REG - Aberdeen Emerg IncCo - Final Results
Aberdeen Emerging Markets Investment Company Limited
Looking for the best-of-breed emerging market funds
Annual Financial Results
31 October 2020
"Aberdeen Emerging Markets Investment Company Limited ("AEMC" or the "Company") is a closed-end investment company with its Ordinary shares listed on the Premium Segment of the London Stock Exchange. It offers investors exposure to some of the best investment talent within the global emerging markets of Asia, Eastern Europe, Africa and Latin America."
Financial Highlights
Net asset value ("NAV") per
Ordinary share total return1,4
NAV per Ordinary share2
Ordinary share price total return1,4
+8.9%
698.3p
+12.2%
2019
+14.1%
2019
663.3p
2019
+13.2%
Ordinary share price - mid market
MSCI Emerging Markets Net Total
Return Index in sterling terms
Net Assets
605.0p
+8.2%
£321.0m
2019
561.0p
2019
+10.3%
2019
£304.9 million
Net gearing4
Revenue return per Ordinary share
Dividends per Ordinary share3
1.6%
1.60p
22.0p
2019
8.0%
2019
2.41p
2019
21.00p
Ongoing charges ratio ('OCR')4
Discount4
1.02%
13.4%
2019
1.07%
2019
15.4%
1 Performance figures stated above include reinvestment of dividends on the ex-date
2 See note 14 in the Notes to these Financial Statements for basis of calculation
3 Dividends declared for the year in which they were earned
4 Definitions of these Alternative Performance Measures ('APMs') together with how these have been calculated can be found below
Financial Calendar
Financial Calendar
Expected payment dates
of quarterly dividends26 March 2021
25 June 2021
24 September 2021
24 December 2021
Annual General Meeting
(Guernsey)20 April 2021
Half year end
30 April 2021
Announcement of
Half-Yearly Financial
Report for the six months
ending 30 April 2021June 2021
Financial year end
31 October 2021
Announcement of Annual
Report and Accounts
for the year ending
31 October 2021February 2022
Chairman's Statement
For the Year Ended 31 October 2020
Overview
I am pleased to report that over the year to 31 October 2020 the Company's net asset value ("NAV") total return per Ordinary share was 8.9%. This compares favourably with a total return of 8.2% from the Company's benchmark, the MSCI Emerging Markets Net Total Return Index (in sterling terms), and reflects a significant recovery following the fall in the NAV of more than 11% for the first half of the financial year.
The Ordinary share price total return for the year was 12.2%, as the discount to NAV at which the Company's shares trade narrowed slightly, to 13.4%, from 15.4% at the start of the financial year. At the time of writing, the discount to NAV stands at 13.0%.
The year under review was dominated by the global impact of the COVID-19 pandemic which caused significant volatility in equity markets. The Company's benchmark index suffered a peak to trough decline of just over 25% between late January and March 2020 as the global spread of the virus led most countries to introduce social and economic restrictions which severely impacted economic activity, leading to a deep global recession. In a number of emerging markets, the weak performance was compounded by commodity price declines and the associated impact of these on currencies.
In response to the crisis, governments and central banks around the world, including those in virtually all emerging markets, implemented unprecedented fiscal and monetary stimulus measures to support their economies. This helped rebuild investor confidence; during the period from late March 2020 until the end of the financial year, the benchmark index rose by more than 31%.
Within emerging markets, Asia, and in particular China, continued to outperform as aggressive measures were introduced to control the spread of the virus, enabling an earlier easing of the lockdown and resumption of economic activity than in many other parts of the world. Latin America, however, was the worst performing emerging market region during the year, declining by more than 33% as the spread of the virus accentuated the economic challenges for the region.
Fund selection contributed strongly to the outperformance during the year, with notable contributions from certain funds invested in China and South Korea. The same was also true in Eastern Europe. However, within these regions, the portfolio's underweight exposure to China and Taiwan, and overweight exposure to Russia and Columbia, detracted from an asset allocation point of view. Whilst the portfolio remains less exposed to China than the benchmark, we would emphasise that it still constitutes over a third of the portfolio in absolute terms.
The Company's performance also benefited from discount narrowing within the closed end fund sector during the latter part of the year, as investor sentiment improved compared to the earlier part of the year.
A more detailed explanation of the year's performance and portfolio activity during the year is provided in the Investment Manager's Report.
Dividends
The Board believes that one of the attractions of the Company is its policy of making quarterly distributions by way of dividends to be funded from a combination of income and capital. This policy has been adopted by the Board in the belief that the level of dividends paid by emerging market companies over the long term is an increasingly important attraction for investors seeking to invest in the emerging market asset class.
Three interim dividends, each of 5.5p per share, were paid on 27 March, 26 June and 25 September 2020 and, since the year end, a fourth and final interim dividend in respect of the year of 5.5p per share was paid on 18 December 2020. This brings the total dividends for the year to 22.0p per share.
For future years, the Board intends to continue to pay interim dividends on a quarterly basis and it is anticipated that the total dividends for the year ending 31 October 2021 will be no less than 23.0p per share, a 4.5% increase on the level of dividends paid last year, representing a yield of 3% based on the share price of 752.5p as at 16 February 2021. Accordingly, the Board declares a first interim dividend for the current financial year of 5.75p per share, which will be paid on 26 March 2021 to shareholders on the register on 26 February 2021.
The Board will put a resolution to shareholders at the AGM in respect of its policy to declare four interim dividends each year, and will include this as a resolution at future AGMs. The payment of any dividends will be subject to compliance with all necessary regulatory obligations of the Company, including the Guernsey Law solvency test, compliance with its loan covenants, and will also be subject to the Company retaining sufficient cash for its working capital requirements.
Loan Facility and Gearing
The Company has a £25 million multi-currency revolving loan facility which is due to mature on 26 March 2021. The Board believes that the use of gearing, which is one of the advantages of a closed ended structure, within pre-determined ranges and at times when the Investment Manager sees attractive investment opportunities, is beneficial to the longer term performance of the Company.
The loan was fully drawn for part of the year, but in light of the Investment's Manager's cautious view of markets, half of the facility was repaid leaving £12.5 million drawn down at the year end. Gearing, net of cash, at the year end was 1.6% compared to 8.0% at the start of the year. Since the end of the year the loan has been drawn down in full.
The Company has commenced discussions with its bankers and the Board expects to renew the facility on similar terms when it matures in March this year.
Share Buy Backs
The Company did not buy back any shares during the year.
The Board's policy in relation to discount control is that it considers it desirable that the Company's shares do not trade at a price which, on average, represents a discount that is out of line with the Company's direct peer group. To assist the Board in taking action to deal with a material and sustained deviation in the Company's discount from its peer group, it seeks authority from Shareholders annually to buy back shares. Shares may be repurchased when, in the opinion of the Board and taking into account factors such as market conditions and the discounts of comparable companies, the Company's discount is higher than desired and shares are available to purchase in the market. The Board is of the view that the principal purpose of share repurchases is to enhance net asset value for remaining shareholders, although it may also assist in addressing the imbalance between the supply of and demand for the Company's shares and thereby reduce the scale and volatility of the discount at which the shares trade in relation to the underlying net asset value.
Shares in Public Hands
The Board has previously announced that the number of Ordinary shares which are deemed by the Listing Rules to be held in public hands is below the minimum 25% threshold. The Listing Rules provide that shares are not considered to be held in public hands ("free float") if they are held by persons (or persons in the same group or persons acting in concert) who have an interest in 5% or more of a listed company's share capital, as well as shares held by directors of a listed company.
In September 2019, the Company announced that the FCA had agreed to modify the relevant Listing Rule for the period up until 21 August 2020 to permit a reduced level of shares in public hands, even though the level was below 25%. Significant efforts have subsequently been made by the Company and its advisers to increase the shares in public hands through additional marketing efforts, but progress has been hindered by the emergence of the COVID-19 pandemic and lockdown measures that have been adopted. Accordingly, the Company has sought and received the agreement of the FCA to extend the period of the Listing Rule modification to 21 August 2021. During this time the Company will continue to monitor its share register, which currently shows a free float of approximately 16%, keep the FCA informed of any relevant developments and work towards restoring the number of shares in public hands.
Compliance with US Executive Order 13959
Following the US Presidential Executive Order 13959 dated 12 November 2020, which prohibits US Persons from purchasing "publicly traded securities" of certain 35 Chinese companies identified as Communist Chinese Military Companies, the Company can confirm that it has no direct investments in any of these 35 companies. It does, however, have indirect exposure via a number of its holdings. Following analysis of the Company's holdings by the Manager, this indirect exposure only amounts to approximately 0.6% of the Company's net asset value. The Company does not expect to have any exposure (direct or indirect) to these 35 companies by 11 November 2021.
Updates on this matter will be provided through the Company's website.
Annual General Meeting ("AGM")
The AGM will be held at 12 noon on 20 April 2021 at 11 New Street, St Peter Port, Guernsey, GY1 2PF. We would encourage all shareholders to complete and return the proxy form enclosed with the Annual Report so as to ensure that your votes are represented at the meeting. If you hold your shares in the Company via a share plan or a platform and would like to attend and/or vote at the AGM, then you will need to make arrangements with the administrator of your share plan or platform. For this purpose, investors who hold their shares in the Company via the Aberdeen Standard Investments Plan for Children, Share Plan or ISA will find a Letter of Direction enclosed. Shareholders are encouraged to complete and return the Letter of Direction in accordance with the instructions printed thereon.
The Board has been considering how best to deal with the potential impact of the COVID-19 pandemic on arrangements for the Company's AGM. The Company is required by law to hold an AGM and the Board has been working on the basis that the Company's AGM would be held on 20 April 2021 as previously scheduled. However, given the possibility that some measure of restriction on public gatherings and maintaining social distancing may remain in place in April, the Board will give further consideration to the format of the AGM for this year. If the guidance on public gatherings remains in place in April, shareholders are strongly discouraged from attending the meeting and indeed entry may be refused if the law and/or Government guidance so requires. In such circumstances, arrangements will be made by the Company to ensure that the minimum number of shareholders required to form a quorum will attend the meeting in order that the meeting may proceed and the business concluded.
In light of the developing situation, shareholders are encouraged to raise any questions in advance of the AGM with the Manager at aberdeen.emerging@aberdeenstandard.com (please include 'AEMC AGM' in the subject heading). Questions must be received by 12 noon on 16 April 2021. Any questions received will be replied to by either the Manager or Board via the Company Secretary.
Further information will be included on the Company's website (www.aberdeenemergingmarkets.co.uk) in advance of the AGM.
The Notice of the Meeting is contained on pages 80 to 82 of the Annual Report.
Board Composition
As previously announced, having served as a Director since the Company's Reconstruction in 2009, John Hawkins will retire at the AGM on 20 April 2021. On behalf of the Board I would like to thank John for his significant contribution to the Company during his time as a Director. He shall be much missed and I wish him well for the future.
Outlook
On the whole, emerging markets have been less impacted by the COVID-19 pandemic than most commentators feared at the outset, and there is evidence to suggest that emerging market economies will recover faster than developed markets and emerge less indebted. The recent weakening of the US Dollar provides a welcome tailwind for emerging market currencies, which should result in more interest from investors in emerging markets in the years ahead than they have received in the recent past.
The Board continues to believe that the Company's approach of investing through a portfolio of specialist funds, often at a discount to NAV, provides an attractive means for investors to benefit from these positive short term developments as well as capturing the longer term opportunities presented by this diverse asset class.
Mark Hadsley-Chaplin
Chairman
18 February 2021
Strategic Report
The Company's investment objective is to achieve consistent returns for shareholders in excess of the MSCI Emerging Markets Net Total Return Index in sterling terms (the "Benchmark").
Investment Manager's Report
Market Environment and the Impact of COVID-19
While the global impact of the COVID-19 pandemic dominated the year under review and caused significant volatility, emerging market equities recorded a gain of 8.2% for the year, a remarkable outcome under the circumstances.
