brunt of this turn in sentiment was felt by Argentina, where the currency collapsed at the end of the period.

Absolute and relative performance was hindered by four factors: the portfolio's exposure to Pakistan, which left the benchmark last year and suffered equity declines for the reasons outlined above; our overweight to Sri Lanka, whose market declined as a result of a poor harvest, fiscal austerity, and a rise in the tax burden; the exposure to Vietnam via off-benchmark names, which lagged the liquidity-fuelled rally of the MSCI Vietnam index due to foreign-ownership restrictions as noted above; and the Company's underweight to Kuwait, which made gains as a result of the stronger oil price and news that the market is under review by MSCI with a view to upgrading to emerging markets status. On a more positive note, our significant underweight to Argentina was a material benefit, but not nearly enough to offset the detractors mentioned above.

Relative country positions

Country

Fund

Benchmark

Difference


%

%

%

Africa & Middle East

33.4

53.5

-20.1

Bahrain

-

3.8

-3.8

Egypt

5.6

-

5.6

Ghana

1.8

-

1.8

Ivory Coast

-

0.2

-0.2

Jordan

-

1.4

-1.4

Kenya

9.3

5.8

3.5

Kuwait

-

19.3

-19.3

Lebanon

1.2

2.0

-0.8

Mauritius

-

2.2

-2.2

Morocco

0.8

8.0

-7.2

Nigeria

10.1

7.8

2.3

Oman

0.6

1.4

-0.8

Senegal

-

0.8

-0.8

South Africa

1.3

-

1.3

Tanzania

1.4

-

1.4

Tunisia

-

0.8

-0.8

Turkey

1.3

-

1.3





Asia Pacific Ex Japan

45.5

20.4

25.1

Bangladesh

7.9

2.9

5.0

Myanmar

1.8

-

1.8

Pakistan

10.3

-

10.3

Sri Lanka

7.9

1.2

6.7

Thailand

1.9

-

1.9

Vietnam

15.7

16.3

-0.6





Europe Ex UK

8.2

9.2

-1.0

Belarus

1.5

-

1.5

Croatia

-

1.7

-1.7

Estonia

-

0.3

-0.3

Georgia

2.7

-

2.7

Kazakhstan

-

0.8

-0.8

Lithuania

-

0.2

-0.2

Romania

4.0

4.3

-0.3

Serbia

-

0.2

-0.2

Slovenia

-

1.7

-1.7





UK

1.0

-

1.0





Latin America

9.6

16.9

-7.3

Argentina

7.5

16.9

-9.4

Panama

2.1

-

2.1





Cash

2.3

-

2.3





Total

100.0

100.0

-

 

 

At 30 June 2018, the benchmark index had an adjusted market cap of US$121.2 bn and was composed of 115 companies across 29 countries (source MSCI).

Portfolio positioning

As at the end of June 2018 the portfolio had 54 equity investments, providing exposure to more than 21 economies. During the year the Company raised exposure to Frontier Asia to 45.5%, primarily as a result of new investments in Vietnam: FPT Corp, Vietnam's leading IT software outsourcing firm, Mobile World Investment Corp, Vietnam's leading electrical goods retailer, Masan Group, a major local consumer goods business, Nam Long Corp, a low-middle income residential real estate developer, Vincom Retail, Vietnam's leading mall developer, and TCB, a leading retail and commercial bank.

Elsewhere, we initiated two notable investments in Argentina: BBVA Frances, a leading retail and commercial bank, and IRSA Propiedades Comerciales, a shopping mall and office developer with an exceptional rental portfolio and pipeline of greenfield projects. In addition we made two new investments in Romania: Purcari Wineries, a vineyard and wine maker, and Sphera Franchise Group, a QSR operator of KFC, Pizza Hut and Taco Bell franchises in the country. Increased exposure to Asia was primarily funded by reduced exposure to the EMEA region, where we exited several names with inferior visibility with regard to earnings growth.

