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Aberdeen Emerging Markets

Investment Company Limited


A UK-listed investment company, seeking consistent returns
from a diversified portfolio of emerging market funds

Annual Report
31 October 2018
Contents
Company Overview
Financial Highlights 2
Chairman’s Statement 4

Strategic Report
Investment Manager’s Report 6

Portfolio
Investments 11
Asset Allocation 12

Governance
Directors’ Report 13
Corporate Governance Statement 19
Report of the Audit Committee 23
Directors’ Remuneration Report 24
Statement of Directors’ Responsibilities 25
Depositary Report 26

Financial Statements
Independent Auditor’s Report 27
Statement of Comprehensive Income 30
Statement of Financial Position 31
Statement of Changes in Equity 32
Statement of Cash Flow 33 Visit our Website
Notes to the Financial Statements 34 To find out more about Aberdeen Emerging
Markets Investment Company Limited, please visit
aberdeenemergingmarkets.co.uk
Corporate Information (unaudited) THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR
Alternative Performance Measures 49 IMMEDIATE ATTENTION. If you are in any doubt about the
Information about the Investment Manager 50 action you should take, you are recommended to seek
your own financial advice from your stockbroker, bank
Investor Information 51
manager, solicitor, accountant or other financial adviser
AIFMD Disclosures 54 authorised under the Financial Services and Markets Act
Glossary of Terms and Definitions 55 2000 (as amended by the Financial Services Act 2012) if
Notice of Annual General Meeting 56 you are in the United Kingdom or, if not, from another
appropriately authorised financial adviser.
Form of Proxy 59
Contact Addresses 61 If you have sold or otherwise transferred all your Ordinary
shares in Aberdeen Emerging Markets Investment
Company Limited, please forward this document, together
with the accompanying documents immediately to the
purchaser or transferee, or to the stockbroker, bank or
agent through whom the sale or transfer was effected for
transmission to the purchaser or transferee.

Aberdeen Emerging Markets Investment Company Limited 1


Company Overview
Financial Highlights

Aberdeen Emerging Markets Investment Company Limited The Company is governed by a board of independent
(“AEMC” or the “Company”) is a closed-end investment directors, and has no employees. Like most other investment
company with its Ordinary shares listed on the premium companies, it outsources its investment management
segment of the London Stock Exchange. It offers investors and administration to an investment management group,
exposure to some of the best investment talent within the the Standard Life Aberdeen Group, and other third party
global emerging markets of Asia, Eastern Europe, Africa and providers.
Latin America.

Net asset value (“NAV”) per Ordinary share total return1, 5 NAV per Ordinary share2

-12.4% 600.6p
2017 +14.9% 2017 706.0p
Share price total return1, 5 Ordinary share price – mid market

-15.7% 515.0p
2017 +17.0% 2017 632.5p
MSCI Emerging Markets Net Total Return Index in sterling terms Net Assets

-9.0% £276.6 million


2017 +16.6% 2017 £361.5 million
Gearing3, 5 Ongoing charges ratio (“OCR”)5

+7.0% 1.02%
2017 +6.0% 2017 1.07%
Dividends per share4 Revenue return per share

21.0p 2.03p
2017 10.0p 2017 -0.68p
1
 erformance figures stated above include reinvestment of dividends on
P 4
Dividends declared for the year in which they were earned
the ex-date 5
Definitions of these Alternative Performance Measures (‘APMs’) together
2
See note 14 in the Notes to the Financial Statements for basis of with how these have been calculated can be found on page 49.
calculation
3
Based on the net of the drawn down loan value and cash, as a percentage
of NAV

NAV per Ordinary share Ordinary share price–mid market


At 31 October – pence At 31 October – pence

706.0p
618.8p 632.5p
600.6p
545.0p 515.0p
493.5p
453.5p 442.3p
400.4p

14 15 16 17 18 14 15 16 17 18

2 Annual Report 2018


Investment Objective Management
The Company’s investment objective is to achieve The Company’s Manager is Aberdeen Standard Fund
consistent returns for shareholders in excess of the MSCI Managers Limited (“ASFML”, the “AIFM” or the “Manager”)
Emerging Markets Net Total Return Index in sterling terms which has delegated the investment management of the
(the "Benchmark"). Company to Aberdeen Asset Managers Limited (“AAML”
or the “Investment Manager”). Both companies are wholly
Investment Policy owned subsidiaries of Standard Life Aberdeen plc, which was
formed by the merger of Aberdeen Asset Management PLC
The Company’s investment policy is included on page 13.
and Standard Life plc on 14 August 2017. Aberdeen Standard
Investments is a brand of the investment business of the
Benchmark merged entity.
MSCI Emerging Markets Net Total Return Index in
The Company’s portfolio is managed by Aberdeen Standard
sterling terms.
Investments’ highly experienced Closed End Fund Strategies
("CEFS") team, which is amongst the most experienced of any
operating globally with a similar strategy. Further details of the
team and the investment strategy and process are included
on page 50.

Financial Calendar

29 March 2019 First interim dividend payable for year ending 31 October 2019

16 April 2019 Annual General Meeting (Guernsey)

June 2019 Second interim dividend payable for year ending 31 October 2019

June 2019 Announcement of Half-Yearly Financial Report for the six months ending 30 April 2019

September 2019 Third interim dividend payable for year ending 31 October 2019

December 2019 Fourth interim dividend payable for year ending 31 October 2019

January/February 2020 Announcement of Annual Report and Accounts for the year ending 31 October 2019

Aberdeen Emerging Markets Investment Company Limited 3


Company Overview
Chairman’s Statement

Overview Dividends
Over the year to 31 October 2018, the Company’s net asset During the previous year the Board announced its intention
value (“NAV”) fell by 12.4% in total return terms. This compares to commence making distributions by way of dividends to
to a fall of 9.0% in the Company’s benchmark, the MSCI be funded from a combination of income and capital. This
Emerging Markets Net Total Return Index (in sterling terms). measure was adopted in the belief that the level of dividends
paid by emerging market companies over the long term is
The fall in markets can be attributed mostly to the final quarter
an increasingly important attraction for investors seeking to
of the financial year when the benchmark index declined by
invest in the emerging market asset class.
more than 9%, with October delivering the worst monthly
decline in two years. Markets were impacted by the effect of a Three interim dividends, each of 5.25p per share, were paid on
rising US Dollar as the US economy continued to strengthen, 29 March, 29 June and 28 September 2018 and, since the year
but also by concerns over trading relationships between the end, a fourth and final interim dividend in respect of the year
US and China as well as a slowdown in economic activity of 5.25p per share was paid on 21 December 2018. This brings
in China. The two largest markets to which the Company is the total dividends for the year to 21p per share.
exposed, China and South Korea, fell by 13.4% and 16.7%
For future years, the Board intends to continue to pay interim
respectively in total return terms.
dividends on a quarterly basis, in March, June, September
Relative to the benchmark, the Company benefited from its and December and it is anticipated that the total dividend for
overweight exposure to Russia and its non-index exposure the year ended 31 October 2019 will be no less than 21p per
to Romania. It also benefited from discount narrowing of its share. Accordingly, the Board declares a first interim dividend
closed ended investment funds holdings. However, there was for the current financial year, of 5.25p per share, which will
an adverse impact from stock selection within the portfolio be paid on 29 March 2019 to shareholders on the register on
as a number of underlying managers struggled to match 1 March 2019.
their respective benchmarks. Many of the underlying funds
The Board will put a resolution to shareholders at the AGM
are exposed to smaller and medium sized companies which
in respect of its policy to declare four interim dividends each
underperformed the market as a whole.
year, and will include this as a resolution at future AGMs.
A more detailed explanation of the year’s performance is
The payment of any dividends will be subject to compliance
provided in the Investment Manager’s Report.
with all necessary regulatory obligations of the Company,
including the Guernsey Law solvency test, compliance with
Continuation Vote and Tender Offer its loan covenants, and will also be subject to the Company
Under the terms of its Articles of Incorporation, the Company retaining sufficient cash for its working capital requirements.
was required to propose a continuation resolution at the
Annual General Meeting (“AGM”) on 12 April 2018 at which Loan Facility and Gearing
the Board was pleased that a significant majority of investors
During the year the Board announced the renewal of the
voted in favour of the continuation of the Company.
Company’s £25 million unsecured multicurrency revolving loan
In the run up to the continuation vote, the Board undertook facility for a further year to March 2019. The Board believes
a consultation exercise covering a large proportion of the that the use of gearing, which is one of the advantages of
shareholder base and received feedback that, while a large a closed ended structure, within pre-determined ranges
majority of shareholders by total number of shares held were and at times when the Investment Manager sees attractive
supportive both of the measures taken to make an investment investment opportunities, will be beneficial to the longer
in the Company more appealing and of the continuation of term performance of the Company. At the end of the year
the Company, there was potentially some appetite for the an amount of £20 million was drawn down under the facility,
liquidity that could be provided by a tender offer. Accordingly, representing gearing, net of cash, of 7.0%.
at a General Meeting held on the same day as the AGM,
The Company has commenced discussions with its bankers
shareholders were asked to approve a tender offer for up to
and the Board expects to renew the facility on similar terms
10% of the shares in issue at a price reflecting a discount of
when it matures in March this year.
3.5% to the prevailing NAV per share. Following the approval
of the tender offer by shareholders, a total of 5,119,633 shares
(representing 10% of the shares in issue) were repurchased by
the Company to hold in treasury.
There will be a further continuation vote at the Company’s
AGM in 2023 and, if that is passed, at every fifth
AGM thereafter.

4 Annual Report 2018


Discount and Share Buy Backs Outlook
The discount of the share price to NAV at the end of the period There were a number of issues that had an impact on
was 14.3%. The Board monitors the discount on an ongoing emerging markets during 2018 but, as these abate, the
basis and, during the year, prior to the tender offer and in backdrop for the sector has started to improve. In particular,
accordance with its stated discount management policy, the there has been a meaningful shift in the likely policy trend
Company bought back 30,000 Ordinary shares (2017: 551,450 of the Federal Reserve which, in light of the recent market
Ordinary shares) to hold in treasury. Shares held in treasury volatility and increasing economic uncertainty, has indicated
may only be resold at a price that represents a premium to the that its stance on further interest rates increases is flexible
prevailing NAV per share. and dependent on economic conditions. This would be a
positive development for emerging markets and, in particular,
The Board’s policy in relation to discount control is that it
their currencies.
considers it desirable that the Company’s shares do not trade
at a price which, on average, represents a discount that is out Most emerging economies are now significantly better
of line with the Company’s direct peer group. To assist the equipped than they were in the past to withstand the
Board in taking action to deal with a material and sustained challenges of external events. Debt levels are relatively low,
deviation in the Company’s discount from its peer group central banks hold substantial hard currency reserves, as
it seeks authority from shareholders annually to buy back well as operating flexible exchange rate regimes, and most
shares. Shares may be repurchased when, in the opinion of countries now benefit from either smaller current account
the Board and taking into account factors such as market deficits, or surpluses.
conditions and the discounts of comparable companies, the
The Board believes that these factors bode well for the outlook
Company’s discount is higher than desired and shares are
for the sector and continues to believe that shareholders
available to purchase in the market. The Board is of the view
benefit from the diversification provided by the Company’s
that the principal purpose of share repurchases is to enhance
approach of investing through a portfolio of specialist
net asset value for remaining shareholders, although it may
funds run by talented managers with strong investment
also assist in addressing the imbalance between the supply of
propositions, providing an attractive means for investors to
and demand for the Company’s shares and thereby reduce the
benefit from the longer term attractions of emerging markets.
scale and volatility of the discount at which the shares trade in
relation to the underlying net asset value.

Board Composition
On 4 October 2018, the Board announced that, due to an Mark Hadsley-Chaplin
increase in other commitments, Mr Mark Barker had resigned Chairman
as a non-executive Director of the Company. The Board is 31 January 2019
currently seeking a replacement. The Board would like to
extend its thanks to Mr Barker for his valued contribution to
the Company over the period of his tenure. Mr John Hawkins
has been a Director of the Company since 2009 and has given
notice to the Board of his intention to step down at the Annual
General Meeting to be held in 2020.

Annual General Meeting ("AGM")


The AGM will be held at 12 noon on 16 April 2019 at 11 New
Street, St Peter Port, Guernsey, GY1 2PF. The Notice of the
Meeting is contained on pages 56 to 57.