After a benign start to the year, by late March 2020 global economies and markets found themselves in the depths of the COVID-19 induced panic. The emerging markets index suffered a peak to trough decline of just over 25% between late January 2020 and its March 2020 low as the global spread of COVID-19 led most countries to introduce social and economic restrictions which severely impacted economic activity, prompting the deepest global recession since World War II. In a number of emerging markets, the weak performance was compounded by commodity price declines and the associated impact of this on currencies. In response to the crisis, governments and central banks around the world, including virtually all emerging markets, implemented unprecedented fiscal and monetary stimulus measures with the aim of ameliorating the worst of the economic impact. These measures spurred a rebound in investor sentiment and over the remainder of the period the emerging markets index rallied sharply, gaining 31.9% between late March and the end of October.
In general, the impact of the pandemic has been to accelerate pre-existing trends in emerging markets, as in other asset classes. Thus, the underperformers of recent years saw their margin of underperformance expand, while the relative "winners" continued to deliver impressive returns. This was evident in the "melt-up" of growth companies compared to those in traditional value / cyclical sectors, with the former outperforming the latter by almost 35% over the year (MSCI Emerging Markets Growth Index +25.9%, MSCI Emerging Markets Value Index -8.5%). This represents the largest deviance between the two measures over a twelve month period since their inception in 2000. Asia continued to outperform the rest of emerging markets and larger companies continued to outperform smaller ones. The benchmark saw further concentration at a country and a company level, with the top three largest constituent countries now comprising 67.8% (compared with 56.0% a year ago) and the 10 largest companies comprising 32.5% (compared with 23.2% a year ago).
Emerging Asia gained 20.1% in aggregate, largely as a consequence of the resilient performance of index heavyweight China. Despite being the epicenter of the COVID-19 outbreak, China implemented aggressive measures to control the spread of the coronavirus quickly and effectively, enabling a gradual resumption of economic activity as the lockdown was eased earlier than in many other parts of the world. Corporate earnings data was robust and allowed the market to shrug off concerns over ongoing friction with the US, while local sentiment was buoyed by state media reports early in July that suggested local equities were ready for a "healthy bull market". Within China, as elsewhere, the market was led by those stocks seen as beneficiaries of the pandemic. Many of these are largely "online" businesses and thus those companies active in e-commerce, social media and electronic gaming were amongst the biggest gainers. Such stocks included Alibaba Group and Tencent Holdings, the two largest stocks in the Chinese index, which gained 72.4% and 86.7% respectively and were responsible for almost two thirds of that market's gain. The other large North Asian markets of South Korea and Taiwan also benefitted from being "first in, first out" as well managed pandemic response plans helped both countries deal more efficiently with the crisis than was the case in many other parts of the world. Taiwan gained 26.4% over the year while South Korean equities rose by 14.1% with both markets also benefitting from the positive sentiment towards technology stocks. The impacts of the pandemic were felt more keenly in the rest of Asia and that was reflected in stock market performance. Despite a sharp rebound in the second half of the period, Indian equities declined 2.6% with performance in the earlier part of the period hampered by the perception of being behind the curve in its response to the coronavirus. As well as coping with a shutdown of its tourism sector, a major source of income and employment, Thailand ended the year in a State of Emergency, imposed against a backdrop of pro-democracy protests demanding the removal of the Prime Minister. The market was the weakest performer in the region, falling 30.8%. Indonesia also fared poorly, losing 21.2%, although there was some good news late in the period as parliament approved the Omnibus Law - a broad based reform aimed at simplifying labour regulations, licensing procedures and improving the ease of doing business.
In Eastern Europe, the Middle East and Africa, the regional index fell by 18.0% and all constituent markets ended the period in negative territory. The Russian market fell by 29.3% which reflected a sharp decline in energy stocks over the period. The price of Brent crude fell by 37.2% in sterling terms as the pandemic depressed demand in a world where renewable energy continues to gain traction. Despite this, Saudi Arabia (-0.9%), Qatar (-3.4%) and the United Arab Emirates (-11.3%) all proved relatively defensive, with measures to contain the coronavirus within their populations proving effective and US dollar pegs serving to avoid the currency declines seen in oil producing countries with floating currencies. The South African market fell 13.3%, despite a 36.4% gain from index heavyweight Naspers, which derives the majority of its value from its holding in Tencent Holdings. In Eastern Europe, equity markets in Hungary (-30.3%), the Czech Republic (-25.7%) and Poland (-37.3%) were all significantly impacted by the pandemic. Turkey was also amongst the weaker markets, declining by 33.3%, largely as a consequence of currency weakness.
Latin America was the worst performing emerging market region, declining 33.2% as the spread of COVID-19 accentuated the economic challenges for the region, notably through the weakness in commodity prices1 and the resulting impact on currencies. Brazil, the largest market in the region, lost 38.1% as the real depreciated by over 30% against sterling. Chilean equities fell 28.1% against a backdrop of macro and political headwinds while Mexican stocks lost 21.4%.
Fund Performance
During the financial year, the Company's net asset value ("NAV") per share total return was 8.9% while the MSCI Emerging Markets Net total return index (the "Benchmark") returned 8.2%. The ordinary share price total return was 12.2%, as the discount to NAV at which the Company's ordinary shares trade narrowed to 13.4% from 15.4% at the start of the financial year.
The Company's NAV total return for the year was 0.7% ahead of the Benchmark. Attribution analysis follows in Table 1 below and shows that underlying holdings, in general, outperformed their benchmarks. Discount narrowing on closed end funds also made a positive contribution while asset allocation by country was detrimental to relative performance.
In Asia, the Company's investments in Korea performed strongly, with Weiss Korea Opportunity Fund (NAV +39.6%) and Korea Value Strategy Fund (+54.7%) both significantly outperforming the broader market (MSCI Korea +14.1%). The managers of both funds invest with a strong value bias, with Weiss expressing this through investments in deeply discounted preferred shares. In China, Fidelity China Special Situations performed exceptionally (NAV +61.3%), with strong stock selection combining with diligent use of gearing and selected exposure to private companies, as permitted by the fund's closed end structure. Elsewhere in Asia, Thai specialist, Ton Poh Fund (-1.6%) had a strong year in relative terms with its portfolio of small to mid-sized growth stocks faring well in a challenging environment where the local index fell by close to 31%, while Schroder AsiaPacific Fund also outperformed (NAV +24.1% compared with MSCI Asia Pacific Ex Japan +11.8%) through good stock selection within communication services and financials. In Eastern Europe, the long-standing investment in Baring Vostok (private equity in Russian and former CIS states) enjoyed a burst of portfolio activity towards the year end with top holding Kaspi (which operates the largest payments, marketplace and financial technology ecosystem in Kazakhstan) listing in London and delivering a significant uplift to performance. The fund's share price rose by 14.8% over the year (vs MSCI Russia -29.3%). Emerging Europe (ex Russia) specialist Avaron Emerging Europe Fund reinforced its long track record of low downside capture with NAV -21.4% compared to -34.8% for the MSCI Eastern Europe Ex Russia Index. Within the Company's frontier market allocation, Romanian holding Fondul Proprietatea delivered another period of good absolute and relative returns (NAV +7.6%).
Relative detractors included dividend focused strategies in Asia (Schroder Oriental Income Fund Limited NAV +1.3%, and Aberdeen Asian Income Fund NAV -0.8%) as dividend payments were cut in the underlying portfolio companies (we estimate by around 15% over the year) and dominant growth companies in the region (which tend not to feature in these portfolios given their tendency to not pay dividends) powered ahead. The holding in Neuberger Berman - China Equity Fund (+21.1%) detracted from relative performance as its focus on quality growth at reasonable valuations led it to be underexposed to some of the largest contributors to the market's gain. Schroder International Selection Taiwanese Equity Fund (+19.4%) failed to match its benchmark (MSCI Taiwan +26.4%) on account of a structural underweight in Taiwan Semiconductor Manufacturing Company, which rallied by close to 60% over the period and represented 45.1% of the Taiwanese Index at the end of the year.
Asset allocation detracted from relative performance. This was largely a consequence of the Company's underweight positioning in China and Taiwan, which outperformed the broad emerging markets index by 26.9% and 18.2% respectively. Despite the Company having more than 40% of NAV invested in these two markets, this reflects an underweight position relative to a Benchmark in which a combination of China and Taiwan now represents close to 56%. Elsewhere, overweight positions in Russia and Colombia detracted while major underweights in South Africa, Brazil, Mexico, India and Malaysia contributed positively.
Closed End Fund discounts contributed to the Company's outperformance with discount narrowing in the latter stages of the year reflecting a general improvement in investor sentiment from the depths of the COVID-19 crisis. The largest contributors were Fidelity China Special Situations and Gulf Investment Fund; the former saw its discount narrow by over 10% over the year to trade at parity by the end of period while the latter saw its discount narrow to 4.5% ahead of the publication of details of a full exit opportunity. For the period as a whole, the weighted average discount to NAV of the Company's closed end holdings narrowed from 10.3% to 8.5%.
Table 1: NAV performance attribution for the year ended
31 October 2020
Fund Selection
6.7%
Asia
2.9%
EMEA
3.6%
Latin America
0.2%
Global Emerging Markets
0.0%
Asset Allocation
(5.8%)
Asia
(2.5%)
EMEA
(2.5%)
Latin America
(0.2%)
Cash/Gearing (direct and underlying)
(0.6%)
Closed End Fund Discounts
0.8%
Fees and Expenses
(1.0%)
NAV excess return*
0.7%
* The above analysis has been prepared on a total return basis.
Portfolio Positioning
The composition of the portfolio by vehicle type is shown below. The most significant change over the period was that the Company moved from being 107.8% invested at the start of the year to just 101.2% of net assets by the end of the financial year. Gearing was reduced towards the end of April 2020 following discussions with the Company's Directors and an agreement that it was prudent to adopt a slightly more cautious stance given the wide range of possible pandemic outcomes at that time. The allocation of net assets to open ended funds declined by around 5% during the year, while closed end fund exposure fell by just over 1%.
October 2020
October 2019
Closed ended investment funds
49.1%
50.1%
Open ended investment funds
51.3%
56.3%
Market access products
0.8%
1.4%
Cash and other net assets
-1.2%
-7.8%
Net assets
100.0%
100.0%
The Company's geographic allocation is shown below. On a regional basis the most notable change was an 8.2% increase in exposure to Asia which resulted from a combination of market performance and investment activity. Active changes reflected the belief that the pandemic likely delayed the recovery in economic performance and thus sentiment towards non-Asian markets for which the Company had been positioned coming into 2020.
China's weight increased to 38.2%, reflecting the country's resilient performance during the period and the initiation of a 5.0% position in the Neuberger Berman China Bond Fund at the end of June 2020. From a top down perspective, we view China favourably but are mindful of the risks associated with having such a large proportion of the Company's portfolio invested in a single country. We believe that the China Bond Fund allows us to add to the long term opportunity presented by China's capital markets but in a more risk-aware manner than adding to the fund's already substantial equity exposure. In the second half of the year, we trimmed sizeable positions in the Aberdeen Standard China A Share Equity Fund and Fidelity China Special Situations, both of which had performed admirably since the market lows in March 2020.
Exposure to South Korea increased to 13.7%, reflecting strong market returns and significant outperformance from the Company's dedicated investments in that market. Taiwan's weighting declined to 8.1% despite the market's outperformance as a result of an exit from a small holding in Taiwan Fund in late 2019 and a scaling back of the position in Schroder's Taiwanese Equity Fund. India saw a reduction in its allocation to 4.8%, reflecting a tender offer and subsequent exit from JPMorgan Indian Investment Trust. Indonesia fell to just 0.8% as redemption proceeds were received from Komodo Fund, which decided to liquidate during the year.
The increase in Asia's allocation was, in large part, at the expense of Latin America, where the Company moved from an overweight to an underweight position over the year. Besides market performance, the decline was driven by the redemption of the Company's position in Brown Advisory Latin American Fund which was completed in August 2020. This was driven by a combination of asset allocation and manager selection considerations, with Latin American markets remaining challenged on a number of fronts (currency weakness, unsettling politics, relatively poor response to COVID-19) while the underlying strategy (which has a focus on consumer companies) had failed to deliver on a relative basis for several years.