Market outlook

As we said in the interim report earlier this year, we believe corporate earnings in Frontier Africa are enjoying a cyclical recovery. In Frontier Asia, where the Company now has significant exposure, we expect another excellent year for corporate earnings in Vietnam, and continued solid results from our companies in Bangladesh, Pakistan and Sri Lanka. Pakistan and Sri Lanka have entered deep value territory and represent an opportunity, albeit macroeconomic challenges may linger some while longer. Turning to Argentina, the IMF package and reform programme agreed in June underpins an optimistic stance for the country in 2019 and we may look to raise exposure to the country on what are now, we believe, more palatable valuations.

For us, the outlook for frontier markets provides plenty of cause for optimism. Operational results from our investee companies, together with conversations on the ground, indicate that the corporate earnings recovery is set to continue. While volatility across various markets and some currencies have undermined the positives we are seeing in the short term, we expect these positive fundamentals to reflect in performance in the not too distant future.

The management style of the portfolio is benchmark aware but importantly not benchmark driven. In this respect we look across a wide array of countries with frontier market characteristics, including outside of the index, seeking out quality companies to invest in. This diversified portfolio of companies is managed with a mind to delivering strong performance over the medium to longer term at a low level of volatility. That said, there will be divergences away from the benchmark, as well as in relative performance. We remain committed to our investment approach, which entails rigorous interaction and engagement with companies. This allows us to identify those with solid long-term prospects and progressive management teams that will negotiate cycles and safeguard shareholder interests.

Aberdeen Fund Managers Limited

19 September 2018

 

Top 20 Investments


as at 30 June 2018

Company

     

Country

     


     


     

Value
$'000

     

Percentage
of net
assets(%)

FPT Corporation


Vietnam






2,713


4.0

Guaranty Trust Bank


Nigeria






2,534


3.7

John Keells


Sri Lanka






2,517


3.7

Mobile World Investment Corporation


Vietnam






2,427


3.6

Vietnam Dairy Products ('Vinamilk')


Vietnam






2,262


3.3

Safaricom


Kenya






2,137


3.1

BBVA Banco Frances


Argentina






2,087


3.0

Square Pharmaceuticals


Bangladesh






1,891


2.8

Grameenphone


Bangladesh






1,790


2.6

Commercial International Bank


Egypt






1,752


2.6

Equity Group Holdings


Kenya






1,742


2.5

IRSA Propiedades


Argentina






1,617


2.4

Shell Pakistan


Pakistan






1,456


2.1

Packages


Pakistan






1,442


2.1

Juhayna Food Industries


Egypt






1,442


2.1

Globant


Argentina






1,436


2.1

Copa Holdings


Panama






1,419


2.1

Commercial Bank of Ceylon


Sri Lanka






1,388


2.0

Zenith Bank


Nigeria






1,355


2.0

Fan Milk


Ghana






1,333


1.9

Top twenty holdings








36,740


53.7

Other holdings








30,191


44.1

Total holdings








66,931


97.8

Cash and other net assets








1,509


2.2

Net assets








68,440


100.0

 

 

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 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. 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.

 

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 investment objective and policy as well as the level of discount at which the Company's Ordinary Shares trade 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 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 within the notes contained in the Annual Report. The Board relies upon the Manager 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.


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 contained within the Annual Report.

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 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.aberdeenstandard.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.

 

 

For and on behalf of the Board

 

John Whittle

Director

 

David Warr

Director

 

19 September 2018

 

Statement of Comprehensive Income


 



Year ended 30 June 2018

Year ended 30 June 2017



Revenue

Capital

Total

Revenue

Capital

Total



$'000

$'000

$'000

$'000

$'000

$'000

(Losses)/gains on investments


-

(8,780)

(8,780)

-

16,695

16,695

Capital gains on currency movements


-

244

244

-

1,973

1,973

Net investment (losses)/gains


-

(8,536)

(8,536)

-

18,668

18,668

Investment income


2,329

-

2,329

1,573

-

1,573

Total (losses)/gains


2,329

(8,536)

(6,207)

1,573

18,668

20,241

Investment management fees


(260)

(519)

(779)

(476)

(952)

(1,428)

Other expenses


(794)

-

(794)

(754)

-

(754)

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


1,275

(9,055)

(7,780)

343

17,716

18,059

Finance costs


(26)

-

(26)

(47)

(94)

(141)

Net (loss)/profit before taxation


1,249

(9,055)

(7,806)

296

17,622

17,918

Withholding tax


(233)

-

(233)