Aberdeen Emerging Markets Investment Company Limited 5


Strategic Report
Investment Manager’s Report

During the financial year the Company’s NAV total return per approach is differentiated from rivals in that they allocate
Ordinary share was -12.4% while the MSCI Emerging Markets solely to high quality growth companies with a focus on the
Net Total Return Index (the “Benchmark”) declined by 9.0%. domestic economy. The strategy of selecting companies with
The share price total return was -15.7%, as the discount to high returns on invested capital is one that has delivered
NAV at which the Company’s shares trade widened to 14.3%, handsomely in most equity markets over the long term. We
compared with 10.4% at the start of the financial year. are comfortable with this approach, believing it delivers a high
quality portfolio that ought to perform strongly over time.
Relative NAV performance over the period was disappointing,
Over the last few years however, this has not been the case,
particularly given the historic tendency for the Company’s
and in the period under review, it underperformed sharply
investment strategy to outperform in risk-off periods due to
(fund -15.7% vs MSCI Latin America +1.5%). We should stress
the high level of diversification in the portfolio. Performance
that the managers do not build their portfolio relative to a
attribution for the period reveals positive contributions from
benchmark, but invest with the goal of generating absolute
asset allocation and discount narrowing, offset by a negative
returns over the long term. To illustrate how different the
contribution from fund selection and the impact of gearing
portfolio is we note that the “active share”1 against the index is
(7.0% at the end of the period, based on the net of the drawn
almost 95%. The major source of relative underperformance
down loan value and cash, as a percentage of NAV). The
during the period was that the managers actively avoid state
contribution from asset allocation was driven to a significant
owned and influenced companies as well as commodity or
extent by positioning in the Europe, Middle East and Africa
energy producers. Vale (iron ore and nickel producer) and
region where the overweighting of Russia and off-benchmark
Petrobras (state influenced energy producer), which together
investment in Romania had a material positive impact.
represented 16% of the MSCI Latin America Index at the end
Asian positioning also added value with the underweight
of the period, rallied by 61.7% and 53.2% respectively. Not
allocation to China the most notable contributor. In Latin
owning these two companies alone explains half the relative
America, an underweight position in Brazil and off-index
underperformance. While this performance is disappointing,
exposure to Argentina detracted from relative returns. The
we do not consider the long term proposition to have been
benefit from discount narrowing in the Company’s closed
impaired; the team is stable (and well aligned with investors),
end fund investments was primarily driven by a number of
the process has been consistently employed and the portfolio
the Company’s larger investments in Asia, notably Edinburgh
is attractive on quality, growth and valuation metrics. If
Dragon Trust, Fidelity China Special Situations (“Fidelity”) and
anything, we believe the fund has become more compelling, as
Weiss Korea Opportunity Fund Limited.
it also provides exposure to materially undervalued currencies
The Company’s financial year proved to be a challenging and an attractive asset allocation that differs significantly from
one for many of the underlying managers with which the the Latin American index (10% Argentina, 33% in the Andean
Company is invested. Managers in all regions struggled to markets of Chile, Colombia and Peru, 50% in Brazil and only
beat benchmark returns. A common theme amongst the 6% in Mexico). For these reasons, we continue to hold the fund
Company’s underlying active managers is a tendency to despite the recent headwinds to performance.
overweight less well researched small and medium sized
In Asia, Fidelity China Special Situations is another core
companies. Such companies underperformed the larger stocks
holding, accounting for 5.6% of the Company’s net assets at
that dominate the index in the risk-averse environment of
the end of the period. It too had a difficult year, delivering
the past twelve months. Over that period, the MSCI Emerging
a NAV total return of -19.2%, which lagged the MSCI China
Markets Small Cap Net Total Return Index declined by 13.9%,
Net Total Return Index by 5.8% as a combination of gearing,
close to 5% adrift of the Company’s Benchmark.
losses on index shorts and several stock-specific issues proved
Material underperformance by an underlying manager costly. Despite last year’s underperformance the fund’s long
necessarily prompts a review of the case for remaining term performance remains impressive with a NAV total
invested. In the vast majority of cases our conversations return of 101.6% over the last five years compared with an
with such managers have revealed sound explanations for index return of 58.3%. The fund is managed by the twenty
benchmark relative underperformance. A couple of examples year Fidelity veteran Dale Nicholls, whose entire career has
may serve to demonstrate the kind of issues that have been focused on Asian equities. Dale draws on a deep pool
been faced. of research analysts based in the region. Like Brown Advisory
Latin American Fund the approach is highly active and index
The Brown Advisory Latin American Fund is the Company’s
agnostic. The process focuses on identifying competitive, cash
largest standalone exposure to Latin America, accounting
generative companies with good long term growth prospects.
for 6.5% of net assets. The management team comprises
Strong governance is vital in China and Fidelity looks for highly
two of the most experienced stock pickers in the region,
competent management teams that are aligned with minority
and is one of very few teams to survive intact what has
investors. This leads the manager to typically favour private
been a brutal 7-8 years for markets in the region. Their

1
 measure of how different a portfolio is from an index that can range
A
from 0% to 100%.

6 Annual Report 2018


companies (as opposed to State Owned Enterprises) which NAV performance attribution for the year ended
often operate in “new economy” areas such as e-commerce 31 October 2018
and social media or are beneficiaries of emerging middle class
Fund Selection (3.7%)
consumption trends in areas such as healthcare and financial
services. The approach also leads the manager to have a Asia (1.9%)
significant bias towards small and mid-sized companies where EMEA (0.8%)
the opportunities to add value are greater given the lack of sell- Latin America (1.0%)
side research. By way of illustration, some 30% of net assets Asset Allocation 0.9%
is invested in stocks with a market cap of less than £1 billion
although such stocks account for just 0.5% of the China index. Asia 0.4%
The trust fully exploits the benefits of the closed end structure EMEA 2.0%
by investing to a modest extent in unlisted stocks (an area in Latin America (0.3%)
which the manager has historically added significant value) Cash/Gearing (direct and underlying) (1.2%)
and makes active use of leverage and the ability to take short Discount Narrowing 0.4%
positions. While the last year has been uncomfortable we
Fees and Expenses (1.0%)
retain confidence in the differentiated approach and the
manager’s abilities to add value over the long term. Net asset value underperformance* (3.4%)

* The above analysis has been prepared on a total return basis.

Market Environment
Emerging markets were largely range-bound in the first half of and sentiment towards emerging markets deteriorated.
the period, but experienced a sharp decline in the final months A disappointing result in a period in which UK and US
of the year as the US dollar resumed its upwards trajectory equities rose.
Chart 1. Emerging and developed market performance during year to 31 October 2018

115
MSCI Emerging Markets Net TR MSCI World Net TR

110
Performance rebased to 100

105

100

95

90

85
Oct 17 Nov 17 Dec 17 Jan 18 Feb 18 Mar 18 Apr 18 May 18 Jun 18 Jul 18 Aug 18 Sep 18 Oct 18

Source: Bloomberg. GBP returns for the period from 31 October 2017 to 31 October 2018

For much of the year, investors’ major concern was the of the few markets to demonstrate any resilience through
rhetoric around trade arrangements between the world’s two this uncertainty, but it too succumbed in the final months of
largest economies – the US and China. This, and a deceleration the year amidst a financial sector panic, ending the period
in economic activity, contributed to the Chinese market’s down 8.9%. In Malaysia, Barisan Nasional’s defeat in the
13.4% decline. Elsewhere in the region, the South Korean parliamentary elections allowed Mahathir Mohamad to
market fell by 16.7%, as trade concerns and a weakening assume the role of Prime Minister at 92 years of age, ending
domestic economy hampered sentiment despite an easing the ruling coalition’s 61 years in power. The stock market
of political tensions in the Korean peninsula. India was one reacted positively, gaining 5.1%.

Aberdeen Emerging Markets Investment Company Limited 7


Strategic Report
Investment Manager’s Report continued

Within the Europe, Middle East and Africa region there was current account deficit and persistent inflationary pressures.
a clear divergence between those markets that benefit from The increasingly autocratic leadership of President Erdogan
rising energy prices and those that do not. Energy exporters called into question the independence of the central bank and
Qatar and Russia gained 42.9% and 15.2% respectively. The its ability to respond appropriately to the economic conditions
gains in Russia were made despite the announcement of facing the country.
additional US sanctions amidst deteriorating diplomatic ties
Latin American equities saw a stark divergence in performance
with the West. The South African and Turkish markets declined
between the region’s two major markets. The Mexican market
by 14.1% and 40.8% respectively. Being net importers of oil
declined 11.1% amidst uncertainty surrounding the North
was not helpful for either country but other factors were
American Free Trade Agreement (“NAFTA”) renegotiation
at play too. The deterioration in the economic and political
process and the July general election that saw the historically
situation in South Africa contributed to a change in leadership
leftist Andrés Manuel López Obrador elected president.
with Cyril Ramaphosa sworn in as president in February. Local
Politics also play a significant role in Brazil where the populist
equities and the currency reacted positively to this change
Jair Bolsonaro emerged victorious in the October presidential
but the euphoria rapidly dissipated. Performance was also
elections. His policy pledges include a clamp down on political
hampered by the technology stock sell-off that saw Naspers
corruption and crime more generally. The stock market and
(close to 30% of the South African index) lose 24.9% of its
currency reacted favourably, resulting in a 9.0% gain for
market value in the period. The sharp decline in Turkey was
the period.
triggered by a collapse in confidence in the face of a widening

Chart 2. Market performances during the year to 31 October 2018

MSCI EM
EM Latin America
EM EMEA
EM Asia
Thailand
Malaysia
Taiwan
India
Indonesia
China
Philippines
South Korea
Pakistan

Qatar
Russia
Czech Republic
United Arab Emirates
Egypt
Hungary
Poland
South Africa
Greece
Turkey

Peru
Brazil
Colombia
Mexico
Chile

US
World
UK
Japan
Frontier
-50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50%

Source: Bloomberg. GBP returns for the period from 31 October 2017 to 31 October 2018

8 Annual Report 2018


Portfolio BlackRock Emerging Europe was required to offer
shareholders a full exit at NAV less applicable costs. Details of
During the year we continued to concentrate the portfolio into
the exit opportunity were released in late May. It subsequently
high conviction investment ideas, whilst also taking advantage
became evident that a significant percentage of the company’s
of market volatility. We added to Turkey around the time of its
shareholders wished to exit and that would have left the
currency collapse, a contrarian move that we felt was justified
on-going fund at an unviable size. Alternative proposals were
based on distressed valuations and the rampant negativity
therefore brought forward that would see the existing vehicle
surrounding that market. At the time the Turkish market was
liquidated and allow shareholders to elect between a cash exit
trading below its global financial crisis lows and at the lowest
or rolling their investment into BlackRock Frontiers Investment
valuations of the past decade. Since our purchase, the Turkish
Trust. This proposal was approved by BlackRock Emerging
market and currency have remained volatile as a consequence
Europe’s shareholders since AEMC’s financial year end. We
of the uncertainty regarding the economic outlook, domestic
elected to exit in full which resulted in the investment being
politics and relations with the US, Europe and its Middle
fully realised in December 2018.
Eastern neighbours.
The weighted average discount to net asset value of the
Later in the year we initiated a holding in Saudi Arabia. While
Company’s closed end holdings was 10.4% at the end of the
recent headlines have been dominated by the Khashoggi
period, largely unchanged from 10.7% at the beginning of the
affair, we believe the country stands well placed to benefit
period despite the weak sentiment towards emerging markets.
from a number of catalysts, including elevated energy prices, a
The overall composition of the portfolio by type of vehicle did
domestic reform programme, low currency risk (given the peg
however change in a meaningful way over the period with
to the US dollar), a financial sector that benefits from higher
the allocation to open ended funds increasing relative to that
US interest rates and the planned inclusion of Saudi Arabian
of closed ended funds. This change reflected steady returns
equities in the MSCI Emerging Markets Index in 2019.
of capital from certain closed end fund liquidity events as
Purchases were funded from a combination of cash returned well as allocations to best of breed managers of open ended
through corporate actions, as well as opportunistic sales of funds in markets we view positively from an asset allocation
closed end funds trading at narrower than average discounts standpoint. We will readily allocate a greater portion of the
to net asset value. portfolio back into closed end funds when we see attractive
opportunities to do so.
The year saw good progress on a number of corporate
actions in the portfolio’s closed end fund investments. In May,
October October
Aberdeen Emerging Markets Equity Income Fund, the rollover 2018 2017
vehicle from AEMC’s investment in Aberdeen Latin American
Closed ended investment funds 48.6% 54.3%
Equity Fund, announced that it would undertake a cash tender
offer for up to 32% of the fund’s outstanding shares at a 1% Open ended investment funds 53.1% 47.2%
discount. The fund also made a special distribution, comprised Market access products 5.3% 4.5%
of net realised capital gains representing 9.1% of the fund’s net
Cash and other net assets -7.0% -6.0%
assets. The tender offer was completed in June.
Also in June, the board of Genesis Emerging Markets Fund The Company’s geographic allocation is shown on page 12.
announced a tender offer for 10% of its shares in issue at a Our top down process continues to favour Eastern Europe,
discount of 3.5% to the prevailing NAV per share. The tender the Middle East and Africa and we increased exposure to
was completed in early September and was not fully taken up the region by over 6.0% during the year through purchases
by all shareholders which allowed AEMC to scale up and exit of BlackRock Emerging Europe, Avaron Emerging Europe
12.4% of its holding. In addition to this tender offer, the board and exchange traded funds in Saudi Arabia and Turkey. This
announced that if the NAV total return over the 5 years ending increase was funded by a reduction of around 3% each in Asia
30 June 2021 does not exceed the MSCI Emerging Markets and Latin America, with full exits made from positions in India
Index, the company will undertake a further tender offer for and Mexico on asset allocation grounds.
25% of shares in issue.
In total, the Company’s exposure to frontier markets increased
China Fund Inc announced proposals in late August for a by 2.6% over the period to 10.7% with Romania (3.3%), Saudi
tender offer for up to 30% of its outstanding shares at 99% of Arabia (2.2%), Nigeria (1.0%), Argentina (0.9%), Vietnam (0.8%)
net asset value to be undertaken following the completion of and Kenya (0.7%) the largest frontier exposures. We believe
the search for a new investment manager. Since the end of many frontier markets offer compelling valuations as they
AEMC’s financial year, Matthews Asia was named as the new remain overlooked by mainstream emerging market investors.
manager and we expect the tender offer will be completed in
February 2019.