The allocation to the Europe, Middle East and Africa region also fell over the year. Partial redemptions from a number of regional vehicles (Avaron Emerging Europe Fund, QIC GCC Equity Fund and Laurium Limpopo in Africa) were utilised to pay down gearing in April 2020, while we also trimmed exposure to Russia through exiting a small holding in JP Morgan Russian Securities and via a tender offer from Baring Vostok. We took profits on Fondul Proprietatea while the company also continued to distribute capital back to shareholders by way of dividends and tender offers. In the latter months of the year, Turkey began to screen attractively, justifying increased exposure through an exchange traded fund. South Africa remained a very significant underweight throughout the period with an already challenging macroeconomic backdrop being compounded by the impact of COVID-19.
We continue to believe that many frontier markets, whilst increasingly marginalised and thus overlooked by most investors, are attractively valued and likely to deliver attractive returns for patient allocators of capital. At the end of the year, 12.5% of the Company's portfolio was allocated to frontier markets equities and fixed income. Towards the end of the period, we initiated a holding in BlackRock Frontiers Investment Trust, acquiring shares at a discount to NAV in excess of 6%, an attractive entry point given the low valuation of the portfolio (including a dividend yield of over 5%) and the company's tendency to trade around net asset value. Investors are given the opportunity to exit all or part of their investment at NAV less cost every five years, with the next such opportunity in early 2021. Around a third of the Company's frontier allocation remains in the in-house managed Aberdeen Standard Frontier Markets Bond Fund, which offers the potential for good absolute returns from a portfolio of predominantly US dollar denominated sovereign bonds issued by a wide range of frontier countries. At the end of October 2020, this portfolio had a yield to maturity of 9.9%, representing a 5.0% spread over mainstream emerging market hard currency debt, a pricing differential that, in our view, is unjustified by fundamentals. Underlying exposure is to countries as diverse as Ukraine, Ivory Coast and Kenya, bringing further diversification to the Company's portfolio.
The Company participated in several accretive corporate actions during the year. JP Morgan Indian Investment Trust completed a tender offer for 25% of shares in issue in February 2020. With a surprisingly low participation rate, there was substantial scaling-up and we exited 60% of the Company's position at a significant premium to the prevailing market price. The Company also benefitted from several modest tender offers in Romanian holding Fondul Proprietatea, selling stock at a premium to prevailing market levels each time. In late 2019, we also took advantage of a liquidity window provided by a share buyback by Russian private equity specialist Baring Vostok that was conducted at a price materially higher than it had traded at over prior months. The Company retains exposure to a number of closed end funds with the potential for future corporate activity through full exit opportunities (Gulf Investment Fund, BlackRock Frontiers Investment Trust, Weiss Korea Opportunity Fund), ongoing regular tenders (Fondul Proprietatea) or conditional tenders (BlackRock Latin American Investment Trust, Genesis Emerging Markets Fund).
The allocation to funds managed by Aberdeen Standard Investments increased from 11.9% to 17.5% of net assets during the year. A significant element of that is accounted for by positions in open ended funds investing in China A Shares (5.2%) and Frontier Market Bonds (4.2%) with the remainder spread across several closed end funds focussed on Asian equities. The use of in-house managed funds, on which there is no double charging of fees, is a valuable tool in making the Company as cost-effective as possible in an environment where this is increasingly a concern for investors. All investments in "in-house" products are subject to the same in-depth diligence as external funds and a rigorous conflicts of interest procedure.
We have discussed in past reports our desire to invest in a focused list of actively managed holdings run by talented investment teams across emerging and frontier markets, thus offering investors an attractive "one stop shop" in a complex and sprawling asset class. In addition, the payment of quarterly dividends from a combination of capital and income and use of gearing, all capture the benefits of the closed end fund structure. To these collective points, at the end of the year the portfolio was invested in 30 funds, with 92.0% of net assets being exposed to equities, 9.2% to fixed income, cash and other net assets of -1.2% and the Company's dividend yield was 3.6% per annum. We believe this is an attractive profile in the circumstances and one that should hold broad appeal.
Outlook
Emerging markets have, over the last five years, quietly delivered strong returns for investors (MSCI Emerging Markets Index +74.4%), while at the same time remaining largely out of favour as an asset class. While 2020 has obviously presented many challenges, we believe it has also provided reasons to believe this spell of performance can continue, if not accelerate.In aggregate, emerging markets have been less impacted by COVID-19 than most commentators feared at the outset of the pandemic. China, South Korea and Taiwan (collectively 60.0% of the Company's portfolio) obviously stand out in a global context as having benefitted from early and decisive measures to quell the spread of the coronavirus, whilst also having a healthy representation of growth companies on their exchanges (technology platforms in the case of China, and hardware in the case of Taiwan and South Korea). For China in particular, we believe 2020 will prove a year in which asset allocators finally overcame many of their fears (trade wars, growth concerns, sovereign and corporate governance) and began taking steps to more adequately reflect the importance of this market in their portfolios - the pandemic, perversely, having served as a positive catalyst for this.
Outside of these three markets, the COVID-19 experience has been more mixed, but one unifying factor is the more muted policy response employed by emerging market central banks. There is much evidence to suggest that emerging market economies will shrink less in 2020, bounce back faster in 2021 and emerge less indebted than developed markets. The likelihood of vaccines being rolled out in 2021 has already been reflected in improved performance in the likes of Brazil, South Africa and India.
The combination of the US congress coming under the control of the Democratic Party, the roll out of vaccines, the accommodative stance of the Federal Reserve (with record levels of debt and low interest rates likely to prevail in the coming years) all suggest the US dollar will continue to weaken. At the same time, emerging equity and debt markets are amongst the few to still offer positive real yields, which are likely to attract capital back into the asset class to the benefit of emerging market currencies. The importance of this should not be underestimated, as can be seen in Chart 3 contained in the Annual Report, which shows quite clearly how long and painful the current cycle has been, whilst also reminding one of how lucrative the prior cycle was.
Many of the major beneficiaries of a decline in the US dollar are outside of the major North Asian economies, and thus we would caution against investors limiting their emerging market exposure to the obvious Asian economies at the expense of Eastern Europe, Latin America and frontier markets, all of which would benefit materially from the trends discussed above. In addition, a weaker US dollar has tended to favour smaller companies and "value" investments. We retain exposure to these unappreciated regions and themes based on fundamentals and future prospects, not recent past performance. Trying to time exactly when any rotation in leadership (by country, market capitalisation or sector) will take place is extremely challenging, as the dash to value following the announcement of the first vaccine highlights.
Risks to this "goldilocks" scenario for emerging markets include geopolitics (in China and Iran, for example), a disappointment in 2021 earnings (currently forecast to grow by 25-30% across emerging markets) and the interplay of this with valuations (a 15x aggregate emerging market forward price to earnings ratio offers less value than has been present in much of the recent past). The major risk we perceive in markets more generally is an earlier than expected withdrawal of the easing measures put in place to deal with the pandemic (higher US rates being the most obvious barometer of this). On this latter point, it is interesting to note that China has already begun tightening, making it the first country globally to do so.
Overall, we maintain a positive outlook. Since the end of the financial year, we have fully drawn the Company's revolving credit facility, taking the portfolio 4.7% geared as at 16 February 2021, with 96.9% of net assets being exposed to funds invested in equities, 7.8% in funds investing in fixed income and -4.7% in cash and other net assets. We believe this positioning differentiates the Company from many of its peers and leaves it well placed to reap rewards. We believe the current uptick in sentiment towards, and strong performance of, the asset class is justified and likely to continue.
Aberdeen Asset Managers Limited
18 February 2021
Portfolio
Investments
As at 31 October 2020
Security investment name
Country of
establishment
Value
(£'000)
Percentage of
net assets (%)Neuberger Berman - China Equity Fund
Ireland
35,730
11.1
Weiss Korea Opportunity Fund Limited
Guernsey
23,966
7.5
Schroder AsiaPacific Fund PLC
United Kingdom
23,494
7.3
Fidelity China Special Situations PLC
United Kingdom
21,494
6.7
Aberdeen Standard SICAV I - China A Share Equity Fund
Luxembourg
16,688
5.2
Schroder International Selection Taiwanese Equity Fund
Luxembourg
15,993
5.0
Neuberger Berman - China Bond Fund
Ireland
15,949
5.0
Aberdeen Standard SICAV I - Frontier Markets Bond Fund
Luxembourg
13,457
4.2
Korea Value Strategy Fund Ltd
British Virgin Islands
13,281
4.1
Genesis Emerging Markets Fund Limited
Guernsey
11,995
3.7
Top ten investments
192,047
59.8
Aberdeen Asian Income Fund Limited
United Kingdom
11,414
3.6
Fondul Proprietatea
Romania
11,337
3.5
Schroder Oriental Income Fund Limited
Guernsey
11,213
3.5
Lazard Emerging World Fund
Ireland
9,780
3.0
Diversified Growth Company QIC GCC Equity Fund
Luxembourg
9,450
2.9
Aberdeen New India Investment Trust PLC
United Kingdom
9,061
2.8
Ton Poh Fund
Cayman Islands
8,356
2.6
Avaron Emerging Europe Fund
Estonia
8,335
2.6
Verno Capital Growth Fund Limited
Cayman Islands
8,098
2.5
BlackRock Latin American Investment Trust PLC
United Kingdom
8,052
2.5
Next ten investments
95,096
29.5
Top twenty investments
287,143
89.3
Laurium Limpopo Africa Fund
Cayman Islands
7,761
2.4
JPMorgan Emerging Markets Investment Trust PLC
United Kingdom
7,289
2.3
Asia Dragon Trust PLC
United Kingdom
5,282
1.7
Baring Vostok Investments PCC Limited
Guernsey
4,673
1.5
Gulf Investment Fund PLC
Isle of Man
3,151
1.0
iShares MSCI Turkey ETF
United States
2,519
0.8
BlackRock Frontiers Investment Trust PLC
United Kingdom
2,516
0.8
JPMorgan Global Emerging Markets Income Trust PLC
United Kingdom
2,512
0.8
Tarpon All Equities Cayman
Cayman Islands
1,070
0.3
Komodo Fund
Cayman Islands
1,059
0.3
Total investments
324,975
101.2
Cash plus other net current assets and liabilities
(4,005)
(1.2)
Net assets
320,970
100.0
Asset Allocation
As at 31 October 2020
Country split
Company (%)
Benchmark (%)
Asia
73.1
81.4
China
38.2
43.2
South Korea
13.7
11.9
Taiwan
8.1
12.7
India
4.8
8.1
Thailand
3.2
1.7
Singapore
1.7
-
Indonesia
0.8
1.3
Vietnam
0.3
-
Philippines
0.2
0.8
Malaysia
0.1
1.7
Pakistan
0.1
-
Other
1.9
-
EMEA
21.2
11.6
Russia
4.3
2.7
Romania
3.7
-
Saudi Arabia
1.9
2.7
Egypt
1.1
0.1
Turkey
1.1
0.3
Kuwait
0.7
-
Qatar
0.7
0.8
UAE
0.7
0.5
Poland
0.6
0.6
South Africa
0.5
3.5
Hungary
0.4
0.2
Greece
0.3
0.1
Czech Republic
0.2
0.1
Other
5.0
-
Latin America
4.8
7.0
Brazil
2.4
4.4
Mexico
0.8
1.6
Argentina
0.4
0.1
Chile
0.2
0.5
Peru
0.1
0.2
Colombia
-
0.2
Other
0.9
-
Non-specified
1.5
-
Cash in underlying investments
0.7
-
Cash plus other net current assets
(1.3)
-
Total
100.0
100.0
The above analysis has been prepared on a portfolio look-through basis.
Benchmark: MSCI Emerging Markets Net Total Return Index in sterling terms
Principal Risks, Emerging Risks and Uncertainties
Together with the issues discussed in the Chairman's Statement and the Investment Manager's Report, the Board considers that the main risks and uncertainties faced by the Company fall into the following categories:
(i) General Market Risks Associated with the Company's Investments
Changes in economic conditions, interest rates, foreign exchange rates and inflationary pressures, industry conditions, competition, political and diplomatic events, tax, environmental and other laws and other factors can substantially and either adversely or favourably affect the value of the securities in which the Company invests and, therefore, the Company's performance and prospects.
The Company's investments are subject to normal market fluctuations and the risks inherent in the purchase, holding or selling of securities, and there can be no assurance that appreciation in the value of those investments will occur. There can be no guarantee that any realisation of an investment will be on a basis which necessarily reflects the Company's valuation of that investment for the purposes of calculating the NAV.