(91)

-

(91)

Net (loss)/profit after taxation


1,016

(9,055)

(8,039)

205

17,622

17,827









(Losses)/earnings per ordinary share


1.19c

(10.61c)

(9.42c)

0.14c

12.16c

12.30c

 

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 (loss)/profit for the year and therefore the 'Net (loss)/profit 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 2018

As at 30 June 2017

 



$'000

 

Non-current assets




 

Investments at fair value through profit or loss


74,872

 





 

Current assets




 

Cash and cash equivalents


719

4,847

 

Sales for future settlement


855

7,313

 

Other receivables


390

 



12,550

 





 

Total assets


87,422

 





 

Current liabilities




 

Purchases for future settlement


                 -

7,112

 

Other payables


141

158

 

Tender offer liabilities


726

 



141

7,996

 




 

Total assets less current liabilities


79,426

 





 

Capital and reserves attributable to equity holders




 

Share capital and Share premium account


12,543

12,254

 

Capital reserve


55,546

66,135

 

Revenue reserve


351

1,037

 




 

Total equity


79,426

 




 

Net assets per Ordinary Share (US cents)


80.90c

92.95c

 

Exchange rate GBP/USD (mid market)


0.75735

0.76780

 

Net assets per Ordinary Share (pence)


71.37p

 

Approved and authorised for issue by the Board of Directors on 19 September 2018:

The notes form an integral part of these financial statements.

Statement of Changes in Equity


 

For the year ended 30 June 2018


Share capital and Share premium account
$'000

Capital reserve
$'000

Revenue reserve
$'000

Total
$'000

Opening equity


12,254

66,135

1,037

79,426

Revaluation on Tender offer


289

                  -

                  -

289

Purchase of own shares


                  -

(679)

                  -

(679)

(Loss)/profit for the year


                  -

(9,055)

1,016

(8,039)

Equity dividends paid


                  -

(855)

(1,702)

(2,557)

Closing equity


12,543

55,546

351

68,440



















For the year ended 30 June 2017


Share capital and Share premium account
$'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

 

The notes form an integral part of these financial statements.

 

Statement of Cash Flow


 


Year ended 30 June 2018
$'000

Year ended 30 June 2017
$'000

Operating activities



Cash inflow from investment income and bank interest

2,671

1,900

Cash outflow from management expenses

(1,601)

(2,273)

Cash inflow/(outflow) from foreign exchange movements

228

(363)

Cash outflow from taxation

(233)

(91)

Net cash flow from/(used in) operating activities

1,065

(827)

Investing activities



Cash inflow from disposal of investments

39,869

176,972

Cash outflow from purchase of investments

(41,355)

(89,796)

Net cash flow (used in)/from investing activities

(1,486)

87,176

Net cash flow (used in)/from operating and investing activities

(421)

86,349

Financing activities



Repayments of bank borrowings

-

(4,500)

Finance charges and interest paid

(26)

(150)

Equity dividends paid

(2,557)

(2,031)

Purchase of own shares

(679)

(310)

Proceeds from on-sale shares

-

12,129

Tender offer costs

(8)

(228)

Tender offer distributions paid

(437)

(87,936)

Net cash flow used in financing activities

(3,707)

(83,026)

Net (decrease)/increase in cash and cash equivalents

(4,128)

3,323

Cash and cash equivalents opening balance

4,847

1,524

Cash (outflow)/inflow

(4,128)

3,323

Cash and cash equivalents balance at 30 June

719

4,847

 

 

The notes form an integral part of these financial statements.

 

Notes to the Financial Statements


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 financial statements 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 held at 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) NAV 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 '(losses)/gains on investments' on the Statement of Comprehensive Income.

(c) Income from investments

Dividend income from 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. 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 the Alternative Investment Market ('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. 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 and at the date of this report, the Company did not have any borrowings.

(j) Cash and cash equivalents

Cash and cash equivalents in the financial statements 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

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 have been endorsed by the EU and 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 and endorsed by the EU but not yet effective during the year:

·   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 has considered the impact of the above standard. Based on their assessment, the standard is not expected to have a material impact on the Company's financial statements.

(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 held at fair value through profit or loss (see note 1(b)).