Aberdeen Emerging Markets Investment Company Limited 9


Strategic Report
Investment Manager’s Report continued

Market Outlook Short term volatility and noise often creates attractive
long-term entry points for investors. Over its 30 years as a
The catalysts that prompted the decline in emerging markets
distinct asset class, the performance of emerging markets
in 2018 were numerous (higher US interest rates, US dollar
has been driven by earnings growth and dividends, and this
strength, the US/China trade dispute, domestic crises in
will remain the case in the future. Consensus expectations
Turkey and Argentina), but as we enter 2019, the backdrop
are for corporate earnings in emerging markets to grow
for emerging markets has started to improve as those
by 9.3% in 2019, with a dividend yield of 2.9% (at the time
issues abate.
of writing the Company’s own shares yield 3.9%). Investors
Early in 2019, markets witnessed a meaningful shift in the are able to access these potential returns at an attractive
likely policy trend of the Federal Reserve, as the central bank valuation, with emerging markets trading on a forward price
took note of recent volatility and rising economic uncertainty to earnings multiple of 10.5 times and a price to book of 1.5
and acted to temper investor expectations for further times. Following the declines of 2018, these metrics are now
tightening. Such a pause would be very positive for emerging below their ten year averages and offer compelling value when
markets, and particularly emerging currencies. This, we compared with developed markets which trade on 13.5 times
believe, is a major driver of the improved relative performance earnings and 2.2 times book value.
of the asset class in recent months and has the potential
We continue to have conviction in our investment process,
to continue.
despite it failing to deliver relative outperformance in the
While we cannot predict how the US-China trade discussions period. This process seeks to add value through manager
will evolve, the economic impact of tariffs has thus far been selection, asset allocation and discount opportunities, two
limited and current discussions point to a compromise of which contributed positively during the financial year. As
becoming more probable than further escalation, as was discussed above, the reasons for the underperformance of
initially feared by investors. In addition, officials in Beijing a number of underlying managers during the period have
have demonstrated their willingness to support the economy been explored and explained and, in almost all instances,
through monetary and fiscal measures. We would expect this do not change our opinion of those managers’ ability to
support from policymakers to continue, as and when required. perform well over the longer term. We select highly active
Despite the short term uncertainty therefore, we view China as managers that can materially outperform or underperform
an improving story after a challenging 2018, and a market that benchmarks in any given period. The outperformance from
still has long term potential. asset allocation in markets like Russia and Romania highlights
that being contrarian worked during the year, and we believe
Whilst losses in Argentina and Turkey were significant, they
it will continue to do so. This belief is reflected in additions
amount to less than 1% of the emerging index, and both
to markets including Turkey, frontier Africa and Saudi Arabia
markets have now stabilised. Contagion to other emerging
during the period. While the proportion of the Company’s
markets now seems unlikely. Indeed, even at the time, we
portfolio allocated to closed end funds has declined, what
viewed this as unlikely given most emerging economies are
remains is a focused list of holdings often benefitting from
now materially better equipped to withstand such episodes
defined catalysts for value creation.
than they were in crises of the past. Debt levels are relatively
low as a proportion of GDP, and maturities are longer. Central The Company’s portfolio is more actively positioned now than
banks hold substantial hard currency reserves, as well as it has been in the past, offering investors exposure to well-
operating flexible exchange rate regimes, which prevent the managed funds in attractive emerging and frontier markets
buildup of imbalances. A much greater proportion of debt that cannot be easily replicated. We believe this, combined
(both corporate and sovereign) is issued in local currency, with the improving outlook for the asset class, bodes well for
reducing the potential for mismatches and debt markets in the coming years.
general have matured and deepened. Finally, whilst many
Aberdeen Asset Managers Limited
emerging countries ran large current-account deficits in the
31 January 2019
past, most countries now benefit from either smaller deficits,
or run surpluses.

10 Annual Report 2018


Investments

Portfolio
Investments

%
Country of Value of net
As at 31 October 2018 Company establishment (£’000) assets
Neuberger Berman - China Equity Fund Ireland 25,133 9.1
Schroder International Selection Taiwanese Equity Fund Luxembourg 20,524 7.4
Schroder AsiaPacific Fund PLC United Kingdom 19,019 6.9
Brown Advisory Latin American Fund - Dollar Class SI Ireland 17,839 6.5
BlackRock Emerging Europe PLC United Kingdom 18,470 6.7
Weiss Korea Opportunity Fund Limited Guernsey 17,847 6.5
Fidelity China Special Situations PLC United Kingdom 15,436 5.6
Avaron Emerging Europe Fund Estonia 14,446 5.2
Steyn Capital SA Equity Fund SP Cayman Islands 10,288 3.7
Laurium Capital International Cayman Feeder SP Cayman Islands 10,268 3.7
Top ten investments 169,270 61.3
Lazard Emerging World Fund - Retail Ireland 9,282 3.4
Korea Value Strategy Fund Ltd - Class B British Virgin Islands 9,232 3.3
Verno Capital Growth Fund Limited Cayman Islands 8,485 3.1
Ton Poh Thailand Fund - Class C Cayman Islands 8,150 2.9
JPMorgan Emerging Investment Trust PLC United Kingdom 8,106 2.9
BlackRock Latin American Investment Trust PLC United Kingdom 7,793 2.8
Schroder Oriental Income Fund Limited Guernsey 7,774 2.8
Genesis Emerging Markets Fund Limited Guernsey 7,667 2.8
Edinburgh Dragon Trust PLC United Kingdom 6,766 2.4
Baring Vostok Investments PCC Limited Guernsey 6,348 2.3
Next ten investments 79,603 28.7
Top twenty investments 248,873 90.0
Fondul Proprietatea Romania 6,266 2.3
Komodo Fund Class S Cayman Islands 6,210 2.2
The China Fund Inc United States 6,112 2.2
Korean Preferred Share Certificate Curacao 6,013 2.2
iShares MSCI Saudi Arabia ET Saudi Arabia 6,006 2.2
Vanguard FTSE Emerging Markets Index Fund United States 5,334 1.9
Taiwan Fund Inc United States 3,104 1.1
iShares MSCI Turkey UCITS ETF Turkey 3,027 1.1
JPMorgan Russian Securities PLC United Kingdom 2,396 0.9
Aberdeen Asian Smaller Companies Investment Trust PLC United Kingdom 1,261 0.5
Tarpon All Equities Cayman (Series B) L.P. Cayman Islands 999 0.4
Total investments 295,601 107.0
Cash and
other net assets (19,045) (7.0)
Net assets 276,556 100.0

Aberdeen Emerging Markets Investment Company Limited 11


Asset Allocation

Portfolio
Asset Allocation

As at 31 October 2018 As at 31 October 2018


Country split Company Benchmark Country split Company Benchmark
Asia 62.1% 72.7% Latin America 11.0% 12.8%
China 26.4% 30.0% Brazil 5.2% 8.0%
India 2.5% 8.7% Chile 0.6% 1.1%
Indonesia 2.8% 2.1% Colombia 1.2% 0.4%
South Korea 14.3% 14.0% Mexico 2.0% 2.9%
Malaysia 0.2% 2.5% Peru 1.1% 0.4%
Pakistan – 0.1% Other 0.9% –
Philippines 0.4% 1.0% Non-specified (0.4%) –
Singapore 1.1% – Cash in underlying
Taiwan 10.9% 11.8% investments 3.9% –
Thailand 2.5% 2.5% Portfolio Cash (7.0%) –
Vietnam 0.8% – Total 100.0% 100.0%
Other 0.2% –
The above analysis has been prepared on a portfolio look-through basis.
EMEA 30.4% 14.5%
Benchmark: MSCI Emerging Markets Net Total Return Index in
Czech Rep 0.4% 0.2% sterling terms.
Egypt 1.1% 0.1%
Greece 0.3% 0.3%
Hungary 0.6% 0.3%
Kenya 0.7% –
Poland 2.2% 1.2%
Qatar – 1.1%
Romania 3.3% –
Russia 10.4% 4.0%
Saudi Arabia 2.2% –
South Africa 4.5% 5.9%
Turkey 2.0% 0.7%
UAE – 0.7%
Other 2.7% –

12 Annual Report 2018


Directors’ Report

Governance
Directors’ Report

The Directors of Aberdeen Emerging Markets Investment Business Activities


Company Limited (“AEMC” or the “Company”) present
The Company is a closed-ended investment company
the report and financial statements for the year ended
incorporated and resident in Guernsey and holds a Premium
31 October 2018.
Listing on the London Stock Exchange.

Investment Policy
Results and Dividends
Objectives The Company’s total comprehensive income for the year was a
The Company’s investment objective is to achieve consistent loss of £40,984,000 (2017: gain of £46,726,000). The Company’s
returns for shareholders in excess of the MSCI Emerging revenue return for the year amounted to £980,000 (2017: loss
Markets Net Total Return Index in sterling terms (Bloomberg of £348,000).
ticker: NDUEEGF Index) (the “Benchmark”).
The Company declared four interim dividends, each of
i) Asset Allocation 5.25p per ordinary share, in respect of the year ended
The Investment Manager invests in a portfolio of funds and 31 October 2018.
products which give a diversified exposure to developing
The Board has declared a first interim dividend of 5.25p per
and emerging market economies. The Investment Manager
share in respect of the year ending 31 October 2019, which will
does not seek to replicate the Benchmark’s geographical
be paid on 29 March 2019 to shareholders on the register on
distribution. The Company’s geographic asset allocation is
1 March 2019.
derived from the Investment Manager’s analysis of prospects
for regions and countries and the underlying opportunities In respect of future financial years, it is anticipated that four
for investment. interim dividends will continue to be paid on a quarterly basis
in March, June, September and December. The Board will put
The Board does not believe that it should impose prescriptive
a resolution to shareholders at the AGM in respect of its policy
limits on the Investment Manager for the geographic
to declare four interim dividends each year, and will include
breakdown and distribution by type of fund as this could
this as a resolution at future AGMs.
have a negative impact on the Company’s performance and
accordingly the Company does not have any prescribed
Investment Report and Outlook
investment limits in this regard.
The Chairman’s Statement and Investment Manager’s Report
The Investment Manager has discretion to enter into hedging
incorporate a review of the highlights during the year and
mechanisms where it believes that this would protect the
the outlook for the forthcoming year.
performance of the Company’s investment portfolio in a cost
effective manner. To date, the Company has never entered
Key Performance Indicators (“KPIs”)
into any such hedging mechanisms.
The Company’s success in attaining its objectives is measured
ii) Risk Diversification by reference to the following KPIs:
Individual investments are selected for their potential to
outperform as a result of one or more of the following: the (a) The Company seeks to generate consistent relative returns
performance of the region, market or asset class in which they ahead of those generated by its Benchmark Index.
invest; the skill of the underlying fund manager; and, in the (b) The Company seeks to achieve a positive absolute return
case of closed end funds, through the narrowing of discounts over the longer term through its exposure to the emerging
at which their shares trade to net asset value. market asset class.
No holding by the Company in any other company will
represent, at the time of the investment, more than 15% by Performance
value of the Company’s net assets. The diversification within An overview of the Company’s performance is contained in the
investee funds is taken into account when deciding on the size Chairman’s Statement and Investment Manager’s Report.
of each investment so the Company’s exposure to any one
underlying company should never be excessive. In sterling terms, the Benchmark Index total return decreased
by 9.0% over the year against a decrease of 12.4% for the
iii) Gearing Company’s Net Asset Value (“NAV”) per Ordinary share.
The Directors reserve the right to borrow up to a maximum
of 15% of the Net Asset Value of the Company at the time Ongoing Charges
of drawdown. For the year ended 31 October 2018, the Company’s ongoing
charges figure, calculated using the Association of Investment
Companies’ (“AIC”) methodology, was 1.02% (2017: 1.07%).