The Company's investments, although not made into developed economies, are not entirely sheltered from the negative impact of economic slowdowns, decreasing consumer demands and credit shortages in such developed economies which, amongst other things, affects the demand for the products and services offered by the companies in which the Company directly or indirectly invests.
A proportion of the Company's portfolio may be held in cash or cash equivalent investments from time to time. Such proportion of the Company's assets will be out of the market and will not benefit from positive stock market movements but may give some protection against negative stock market movements.
(ii) Emerging Markets
The funds selected by the Investment Manager invest in emerging markets. Investing in emerging markets involves certain risks and special considerations not typically associated with investing in other more established economies or securities markets. In particular there may be: (a) the risk of nationalisation or expropriation of assets or confiscatory taxation; (b) social, economic and political uncertainty including war and revolution; (c) dependence on exports and the corresponding importance of international trade and commodities prices; (d) less liquidity of securities markets; (e) currency exchange rate fluctuations; (f) potentially higher rates of inflation (including hyper-inflation); (g) controls on foreign investment and limitations on repatriation of invested capital and a fund manager's ability to exchange local currencies for pounds sterling; (h) a higher degree of governmental involvement and control over the economies; (i) government decisions to discontinue support for economic reform programmes and imposition of centrally planned economies; (j) differences in auditing and financial reporting standards which may result in the unavailability of material information about economies and issuers; (k) less extensive regulatory oversight of securities markets; (l) longer settlement periods for securities transactions; (m) less stringent laws regarding the fiduciary duties of officers and directors and protection of investors; and (n) certain consequences regarding the maintenance of portfolio securities and cash with sub-custodians and securities depositories in developing markets.
(iii) Other Portfolio Specific Risks
(a) Small cap stocks
The underlying investee funds selected by the Investment Manager may have significant investments in smaller to medium sized companies of a less seasoned nature whose securities are traded in an "over-the-counter" market. These "secondary" securities often involve significantly greater risks than the securities of larger, better-known companies, due to shorter operating histories, potentially lower credit ratings and, if they are not listed companies, a potential lack of liquidity in their securities. As a result of lower liquidity and greater share price volatility of these "secondary" securities, there may be a disproportionate effect on the value of the investee funds and, indirectly, on the value of the Company's portfolio.
(b) Liquidity of the portfolio
The fact that a share is traded does not guarantee its liquidity and the Company's investments may be less liquid than other listed and publicly traded securities. The Company may invest in securities that are not readily tradable or may accumulate investment positions that represent a significant multiple of the normal trading volumes of an investment, which may make it difficult for the Company to sell its investments. Investors should not expect that the Company will necessarily be able to realise its investments within a period which they would otherwise regard as reasonable, and any such realisations that may be achieved may be at a considerably lower price than prevailing indicative market prices. The Company has a borrowing facility in place which may be utilised to assist in the management of liquidity. The borrowing facility is described later in this Directors' Report.
Liquidity of the portfolio is further discussed in note 17 to the financial statements.
(c) Foreign exchange risks
It is not the Company's present policy to engage in currency hedging. Accordingly, the movement of exchange rates between sterling and the other currencies in which the Company's investments are denominated or its borrowings are drawn down may have a material effect, unfavourable or favourable, on the returns otherwise experienced on the investments made by the Company.
Movements in the foreign exchange rate between sterling and the currency applicable to a particular shareholder may have an impact upon that shareholder's returns in their own currency of account.
Management or mitigation of the above risks
Risk
Management or mitigation of risk
General market risks associated with the Company's investments
These risks are largely a consequence of the Company's investment strategy but the Investment Manager attempts to mitigate such risks by maintaining an appropriately diversified portfolio by number of holdings, fund structure, geographic focus, investment style and market capitalisation focus. Liquidity, risk and exposure measures are produced on a monthly basis by the Investment Manager and monitored against internal limits.
Emerging markets
Other portfolio specific risks
(a) Small cap stock
(b) Liquidity of the portfolio
(c) Foreign exchange
The investment management of the Company has been delegated to the Company's Investment Manager. The Investment Manager's investment process takes into account the material risks associated with the Company's portfolio and the markets and holdings in which the Company is invested. The Board monitors the portfolio and the performance of the Investment Manager at regular Board meetings.
(iv) Internal Risks
Poor allocation of the Company's assets to both markets and investee funds by the Investment Manager, poor governance, compliance or administration, including poor controls over cyber security, could result in shareholders not making acceptable returns on their investment in the Company.
Management or mitigation of internal risks
The Board monitors the performance of the Manager and the other key service providers at regular Board meetings. The Manager provides reports to the Board on compliance matters and the Administrator provides reports to the Board on compliance and other administrative matters. The Board has established various committees to ensure that relevant governance matters are addressed by the Board.
The management or mitigation of internal risks is described in detail in the Corporate Governance Statement found in the Annual Report,
(v) Emerging Risks
Emerging risks are slow moving trends, innovations and shifts with potential consequence to a specific industry or sector in the long term. They can include movements in: demographics, economics, society, technological innovations, national policy and governance. The most significant risk which emerged during the year was the COVID-19 pandemic. The first case of the virus was identified in Wuhan, China, in December 2019 and continued to spread worldwide during 2020. The consequence of the virus has dramatically impacted public health and mobility, with a cascading effect on consumerism, the global financial markets and the future economic outlook.
Management or mitigation of emerging risks
A risk management register and associated risk heat map, providing a visual reflection of the Company's identified and emerging risks have been established to monitor and mitigate risks to the Company, with both a risk pre mitigation and risk post mitigation score determined, depending on the impact of the risk combined with the probability of the risk occurring.
Statement of Directors' Responsibilities
In Respect of the Annual Report and Accounts
The Directors are responsible for preparing the Annual Report and Accounts in accordance with applicable law and regulations.
Guernsey company law requires the Directors to prepare financial statements for each financial year. The Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards as issued by the IASB and applicable law.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of its profit or loss for that period. In preparing these financial statements, the directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and estimates that are reasonable, relevant and reliable;
· state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;
· assess the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
· use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies (Guernsey) Law, 2008. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website, but not for the content of any information included on the website that has been prepared or issued by third parties. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Disclosure of Information to the Auditor
The Directors who held office at the date of approval of this Directors' Report confirm that, so far as they are each aware, there is no relevant audit information of which the Company's auditor is unaware; and each Director has taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
Responsibility Statement of the Directors in Respect of the Annual Report
We confirm that to the best of our knowledge:
· the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
· the Management Report (comprising the Chairman's Statement, the Investment Manager's Report and the Governance reports including the Directors' Report) includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.
The Board considers that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.
Helen Green
DirectorWilliam Collins
Director
18 February 2021
Financial Statements
Statement of Comprehensive Income
Year ended 31 October 2020
Year ended 31 October 2019
Note
Revenue
£'000
Capital
£'000
Total
£'000
Revenue
£'000
Capital
£'000
Total
£'000Gains on investments at fair value through profit
or loss
4
-
25,522
25,522
-
37,730
37,730
Losses on currency movements
-
(166)
(166)
-
(392)
(392)
Net investment gains
-
25,356
25,356
-
37,338
37,338
Investment income
5
4,187
-
4,187
4,861
-
4,861
4,187
25,356
29,543
4,861
37,338
42,199
Investment management fees
6
(2,216)
-
(2,216)
(2,331)
-
(2,331)
Other expenses
6
(842)
-
(842)
(883)
-
(883)
Operating profit before finance costs
and taxation
1,129
25,356
26,485
1,647
37,338
38,985
Finance costs
9
(212)
-
(212)
(315)
-
(315)
Operating profit before taxation
917
25,356
26,273
1,332
37,338
38,670
Withholding tax expense
(183)
-
(183)
(223)
-
(223)
Total profit and comprehensive income for the
year
734
25,356
26,090
1,109
37,338
38,447
Earnings per Ordinary share
10
1.60p
55.16p
56.76p
2.41p
81.17p
83.58p
The Total column of this statement represents the Company's Statement of Comprehensive Income, prepared under IFRS. The revenue and capital columns, including the revenue and capital earnings per Ordinary share data, are supplementary information prepared under guidance published by the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year.
The notes form part of these financial statements.
Statement of Financial Position
Note
As at
31 October 2020
£'000
As at
31 October 2019
£'000Non-current assets
Investments at fair value through profit or loss
4
324,975
328,713
Current assets
Cash and cash equivalents
8,315
1,190
Sales for future settlement
924
72
Other receivables
367
350
9,606
1,612
Total assets
334,581
330,325
Current liabilities
Purchases for future settlement
-
(104)
Other payables
(1,111)
(344)
Bank loan payable
9
(12,500)
(25,000)
Total liabilities
(13,611)
(25,448)
Net assets
320,970
304,877
Equity
Share capital
12
149,616
149,616
Capital reserve
13
176,563
161,204
Revenue reserve
(5,209)
(5,943)
Total equity
320,970
304,877
Net assets per Ordinary share
14
698.29p
663.28p
Approved by the Board of Directors and authorised for issue on 18 February 2021 and signed on its behalf by:
Helen Green
DirectorWilliam Collins
DirectorThe notes form part of these financial statements.
Incorporated in Guernsey: Company registration number 50900
Statement of Changes in Equity
For the year ended 31 October 2020
Note
Share
capital
£'000
Capital
reserve
£'000
Revenue
reserve
£'000
Total
£'000Balance at 1 November 2019
149,616
161,204
(5,943)
304,877
Profit for the year
-
25,356
734
26,090
Dividends paid
11
-
(9,997)
-
(9,997)
Balance at 31 October 2020
149,616
176,563
(5,209)
320,970
For the year ended 31 October 2019
Note
Share
capital
£'000
Capital
reserve
£'000
Revenue
reserve
£'000
Total
£'000Balance at 1 November 2018
150,082
132,546
(6,072)
276,556
Profit for the year
-
37,338
1,109
38,447
Dividends paid
11
-
(8,680)
(980)
(9,660)
Purchase of own Ordinary shares
12
(466)
-
-
(466)
Balance at 31 October 2019
149,616
161,204
(5,943)
304,877
The capital reserve at 31 October 2020 is split between realised gains of £85,726,000 and unrealised gains of £90,837,000 (2019: realised gains of £91,515,000 and unrealised gains of £69,689,000).
The revenue reserve and realised element of the capital reserve represents the amount of the Company's retained reserves.
The notes form part of these financial statements.
Statement of Cash Flows
Note
Year ended 31
October 2020
£'000
Year ended 31
October 2019
£'000Operating activities
Cash inflow from investment income
4,184
4,830
Cash outflow from management expenses
(2,305)
(3,243)
Cash inflow from disposal of investments*
93,513
110,609
Cash outflow from purchase of investments*
(65,209)
(105,959)
Cash outflow from withholding tax
(183)
(223)
Net cash flow from operating activities
15
30,000
6,014
Financing activities
(Repayment of)/drawdown from bank borrowings
9
(12,500)
5,000
Borrowing commitment fee and interest charges
(212)
(343)
Dividend paid
11
(9,997)
(9,660)
Share buybacks
12
-
(466)
Net cash flow used in financing activities
(22,709)
(5,469)
Net increase in cash and cash equivalents
7,291
545
Effect of foreign exchange
(166)
(392)
Cash and cash equivalents at start of the year
1,190
1,037
Cash and cash equivalents at end of the year
8,315
1,190
*Receipts from the disposal and purchase of investments have been classified as components of cash flow from operating activities because they form part of the Company's operating activities.
The notes form part of these financial statements.
Notes to the Financial Statements
For the Year Ended 31 October 2020
1. Reporting entity
Aberdeen Emerging Markets Investment Company Limited (the "Company") is a closed-ended investment company, registered in Guernsey on 16 September 2009. The Company's registered office is 11 New Street, St Peter Port, Guernsey, GY1 2PF. The Company's Ordinary shares have a premium listing on the London Stock Exchange and commenced trading on 10 November 2009. The Company changed its name to Aberdeen Emerging Markets Investment Company Limited on 14 April 2016. The financial statements of the Company are presented for the year ended 31 October 2020.
