TIDMAFMC
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 YEARED 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').
DIVIDS
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) GBP0.6663
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 GBP10m 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 GBP581bn 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
Fund Benchmark Difference
Country % % %
------------------- ------ ---------- -----------
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
----------------------------------------------------------------------------------------------------
Percentage
Market Value of net
Company Country cap Description $'000 assets
---------------- ---------- -------- -------------------------------------- ------- -----------
Sri Lanka's Largest listed
conglomerate with a diverse
portfolio of interests ranging
from container ports, hotels,
Sri property development and
John Keells Lanka $1.3bn food & retail. 4,432 5.6%
---------------- ---------- -------- -------------------------------------- ------- -----------
Biggest dairy company in
Vietnam, manufacturing and
distributing products derived
from milk, and also coffee
Vinamilk Vietnam $9.1bn and fruit. 4,219 5.3%
---------------- ---------- -------- -------------------------------------- ------- -----------
The Leading mobile network
operator in Kenya, with an
innovative alternative payments
Safaricom Kenya $7.0bn platform called M-Pesa. 4,093 5.2%
---------------- ---------- -------- -------------------------------------- ------- -----------
Largest private sector bank
Habib in Pakistan with a global
Bank Pakistan $3.8bn presence in over 25 countries. 3,307 4.2%
---------------- ---------- -------- -------------------------------------- ------- -----------
The fifth-largest bottler
in the Coca-Cola System in
terms of sales volume, with
operations in Pakistan, Kazakhstan,
Azerbaijan, Iraq and Libya,
Coca-Cola as well as their home market,
Icecek Turkey $2.5bn Turkey. 2,740 3.5%
---------------- ---------- -------- -------------------------------------- ------- -----------
Global provider of software
engineering and IT consulting
services out of Belarus,
Epam Systems Belarus $4.2bn Ukraine and Russia. 2,480 3.1%
---------------- ---------- -------- -------------------------------------- ------- -----------
Guaranty
Trust One of the leading private
Bank Nigeria $2.3bn sector banks in Nigeria. 2,455 3.1%
---------------- ---------- -------- -------------------------------------- ------- -----------
Private sector bank in Romania:
BRD Romania $2.0bn subsidiary of Societe Generale. 2,393 3.0%
---------------- ---------- -------- -------------------------------------- ------- -----------
Commercial Leading private-sector bank
International in Egypt with a universal
Bank Egypt $4.9bn banking model. 2,165 2.7%
---------------- ---------- -------- -------------------------------------- ------- -----------
Diversified group in Georgia
with the leading private
sector bank and a healthcare
BGEO Group Georgia $4.6bn / hospitals business. 2,137 2.7%
---------------- ---------- -------- -------------------------------------- ------- -----------
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 The Board keeps the
and objectives - the level of discount at
setting of an unattractive which the Company's
strategic proposition Ordinary shares trade
to the market and the as well as the investment
failure to adapt to objective and policy
changes in investor under review and the
demand may lead to the Board is updated at
Company becoming unattractive each Board meeting on
to investors, a decreased the makeup of, and any
demand for Ordinary movements in, the Shareholder
shares and a widening register.
discount at which the
Ordinary shares trade
relative to their NAV.
--------------------------------- --------------------------------------
Investment portfolio, The Board sets, and
investment management monitors, its investment
- restrictions and guidelines,
investing outside of and receives regular
the investment restrictions reports which include
and guidelines set by performance reporting
the Board could result on the implementation
in poor performance of the investment policy,
and inability to meet the investment process
the Company's objectives. and application of the
guidelines.
--------------------------------- --------------------------------------
Financial obligations The Board sets a gearing
- the ability of the limit and receives regular
Company to meet its updates on the actual
financial obligations, gearing levels the Company
or increasing the level has reached from the
of gearing, could result Investment Manager together
in the Company becoming with the assets and
over-geared and therefore liabilities of the Company
unable to take advantage and reviews these at
of potential opportunities each Board meeting.
and result in a loss
of value of the Company's
Shares.
--------------------------------- --------------------------------------
Financial and regulatory The financial risks
- the financial risks associated with the
associated with the Company include market
portfolio could result risk, liquidity risk
in losses to the Company. and credit risk, all
In addition, failure of which are managed
to comply with relevant by the Investment Manager.
regulation (including Further details of the
the Companies (Guernsey) steps taken to mitigate
Law, the Financial Services the financial risks
and Markets Act, the associated with the
Alternative Investment portfolio are set out
Fund Managers Directive, in note xx to the financial
Accounting Standards statements. The Board
and the AIM listing relies upon Aberdeen
rules, disclosure and to ensure the Company's
prospectus rules) may compliance with applicable
have a negative impact regulations and from
on the Company. time to time employs
external advisers to
advise on specific concerns.