Aberdeen Emerging Markets Investment Company Limited 13


Governance
Directors’ Report continued

Principal Risks and Uncertainties economies; (j) differences in auditing and financial reporting
standards which may result in the unavailability of material
Together with the issues discussed in the Chairman’s
information about economies and issuers; (k) less extensive
Statement and the Investment Manager’s Report, the Board
regulatory oversight of securities markets; (l) longer settlement
considers that the main risks and uncertainties faced by the
periods for securities transactions; (m) less stringent laws
Company fall into the following categories:
regarding the fiduciary duties of officers and directors
(i) General Market Risks Associated with the Company’s and protection of investors; and (n) certain consequences
Investments regarding the maintenance of portfolio securities and
Changes in economic conditions, interest rates, foreign cash with sub-custodians and securities depositories in
exchange rates and inflationary pressures, industry developing markets.
conditions, competition, political and diplomatic events,
(iii) Other Portfolio Specific Risks
tax, environmental and other laws and other factors can
(a) Small cap stocks
substantially and either adversely or favourably affect the
The underlying investee funds selected by the Investment
value of the securities in which the Company invests and,
Manager may have significant investments in smaller to
therefore, the Company’s performance and prospects.
medium sized companies of a less seasoned nature whose
The Company’s investments are subject to normal market securities are traded in an “over-the-counter” market. These
fluctuations and the risks inherent in the purchase, holding “secondary” securities often involve significantly greater
or selling of securities, and there can be no assurance risks than the securities of larger, better-known companies,
that appreciation in the value of those investments will due to shorter operating histories, potentially lower credit
occur. There can be no guarantee that any realisation of an ratings and, if they are not listed companies, a potential lack
investment will be on a basis which necessarily reflects the of liquidity in their securities. As a result of lower liquidity
Company’s valuation of that investment for the purposes of and greater share price volatility of these “secondary”
calculating the net asset value. securities, there may be a disproportionate effect on the
value of the investee funds and, indirectly, on the value of the
The Company’s investments, although not made into
Company’s portfolio.
developed economies, are not entirely sheltered from
the negative impact of economic slowdowns, decreasing (b) Liquidity of the portfolio
consumer demands and credit shortages in such developed The fact that a share is traded does not guarantee its liquidity
economies which, amongst other things, affects the demand and the Company’s investments may be less liquid than
for the products and services offered by the companies in other listed and publicly traded securities. The Company
which the Company directly or indirectly invests. may invest in securities that are not readily tradable or may
accumulate investment positions that represent a significant
A proportion of the Company’s portfolio may be held in cash
multiple of the normal trading volumes of an investment,
or cash equivalent investments from time to time. Such
which may make it difficult for the Company to sell its
proportion of the Company’s assets will be out of the market
investments. Investors should not expect that the Company
and will not benefit from positive stock market movements,
will necessarily be able to realise its investments within a
but may give some protection against negative stock
period which they would otherwise regard as reasonable,
market movements.
and any such realisations that may be achieved may be at
(ii) Emerging Markets a considerably lower price than prevailing indicative market
The funds selected by the Investment Manager invest in prices. The Company has a borrowing facility in place which
emerging markets. Investing in emerging markets involves may be utilised to assist in the management of liquidity. The
certain risks and special considerations not typically associated borrowing facility is described later in this Directors’ Report.
with investing in other more established economies or Liquidity of the portfolio is further discussed in note 17 to the
securities markets. In particular there may be: (a) the risk financial statements.
of nationalisation or expropriation of assets or confiscatory
taxation; (b) social, economic and political uncertainty (c) Foreign exchange risks
including war and revolution; (c) dependence on exports and It is not the Company’s present policy to engage in currency
the corresponding importance of international trade and hedging. Accordingly, the movement of exchange rates
commodities prices; (d) less liquidity of securities markets; between sterling and the other currencies in which the
(e) currency exchange rate fluctuations; (f) potentially higher Company’s investments are denominated or its borrowings
rates of inflation (including hyper-inflation); (g) controls are drawn down may have a material effect, unfavourable
on foreign investment and limitations on repatriation of or favourable, on the returns otherwise experienced on the
invested capital and a fund manager’s ability to exchange investments made by the Company.
local currencies for pounds sterling; (h) a higher degree of Movements in the foreign exchange rate between sterling
governmental involvement and control over the economies; and the currency applicable to a particular shareholder may
(i) government decisions to discontinue support for economic have an impact upon that shareholder’s returns in their own
reform programmes and imposition of centrally planned currency of account.

14 Annual Report 2018


Management or mitigation of the above risks Market Information
Risk Management or mitigation of risk The net asset value per Ordinary share is calculated for
General market risks These risks are largely a each business day and is published through a regulatory
associated with the consequence of the Company’s information service.
Company’s investments investment strategy but the
Investment Manager attempts to Discount Management Policy
Emerging markets
mitigate such risks by maintaining
Other portfolio specific risks an appropriately diversified The Board considers it desirable that the Company’s shares do
portfolio by number of holdings, not trade at a price which, on average, represents a discount
(a) Small cap stock
fund structure, geographic focus, that is out of line with the Company’s direct peer group. To
(b) Liquidity of the portfolio investment style and market assist the Board in taking action to deal with a material and
capitalisation focus.
(c) Foreign exchange sustained deviation in the Company’s discount from its peer
Liquidity, risk and exposure group it seeks authority from shareholders annually to buy
measures are produced on a back shares. Shares may be repurchased when, in the opinion
monthly basis by the Investment
of the Board and taking into account factors such as market
Manager and monitored against
internal limits. conditions and the discounts of comparable companies, the
Company’s discount is higher than desired and shares are
The investment management of the Company has been available to purchase in the market. The Board is of the view
delegated to the Company’s Investment Manager. The that the principal purpose of share repurchases is to enhance
Investment Manager’s investment process takes into account net asset value for remaining shareholders, although it may
the material risks associated with the Company’s portfolio and also assist in addressing the imbalance between the supply of
the markets and holdings in which the Company is invested. and demand for the Company’s shares and thereby reduce the
The Board monitors the portfolio and the performance of the scale and volatility of the discount at which the shares trade in
Investment Manager at regular Board meetings. relation to the underlying net asset value.

(iv) Internal Risks Ordinary Shares in Issue


Poor allocation of the Company’s assets to both markets and
As at 31 October 2018 the Company had 46,047,096 (2017:
investee funds by the Investment Manager, poor governance,
51,196,729) ordinary shares in issue (excluding shares held in
compliance or administration, could result in shareholders
treasury). The Company also held 8,571,411 ordinary shares in
not making acceptable returns on their investment in the
treasury (2017: 3,421,778)
Company.
Management or mitigation of internal risks Tender Offer
The Board monitors the performance of the Manager and As described in the circular to shareholders dated 13 March
the other key service providers at regular Board meetings. 2018, the Company put forward proposals for a tender offer
The Manager provides reports to the Board on compliance under which shareholders had the ability to tender up to 10%
matters and the Administrator provides reports to the Board of their Ordinary shares held.
on compliance and other administrative matters. The Board
has established various committees to ensure that relevant A total of 5,119,633 shares were purchased by the Company
governance matters are addressed by the Board. on 17 April 2018 under the terms of the Tender Offer and
placed in treasury.
The management or mitigation of internal risks is described
in detail in the Corporate Governance Statement on
Purchases of Own Shares
pages 19 to 22.
In addition to the Ordinary shares purchased by the Company
Borrowings under the terms of the Tender Offer, during the year ended
31 October 2018, the Company purchased 30,000 (2017:
The Company is permitted to borrow, at the point of 551,450) of its Ordinary shares to be held in treasury in
drawdown, up to 15% of its net assets. accordance with its general share buy back authority.
On 31 March 2017, the Company entered into an unsecured The Company’s discount management policy is
12 month revolving credit facility with The Royal Bank of described above.
Scotland plc (“RBS”), under which loans with a maximum
aggregate value of £25 million may be drawn, The facility was The Company’s present authority to make market purchases
renewed on 29 March 2018 for a further 12 month period. As of its own Ordinary shares will expire at the conclusion of the
at 31 October 2018, £20 million was drawn down. AGM at which time a new authority to buy back shares will
be sought. The timing of any purchase will be decided by the
Gearing Board. Any shares bought back by the Company will either be
cancelled, or if the Directors so determine, held in treasury
The Company’s year-end net gearing was 7.0% (2017: 6.0%).
(and may be re-sold). Purchases of own shares will only be
The Directors monitor the Company’s gearing on a regular
made at a price representing a discount to net asset value
basis in accordance with the Company’s investment policy and
per share.
under advice from the Investment Manager.

Aberdeen Emerging Markets Investment Company Limited 15


Governance
Directors’ Report continued

Allotment of Shares and Disapplication of The Board has been advised that the Company’s shares are
Pre-Emption Rights excluded from the FCA’s restrictions which apply to NMPIs
because they are shares issued by a non-UK company which
At the forthcoming AGM, an ordinary resolution will
would qualify as an investment trust if resident in the UK.
be proposed to confer an authority on the Directors, in
substitution for any existing authority, to allot, either as new
Ordinary shares or shares from treasury, up to 5% of the
Continuation Vote
issued Ordinary share capital of the Company (excluding The Company does not have a fixed life but the Directors
shares held in treasury) as at the date of the passing of the consider it desirable that shareholders have the opportunity
resolution (up to a maximum of 2,302,354 Ordinary shares to review the future of the Company at appropriate intervals.
based on the number of Ordinary shares in issue as at the At the 2018 AGM, a resolution was approved by shareholders
date of this report). that the Company should continue in existence in its current
form until the AGM to be held in 2023. If the vote to continue is
A further resolution will be proposed as a special resolution
not passed at the 2023 AGM then, within four months of that
to provide the Directors with the authority to disapply pre-
resolution failing, the Directors will be required to formulate
emption rights in respect of issuing shares and/or selling
and put to shareholders proposals relating to the future of the
shares from treasury under the general authority granted as
Company, having had regard to, inter alia, prevailing market
described above. Any future issues of Ordinary shares, or sales
conditions and the applicable law and regulations. If the
of shares from treasury, will only be undertaken at a premium
resolution is passed, the Company will continue in operation
to the prevailing net asset value per share.
and a similar resolution will be put to shareholders at every
These authorities will expire at the conclusion of the AGM in fifth AGM thereafter.
2020. The Directors consider that the authorities proposed
to be granted at the AGM are necessary to retain flexibility, Automatic Exchange of Information (“AEOI”)
although they do not, at the present time, have any intention
of exercising such authorities. Foreign Account Tax Compliance Act (“FATCA”)
FATCA legislation, which was introduced in the United
States of America, places obligations on foreign financial
Significant Shareholders
institutions such as the Company. In Guernsey, local law has
As at 31 October 2018, the Company had been formally been introduced that gives effect to the FATCA requirements
notified of the following significant shareholdings of the issued and certain reporting obligations are placed on financial
Ordinary shares (excluding treasury shares) in accordance institutions as defined by this act. The Company is registered
with the requirements of the FCA’s Disclosure Guidance and as a reporting financial institution and is subject to ongoing
Transparency Rules. reporting obligations under the legislation.

Holding % The Common Reporting Standard (“CRS”)


City of London Investment CRS is the result of the drive by the G20 nations to develop
Management Company Limited 13,727,013 29.8 a global standard for the automatic exchange of financial
account information, developed by the Organisation for
Lazard Asset Management LLC 7,289,798 15.8
Economic Cooperation and Development (“OECD”). Guernsey
Wells Capital Management Inc 6,929,000 15.0 has introduced local legislation to give effect to CRS. Guernsey
financial institutions are required to identify, review and report
Since the end of the year, the Company has been notified on accounts maintained by them which are held by account
that Wells Capital Management Inc’s holding has changed to holders resident in jurisdictions with which Guernsey has
7,132,116 Ordinary shares (15.5%). There have been no other agreed to exchange information.
changes notified to the Company as at the date of this Report.
Depositary and Custody Services
Non-Mainstream Pooled Investments (“NMPIs”)
Northern Trust (Guernsey) Limited has been appointed to
Financial Conduct Authority (“FCA”) rules determine which provide depositary and custody services to the Company.
investment products can be promoted to ordinary retail
investors. As a result of these rules, certain investment Management
products are classified as NMPIs and as a result face
restrictions on their promotion to retail investors. Since 1 June 2016, the Company’s Alternative Investment
Fund Manager has been Aberdeen Standard Fund Managers
The Company currently conducts its affairs so that the shares Limited (“ASFML”), which is a wholly owned subsidiary of
issued by the Company can be recommended by Independent Standard Life Aberdeen plc and is authorised and regulated
Financial Advisers (“IFAs”) to ordinary retail investors in by the FCA. ASFML has been appointed to provide investment
accordance with the FCA rules in relation to NMPIs and intends management, risk management and promotional activities
to continue to do so for the foreseeable future.