The Company invests in a portfolio of funds and products which give diversified exposure to developing and emerging markets economies with the objective of achieving consistent returns for shareholders in excess of the MSCI Emerging Markets Net Total Return Index in sterling terms.
Manager
The investment activities of the Company were managed by Aberdeen Standard Fund Managers Limited ("ASFML") during the year ended 31 October 2020.
Non-mainstream pooled investments ("NMPIs")
The Company currently conducts its affairs so that the shares issued by the Company can be recommended by Independent Financial Advisers to ordinary retail investors in accordance with the Financial Conduct Authority's rules in relation to NMPIs and intends to continue to do so for the foreseeable future.
2. Basis of preparation
(a) Statement of compliance
The financial statements, which give a true and fair view, have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the IASB and are in compliance with the Companies (Guernsey) Law, 2008. There were no significant changes in the accounting policies of the Company in the year to 31 October 2020.
Where presentational guidance set out in the Statement of Recommended Practice ("SORP") for Investment Companies issued by the Association of Investment Companies ("AIC") in October 2019 is consistent with the requirements of IFRS, the Directors have prepared the financial statements on a basis compliant with the recommendations of the SORP.
The "Total" column of the Statement of Comprehensive Income is the profit or loss account of the Company. The "Capital" and "Revenue" columns provide supplementary information prepared under guidance published by the AIC.
The financial statements were approved and authorised for issue by the Board on 18 February 2021.
This report will be sent to shareholders and copies will be made available to the public at the Company's registered office. It will also be made available on the Company's website: aberdeenemergingmarkets.co.uk.
(b) Going concern
The Directors have adopted the going concern basis in preparing the financial statements. The Board formally considered the Company's going concern status and the impact of the COVID-19 pandemic at the time of the publication of these financial statements and a summary of the assessment is provided below.
At the AGM held in April 2018, a resolution was approved by shareholders that the Company will continue in existence in its current form until the AGM to be held in 2023, at which time a further continuation vote will be put to shareholders.
The Directors believe that the Company has adequate resources to continue in operational existence for at least 12 months from the date of approval of this document. In reaching this conclusion, the Directors have considered the liquidity of the Company's portfolio of investments as well as its cash position, income and expense flows.
As at 31 October 2020, the Company held £8.3 million in cash and £325.0 million in investments. It is estimated that approximately 68% of the investments held at the year end could be realised in one month. The total operating expenses for the year ended 31 October 2020 were £3.1 million, which on an annualised basis represented approximately 1.02% of average net assets during the year. The Company also incurred £0.2 million of finance costs. At the date of approval of this report, based on the aggregate of investments and cash held, the Company has substantial operating expenses cover.
The Company has a £25 million revolving loan facility with RBSI, maturing on 26 March 2021. The Company has commenced discussions with RBSI and the Board expects to renew the facility on similar terms when it matures. As at 31 October 2020, £12.5 million was drawn down from the RBSI facility. The liquidity of the Company's portfolio, as mentioned above, sufficiently supports the Company's ability to repay its borrowings at short notice.
In light of the COVID-19 pandemic, the Directors have fully considered and assessed the Company's portfolio of investments. A prolonged and deep market decline could lead to falling values of the investments or interruptions to cashflow. However, the Company currently has more than sufficient liquidity available to meet any future obligations.
The Directors are satisfied that it is appropriate to adopt the going concern basis in preparing the financial statements and, after due consideration, that the Company is able to continue in operation for a period of at least 12 months from the date of approval of these financial statements.
COVID-19
The rapid spread of COVID-19 led governments across the globe to implement policies to restrict the gathering, interaction and/or movement of people. These policies have inevitably impacted and changed the nature of the operations of some aspects of the Company, its key service providers and companies in its investment portfolio. The operational requirements of the Company have been stress tested during the COVID-19 pandemic. The continued operational success of the Company and its key service providers have been enabled by the increased use of online communication and remote working.
Share prices respond to assessments of future economic activity as well as their own forecast performance, and the COVID-19 pandemic has had a material impact on the economy and may continue to do so for an unknown period of time. During the year, stock markets have seen unprecedented movements in prices and in some cases, uncorrelated with underlying valuations. The Board and Manager have regular discussions to assess the impact of emerging risks, including COVID-19 on both the investment portfolio and on its ability to maximise returns for shareholders.
The market and operational risks associated with the COVID-19 pandemic, and the ongoing economic impact of measures introduced to combat its spread were discussed and are continually monitored by the Directors. The Manager, Administrator and other key service providers provide regular updates on operational resilience. The Directors are satisfied that the key service providers have the ability to continue to operate efficiently in a remote or virtual working environment.
(c) Basis of measurement
The financial statements have been prepared on the historical cost basis except for investments held at fair value through profit or loss which are measured at fair value.
(d) Functional and presentation currency
The Company's investments are denominated in multiple currencies. However, the Company's Ordinary shares are issued in GBP sterling and the majority of its investors are UK based. Therefore, the financial statements are presented in sterling, which is the Company's functional currency. All financial information presented in sterling has been rounded to the nearest thousand pounds.
(e) Capital reserve
Profits achieved by selling investments and changes in fair value arising upon the revaluation of investments that remain in the portfolio are all charged to profit or loss in the capital column of the Statement of Comprehensive Income and allocated to the capital reserve. The capital reserve attributable to realised profits is also used to fund dividend distributions.
(f) Revenue reserve
The balance of all items allocated to the revenue column of the Statement of Comprehensive Income in each year is transferred to the Company's revenue reserve. The revenue reserve is also used to fund dividend distributions.
(g) Use of estimates, assumptions and judgements
The preparation of the financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Use of estimates and assumptions
Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in future periods affected.
Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are described below.
Classification and valuation of investments
Investments are designated as fair value through profit or loss on initial recognition and are subsequently measured at fair value. The valuation of such investments requires estimates and assumptions made by the management of the Company depending on the nature of the investments as described in notes 3 (a) and 18 and fair value may not represent actual realisable value for those investments.
Allocation of investments to fair value hierarchy
IFRS requires the Company to measure fair value using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements. IFRS establishes a fair value hierarchy that prioritises the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).The three levels of fair value hierarchy under IFRS are as follows:
Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and
Level 3 - inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.
Use of judgements
The determination of what constitutes 'observable' requires significant judgement by the Company. The Company considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary and provided by independent sources that are actively involved in the relevant market.
3. Significant accounting policies
(a) Investments
As the Company's business is investing in financial assets with a view to 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. These investments are recognised on the trade date of their acquisition at which the Company becomes a party to the contractual provisions of the instrument. At this time, the best evidence of the fair value of the financial assets is the transaction price. Transaction costs that are directly attributable to the acquisition or issue of the financial assets are charged to profit or loss in the Statement of Comprehensive Income as a capital item. Subsequent to initial recognition, investments designated as fair value through profit or loss are measured at fair value with changes in their fair value recognised in profit or loss in the Statement of Comprehensive Income and determined by reference to:
i) investments quoted or dealt on recognised stock exchanges in an active market are valued by reference to their market bid prices;
ii) investments other than those in i) above which are dealt on a trading facility in an active market are valued by reference to broker bid price quotations, if available, for those investments;
iii) investments in underlying funds, which are not quoted or dealt on a recognised stock exchange or other trading facility or in an active market, are valued at the net asset values provided by such entities or their administrators. These values may be unaudited or may themselves be estimates and may not be produced in a timely manner. If such information is not provided, or is insufficiently timely, the Investment Manager uses appropriate valuation techniques to estimate the value of investments. In determining fair value of such investments, the Investment Manager takes into consideration the relevant issues, which may include the impact of suspension, redemptions, liquidation proceedings and other significant factors. Any such valuations are assessed and approved by the Directors. The estimates may differ from actual realisable values;
iv) investments which are in liquidation are valued at the estimate of their remaining realisable value; and
v) any other investments are valued at the directors' best estimate of fair value.
Transfers between levels of the fair value hierarchy are recognised as at the end of the reporting period during which the change has occurred.
Investments are derecognised on the trade date of their disposal, which is the point where the Company transfers substantially all the risks and rewards of the ownership of the financial asset. Gains or losses are recognised in profit or loss in the capital column of the Statement of Comprehensive Income. The Company uses the weighted average cost method to determine realised gains and losses on disposal of investments.
(b) Foreign currency
Transactions in foreign currencies are translated into sterling at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated into sterling at the spot exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value through profit or loss are retranslated into sterling at the exchange rate at the date that the fair value was determined. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated into sterling using the exchange rate at the date of the transaction.
Foreign currency differences arising on retranslation are recognised in profit or loss and, depending on the nature of the gain or loss, are allocated to the revenue or capital column of the Statement of Comprehensive Income. Foreign currency differences on retranslation of financial instruments designated as fair value through profit or loss are shown in the "Losses on currency movements" line.
(c) Income from investments
Dividend income is recognised when the right to receive it is established and is reflected in the Statement of Comprehensive Income as Investment income in the revenue column. For quoted equity securities this is usually on the basis of ex-dividend dates. For unquoted investments this is usually on the entitlement date confirmed by the relevant holding. Income from bonds is accounted for using the effective interest rate method.
Special dividends and distributions described as capital distributions are assessed on their individual merits and may be credited to the capital reserve if considered to be closely linked to reconstructions of the investee company or other capital transactions. Bank interest receivable is accounted for on a time apportionment basis and is based on the prevailing variable interest rates for the Company's bank accounts.
(d) Treasury shares
Where the Company purchases its own share capital, the consideration paid, which includes any directly attributable costs, is recognised as a deduction from equity shareholders' funds through the Company's reserves. When such shares are subsequently sold or re-issued to the market any consideration received, net of any directly attributable incremental transaction costs, is recognised as an increase in equity shareholders' funds through the share capital account. Shares held in treasury are excluded from calculations when determining NAV per share.
(e) Cash and cash equivalents
Cash comprises cash and demand deposits. Cash equivalents, which include bank overdrafts, are short term, highly liquid investments that are readily convertible to known amounts of cash, are subject to insignificant risks of changes in value, and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.
(f) Investment management fees and finance costs
Investment management fees and finance costs are charged to the Statement of Comprehensive Income as a revenue item and are accrued monthly in arrears. Finance costs include interest payable and direct loan costs. Performance-related fees, if any, are payable directly by reference to the capital performance of the Company and are therefore charged to profit or loss in the Statement of Comprehensive Income as a capital item.
(g) Financial liabilities
Financial liabilities (including bank loans) are classified according to the substance of the contractual arrangements entered into. Financial liabilities held at fair value through profit or loss are measured initially at fair value, with transaction costs recognised in profit or loss in the Statement of Comprehensive Income.
(h) Taxation
The Company has exempt status under the Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989 and is charged an annual exemption fee of £1,200 (2019: £1,200).
Dividend and interest income received by the Company may be subject to withholding tax imposed in the country of origin. The tax charges shown in profit or loss in the Statement of Comprehensive Income relate to overseas withholding tax on dividend income.
(i) Operating segments
IFRS 8, 'Operating segments' requires a 'management approach', under which segment information is presented on the same basis as that used for internal reporting purposes. The Board, as a whole, has been determined as constituting the chief operating decision maker of the Company. The Board has considered the requirements of the standard and is of the view that the Company is engaged in a single segment of business, which is investing in a portfolio of funds and products which give exposure to developing and emerging market economies. The key measure of performance used by the Board is the NAV of the Company (which is calculated under IFRS). Therefore no reconciliation is required between the measure of profit or loss used by the Board and that contained in the financial statements.
Further information on the Company's operating segment is provided in note 19.
(j) Offsetting
Financial assets and liabilities are offset and the net amount presented in the Statement of Financial Position when, and only when, the Company has a legal right to set off the recognised amounts and it intends to either settle on a net basis or to realise the asset and settle the liability simultaneously.
Income and expenses are only presented on a net basis when permitted under IFRS.
(k) Structured entities
A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements. A structured entity often has some or all of the following features or attributes; (a) restricted activities, (b) a narrow and well-defined objective, such as to provide investment opportunities for investors by passing on risks and rewards associated with the assets of the structured entity to investors, (c) insufficient equity to permit the structured entity to finance its activities without subordinated financial support and (d) financing in the form of multiple contractually linked instruments to investors that create concentrations of credit or other risks.