--------------------------------- --------------------------------------
Operational - the Company The Board receives regular
is dependent on third reports from the Manager
parties for the provision on internal controls
of all systems and services and risk management
(in particular, those and receives assurances
of the Manager) and from its significant
any control failures service providers. Further
and gaps in these systems details of the internal
and services could result controls which are in
in a loss or damage place are set out in
to the Company. the Directors' Report
in the Annual Report
and Financial Statements.
Discount - factors which
affect the discount
to NAV at which the The Board keeps under
Ordinary shares of the review the discount
Company trade. These and may consider selective
may include the popularity buyback of shares where
of the investment objective to do so would be in
of the Company, the the best interests of
popularity of investment shareholders, balanced
trust shares in general against reducing the
and the ease with which overall size of the
the Company's Ordinary Company. Any shares
shares can be traded bought back would be
on the London Stock either cancelled or
Exchange. held in treasury.
--------------------------------- --------------------------------------
Political risk and exchange Given the nature of
controls - investments the risks to which the
in less developed markets Company's investments
are subject to a greater are subject, which are
degree of political those inherently associated
risk than that with with less developed
which investors might markets, there are limited
be familiar. options available to
the Board for mitigating
In addition, investments these risks. The Board
purchased by the Company believes that mitigation
may be subject, in the is best effected by
future, to exchange careful selection of
controls or withholding the constituents of
taxes. In the event the Company's portfolio
that exchange controls with high-calibre, financially-sound
or withholding taxes companies, with good
are imposed with respect management and excellent
to any of the Company's growth potential.
investments, the effect
will generally be to Investment in Frontier
reduce both the income Markets involves a greater
received by the Company degree of risk than
from its investments that usually associated
and/or the capital value with investment in major
of the affected investments. 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 Investment Manager
the risk that the portfolio, seeks to diversify market
managed by the Investment risk by investing in
Manager, suffers a fall a wide variety of companies
in its market value with strong balance
which would have an sheets and the earnings
adverse effect on shareholders' power to pay increasing
funds. The Company's dividends. In addition,
investments are subject investments are made
to normal market fluctuations across various countries
and the risks inherent in order to reduce the
in the purchase, holding risk of a single concentrated
or selling of equity exposure; at present
securities and there the Investment Manager
can be no assurance may not invest more
that appreciation in than 10% of the Company's
the value of those investments total assets in any
will occur. single stock at the
time of investment and
The Investment Manager's the Company will invest
investment process concentrates in between 30 to 80
on a company's business holdings.
strategy, management,
financial strength, The Investment Manager
ownership structure believes that diversification
as well as corporate should be looked at
governance, with a view in absolute terms rather
to seeking companies than relative to an
that it can invest in index. The performance
for the long term. This of the portfolio relative
quality test means that to the MSCI Frontier
there may be stocks Markets Index and the
which the Investment underlying stock weightings
Manager will not invest in the portfolio against
in due to a perceived their index weightings
lack of transparency are monitored closely
or poor corporate governance. by the Board.
--------------------------------- --------------------------------------
Liquidity risk - the Liquidity risk is not
Company, and/or its considered to be significant
Investment Manager may as, whilst liquidity
accumulate investment is limited in certain
positions which represent stocks which the Company
more than normal daily holds, the majority
trading volumes which of the Company's assets
may make it difficult comprise readily realisable
to realise investments securities which can
quickly. 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 Year ended 30
June 2017 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 As at
30 June 30 June
2017 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
Share Share
premium purchase Capital Revenue
For the year ended account reserve reserve reserve Total
30 June 2017 $'000 $'000 $'000 $'000 $'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 Share
premium purchase Capital Revenue
account reserve reserve reserve Total
For the year ended $'000 $'000 $'000 $'000 $'000
30 June 2016
--------------------------- ---------- ------------- ------------- ------------- -----------
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 Year ended
30 June 30 June
2017 2016
$'000 $'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 (87,936) -
paid
----------- -----------
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 2016
$'000 $'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 2016
$'000 $'000
Dividends from investments 1,573 915
Total investment income 1,573 915
------- -------
4. Investment management fees and other expenses
2017 2016
Revenue Capital Total Revenue Capital Total
$'000 $'000 $'000 $'000 $'000 $'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 GBP43,000 with effect
from April 2016 and an annual rate of GBP43,000 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 Capital Total Revenue Capital Total
$'000 $'000 $'000 $'000 $'000 $'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 GBP1,200 (2016: GBP1,200) 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 GBP4,847,000 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
Allotted,
issued
For the year ended 30 and fully Treasury
June 2017 Authorised paid 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
-------------------------- ------------ ------------- ---------
Allotted,
issued
For the year ended 30 and fully Treasury
June 2016 Authorised paid 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
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This information is provided by RNS
The company news service from the London Stock Exchange
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September 18, 2017 09:43 ET (13:43 GMT)
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