16 Annual Report 2018


to the Company. The Company’s portfolio is managed by Donations
Aberdeen Asset Managers Limited (“AAML”) by way of a group
The Company did not make any donations during the year
delegation agreement in place between ASFML and AAML.
under review.
Promotional activities have also been delegated to AAML.
Further details of the key terms of the agreement and Going Concern
fees payable to the Manager can be found in Note 6 to the
The Directors have adopted the going concern basis in
financial statements.
preparing the financial statements. The Board formally
considered the Company’s going concern status at the time of
Alternative Investment Fund Managers Directive the publication of these financial statements and a summary
(“AIFMD”) of the assessment is provided below.
The Company appointed ASFML as its Alternative Investment At the AGM held in April 2018, a resolution was approved by
Fund Manager (“AIFM”) with effect from 1 June 2016. shareholders that the Company will continue in existence in its
An AIFM must ensure that an Annual Report for the Company current form until the AGM to be held in 2023.
is made available to investors for each financial year, provide The Directors believe that the Company has adequate
the Annual Report to investors on request and make the resources to continue in operational existence for at least
Annual Report available to the FCA. The investment funds twelve months from the date of approval of this document.
sourcebook of the FCA details the requirements of the In reaching this conclusion, the Directors have considered the
Annual Report. liquidity of the Company’s portfolio of investments as well as
All the information required by those rules and relevant its cash position, income and expense flows.
AIFM remuneration disclosures are or will be available on the As at 31 October 2018, the Company held £1.0 million in
Company’s website (aberdeenemergingmarkets.co.uk). cash and £295.6 million in investments. It is estimated that
approximately 63% of the investments held at the year end
Management Engagement could be realised in one month. The total operating expenses
In accordance with the requirements of the FCA’s Listing Rules, for the year ended 31 October 2018 were £3.4 million, which
the Management Engagement Committee has reviewed represented approximately 1.02% of average net assets during
whether to retain ASFML as the Manager of the Company. The the year. The Company also incurred £0.3 million of finance
Management Engagement Committee has agreed that, given costs. At the date of approval of this report, based on the
the performance of the Company and the specialist knowledge aggregate of investments and cash held, the Company has
of ASFML, it is in the best interests of shareholders as a whole to substantial operating expenses cover. The Company’s net
continue with ASFML’s appointment as Manager to the Company. assets at 31 December 2018 were £278.3 million.
The Company has a £25 million revolving loan facility with RBS,
Company Secretary and Administrators maturing on 29 March 2019. The Company has commenced
Vistra Fund Services (Guernsey) Limited (“Vistra”) is appointed discussions with RBS and the Board expects to renew the
as Administrator and Secretary to the Company. facility on similar terms when it matures. As at 31 October
2018, £20 million was drawn down from the RBS facility. The
PraxisIFM Fund Services (UK) Limited (“PraxisIFM”) is appointed liquidity of the Company’s portfolio, as mentioned above,
by Vistra to act as administration agent in the United Kingdom. sufficiently supports the Company’s ability to repay its
Further details on the fees payable under these agreements borrowings at short notice.
can be found in Note 6 to the financial statements. The Directors are satisfied that it is appropriate to adopt the
going concern basis in preparing the financial statements and,
Payment of Suppliers after due consideration, that the Company is able to continue
It is the Company’s payment policy to obtain the best terms in operation for a period of at least twelve months from the
for all business and therefore there is no consistent policy as date of approval of these financial statements.
to the terms used. The Company contracts with its suppliers
setting out the terms on which business will take place and Viability Statement
abides by such terms. A high proportion of expenses, including The continuation of the Company is subject to the approval of
management and administration fees, are paid within the shareholders every five years, with the next vote due to take
month when invoiced. There were no overdue amounts owing place at the AGM in 2023.
to trade creditors at 31 October 2018.
In accordance with Principle 21 of the AIC Code of Corporate
Settlement of Share Transactions Governance published in July 2016, the Directors have
assessed the prospects of the Company over the period from
Transactions in the Company’s Ordinary shares are settled by
the date of this report up until 31 October 2021 (the “Period”).
the CREST share settlement system.
The Directors believe that the Period, being approximately
three years, is an appropriate time horizon over which

Aberdeen Emerging Markets Investment Company Limited 17


Governance
Directors’ Report continued

to assess the viability of the Company, particularly when Annual General Meeting (“AGM”)
taking into account the long-term nature of the Company’s
The AGM will be held on 16 April 2019. The notice of AGM is
investment strategy.
included in this document.
In their assessment of the prospects of the Company, the
Directors have considered each of the principal risks and Corporate Governance
uncertainties set out on pages 14 and 15 of this report.
The Corporate Governance Statement on pages 19 to 22 forms
Developments in emerging markets and portfolio changes are
part of this report.
discussed at quarterly Board meetings and the internal control
framework of the Company is subject to formal review on at
Statement of Directors’ Responsibilities
least an annual basis. The Company’s portfolio consists of a
range of funds and other products which provide exposure The Statement of Directors’ Responsibilities on page 25 forms
to emerging markets. Under normal market conditions, the part of this report.
majority of the investments held by the Company could be
sold within one month. However, there are circumstances
which could lead to a reduction in market liquidity and,
therefore, the ability of the Company to realise its investments.
Helen Green
The Directors do not expect there to be any material increase Director
in the annual ongoing charges of the Company over the
Period. The Company’s income from investments and cash
realisable from the sale of its investments provide substantial
cover to the Company’s operating expenses, and any other
costs likely to be faced by the Company over the Period. William Collins
Director
Taking the above into account, the Directors have a reasonable
31 January 2019
expectation that the Company will be able to continue
in operation and meet its liabilities as they fall due over
the Period.

Auditor
KPMG Channel Islands Limited was re-appointed as
auditor of the Company at the AGM held in April 2018. A
resolution for the re-appointment of KPMG Channel Islands
Limited as auditor of the Company is to be proposed at the
forthcoming AGM.

18 Annual Report 2018


Governance
Corporate Governance Statement

This Corporate Governance Statement forms part of the Mr Hadsley-Chaplin was appointed Chairman of the Board on
Directors’ Report. 10 April 2017.
The Board of Aberdeen Emerging Markets Investment All Directors are considered by the Board to be independent at
Company Limited (the “Company”) has considered the the date of this report.
principles and recommendations of the Association of
An insurance policy covering Directors’ and officers’ liabilities is
Investment Companies’ (“AIC”) Code of Corporate Governance
maintained by the Company.
(“AIC Code”) by reference to the AIC Corporate Governance
Guide for Investment Companies (“AIC Guide”) as issued Board Diversity
in July 2016. The AIC Code, as explained by the AIC Guide, The Company’s policy is that the Board should have a broad
addresses all of the principles set out in the UK Corporate range of skills and diversity. The Board performs an annual
Governance Code, as well as setting out additional principles review of its performance and these factors form part of that
and recommendations on issues that are of specific relevance review process.
to the Company.
The Board has given careful consideration to the
The Board considers that reporting against the principles and recommendations of the AIC Code and other guidance
recommendations of the AIC Code, and by reference to the on boardroom diversity. The Board considers these
AIC Guide (which incorporates the UK Corporate Governance recommendations when reviewing Board composition.
Code), will provide better information to shareholders.
Mark Hadsley-Chaplin (Chairman) (aged 57) – United Kingdom
The Guernsey Financial Services Commission revised its Code resident - founded RWC Partners Ltd, a London based fund
of Corporate Governance (the “Guernsey Code”) in February management firm in 2000, was CEO until 2006 and Chairman
2016. Companies which report under the AIC Code are until 2010. Prior to this he was Vice Chairman of UBS Securities
deemed to meet the requirements of the Guernsey Code. (East Asia) Ltd, based in Singapore and responsible for the
The Company has complied with the recommendations of management and development of the bank’s Asian equity
the AIC Code and the relevant provisions of the UK Corporate business worldwide.
Governance Code, except as set out below. Mr Hadsley-Chaplin holds no other public company
The UK Corporate Governance Code includes provisions directorships.
relating to: John Hawkins (aged 76) - United Kingdom resident - is a
• the role of the chief executive Fellow of the Institute of Chartered Accountants in England
• executive directors’ remuneration and Wales. He was formerly Executive Vice President and a
• the need for an internal audit function member of the Corporate Office of The Bank of Bermuda
Limited. He was with The Bank of Bermuda for 25 years, of
For the reasons set out in the AIC Guide, and in the preamble which approximately 15 years were based in Hong Kong. He is
to the UK Corporate Governance Code, the Board considers also a director of The Prospect Japan Fund Limited and Raffles
these provisions are not relevant to the position of the Asia Investment Company Limited.
Company, being an externally managed investment company.
The Company has therefore not reported further in respect of Mr Hawkins was, until 30 April 2018, a director of US - listed
these provisions. Aberdeen Greater China Fund Inc which was also managed
by the Standard Life Aberdeen Group. Consequently,
The Board Mr Hawkins was not considered to be an independent Director
of the Company prior to that date. However, following the
The Board aims to provide effective leadership so the reconstruction of that company Mr Hawkins retired as a
Company has the platform from which it can achieve its director on 30 April 2018 and since then has been regarded by
investment objective. Its role is to guide the overall business the Board as an independent Director of the Company. Given
strategy for the benefit of shareholders and stakeholders, Mr Hawkins’ tenure of service as a Director, of more than nine
ensuring that their interests are its primary consideration. The years, he stands annually for re-election at the AGM.
intention is to create a supportive working environment which
allows the Investment Manager the opportunity to manage the William Collins (Senior Independent Director) (aged 69) –
portfolio in accordance with the investment policy, through Guernsey resident - has over 45 years’ experience in banking
a framework of effective controls which enable risks to be and investment. From September 2007 he was employed by
assessed and managed. Bank J Safra Sarasin (formerly Bank Sarasin) in Guernsey as
Director - Private Clients, retiring at the end of 2014. Prior to
Composition that he worked for Barings in Guernsey for over 18 years. In
Mr Hawkins was appointed as a Director of the Company 1995 he was appointed a director and from 2003 until August
with effect from its commencement on 16 September 2009. 2007 was Managing Director of Baring Asset Management
Mr Hadsley-Chaplin was appointed by the Board on 26 April (CI) Ltd.
2012, Mr Collins was appointed by the Board on 14 June
Mr Collins holds no other public company directorship.
2012 and Mrs Green was appointed by the Board on 1 July
2016. Mr Barker was appointed by the Board with effect from Helen Green (aged 56) - Guernsey resident - is a chartered
21 July 2017 and resigned as a Director on 4 October 2018 due accountant and has been employed by Saffery Champness, a
to other commitments. All the Directors hold their office in top 20 firm of chartered accountants, since 1984. She qualified
accordance with the Company’s Articles of Incorporation. as a chartered accountant in 1988 and became a partner in

Aberdeen Emerging Markets Investment Company Limited 19


Governance
Corporate Governance Statement continued

the London office in 1998. Since 2000 she has been based Directors’ Shareholdings
in the Guernsey office where she is Client Liaison Director At 31 October 2018 and at the date of this report, the Directors
responsible for trust and company administration. Mrs Green had the following shareholdings in the Company.
serves as a non-executive director on the boards of a number
of companies in various jurisdictions. Ordinary shares
At 31 October
Mrs Green holds other public company directorships in UK 2018 Ordinary shares
Mortgages Limited, Landore Resources Limited, City Natural and at the date of At 31 October
Resources High Yield Trust plc and Acorn Income Fund this report 2017
Limited, of which she is Chairman. M Hadsley-Chaplin 25,000 25,000
W Collins 12,000 12,000
The Chairman
J Hawkins 10,000 10,000
The Chairman is independent in accordance with principle 1 of
H Green – –
the AIC Code. Mr Hadsley-Chaplin has extensive knowledge of
the investment management industry and backgrounds which
provide the foundation for the role of Chairman and the basis Mr Barker held no Ordinary shares of the Company as at the
on which to make judgements as head of the Board, on behalf date of his resignation on 4 October 2018 (2017: nil).
of shareholders. A procedure has been adopted for the Directors, in the
furtherance of their duties, to take independent professional
advice at the expense of the Company. Directors are
encouraged to attend industry and other seminars, including
courses run by the AIC, covering issues and developments
relevant to investment companies.

Board Meetings
The actual number of meetings of the Board and Committees for the year under review is given below, together with individual
Directors’ attendance at those meetings. The first number in the table is the meetings attended by the individual Director and the
second number is the number of meetings that Director was eligible to attend.

Management
Nomination Audit Engagement Remuneration
Board Committee Committee Committee Committee
M Hadsley-Chaplin 4/4 1/1 n/a 1/1 2/2
W Collins 4/4 1/1 3/3 1/1 2/2
J Hawkins 4/4 1/1 2/2 1/1 1/1
H Green 4/4 1/1 3/3 1/1 2/2
M Barker 3/4 1/1 3/3 1/1 2/2

In addition there were six Board meetings to deal with matters The Board has reviewed the contributions made by Mr
relating to the Tender Offer, the loan facility renewal, and the Hawkins and Mr Hadsley-Chaplin and recommends their
approval of dividends and share buybacks. continuing appointment as Directors of the Company.

Re-election of Directors Board Committees


The services of each of the Directors are provided under the The Company has established an Audit Committee, a
terms of letters of appointment between each of them and the Management Engagement Committee, a Nomination
Company. Each Director’s appointment is for an initial three Committee and a Remuneration Committee. Other
year period subject to renewal and termination upon three committees of the Board may be formed from time to time to
months’ notice. deal with specific matters.
In accordance with the Company’s Articles of Incorporation one Audit Committee
third of the Directors will retire by rotation. In addition to this A report on page 23 provides details of the role, composition
requirement, the Board has agreed that all Directors should and meetings of the Audit Committee together with a
be subject to re-election at intervals of no more than three description of the work of the Audit Committee in discharging
years. A retiring Director shall be eligible for re-appointment its responsibilities.
in accordance with the Articles of Incorporation. In accordance
with the Articles of Incorporation, Mr Hadsley-Chaplin will retire Mrs Green is the Chairman of the Audit Committee. The Audit
and put himself forward for re-election at the AGM. Committee has formal terms of reference and copies of these
are available on request from the Company Secretary.
In accordance with the AIC Code, Mr Hawkins will retire and
put himself forward for re-election as he has been a Director
of the Company for over nine years.