The Company holds shares, units or partnership interests in the funds or investment products presented 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 profit or loss in the Statement of Comprehensive Income.
(l) Dividend payable
Final dividends payable to equity shareholders are recognised in the financial statements when they have been approved by shareholders and become a liability of the Company. Interim dividends payable are recognised in the period in which they are paid. The capital and revenue reserve may be used to fund dividend distributions.
(m) New standards and interpretations effective in the current financial year
There are a number of new standards, interpretations or amendments, which became effective during the year for financial periods beginning 1 January 2019 that had no material impact on the Company.
At the date of approval of these financial statements, the following interpretations became effective during the year:
· IFRS 16 - Leases (effective 1 January 2019) specifies accounting for leases and removes the distinction between operating and finance leases. This standard is not applicable to the Company as it has no leases.
· IFRIC 23 (effective for periods beginning on or after 1 January 2019), clarifies the accounting for uncertainties in income taxes. An entity is required to use judgement to determine whether each tax treatment should be considered independently or whether some tax treatments should be considered together. The decision should be based on which approach provides better predictions of the resolution of the uncertainty. An entity has to consider whether it is probable that the relevant authority will accept each tax treatment, or group of tax treatments, that it used or plans to use in its income tax filing.
The Board have assessed new but not yet effective standards applicable to the Company and have concluded that they will not have a material impact to the Company.
4. Investments at fair value through profit or loss and classification of financial instruments
2020
£'0002019
£'000Quoted and listed closed end fund investments
159,968
157,004
Open ended fund and limited liability partnership investments
165,007
171,709
Total fair value investments at 31 October
324,975
328,713
Investments held at fair value through profit or loss
Opening book cost
259,025
246,718
Opening investment holding gains
69,688
48,883
Opening fair value
328,713
295,601
Analysis of transactions made during the year
Purchases at cost
65,105
106,064
Sales proceeds received
(94,365)
(110,682)
Gains on investments
25,522
37,730
Closing fair value
324,975
328,713
Closing book cost
234,136
259,025
Closing investment holding gains
90,839
69,688
Closing fair value
324,975
328,713
The company received £94,365,000 (2019: £110,682,000) from investments sold during the year. The book cost of these investments when they were purchased was £89,994,000 (2019: £93,757,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments.
The table below sets out the classifications of the carrying amounts of the Company's financial assets and financial liabilities into categories of financial instruments.
Financial instruments as at 31 October 2020
Held at
fair value
£'000Loans and
receivables
£'000Other financial
liabilities
£'000Total
£'000Investments at fair value through profit or loss
324,975
-
-
324,975
Cash and cash equivalents
-
8,315
-
8,315
Sales for future settlement and other receivables
-
1,291
-
1,291
Purchases for future settlement and other payables
-
-
(1,111)
(1,111)
Bank loan payable
-
-
(12,500)
(12,500)
Total
324,975
9,606
(13,611)
320,970
Financial instruments as at 31 October 2019
Held at
fair value
£'000Loans and
receivables
£'000Other financial
liabilities
£'000Total
£'000Investments at fair value through profit or loss
328,713
-
-
328,713
Cash and cash equivalents
-
1,190
-
1,190
Sales for future settlement and other receivables
-
422
-
422
Purchases for future settlement and other payables
-
-
(448)
(448)
Bank loan payable
-
-
(25,000)
(25,000)
Total
328,713
1,612
(25,448)
304,877
5. Investment income
2020
£'0002019
£'000Dividends from UK Investments
3,168
2,585
Dividends from Overseas Investments
1,018
2,270
Other income
1
6
Total Investment income
4,187
4,861
6. Investment Management fee and other expenses
2020
£'0002019
£'000Management fee
2,216
2,331
Administration fees
200
200
Depositary and custody service fees
157
150
Registration fees
36
33
Directors' fees
155
142
Auditor's fees:
Audit services
40
39
Non-audit services
16
15
Promotional fees
94
158
Broker fees
52
57
Miscellaneous expenses
92
89
Total other expenses
842
883
Total Investment Management fee and other expenses
3,058
3,214
Management fee
Management services are provided by Aberdeen Standard Fund Managers Limited ("ASFML"). The management fee is payable monthly in arrears (and pro rata for part of any month during which the management agreement is in force) at an annualised rate of 0.8% of net assets, reduced by the proportion of the Company's net assets invested in funds which are managed by Aberdeen Standard Investments ("Aberdeen Standard Funds"), other than the investments in Aberdeen Standard SICAV I - China A Share Equity Fund and Aberdeen Standard SICAV I - Frontier Markets Bond Fund, which are held in share classes not subject to management charges at a fund level and the Manager is therefore entitled to a fee on the value of those investments.
The Management Agreement is terminable by either party on not less than six months' written notice at any time, subject to earlier termination in certain circumstances including certain breaches or the insolvency of either party.
Promotional fee
The Company has agreed to pay a fee to ASFML for the provision of promotional activities at an annual rate of £123,000 with effect from 1 July 2020 (2019: £104,000 with effect from 1 July 2019).
Company Secretary and Administrator fees
Vistra Fund Services (Guernsey) Limited ("Vistra") is appointed as Administrator and Secretary to the Company. Vistra is appointed under a contract subject to ninety days' written notice and receives a fee at a rate of £40,000 per annum plus certain additional fees (during the year ended 31 October 2020, Vistra's fee for ad hoc meetings held amounted to £8,250 (2019: £11,000)). Vistra also receives the fees payable to the UK Administration Agent.
UK Administration agent fees
PraxisIFM Fund Services (UK) Limited ("PraxisIFM") is appointed by Vistra to act as administration agent in the United Kingdom. PraxisIFM is appointed under a contract subject to not less than ninety days' notice. The UK Administration Agent receives from the Administrator a monthly fee equal to one twelfth of 0.1% of NAV subject to a maximum fee for the year ended 31 October 2020 of £151,736 (2019: £148,653) per annum. The maximum fee is increased annually, in November, by the change in the UK Retail Price Index (all items) over the preceding 12 months.
Depositary services and custodian fees
Northern Trust (Guernsey) Limited, receives fees for Depositary services calculated at the rate of 2.95 basis points per annum subject to a minimum annual fee of £20,000, effective 1 August 2018. Northern Trust (Guernsey) Limited also receives a fee for custody services. It receives an asset based fee equal to between 1.00 basis points and 60.00 basis points of the value of the assets of the Company. Transaction based fees are also payable of between £10 and £140 per transaction. The variable fees are dependent on the countries in which the individual holdings are registered.7. Directors' fees
The Director's fees payable for the year were £155,000 (2019: £142,200). There were no other emoluments.8. Transaction charges
2020
£'0002019
£'000Transaction costs on purchases of investments
106
58
Transaction costs on sales of investments
56
29
Total transaction costs included in gains on investments
162
87
9. Bank loan payable and finance costs
On 29 March 2018, the Company entered into an unsecured 12 month revolving credit facility with The Royal Bank of Scotland plc, under which loans with a maximum aggregate value of £25 million may be drawn. The facility was renewed with The Royal Bank of Scotland International Limited (London Branch) ("RBSI") on 26 March 2020 for a further 12 month period, with a termination date of 26 March 2021. As at 31 October 2020, £12.5 million (2019: £25 million) was drawn down at an all-in monthly rate of 0.76925% (2019: 1.26413%).
2020
£'0002019
£'000Interest payable
184
303
Facility arrangement fees and other charges
28
12
Total finance costs
212
315
At 31 October 2020, interest payable of £nil (2019: £nil) was accrued in the Statement of Financial Position.
10. Earnings per Ordinary share
Earnings per Ordinary share is based on the total comprehensive income for the year ended 31 October 2020, being a profit of £26,090,000 (2019: profit of £38,447,000) attributable to the weighted average of 45,965,159 (2019: 46,000,304) Ordinary shares in issue (excluding shares held in treasury) during the year ended 31 October 2020.Supplementary information is provided as follows: revenue per share is based on the net revenue profit of £734,000 (2019: profit of £1,109,000) and capital earnings per share is based on the net capital profit of £25,356,000 (2019: profit of £37,338,000) attributable to the above Ordinary shares.
11. Dividends paid
Dividends paid during the year ended 31 October 2020
Dividend type (in respect of the year) - Pay date
Pence per
Ordinary
share
Capital
reserve
£'000
Revenue
reserve
£'000
Fourth interim (2019) - paid 20 December 2019
5.25
2,413
-
First interim (2020) - paid 27 March 2020
5.50
2,528
-
Second interim (2020) - paid 26 June 2020
5.50
2,528
-
Third interim (2020) - paid 25 September 2020
5.50
2,528
-
Total dividends
21.75
9,997
-
On 1 October 2020, the Board declared a fourth interim dividend in respect of the year of 5.50p per Ordinary share, payable on 18 December 2020 to those shareholders on the register on 27 November 2020.
The Board declares a first interim dividend for the financial year ending 31 October 2021, of 5.75p per Ordinary share, which will be paid on 26 March 2021 to shareholders on the register on 26 February 2021.
Dividends paid during the year ended 31 October 2019
Dividend type (in respect of the year) - Pay date
Pence per
Ordinary
share
Capital
reserve
£'000
Revenue
reserve
£'000
Fourth interim (2018) - paid 21 December 2018
5.25
1,437
980*
First interim (2019) - paid 29 March 2019
5.25
2,417
-
Second interim (2019) - paid 28 June 2019
5.25
2,413
-
Third interim (2019) - paid 27 September 2019
5.25
2,413
-
Total dividends
21.00
8,680
980
* The revenue reserve element of the fourth interim dividend paid for the year ended 31 October 2018 was partly funded from the revenue profit for the year ended 31 October 2018.
12. Share capital
For the year ended
31 October 2020
Authorised
Ordinary shares of
1 p nominal value
£'000
Allotted,
issued and
fully paid
Ordinary shares with
voting rights (excluding
treasury shares)
Treasury
shares
Opening number of shares
Unlimited
546
54,618,507
45,965,159
8,653,348
Purchase of own shares
-
-
-
-
-
Closing number of shares
Unlimited
546
54,618,507
45,965,159
8,653,348
For the year ended
31 October 2019
Authorised
Ordinary shares of
1 p nominal value
£'000
Allotted,
issued and
fully paid
Ordinary shares with
voting rights (excluding
treasury shares)
Treasury
shares
Opening number of shares
Unlimited
546
54,618,507
46,047,096
8,571,411
Purchase of own shares
-
-
-
(81,937)
81,937
Closing number of shares
Unlimited
546
54,618,507
45,965,159
8,653,348
Purchases of own shares
There were no Ordinary shares purchased during the year (2019: 81,937 at an aggregate cost to the Company of £466,000 all of which are held in treasury).
Share capital account
The aggregate balance (including share premium) standing to the credit of the share capital account as at 31 October 2020 was £149,616,000 (2019: £149,616,000).Ordinary shares
Voting rights
Holders of Ordinary shares are entitled to attend, speak and vote at general meetings of the Company. Each Ordinary share (excluding shares in treasury) carries one vote. Treasury shares do not carry voting rights.At its financial year end, the Company had 202 registered shareholders. At 31 October 2020, the Company was notified of 4 shareholders who each held more than 10% of the issued share capital and their holdings were 28.8% (2019: 29.8%), 22.5% (2019: 16.1%), 19.6% (2019: 14.3%) and 12.2% (2019: 11.7%) respectively.
Dividends
The holders of Ordinary shares are entitled to such dividend as may be declared by the Company from time to time. Shares held in treasury do not receive dividends.Capital entitlement
On a winding up, the Ordinary shares (excluding treasury shares) shall rank pari passu for the nominal capital paid up thereon and in respect of any surplus. Shares held in treasury have no capital entitlement on a winding up of the Company.13. Capital reserve
2020
£'000
2019
£'000
Realised gains on investments and other capital reserve movements
Opening balance
91,515
83,663
Dividends paid from capital reserves
(9,997)
(8,680)
Gains from disposal of investments*
15,107
19,216
Losses from disposal of investments*
(10,733)
(2,292)
Foreign exchange losses
(166)
(392)
Balance at 31 October
85,726
91,515
Investments held
Opening balance
69,689
48,883
Movement in unrealised gain on revaluation of investments held*
38,149
31,218
Movement in unrealised loss on revaluation of investments held*
(17,001)
(10,412)
Balance at 31 October
90,837
69,689
Capital reserve balance at 31 October
176,563
161,204
* Net gains on investments held at fair value through profit or loss figure for the year ended 31 October 2020 totalled £25,522,000 (2019: £37,730,000).