(o) Going concern

As discribed in the Directors' Report in the Annual Report, the Directors have adopted the going-concern basis in preparing the financial statements.


2018

2017

$'000

$'000

Quoted closed-end fund shares and warrants

-

1,699

Quoted direct equity investments

66,295

69,900

Quoted open-ended fund holdings

-

1,624

Open-ended fund and limited liability partnership investments

636

1,649

Total fixed asset investments at fair value

66,931

74,872

Investments at cost



Opening balance of investments at cost

76,320

149,508

Additions at cost

34,243

96,909

Disposals at cost

(32,770)

(170,097)

Cost of investments at 30 June

77,793

76,320

Revaluation of investments to fair value



Opening balance

(1,448)

(6,518)

Unrealised (losses)/gains taken to Capital reserve

(9,414)

5,070

Balance at 30 June

(10,862)

(1,448)

Fair value of investments at 30 June

66,931

74,872

  



(Losses)/gains on investments per Statement of Comprehensive Income



Gains on disposal of investments

634

11,625

Movement on valuation of investments held

(9,414)

5,070


(8,780)

16,695

 

3    Investment income


2018

2017

$'000

$'000

Dividends from investments

2,329

1,573

Total investment income

2,329

1,573

4    Investment management fees and other expenses


2018

2017


Revenue

Capital

Total

Revenue

Capital

Total

$'000

$'000

$'000

$'000

$'000

$'000

Investment management fees

260

519

779

476

952

1,428

Total investment management fees

260

519

779

476

952

1,428

Administration fees

145

-

145

198

-

198

Directors' fees

122

-

122

162

-

162

Depository and custody fees

301

-

301

172

-

172

Legal fees

-

-

-

2

-

2

Broker fees

33

-

33

32

-

32

Registrar's fees

38

-

38

32

-

32

Auditor's fees

28

-

28

27

-

27

Nominated adviser fees

27

-

27

26

-

26

Promotion

36

-

36

56

-

56

Other expenses

64

-

64

47

-

47

Total other expenses

794

-

794

754

-

754

Total expenses

1,054

519

1,573

1,230

952

2,182

 

The Company has agreed to pay a fee to Aberdeen Asset Managers Limited for the provision of promotional activities at an annual rate of £26,600 with effect from July 2017 (prior to that, the fee was at an annual rate of £43,000).

The Company's ongoing charges for the year ended 30 June 2018 calculated in accordance with the AIC methodology were 2.01% (2017: 1.66%). The ongoing charges figure does not include 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.


2018

2017


Revenue

Capital

Total

Revenue

Capital

Total

$'000

$'000

$'000

$'000

$'000

$'000

Facility costs and arrangement fees

             -

             -

             -

15

30

45

Interest charges

26

             -

26

32

64

96

Total finance costs

26

             -

26

47

94

141

6    Directors' fees

The fees paid or accrued were $122,000 (2017: $161,910). There were no other emoluments.

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 (2017: £1,200) during the year.

During the year, the Company suffered foreign withholding tax on income from investments totalling in aggregate $233,000 (2017: $91,256 ).

8    Earnings per Ordinary Share

Earnings per Ordinary Share is based on the net loss of $8,039,000 (2017: profit of $17,827,000) attributable to the weighted average of 85,316,533 (2017: 144,898,182) Ordinary Shares of no par value in issue during the year to 30 June 2018.

 

Supplementary information is provided as follows: revenue per Ordinary Share is based on the net revenue profit of £1,016,000 (2017: profit of £205,000) and capital loss per Ordinary Share is based on the net capital loss of £9,055,000 (2017: profit of £17,622,000) attributable to the Ordinary Shares.

9    Loans and overdraft facility payable

During the year, 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 2018, the Company did not have an overdraft facility (2017: the Company had a $6,000,000 revolving loan facility with Investec Bank Plc which was fully repaid and the agreement terminated in January 2017).

10  Share capital

Movement in Ordinary Shares of no par value

For the year ended 30 June 2018

Authorised

Allotted, issued

Treasury shares

and fully paid

Opening number of shares

Unlimited

85,452,608

450,000

Purchase of own shares

-

(852,500)

852,500

Closing number of shares

Unlimited

84,600,108

1,302,500





For the year ended 30 June 2017

Authorised

Allotted, issued

Treasury shares

and fully paid

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

 

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 (2017)

A third and final distribution was made to Ordinary Shareholders for validly tendered shares, returning an aggregate amount equivalent to $437,000 in February 2018.