20 Annual Report 2018


Management Engagement Committee carried out under the supervision of the Senior Independent
The Company has established a Management Engagement Director and the results are reviewed and reported back to the
Committee which at the year end comprised all the Chairman. The results of the performance appraisal carried
independent Directors, namely, Mr Hadsley-Chaplin, out in the financial year ended 31 October 2018 demonstrated
Mr Collins, Mr Hawkins and Mrs Green. The Committee that the structure of the Board and the diverse experience
meets formally at least on an annual basis to consider of the Directors are appropriate to meet the Company’s
the appointment and remuneration of the Manager. The requirements.
Committee also considers the appointment and remuneration
The Directors are aware that the Board should have an
of other suppliers of services to the Company.
appropriate balance of skills, experience, independence and
Mr Hadsley-Chaplin was appointed Chairman of the knowledge. The annual performance evaluation report covers
Management Engagement Committee on 24 January 2019. this issue and the Board understands the requirement for this
Mr Barker ceased to be a member and Chairman of the balance to be maintained.
Management Engagement Committee upon his resignation
on 4 October 2018. The Committee has formal terms of Internal Controls
reference and copies of these are available on request from
The AIC Code requires the Board to review the effectiveness
the Company Secretary.
of the Company’s system of internal controls. The Board
Nomination Committee recognises its ultimate responsibility for the Company’s system
The Company has established a Nomination Committee of internal controls and for monitoring its effectiveness and
which at the year end comprised Mr Collins, Mrs Green, Mr has applied the Financial Reporting Council’s (“FRC”) guidance
Hawkins and Mr Hadsley-Chaplin. Mr Barker ceased to be a on internal controls. The system of internal controls is
member of the Nomination Committee upon his resignation designed to manage rather than eliminate the risk of failure
on 4 October 2018. The Committee has been established for to achieve business objectives. It can provide only reasonable
the purpose of considering the composition of the Board as a assurance against material misstatement or loss. The Board
whole and for identifying and putting forward candidates for has undertaken a review of the aspects covered by the
the office of Director of the Company and meets as and when guidance and has identified risk management controls in the
it is required. The Committee considers job specifications and key areas of business objectives, accounting, compliance,
assesses whether candidates have the necessary skills and operations and secretarial as being matters of particular
time available to devote to the job. importance upon which it requires reports. The Board believes
that the existing arrangements, set out below, represent
Mr Collins is Chairman of the Nomination Committee. The an appropriate framework to meet the internal control
Nomination Committee has formal terms of reference and requirements. Through these procedures the Directors have
copies of these are available on request from the Company kept under review the effectiveness of the internal control
Secretary. system throughout the year and up to the date of this report.

Remuneration Committee The Board uses a risk assessment matrix to consider the main
The Company has established a Remuneration Committee, risks and controls for the Company. The matrix is reviewed
which at the year end comprised Mr Collins, Mr Hadsley- and updated on a frequent basis by the Board.
Chaplin, Mr Hawkins and Mrs Green. Mr Barker ceased to be a
The Board has contractually delegated to external
member of the Remuneration Committee upon his resignation
agencies, including the Manager, the management of the
on 4 October 2018. The Committee meets at least on an
investment portfolio, the custodial services (which include
annual basis to consider the remuneration of the Directors.
the safeguarding of the assets), the registration services and
The Committee reviews the remuneration of the Directors
the accounting and company secretarial requirements. Each
and Chairman against the fees paid to the directors of other
of these contracts was entered into after full and proper
investment companies of a similar size and nature, as well as
consideration of the quality and cost of services offered,
taking into account other comparable data.
including the financial control systems in operation in so far as
Mr Collins is the Chairman of the Remuneration Committee. they relate to the affairs of the Company.
The Remuneration Committee has formal terms of reference
and copies of these are available on request from the Financial Aspects of Internal Control
Company Secretary. The Directors are responsible for the internal financial control
systems of the Company and for reviewing their effectiveness.
These aim to ensure the maintenance of proper accounting
Performance Evaluation
records, the reliability of the financial information upon which
A formal annual performance appraisal process is performed business decisions are made and which is used for publication
on the Board, the committees, and the individual Directors. and that the assets of the Company are safeguarded. As stated
The appraisal is performed internally and the Board considers above, the Board has contractually delegated to external
that this is appropriate given the nature and size of the agencies the services the Company requires, but it is fully
Company. A programme consisting of open and closed end informed of the internal control framework established by
questions is used as the basis for the appraisals. The results the Manager, the Administrator and the UK Administration
are reviewed by the Chairman and are then discussed with Agent to provide reasonable assurance on the effectiveness of
the Board so that any necessary action can be considered internal financial controls.
and undertaken. A separate appraisal of the Chairman is

Aberdeen Emerging Markets Investment Company Limited 21


Governance
Corporate Governance Statement continued

The key procedures include monthly production of Shareholder Relations


management accounts and NAV calculations, monitoring of
The Board encourages all shareholders to attend the AGM and
performance monthly and at regular Board meetings, review
seeks to provide twenty working days’ notice of that meeting.
by the Directors of the valuation of securities, segregation
The Notice of Meeting sets out the business of the AGM and
of the administrative function from that of securities and
any item not of an entirely routine nature is explained in the
cash custody and of both from investment management,
Directors’ Report. Separate resolutions are proposed for each
maintenance of appropriate insurance and adherence to
substantive issue.
physical and computer security procedures. In addition, the
Board keeps under its own direct control all material payments The Board welcomes feedback from the Company’s
out of the Company other than for investment purposes. shareholders. The Board receives shareholder feedback
directly and via the Company’s Manager and Broker through
The Statement of Directors’ Responsibilities in respect of the
their programme of meetings with shareholders.
financial statements is on page 25 and a statement of going
concern is on page 17. The Independent Auditor’s Report is on All Directors are available to shareholders if they have
pages 27 to 29. concerns over issues they feel have not been dealt
with through the normal mode of communication with
Other Aspects of Internal Control the Chairman.
The Board holds at least four regular meetings each year,
plus ad hoc meetings and committee meetings as required. Exercise of Voting Powers
Between these meetings there is regular contact with the
Manager, the Administrator, the UK Administration Agent and The Company is committed to exercise diligently its rights
the external Auditor. as a shareholder and usually votes on relevant decisions of
its holdings. In making a voting decision all relevant factors
The Company Secretary reports in writing to the Board on are taken into account, including the performance of the
operational and compliance issues prior to each meeting, and investee company, its corporate governance where this bears
otherwise as necessary. meaningfully upon the responsiveness of its management to
Upon joining the Board, any new Directors receive an shareholders’ needs and the readiness of its management to
induction and other relevant training is available to Directors address any areas where improvements might be expected
on an ongoing basis. to strengthen its share price or otherwise create real
benefit for shareholders. Further information regarding the
Directors receive and consider monthly reports from the activities of the Company in pursuing these issues may be
UK Administration Agent, giving full details of all holdings in found in the Investment Manager’s report. The Manager has
the portfolio and of all transactions and of all aspects of the published on its website its statement of compliance with the
financial position of the Company. The Administrator and UK principles of best practice of the Stewardship Code issued by
Administration Agent report separately in writing to the Board the Financial Reporting Council in July 2010 and updated in
concerning risks and internal control matters within the scope September 2012.
of their services, including internal financial control procedures
and secretarial matters. Additional ad hoc reports are received Social and Environmental Policy
as required and Directors have access at all times to the advice
The Company is a closed-ended investment company and
and services of the Company Secretary, which is responsible
therefore has no staff, premises, manufacturing or other
to the Board for ensuring that Board procedures are followed
operations. The Investment Manager takes into account the
and that applicable rules and regulations are complied with.
environmental, social and governance policies of potential
This contact with the Manager, Administrator, UK investee funds as part of its investment process and has
Administration Agent and the external Auditor enables implemented an Environmental, Social and Corporate
the Board to monitor the Company’s progress towards its Governance (“ESG”) policy.
objectives and encompasses an analysis of the risks involved.
These matters are assessed on an ongoing basis through the UK Stewardship Code and Proxy Voting as an
year. Institutional Shareholder
There are no significant findings to report from the review of Responsibility for actively monitoring the activities of
internal controls during the year. portfolio companies has been delegated by the Board to the
Manager and in turn to the Investment Manager.
Principal Risks
The full text of the Company’s response to the Stewardship
The Directors confirm that they have carried out a robust Code may be found on its website.
assessment of the principal risks facing the Company,
including those that would threaten its business model, future
performance, solvency or liquidity. The principal risks and how
they are being managed is set out in the Directors’ Report.

22 Annual Report 2018


Governance
Report of the Audit Committee

Role, Composition and Meetings Manager that the Company’s accounting policies on valuation
of investments had been followed. The Audit Committee made
The Company has established an Audit Committee, which
enquiries of the Administrator, UK Administration Agent and
at the year end comprised Mrs Green, Mr Collins and
the Manager with regards to the procedures that are in place
Mr Hawkins. Mr Barker resigned as a member of the Audit
to ensure that the portfolio is valued correctly.
Committee upon his resignation as a Director of the Company
on 4 October 2018. As a minimum, the Audit Committee meets The Audit Committee agreed the approach to the audit of the
on a bi-annual basis and its main functions include, inter alia, valuation of investments with the external auditor prior to the
reviewing and monitoring internal financial control systems commencement of the audit. The results of the audit in this
and risk management systems on which the Company is area were reported by the external auditor and there were
reliant, considering annual and interim financial statements no significant disagreements between management and the
and reports from the auditor, making recommendations to external auditor’s conclusions.
the Board in relation to the appointment and remuneration of
the Company’s auditor and monitoring and reviewing annually Effectiveness of External Audit
the auditor’s independence, objectivity, effectiveness and The Audit Committee reviews the effectiveness of the
qualifications and, where relevant, compliance with corporate Company’s external audit. The Audit Committee received
governance changes. The Committee is responsible for the a presentation of the audit plan from the external auditor
development and implementation of a policy on the supply of prior to the commencement of the audit and a presentation
any non-audit services provided by the auditor. The Board has of the results of the audit following completion of the main
also requested that the Audit Committee advise it on whether audit testing. The Audit Committee performed a review of
it believes that the Annual Report and Financial Statements the external auditor following the presentation of the results
taken as a whole is fair, balanced and understandable and of the audit. The review included a discussion of the audit
provides the information necessary for shareholders to assess process and the ability of the external auditor to fulfil its role.
the Company’s position and performance, business model The factors considered by the Audit Committee included
and strategy. the external auditor’s resources, the external auditor’s
Mrs Green is the Chairman of the Audit Committee and has independence, the performance of the team employed to
recent and relevant financial experience. The Audit Committee conduct the audit, audit planning, communication and scope
as a whole has competence relevant to the investment of the audit.
company sector. Following the review, the Audit Committee agreed that the
In the year ended 31 October 2018 there were three meetings reappointment of the auditor should be recommended to the
of the Audit Committee. The Company’s external auditor also Board and the shareholders of the Company.
attends the Committee meetings at the Audit Committee’s
request and reports on its work procedures and its findings Audit Tenure
in relation to the Company’s statutory audit. The Company’s KPMG Channel Islands Limited has been appointed as the
external auditor attended all of the Audit Committee meetings Company’s external auditor since 2009. Following professional
during the year ended 31 October 2018. guidelines, the audit partner rotates after five years. The
current audit partner is in his third year of appointment. The
Financial Statements and Significant Audit Committee is aware that the tenure of the auditor is
Accounting Matters approaching ten years. Therefore the Audit Committee intends
to undertake an audit tender process in the coming year in
The Audit Committee considered the following significant
respect of the 2020 financial statements.
accounting issues in relation to the Company’s financial
statements for the year ended 31 October 2018. Provision of Non-Audit Services
Valuation of Investments The Audit Committee has put a policy in place for the supply
The Company, as an investment company, invests virtually all of any non-audit services provided by the external auditor.
of its assets into funds invested in developing and emerging Such services are considered on a case-by-case basis and
markets. As at 31 October 2018, investments represented may only be provided to the Company if the provision of such
approximately 107.0% of its net assets. The valuation of services is at a reasonable and competitive cost and does not
investments is therefore the most significant factor in relation to constitute a conflict of interest or potential conflict of interest
the accuracy of the financial statements. The portfolio consists which would prevent the auditor from remaining objective and
of investments in either quoted investment companies or independent. In the year ended 31 October 2018 there were
open ended funds with observable independent values. The no non-audit services provided, other than reporting on the
estimates, assumptions and judgements required to be made by Company’s half year financial statements. The fee payable to
management in determining the valuation of investments and the Auditor for this additional service amounted to £14,500
method of accounting are described in more detail in notes 3(a) (2017: £14,000).
and 18 to the financial statements.
Helen Green
The Audit Committee reviewed the portfolio valuation as at Audit Committee Chairman
31 October 2018. The Audit Committee obtained confirmation 31 January 2019
from the Administrator, UK Administration Agent and the