14. Net asset value ("NAV") per Ordinary share
The NAV per Ordinary share is based on net assets of £320,970,000 (2019: £304,877,000) divided by 45,965,159 (2019: 45,965,159) Ordinary shares in issue (excluding shares held in treasury) at the year end.The table below is a reconciliation between the NAV per Ordinary share as announced on the London Stock Exchange and the NAV per Ordinary share disclosed in these financial statements.
As at
31 October 2020
As at
31 October 2019
Net assets
(£'millions)
NAV per
Ordinary
share (p)
Net assets
(£'millions)
NAV per
Ordinary
share (p)
NAV as published on 2 November 2020 and
1 November 2019 respectively
321.2
698.72
304.5
662.42
Revaluation adjustments - delayed prices
(0.2)
(0.43)
0.4
0.86
NAV as disclosed in these Financial Statements
321.0
698.29
304.9
663.28
15. Reconciliation of operating profit to net cash flow from operating activities
2020
£'000
2019
£'000
Operating profit before finance costs and taxation
26,485
38,985
Less: Tax deducted at source on income from investments
(183)
(223)
Add: Realisation of investments at book cost
89,994
93,757
Less: Purchase of investments
(65,105)
(106,063)
Less: Adjustment for unrealised gains
(21,151)
(20,806)
Effect of foreign exchange
166
392
Increase in trade receivables
(869)
(125)
Increase in trade payables
663
97
Net cash flow from operating activities
30,000
6,014
16. Related party disclosures
Manager
Management fees payable are shown in the Statement of Comprehensive Income and note 6. As at 31 October 2020, management fees of £951,000 (2019: £199,000) were accrued in the Statement of Financial Position. Total management fees for the year were £2,216,000 (2019: £2,331,000).Details of promotional fees payable can be found in note 6. The balance outstanding at the financial year end was £61,000 (2019: £51,000).
Investments held by the Company which are managed by the Standard Life Aberdeen Group
As at 31 October 2020, the Company held the following investments managed by the Standard Life Aberdeen Group;
As at
31 October 2020
As at
31 October 2019
£'000
£'000
Aberdeen Standard SICAV I - China A Share Equity Fund
16,688
14,929
Aberdeen Standard SICAV I - Frontier Markets Bond Fund
13,457
7,571
Aberdeen Asian Income Fund Limited
11,414
6,187
Aberdeen New India Investment Trust PLC
9,061
3,592
Asia Dragon Trust PLC
5,282
4,099
Total
55,902
36,378
Directors
Total fees for the Directors in the year ended 31 October 2020 were £155,000 (2019: £142,200). There were no outstanding fees due to the Directors at the year end (2019: £nil). Details of Directors' share holdings in the Company can be found in the Annual Report.17. Financial instruments - risk profile
Risk Management Framework
The Company has established procedures to enable it to manage its financial risks. The main financial risks faced from its financial instruments are market risk, liquidity risk and credit risk, which are discussed as follows.Market risk
i) Risks associated with emerging markets
Investment in certain developing and emerging securities markets may involve a greater degree of risk than that associated with investment in more developed securities markets. In particular, in certain countries in which the Company is proposing to invest:· liquidity and settlement risks may be greater;
· accounting standards may not provide the same degree of shareholder protection as would generally apply internationally;
· national policies may restrict the investment opportunities available to foreign investors, including restrictions on investing in issuers or industries deemed sensitive to relevant national interests;
· the fiscal and monetary systems remain relatively undeveloped and this may affect the stability of the economic and financial markets of those countries;
· substantial limitations may exist with respect to the Company's ability to repatriate investment income, capital or the proceeds of sales of securities by foreign investors; and
· assets may be subject to increased political and/or regulatory risk.
The day to day management of the market risks is the responsibility of the Investment Manager, who analyses markets within a framework of quality, value, growth and change. The Board believes the Investment Manager utilises its proven research and management selection experience to ensure that these risks are minimised, as far as is possible. The investment policy employed by the Investment Manager ensures that diversification within investee funds is taken into account when deciding on the size of each investment so the Company's exposure to any one underlying company should never be excessive. The Company's market positions are monitored by the Board in the monthly portfolio valuations and at Board meetings.
ii) Currency risk
As stated under i) above, the Company invests in emerging markets. It is therefore exposed to currency risks which affect both the performance of its investee funds and also the value of the Company's holdings against the Company's functional currency, sterling. The Company holds US dollars and occasionally other foreign currencies for brief periods in its account with the custodian, but only at times when it expects soon to invest that currency into portfolio holdings.It is not the Company's policy to hedge against foreign currency movements, nor does the Company use financial instruments to mitigate the currency exposure in the period between the time that income is included in the financial statements and its receipt. Movements in exchange rates are likely to affect directly and indirectly the value of the Company's investments.
Currency price risk sensitivity
The effect of a 1% appreciation/depreciation in the exchange rate of the US dollar over sterling would have resulted in an increase/decrease of £1,526,000 (2019: £1,780,000) in the Company's investments held at fair value through profit or loss at the Statement of Financial Position date. This analysis assumes that all other variables remain constant.iii) Interest rate risk
With the exception of cash, no significant interest rate risks arise in respect of any current asset. The Company, generally, does not hold significant cash balances, with short-term borrowings being used when required. All cash held as a current asset is sterling or US dollar and is held at the variable interest rates of the custodian.On 29 March 2018, the Company entered into an unsecured 12 month revolving credit facility with The Royal Bank of Scotland plc, under which loans with a maximum aggregate value of £25 million may be drawn. The facility was renewed with The Royal Bank of Scotland International Limited (London Branch) ("RBSI") on 26 March 2020 for a further 12 month period, with a termination date of 26 March 2021. As at 31 October 2020, £12.5 million (2019: £25 million) was drawn down at an all-in monthly variable rate of 0.76925% (2019: 1.26413%).
Movements in interest rates are likely to indirectly affect the value of the Company's investments.
Interest rate risk sensitivity
Movements in interest rates are likely to directly affect bank loan interest payments and commitment fees and are likely to indirectly affect the value of the Company's investments. Both of which are not likely to affect the Company's net assets to a material extent. However, it is not possible to give an accurate assessment of how significant changes in interest rates would affect the prices of equity investments held by the Company.
Quantitative analysis
A breakdown of the pricing denominations of the funds in which the Company is invested is shown below.
As at 31 October 2020
As at 31 October 2019
Cash flow
Interest
rate risk
£'000
Non
interest
rate risk
£'000
Total
£'000
% of net
assets
Cash flow
Interest
rate risk
£'000
No
interest
rate risk
£'000
Total
£'000
% of net
assetsNon-current asset investments
at fair value:
EUR denominated
-
8,335
8,335
2.6
-
13,958
13,958
4.6
GBP denominated
-
164,017
164,017
51.1
-
136,738
136,738
44.8
USD denominated
-
152,623
152,623
47.5
-
178,017
178,017
58.4
Cash and cash equivalents
Floating rate - GBP
6,697
-
6,697
2.1
873
-
873
0.3
Floating rate - USD
1,618
-
1,618
0.5
317
-
317
0.1
Short term receivables
-
1,291
1,291
0.4
-
422
422
0.1
Short term payables
(12,500)
(1,111)
(13,611)
(4.2)
(25,000)
(448)
(25,448)
(8.3)
(4,185)
325,155
320,970
100.0
(23,810)
328,687
304,877
100.0
iv) Other price risks
The principal price risk for the Company is the price volatility on the investment portfolio. The Investment Manager attempts to diversify the price risk by spreading the Company's investments across a number of geographical regions and economic sectors. The Board meets regularly to review the Investment Manager's performance and the asset allocation.Market price risk sensitivity
The effect on the portfolio of a 10% increase or decrease in market prices would have resulted in an increase or decrease of £32,497,000 (2019: £32,871,000) in the investments designated as fair value through profit or loss at the Statement of Financial Position date, equivalent to 10.1% (2019: 11%) of the net assets attributable to equity holders. This analysis assumes that all other variables remain constant.Market concentration
At 31 October 2020, the largest five country concentrations on a look through basis were as follows:
Country
2020
% of net
assets
2019
% of net
assetsChina
38.2
29.6
Korea
13.7
10.7
Taiwan
8.1
8.8
India
4.8
7.4
Russia
4.3
6.5
Liquidity risks
A large portion of the Company's investments are in closed ended, quoted securities. A high percentage of securities are listed on the London or New York Stock Exchanges and are considered to be readily realisable by comparison with most emerging market securities. The Company also holds unquoted investments, which are predominantly in open-ended funds. Some delay may be encountered in obtaining liquidity in respect of these securities; the Company may utilise its borrowing powers on a short-term basis to avoid delays in reinvestment of the proceeds of redemptions. As at 31 October 2020, the Company held shares in Tarpon All Equities Cayman (Series B) L.P. ("Tarpon"). Tarpon holds side pockets within private equity structures which were valued at £1.1 million at 31 October 2020 (2019: £1.8 million).The Investment Manager has estimated the percentages of the portfolio that could be liquidated within various timescales, assuming one third of daily trading volumes. The results are shown below.
Liquidation Period
2020
(%)
2019
(%)One month
68
75
Three months
84
88
One year
91
92
The analysis above supports the Company's ability to repay borrowings, considering the Company is permitted to borrow, at the point of borrowing, up to 15% of its net assets compared to the Company's ability to realise an estimated 68% of its portfolio within one month.
The Company had £nil (2019: £104,000) purchase transactions and £924,000 (2019: £72,000) sales transactions awaiting settlement at the year end.
The liquidity of the underlying holdings in the funds in which the Company is invested may have an impact on the ability of the Company to realise its holdings in those funds.
Credit risks
The Company's principal direct credit risk is the risk of default on cash held at the custodian. Cash at bank at 31 October 2020 included £8,315,000 (2019: £1,190,000) held by the custodian, Northern Trust (Guernsey) Limited. The Company monitors the credit quality of the custodian. Interest is based on the prevailing money market rates.Credit risk arising on transactions with brokers relates to transactions awaiting settlement. Risk relating to unsettled transactions is considered to be low as trading is almost always done on a delivery versus payment basis. When investments are made in open-ended funds, the Investment Manager performs due diligence on those funds before making any investment.
All of the assets of the Company are held by the custodian or through the custodian's nominated sub custodians. Bankruptcy or insolvency of the Company's custodian, Northern Trust (Guernsey) Limited, or its sub custodians may cause the Company's rights with respect to securities held by them to be delayed or limited. The latest credit ratings at the time of approval of this document for Northern Trust (Guernsey) Limited's parent company, The Northern Trust Company, were as follows:
Standard & Poor's
Moody's
Fitch Ratings
Individual rating
-
-
BBB
Short-term deposit/debt
A-1+
P-1
F1+
Long-term deposit/debt
AA-
Aa2
AA
The funds in which the Company is invested may be exposed to credit risk.
Capital management
The Company considers that its capital consists of its net assets.The Company's authorised share capital consists of an unlimited number of Ordinary shares of £0.01 par value. At 31 October 2020, there were 45,965,159 (2019: 45,965,159) Ordinary shares in issue (excluding shares held in treasury).
The Manager and the Company's broker monitor the demand for the Company's shares and the Directors review the position at Board meetings. Details on the Company's policies for issuing further shares and buying back shares can be found in the Directors' Report.
The Company entered into an unsecured revolving credit facility with RBSI on 29 March 2018, under which loans with a maximum aggregate value of £25 million may be drawn. On 30 March 2020, the Board announced the renewal of the loan facility for a further year to 26 March 2021. As at 31 October 2020, £12.5 million was drawn down from RBSI (2019: £25 million).
Restrictions imposed by RBSI in connection with the loan facility include the following covenants:
· Consolidated net tangible assets are not less than £175 million.
· Consolidated gross borrowings expressed as a percentage of the investment portfolio value shall not exceed 15%.