Other purchases of own shares

There were 852,500 (2017: 450,000) Ordinary Shares re-purchased during the year at an aggregate cost to the Company of $679,000 (2017: $310,000), all of which are held in treasury.

11 Net Assets Value ("NAV") per Ordinary Share

NAV per Ordinary Share of $0.8090 (2017: $0.9295) is based on NAV of $68,440,000 (2017: $79,426,000) divided by 84,600,108 (2017: 85,452,608) 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 within the Annual Report. Fees payable to the Investment Manager are detailed in note 4 above. Other payables include accruals of basic management fees of $57,033 (2017: $66,284).

Aberdeen Asset Management PLC shareholding in the Company as at year end stood at 13,750,000 Ordinary Shares.

 

The Directors' shareholdings in the Company as at year end are disclosed in the Corporate Governance Statement contained within the Annual Report.

13  Dividends paid


Dividends paid during the year ended 30 June 2018

Dividends paid during the year ended 30 June 2017


Cents per Ordinary Share

Pence per Ordinary Share

Dividend paid out the Capital reserve 1,
US Dollar equivalent
$'000

Dividend paid out the Revenue reserve 1,
US Dollar equivalent
$'000

Cents per Ordinary Share

Pence per Ordinary Share

Dividend paid out the Capital reserve 1,
US Dollar equivalent
$'000

Dividend paid out the Revenue reserve 1,
US Dollar equivalent
$'000










Final dividend in respect of the year ended 30 June 2016 paid on 19 December 2016





1.200

0.964320

2,031

               -










Interim dividend in respect of the year ended 30 June 2017 paid on 11 August 2017

1.000

0.766947

855

               -














Final dividend in respect of the year ended 30 June 2017 paid on 13 December 2017

1.000

0.761832

               -

855














Interim dividend in respect of the year ended 30 June 2018 paid on 29 June 2018

1.000

0.766947

               -

847

















855

1,702



2,031

               -

1 Dividends are paid in sterling

















The Board is recommending to shareholders the payment of a final dividend for the year end of 1 cent per share. If approved by shareholders at the Annual General Meeting on 12 December 2018, this dividend will be paid on 19 December 2018 to those shareholders who are on the register on 16 November 2018. The ex-dividend date will be 15 November 2018. The final dividend will be paid in sterling and the sterling dividend rate will be announced in due course.

14  Subsequent events

Tender Offer (2018)

As described in the circular dated 17 September 2018, the Company put forward proposals for a tender offer under which shareholders have the ability to tender up to 15% of their Ordinary Shares held.

15  Financial information

The financial information in this announcement is derived from the audited financial statements for the year ended 30 June 2018.

 

The Annual Report for the year ended 30 June 2018 was approved by the Board of Directors on 19 September 2018.  It will be made available on the Company's website 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 12 December 2018.

 

 

 

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 30 June 2018

NAV per Ordinary Share (GB Pounds equivalent)


a


0.6127

Share price (in GB Pounds)


b


0.5575

Discount


(b÷a)-1


9.0%






Ongoing charges





A measure, expressed as a percentage of average NAV, of the regular, recurring annual costs of running an investment company.

Year end 30 June 2018




$'000

Average NAV


a


78,345

Annualised expenses


b


1,573

Ongoing charges


b÷a


2.01%






Premium





The amount, expressed as a percentage, by which the share price is more than the Net Asset Value per share.

There is no calculation of premium shown as the Company's Ordinary Shares were trading at a discount of 9.0% at the period end.






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.

Year end 30 June 2018



Share price

NAV

Opening at 1 July 2017 (in US dollars)

a


0.8678

0.9295

Closing at 30 June 2018 (in US dollars)

b


0.7361

0.8090

Dividend adjustment factor

c


1.0375

1.0303

Adjusted closing (d = b x c)

d


0.7637

0.8335

Total return

(d÷a)-1


-12.0%

-10.3%






n/a = not applicable





 

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

 

19 September 2018

 

END

 

 


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