Aberdeen Emerging Markets Investment Company Limited 23


Governance
Directors’ Remuneration Report

This Directors’ Remuneration Report has been prepared on a The following emoluments in the form of fees were payable in
voluntary basis in accordance with UK regulations governing the year ended 31 October 2018 to the Directors who served
the disclosure and approval of Directors’ remuneration, and during the year:
comprises three parts:
Fees Fees
1. a Remuneration Policy which the Board has decided will be 2018 2017
subject to a binding shareholder vote every three years (or £’000 £’000
sooner if varied during this interval). The first such vote took
Mark Hadsley-Chaplin (Chairman) 34.7 29.5
place at the AGM on 10 April 2017, covering the three year
Helen Green 29.7 28.0
period to 31 October 2019.
John Hawkins 26.0 25.0
2. an Implementation Report which is subject to an advisory William Collins 26.0 25.0
vote on the level of remuneration paid during the year; and Mark Barker (resigned 4 October 2018) 23.9 7.1
3. an Annual Statement. Richard Bonsor (retired 10 April 2017) – 14.6
Terence Mahony (retired 30 January
A Remuneration Committee has been formed which
2017) – 5.9
comprises Mr Collins (Chairman), Mr Hadsley-Chaplin, Mr
Hawkins and Mrs Green. Mr Barker ceased to be a member of 140.3 135.1
the Committee upon his resignation on 4 October 2018.
Statement of Voting at the AGM
Remuneration Policy At the Company’s last AGM, held on 12 April 2018,
The Board’s policy is that the remuneration of non-executive shareholders approved the Directors’ Remuneration Report in
Directors should be fair and should reflect the experience, respect of the year ended 31 October 2017. 99.99% of proxy
work involved, responsibilities and potential liabilities of votes were in favour of the resolution and 0.01% of proxy
the Board as a whole. The non-executive Directors’ fees are votes were against. At the Company’s AGM held on 10 April
determined within the limits set out in the Company’s Articles 2017, shareholders approved the Directors’ Remuneration
of Incorporation and they are not eligible for bonuses, pension Policy in respect of the three years ending 31 October 2019.
benefits, share benefits, share options, long-term incentive 99.9% of proxy votes were in favour of the resolution and 0.1%
schemes or other benefits. This policy will continue for the of proxy votes were against.
period to 31 October 2019. A resolution to approve the Directors’ Remuneration Report
The Company’s Articles of Incorporation currently limit the (excluding the Directors’ Remuneration Policy) in respect of the
maximum amount payable in aggregate to the Directors to year ended 31 October 2018 will be proposed at the AGM.
£200,000 per annum and this may only be changed by the
Spend on Pay
passing of an ordinary resolution of the Company.
As the Company has no employees, the Directors do not
No services have been provided by, or fees paid to, advisers consider it appropriate to present a table comparing
in respect of remuneration policy during the year ended remuneration paid to employees with distributions to
31 October 2018. shareholders. The total fees paid to Directors are shown
above.
Directors’ Service Contracts
The Directors do not have service contracts. The Directors Annual Statement
have appointment letters subject to termination upon three
months’ notice. The Directors are subject to re-election by The Board confirms that the above Directors’ Remuneration
shareholders at a maximum interval of three years. Report summarises, as applicable, for the year ended
31 October 2018:
Implementation Report • the major decisions on Directors’ remuneration;
• any substantial changes relating to Directors’
Directors’ Emoluments for the Year
remuneration; and
Fees payable with effect from 1 July 2018 have been at a rate
• the context in which the changes occurred and decisions
of £38,000 per annum for the Chairman, £33,000 per annum
have been taken.
for the Audit Committee Chairman and £28,000 per annum
for the other Directors. Fees payable between 1 November William Collins
2017 and 30 June 2018 were at a rate of £33,000 per annum Remuneration Committee Chairman
for the Chairman, £28,000 per annum for the Audit Committee 31 January 2019
Chairman and £25,000 per annum for the other Directors.
During the year ended 31 October 2018, there were no
additional fees paid to the Directors.

24 Annual Report 2018


Governance
Statement of Directors’ Responsibilities in Respect of the
Annual Report and Accounts

The Directors are responsible for preparing the Annual Disclosure of Information to the Auditor
Report and Accounts in accordance with applicable law
The Directors who held office at the date of approval of
and regulations.
this Directors’ Report confirm that, so far as they are each
Guernsey company law requires the Directors to prepare aware, there is no relevant audit information of which the
financial statements for each financial year. The Directors have Company’s auditor is unaware; and each Director has taken
elected to prepare the financial statements in accordance with all the steps that they ought to have taken as a Director to
International Financial Reporting Standards as issued by the make themselves aware of any relevant audit information
IASB and applicable law. and to establish that the Company’s auditor is aware of that
information.
Under company law the Directors must not approve the
financial statements unless they are satisfied that they give a
Responsibility Statement of the Directors in Respect
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 of the Annual Financial Report
statements, the directors are required to: We confirm that to the best of our knowledge:
• select suitable accounting policies and then apply them • the financial statements, prepared in accordance with the
consistently; applicable set of accounting standards, give a true and fair
• make judgements and estimates that are reasonable, view of the assets, liabilities, financial position and profit or
relevant and reliable; loss of the Company; and
• state whether applicable accounting standards have been • the Management Report (comprising the Chairman’s
followed, subject to any material departures disclosed and Statement, the Investment Manager’s Report and the
explained in the financial statements; Directors’ Report) includes a fair review of the development
• assess the Company’s ability to continue as a going and performance of the business and the position of the
concern, disclosing, as applicable, matters related to going Company, together with a description of the principal risks
concern; and and uncertainties that it faces.
• use the going concern basis of accounting unless they either
The Board considers that the Annual Report and Accounts,
intend to liquidate the Company or to cease operations, or
taken as a whole, is fair, balanced and understandable and
have no realistic alternative but to do so.
provides the information necessary for shareholders to assess
The Directors are responsible for keeping proper accounting the Company’s position and performance, business model and
records that are sufficient to show and explain the Company’s strategy.
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 Helen Green
to enable the preparation of financial statements that are Director
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. William Collins
Director
The Directors are responsible for the maintenance and 31 January 2019
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.

Aberdeen Emerging Markets Investment Company Limited 25


Governance
Depositary Report

Northern Trust (Guernsey) Limited (the “Depositary”) has Basis of Depositary Review
been appointed to provide depositary services to Aberdeen
The Depositary conducts such reviews as it, in its reasonable
Emerging Markets Investment Company Limited (the
discretion, considers necessary in order to comply with its
“Company”) with effect from 1 August 2014 in accordance
obligations and to ensure that, in all material respects, the
with the requirements of Article 36 and Articles 21(7), (8) and
Company has been managed (i) in accordance with the
(9) of the Directive 2011/61/EU of the European Parliament
limitations imposed on its investment and borrowing powers
and of the Council of 8 June 2011 on Alternative Investment
by the provisions of its constitutional documentation and
Fund Managers and amending Directives 2003/41/EC and
the appropriate regulations and (ii) otherwise in accordance
2009/65/EC and Regulations (EC) No. 1060/2009 and (EU) No.
with the constitutional documentation and the appropriate
1095/2010 (the “AIFM Directive”).
regulations. Such reviews vary based on the type of Company,
We have enquired into the conduct of Aberdeen Standard the assets in which a Company invests and the processes
Fund Managers Limited, formerly Aberdeen Fund Managers used, or experts required, in order to value such assets.
Limited, (the “AIFM”), for the year ended 31 October 2018, in
our capacity as Depositary to the Company. Review
This report including the review provided below has In our view, the Company has been managed during the
been prepared for and solely for the shareholders in the period, in all material respects:
Company. We do not, in giving this report, accept or assume
(i) in accordance with the limitations imposed on the
responsibility for any other purpose or to any other person to
investment and borrowing powers of the Company by the
whom this report is shown.
constitutional document; and by the AIFMD legislation; and
Our obligations as Depositary are stipulated in the relevant (ii) otherwise in accordance with the provisions of the
provisions of the AIFM Directive and the relevant sections constitutional document and the AIFMD legislation.
of Commission Delegated Regulation (EU) No 231/2013
collectively (the “AIFMD legislation”).
Amongst these obligations is the requirement to enquire into
the conduct of the AIFM and the Company and their delegates For and on behalf of
in each annual accounting period. Northern Trust (Guernsey) Limited
Our report shall state whether, in our view, the Company 31 January 2019
has been managed in that period in accordance with the
constitutional documents, the scheme particulars and the
AIFMD legislation. It is the overall responsibility of the AIFM to
comply with these provisions. If the AIFM or their delegates
have not so complied, we as the Depositary will state why this
is the case and outline the steps which we have taken to rectify
the situation.
The Depositary and its affiliates are or may be involved in
other financial and professional activities which may on
occasion cause a conflict of interest with its roles with respect
to the Company. The Depositary will take reasonable care to
ensure that the performance of its duties will not be impaired
by any such involvement and that any conflicts which may
arise will be resolved fairly and any transactions between the
Depositary and its affiliates and the Company shall be carried
out as if effected on normal commercial terms negotiated at
arm’s length and in the best interests of shareholders.

26 Annual Report 2018


Financial Statements
Independent Auditor’s Report

Independent Auditor’s Report to the Members of Aberdeen Basis for Opinion


Emerging Markets Investment Company Limited
We conducted our audit in accordance with International
Our Opinion is Unmodified Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities are described below. We have fulfilled
We have audited the financial statements of Aberdeen
our ethical responsibilities under, and are independent of
Emerging Markets Investment Company Limited (the
the Company in accordance with, UK ethical requirements
“Company”), which comprise the Statement of Financial
including FRC Ethical Standards as applied to listed entities. We
Position as at 31 October 2018, the Statements of
believe that the audit evidence we have obtained is a sufficient
Comprehensive Income, Changes in Equity and Cash Flow
and appropriate basis for our opinion.
for the year then ended, and notes, comprising significant
accounting policies and other explanatory information.
Key Audit Matters: Our Assessment of the Risks of
In our opinion, the accompanying financial statements: Material Misstatement
• give a true and fair view of the financial position of the Key audit matters are those matters that, in our professional
Company as at 31 October 2018, and of its financial judgment, were of most significance in the audit of the
performance and cash flows for the year then ended; financial statements and include the most significant assessed
• are prepared in accordance with International Financial risks of material misstatement (whether or not due to fraud)
Reporting Standards (“IFRS”); and identified by us, including those which had the greatest effect
• comply with the Companies (Guernsey) Law, 2008. on: the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters. In arriving at our audit opinion above, the key audit
matter, was as follows (unchanged from 2017):

The risk Our response


Valuation of Investments Basis: Our audit procedures included, but were not limited to:
(Investments at fair value As at 31 October 2018 the
Internal controls:
through profit or loss) Company had invested in closed
Testing the design and implementation of controls over the valuation of
£295,601,000; and open-ended investment
investments including the Investment Manager’s oversight controls of the
(2017: £383,263,000) funds and a structured note
underlying funds’ administrators
(together, the “investments”)
Refer to page 23 of the
which represented 107% of net Challenging managements’ assumptions and inputs including use of
Audit Committee, notes
assets KPMG specialist:
2(g), 3(a) and 18
Our valuation specialist independently priced investments with a value of
The Company’s listed or quoted
£250,119,000 to a third party pricing source
investments, which represents
70% of investments, are valued For holdings in unlisted funds with a value of £45,482,000, we:
based on prices obtained from
• reviewed the valuation technique applied for appropriateness
third party pricing providers
• confirmed the net asset value per share directly with the underlying funds’
The Company’s holdings in
administrators
unlisted funds, which represents
30% of investments and are • obtained the latest audited financial statements of the underlying funds in order
not quoted or traded on a to consider: the nature of the investments held by the underlying funds; the
recognised stock exchange financial reporting standards applied in the preparation of the underlying funds’
or other trading facility are financial statements; any modifications to audit reports; and any other
valued at the net asset values disclosures that may be relevant to their valuation
provided by the underlying
Assessing disclosures:
funds’ administrators
We also considered the Company’s disclosures (see note 2(g)) in relation to the
Risk: use of estimates and judgments regarding the valuation of investments and the
The valuation of the Company’s Company’s investment valuation policies adopted in note 3(a) and fair value
investments, given that it disclosures in note 18 for compliance with IFRS
represents the majority of the
Company’s net assets, is a
significant area of our audit,
with those which are unlisted
being subject to estimation risk

Aberdeen Emerging Markets Investment Company Limited 27


Financial Statements
Independent Auditor’s Report continued

Our Application of Materiality and an Overview of the • the Directors’ explanation in the viability statement,
Scope of our Audit pages 17 to 18, as to how they have assessed the prospects
of the Company, over what period they have done so and
Materiality for the financial statements as a whole was set at
why they consider that period to be appropriate, and their
£8,296,000, determined with reference to a benchmark of Net
statement as to whether they have a reasonable expectation
Assets of £276,556,000 of which it represents approximately
that the Company will be able to continue in operation and
3% (2017: approximately 3%).
meet its liabilities as they fall due over the period of their
We reported to the Audit Committee any corrected or assessment, including any related disclosures drawing
uncorrected identified misstatements exceeding £415,000, attention to any necessary qualifications or assumptions.
in addition to other identified misstatements that warranted
reporting on qualitative grounds. Corporate Governance Disclosures
Our audit of the Company was undertaken to the materiality We are required to report to you if:
level specified above, which has informed our identification of
• we have identified material inconsistencies between the
significant risks of material misstatement and the associated
knowledge we acquired during our financial statements
audit procedures performed in those areas as detailed above.
audit and the Directors’ statement that they consider that
the Annual Report and financial statements taken as a
We Have Nothing to Report on Going Concern whole is fair, balanced and understandable and provides
We are required to report to you if we have anything material the information necessary for shareholders to assess the
to add or draw attention to in relation to the Directors’ Company’s position and performance, business model and
statement in note 2(b) to the financial statements on the use strategy; or
of the going concern basis of accounting with no material • the section of the Annual Report describing the work of the
uncertainties that may cast significant doubt over the Audit Committee does not appropriately address matters
Company’s use of that basis for a period of at least twelve communicated by us to the Audit Committee.
months from the date of approval of the financial statements.
We are required to report to you if the Corporate Governance
We have nothing to report in this respect.
Statement does not properly disclose a departure from the
eleven provisions of the 2016 UK Corporate Governance Code
We Have Nothing to Report on the Other Information specified by the Listing Rules for our review.
in the Annual Report
We have nothing to report to you in these respects.
The Directors are responsible for the other information
presented in the Annual Report together with the financial
We Have Nothing to Report on Other Matters on
statements. Our opinion on the financial statements does not
cover the other information and we do not express an audit Which We are Required to Report by Exception
opinion or any form of assurance conclusion thereon. We have nothing to report in respect of the following matters
where the Companies (Guernsey) Law, 2008 requires us to
Our responsibility is to read the other information and, in
report to you if, in our opinion:
doing so, consider whether, based on our financial statements
audit work, the information therein is materially misstated • the Company has not kept proper accounting records; or
or inconsistent with the financial statements or our audit • the financial statements are not in agreement with the
knowledge. Based solely on that work we have not identified accounting records; or
material misstatements in the other information. • we have not received all the information and explanations,
which to the best of our knowledge and belief are necessary
Disclosures of Principal Risks and Longer- for the purpose of our audit.
Term Viability
Respective Responsibilities
Based on the knowledge we acquired during our financial
statements audit, we have nothing material to add or draw Directors’ Responsibilities
attention to in relation to: As explained more fully in their statement set out on page 25,
• the Directors’ confirmation within the viability statement, the Directors are responsible for: the preparation of the
pages 17 to 18, that they have carried out a robust financial statements including being satisfied that they give a
assessment of the principal risks facing the Company, true and fair view; such internal control as they determine is
including those that would threaten its business model, necessary to enable the preparation of financial statements
future performance, solvency or liquidity; that are free from material misstatement, whether due to
• the principal risks and uncertainties disclosures describing fraud or error; assessing the Company’s ability to continue
these risks and explaining how they are being managed or as a going concern, disclosing, as applicable, matters related
mitigated; to going concern; and using 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.