· Consolidated gross borrowings expressed as a percentage of the adjusted investment portfolio value shall not exceed 22.5%.
· The Borrower's portfolio must contain a minimum of 20 eligible Investments of which a minimum of 5 shall be of a closed-ended structure.
The Company does not have any externally imposed capital requirements other than disclosed above.
Operational risk
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the processes, technology and infrastructure supporting the Company's activities with financial instruments either internally within the Company or externally at the Company's service providers, and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of investment management behaviour.The Company's objective is to manage operational risk so as to balance limiting of financial losses and damage to its reputation with achieving its investment objective of generating returns to investors.
The primary responsibility for the development and implementation of controls over operational risk rests with the Board of Directors. This responsibility is supported by the development of overall standards for the management of operational risk, which encompasses the controls and processes at the service providers and the establishment of service levels with the service providers, in the following areas:
· requirements for appropriate segregation of duties between various functions, roles and responsibilities;
· requirements for the reconciliation and monitoring of transactions;
· compliance with regulatory and other legal requirements;
· documentation of controls and procedures;
· requirements for the periodic assessment of operational risk faced, and the adequacy of controls and procedures to address the risks identified;
· contingency plans;
· ethical business standards;
· insurance; and
· risk mitigation.
The Directors' assessment over the adequacy of the controls and processes in place at the service providers with respect to operational risk is carried out via regular discussions with the main service providers to the Company and a review of their internal controls documents prepared under industry recognised guidance, if available.
18. Valuation of financial instruments
The Company's financial assets and liabilities held at fair value through profit or loss are valued at fair value in accordance with the provisions of IFRS as described in note 2 (g).The classification of the Company's investments held at fair value is detailed in the table below:
31 October 2020
£'000
31 October 2019
£'000Level 1
277,526
275,888
Level 2
45,320
51,046
Level 3
2,129
1,779
Total
324,975
328,713
The Company recognises transfers between levels of fair value hierarchy at the date the change occurred.
There were three investments transferred between levels during the year (2019: no investments were transferred between levels). Weiss Korea Opportunity Fund Limited moved from level 2 to level 1 and Gulf Investment Fund PLC moved from level 1 to level 2. Komodo Fund entered into liquidation and was therefore transfered from level 2 to level 3.
Level 1 classification basis
Investments, whose values are based on quoted market prices in active markets, and therefore classified within level 1, include listed equities in active markets. The Company does not adjust the quoted price for these instruments.Level 2 classification basis
Investments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within level 2. These include monthly priced investment funds. The underlying net asset values of the open ended funds included under level 2 are prepared using industry accepted standards and the funds have a history of accepting and redeeming funds on a regular basis at net asset value. The net asset values of regularly traded open ended funds are considered to be reasonable estimates of the fair values of those investments and such investments are therefore classified within level 2 if they do not meet the criteria for inclusion in level 1.Level 3 classification basis
Investments classified within level 3 have significant unobservable inputs, as they trade infrequently. The level 3 figure consists of a private equity investment held in a side pocket of Tarpon and an investment in Komodo Fund. This holding is stated at fair value which is estimated in good faith by the directors following consultation with the Investment Manager with a view to establishing the probable realisable value of this investment. The fair value of Tarpon and its side pocket has been based on an unadjusted net asset value provided by the administrator of that fund. Komodo Fund is valued at the unadjusted net asset values provided by the administrator of that fund.The movement on the level 3 classified investments during the year is shown below:
2020
£'000
2019
£'000Opening balance
1,779
999
Additions during the year
-
-
Disposals during the year
(5,592)
-
Profit or loss on disposals during the year
1,837
-
Transfer of investment from level 2 to level 3
6,852
-
Valuation adjustments*
(2,747)
780
Closing balance at 31 October
2,129
1,779
* Total gains/(losses) included in profit or loss on assets held at year end.
Level 3 classified investments sensitivity analysis
If the fair value of level 3 classified investments changed by 5%, the impact on the Company's net assets attributable to equity holders would be 0.02% (2019: 0.03%). As at 31 October 2020, the Company's net assets attributable to equity holders would be adversely affected by a maximum of 0.3% (2019: 0.6%) if level 3 classified investments were written off to £nil.
Structured entities
The Company invests in a portfolio of funds and products which give diversified exposure to developing and emerging market economies. 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.
The investments in structured entities are subject to the terms and conditions of offering documents and/or constitutional documents. These investments are subject to market price and other risks arising from their underlying portfolios. Investee funds are managed by portfolio managers who are compensated by the respective funds for their services. Such compensation generally may consist of an asset based fee and/or a performance based fee.
The investments in structured entities are financial assets which are designated as fair value through profit or loss in the Company's financial statements. During the year ended 31 December 2020, the Fund did not provide financial support to unconsolidated structured entities and has no intention of providing financial or other support.
The Fund did not hold interests in unconsolidated structured entities at 31 December 2020.
The exposure to investments in investee funds and products at fair value by strategy employed is disclosed in the following table.
2020
Strategy
Number of
investee
funds
Fair value
range
£'000
Weighted average
fair value
£'000
Investment
at fair value
£'000
% of total
net assets of
underlying fundsEquity long-only
9
1,059 - 35,730
19,088
100,754
31.0%
2019
Strategy
Number of
investee
funds
Fair value
range
£'000
Weighted average
fair value
£'000
Investment
at fair value
£'000
% of total
net assets of
underlying fundsEquity long-only
10
1,779 - 29,514
15,678
97,954
32.1%
Equity long-only
Portfolio managers implementing equity long-only strategies generally take long positions in equity related instruments such as Ordinary shares, preferred shares, convertible bonds, Depositary receipts, exchange traded funds and market access products such as index futures with the expectation that the asset will rise in value.
19. Operating segments
The Board of Directors is responsible for ensuring that the Company's objective and investment strategy is followed. The day-to-day implementation of the investment strategy 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 to ensure compliance with the investment strategy and to assess the achievement of the Company's objective. The Investment Manager has been given full authority to make investment decisions on behalf of the Company in accordance with the investment strategy and analyses markets within a framework of quality, value, growth and change. The investment policy employed by the Investment Manager ensures that diversification within investee funds is taken into account when deciding on the size of each investment so the Company's exposure to any one underlying company should never be excessive. The Company's positions are monitored as a whole by the Board in monthly portfolio valuations and at Board meetings. Any significant change to the Company's investment strategy requires shareholder approval. The Company has a diversified portfolio of investments and no single investment accounted for more than 11.1% (2019: 9.7%) of the Company's net assets at the Company's year end. The Investment Manager aims to identify funds which it considers are likely to deliver consistent capital growth over the longer term. The largest income from an individual investment is a Romanian investment (Fondul Proprietatea) which accounted for 15% (2019: 14%) of the total investment income receivable in the year.
20. Post balance sheet events
On 18 December 2020, the Company paid a fourth interim dividend in respect of the year ended 31 October 2020 of 5.50p per Ordinary share, to shareholders on the register on 27 November 2020. The total payment amounted to £2,528,000 and will be accounted for in the financial year ending 31 October 2021.
21. Financial information
The Annual Report and Accounts was approved by the Board of directors on 18 February 2021. The information in this announcement has been extracted from the Annual Report and Accounts on which the Company's auditors have given an unqualified report. The Annual Report and Accounts will be posted to shareholders and will be made available on the Company's website at aberdeenemergingmarkets.co.uk. It will also be available from the registered office of Company and the UK Administration Agent.
Alternative Performance Measures ("APMs") (unaudited)
Discount
The amount, expressed as a percentage, by which the share price is less than the NAV per Ordinary share.
As at 31
October
2020NAV per Ordinary share (pence)
a
698.29
Ordinary share price (pence)
b
605.00
Discount
1-(b÷a)
13.4%
Gearing
A way to magnify income and capital returns, but which can also magnify losses. The revolving loan facility with RBSI is a common method of gearing.
As at 31
October
2020Total assets less cash/cash equivalents (£'000)
a
326,266
Net assets (£'000)
b
320,970
Gearing (net)
(a÷b)-1
1.6%
Leverage
Under the Alternative Investment Fund Managers Directive ("AIFMD"), leverage is any method by which the exposure of an Alternative Investment Fund ("AIF") is increased through borrowing of cash or securities or leverage embedded in derivative positions.
Under AIFMD, leverage is broadly similar to gearing, but is expressed as a ratio between the assets (excluding borrowings) and the net assets (after taking account of borrowing). Under the gross method, exposure represents the sum of the Company's positions after deduction of cash balances, without taking account of any hedging or netting arrangements. Under the commitment method, exposure is calculated without the deduction of cash balances and after certain hedging and netting positions are offset against each other.
Ongoing charges
A measure, expressed as a percentage of average NAV, of the regular, recurring annual costs of running an investment company.
As at 31
October
2020Average NAV
a
299,662,000
Annualised expenses*
b
3,058,000
Ongoing charges
b÷a
1.02%
* 100% of the Company's portfolio is held in other funds. The Company's ongoing charges figure does not reflect any costs of the underlying funds as the underlying information is not readily available.
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 ended 31 October 2020
Ordinary share
price
NAV
Opening at 1 November 2019 (pence)
a
561.00
663.28
Closing at 31 October 2020 (pence)
b
605.00
698.29
Share price/NAV movement (b ÷ a) - 1
c
7.8%
5.3%
Dividend reinvestment
d
4.4%
3.6%
Total return (c+d)
12.2%
8.9%
Company Contacts
Directors
Mark Hadsley-Chaplin (Chairman)
William Collins
Helen Green
John Hawkins
Eleonore de RochechouartRegistered Office
11 New Street
St Peter Port
Guernsey GY1 2PFCompany Secretary and Administrator
Vistra Fund Services (Guernsey) Limited
11 New Street
St Peter Port
Guernsey GY1 2PFAlternative Investment Fund Manager
Aberdeen Standard Fund Managers Limited
Bow Bells House
1 Bread Street
London EC4M 9HHInvestment Manager
Aberdeen Asset Managers Limited
Bow Bells House
1 Bread Street
London EC4M 9HHCustomer Services Department,
Children's Plan, Share Plan and ISA enquiriesAberdeen Standard Investment Trusts
PO Box 11020
Chelmsford
Essex CM99 2DBFreephone: 0808 500 0040
(open Monday to Friday, 9.00 a.m. - 5.00 p.m., excluding
public holidays in England and Wales)
Email: inv.trusts@aberdeenstandard.comCompany Registration Number
Incorporated in Guernsey Number 50900
Website
aberdeenemergingmarkets.co.uk
UK Administration Agent
PraxisIFM Fund Services (UK) Limited
1st Floor, Senator House
85 Queen Victoria Street
London
EC4V 4ABRegistrars
Link Asset Services
Longue Hougue House
St Sampson
Guernsey GY2 4JNDepositary Services and Custodian
Northern Trust (Guernsey) Limited
Trafalgar Court
Les Banques
St Peter Port
Guernsey GY1 3DAFinancial Adviser and Stockbroker
Shore Capital Markets Limited
Cassini House
57-58 St James's Street
London SW1A 1LDAdvisers as to Guernsey law
Mourant Ozannes
1 Le Marchant Street
St Peter Port
Guernsey GY1 4HPIndependent Auditor
KPMG Channel Islands Limited
Glategny Court
Glategny Esplanade
St Peter Port
Guernsey GY1 1WRUnited States Internal Revenue Service FATCA Registration
Number ("GIIN")WLL8YJ.99999.SL.831
Legal Entity Identifier ("LEI")
213800RIA1NX8DP4P938
Enquiries:
Aberdeen Standard Fund Managers Limited (Investment Manager to Aberdeen Emerging Markets Investment Company Limited)
William Hemmings Tel: +44 (0)207 463 6223
Luke Mason Tel +44 (0)207 463 5971
Shore Capital Markets Limited (Financial adviser and stockbroker)
Robert Finlay Tel: +44 (0)20 7601 6115
Vistra Fund Services (Guernsey) Limited (Company Secretary)
Patrick Farncombe Tel: +44 (0)1481 732152
PraxisIFM Fund Services (UK) Limited (UK Administration Agent)
Brian Smith Tel: +44 (0)204 513 9260
Ordinary Shares - Listing Category: Premium - Equity Closed-ended Investment Funds
18 February 2021
END
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