28 Annual Report 2018


Auditor’s Responsibilities
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue our opinion in an auditor’s report. Reasonable assurance
is a high level of assurance, but does not guarantee that an
audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the
basis of the financial statements.
A fuller description of our responsibilities is provided on the
FRC’s website at www.frc.org.uk/auditorsresponsibilities.

The Purpose of this Report and Restrictions on its Use


by Persons Other Than the Company’s Members as
a Body
This report is made solely to the Company’s members, as
a body, in accordance with section 262 of the Companies
(Guernsey) Law, 2008 and, in respect of any further matters
on which we have agreed to report, on terms we have agreed
with the Company. Our audit work has been undertaken so
that we might state to the Company’s members those matters
we are required to state to them in an auditor’s report and for
no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than
the Company and the Company’s members, as a body, for our
audit work, for this report, or for the opinions we have formed.

Barry Ryan
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants and Recognised Auditors, Guernsey
31 January 2019

Aberdeen Emerging Markets Investment Company Limited 29


Financial Statements
Statement of Comprehensive Income

Year ended 31 October 2018 Year ended 31 October 2017


Revenue Capital Total Revenue Capital Total
Note £’000 £’000 £’000 £’000 £’000 £’000
(Losses)/gains on investments at fair value
through profit or loss 4 – (41,807) (41,807) – 46,978 46,978
(Losses)/gains on currency movements – (157) (157) – 96 96
Net investment (losses)/gains – (41,964) (41,964) – 47,074 47,074
Investment income 5 5,019 – 5,019 3,500 – 3,500
5,019 (41,964) (36,945) 3,500 47,074 50,574
Management fee 6 (2,515) – (2,515) (2,695) – (2,695)
Other expenses 6 (886) – (886) (857) – (857)
Operating (losses)/profit before
finance costs and taxation 1,618 (41,964) (40,346) (52) 47,074 47,022
Finance costs 9 (312) – (312) (155) – (155)
Operating (losses)/profit before taxation 1,306 (41,964) (40,658) (207) 47,074 46,867
Withholding tax expense (326) – (326) (141) – (141)
(Loss)/profit and total comprehensive
income for the year 980 (41,964) (40,984) (348) 47,074 46,726

Earnings per Ordinary share 10 2.03p (86.83p) (84.80p) (0.68p) 91.68p 91.00p

The total column of this statement represents the Company’s Statement of Comprehensive Income, prepared under IFRS.
The revenue and capital columns, including the revenue and capital earnings per share data, are supplementary information
prepared under guidance published by the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or
discontinued during the year.
The notes on pages 34 to 48 form part of these financial statements.

30 Annual Report 2018


Financial Statements
Statement of Financial Position

As at As at
31 October 31 October
2018 2017
Note £’000 £’000
Non-current assets
Investments at fair value through profit or loss 4 295,601 383,263
Current assets
Cash and cash equivalents 1,037 3,414
Other receivables 297 186
1,334 3,600
Total assets 296,935 386,863
Current liabilities
Interest payable 9 (28) (35)
Other payables (351) (357)
Loans payable 9 (20,000) (25,000)
Total liabilities (20,379) (25,392)
Net assets 276,556 361,471
Equity
Share capital 12 150,082 183,930
Capital reserve 13 132,546 184,593
Revenue reserve (6,072) (7,052)
Total equity 276,556 361,471

Net assets per Ordinary share 14 600.59p 706.04p

Approved by the Board of Directors and authorised for issue on 31 January 2019 and signed on its behalf by:

Helen Green – Director

William Collins – Director

The notes on pages 34 to 48 form part of these financial statements.

Aberdeen Emerging Markets Investment Company Limited 31


Financial Statements
Statement of Changes in Equity

Share Capital Revenue


capital reserve reserve Total
For the year ended 31 October 2018 Note £’000 £’000 £’000 £’000
Balance at 1 November 2017 183,930 184,593 (7,052) 361,471
(Loss)/profit for the year – (41,964) 980 (40,984)
Dividends paid 11 – (10,083) – (10,083)
Tender offer 12 (33,413) – – (33,413)
Tender offer costs 12 (254) – – (254)
Share buybacks 12 (181) – – (181)
Balance at 31 October 2018 150,082 132,546 (6,072) 276,556

Share Capital Revenue


capital reserve reserve Total
For the year ended 31 October 2017 Note £’000 £’000 £’000 £’000
Balance at 1 November 2016 186,840 140,079 (6,704) 320,215
Profit/(loss) for the year – 47,074 (348) 46,726
Dividends paid 11 – (2,560) – (2,560)
Share buybacks 12 (2,910) – – (2,910)
Balance at 31 October 2017 183,930 184,593 (7,052) 361,471

The Company’s distributable reserves comprise; the Capital reserve attributable to realised profits and the Revenue reserve.
The notes on pages 34 to 48 form part of these financial statements.

32 Annual Report 2018


Financial Statements
Statement of Cash Flow

Year ended Year ended


31 October 31 October
2018 2017
Note £’000 £’000
Cash flows from operating activities
Cash inflow from investment income and bank interest 4,908 3,544
Cash outflow from management expenses (3,407) (3,522)
Cash inflow from disposal of investments* 73,523 75,404
Cash outflow from purchase of investments* (27,668) (93,478)
Cash outflow from taxation (326) (141)
Net cash flow from/(used in) operating activities 15 47,030 (18,193)
Cash flows from financing activities
(Repayment)/proceeds from bank borrowings 9 (5,000) 25,000
Borrowing commitment fee and interest charges (319) (155)
Dividend paid 11 (10,083) (2,560)
Tender offer and associated costs 12 (33,667) –
Share buy backs 12 (181) (2,910)
Net cash flow (used in)/from financing activities (49,250) 19,375
Net (decrease)/increase in cash and cash equivalents (2,220) 1,182
Effect of foreign exchange (157) 122
Cash and cash equivalents at 1 November 3,414 2,110
Cash and cash equivalents at 31 October 1,037 3,414

The notes on pages 34 to 48 form part of these financial statements.


* Receipts from the disposal and purchase of investments have been classified as components of cash flow from/(used in)
operating activities because they form part of the Company’s operating activities.

Aberdeen Emerging Markets Investment Company Limited 33


For the Year Ended 31 October 2018

Financial Statements
Notes to the Financial Statements For the Year Ended 31 October 2018

1. Reporting entity
Aberdeen Emerging Markets Investment Company Limited (the “Company”) is a closed-ended investment company, registered
in Guernsey on 16 September 2009. The Company’s registered office is 11 New Street, St Peter Port, Guernsey, GY1 2PF. The
Company’s shares have a premium listing on the London Stock Exchange and commenced trading on 10 November 2009.
The Company changed its name to Aberdeen Emerging Markets Investment Company Limited on 14 April 2016. The financial
statements of the Company are presented for the year ended 31 October 2018.
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 2018.

Non-mainstream pooled investments (“NMPIs”)


The Company currently conducts its affairs so that the shares issued by the Company can be recommended by Independent
Financial Advisers to ordinary retail investors in accordance with the Financial Conduct Authority’s rules in relation to NMPIs and
intends to continue to do so for the foreseeable future.

2. Basis of preparation

(a) Statement of compliance


The financial statements, which give a true and fair view, have been prepared in accordance with International Financial
Reporting Standards (“IFRS”) and are in compliance with the Companies (Guernsey) Law, 2008. There were no changes in the
accounting policies of the Company in the year to 31 October 2018.
Where presentational guidance set out in the Statement of Recommended Practice (“SORP”) for Investment Companies
issued by the Association of Investment Companies (“AIC”) in November 2014 and updated in February 2018 is consistent
with the requirements of IFRS, the directors have sought to prepare the financial statements on a basis compliant with the
recommendations of the SORP.
The total column of the Statement of Comprehensive Income is the profit or loss account of the Company. The “Capital” and
“Revenue” columns provide supplementary information.
The financial statements were approved and authorised for issue by the Board on 31 January 2019.
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.
At the AGM held in April 2018, a resolution was approved by shareholders that the Company will continue in existence in its
current form until the AGM to be held in 2023.
The Directors believe that the Company has adequate resources to continue in operational existence for at least twelve 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 2018, the Company held £1.0 million in cash and £295.6 million in investments. It is estimated that
approximately 63% of the investments held at the year end could be realised in one month. The total operating expenses for
the year ended 31 October 2018 were £3.4 million, which represented approximately 1.02% of average net assets during the
year. The Company also incurred £0.3 million of finance costs. At the date of approval of this report, based on the aggregate of
investments and cash held, the Company has substantial operating expenses cover.
The Company has a £25 million revolving loan facility with RBS, maturing on 29 March 2019. The Company has commenced
discussions with RBS and the Board expects to renew the facility on similar terms when it matures. As at 31 October 2018, £20
million was drawn down from the RBS facility. The liquidity of the Company’s portfolio, as mentioned above, sufficiently supports
the Company’s ability to repay its borrowings at short notice.
The Directors are satisfied that it is appropriate to adopt the going concern basis in preparing the financial statements and, after
due consideration, that the Company is able to continue in operation for a period of at least twelve months from the date of
approval of these financial statements.

34 Annual Report 2018


(c) Basis of measurement
The financial statements have been prepared on the historical cost basis except for investments held at fair value through profit
or loss which are measured at fair value.

(d) Functional and presentation currency


The Company’s investments are denominated in multiple currencies. However, the Company’s shares are issued in GBP sterling
and the majority of its investors are UK based. Therefore, the financial statements are presented in sterling, which is the
Company’s functional currency. All financial information presented in sterling has been rounded to the nearest thousand pounds.

(e) Capital reserve


Profits achieved by selling investments and changes in fair value arising upon the revaluation of investments that remain in the
portfolio are all charged to profit or loss in the capital column of the Statement of Comprehensive Income and allocated to the
capital reserve. The capital reserve is also used to fund dividend distributions.

(f) Revenue reserve


The balance of all items allocated to the revenue column of the Statement of Comprehensive Income in each year is transferred
to the Company’s revenue reserve.

(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

Aberdeen Emerging Markets Investment Company Limited 35


Financial Statements
Notes to the Financial Statements continued

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 “Gains 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 as detailed in note 14.

(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.

36 Annual Report 2018


(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 (2017: £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 Net Asset
Value of the Company (which is calculated under IFRS). Therefore no reconciliation is required between the measure of profit or
loss used by the Board and that contained in the financial statements.
Further information on the Company’s operating segment is provided in note 19.

(j) Offsetting
Financial assets and liabilities are offset and the net amount presented in the Statement of Financial Position when, and only
when, the Company has a legal right to set off the recognised amounts and it intends to either settle on a net basis or to realise
the asset and settle the liability simultaneously.
Income and expenses are only presented on a net basis when permitted under IFRS.

(k) Structured entities


A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who
controls the entity, such as when any voting rights relate to administrative tasks only and the relevant activities are directed by
means of contractual arrangements. A structured entity often has some or all of the following features or attributes; (a) restricted
activities, (b) a narrow and well-defined objective, such as to provide investment opportunities for investors by passing on risks
and rewards associated with the assets of the structured entity to investors, (c) insufficient equity to permit the structured entity
to finance its activities without subordinated financial support and (d) financing in the form of multiple contractually linked
instruments to investors that create concentrations of credit or other risks.
The Company holds shares, units or partnership interests in the funds or investment products presented on the Company’s
portfolio. The Company does not consider its investments in listed funds to be structured entities but does consider its
investments in unlisted funds to be investments in structured entities because the voting rights in such entities are limited to
administrative tasks and are not the dominant factor in deciding who controls those entities.
Changes in fair value of investments, including structured entities, are included in profit or loss in the Statement of
Comprehensive Income.

(l) Dividend payable


Final dividends payable to equity shareholders are recognised in the financial statements when they have been approved by
shareholders and become a liability of the Company. Interim dividends payable are recognised in the period in which they are
paid. The capital and revenue reserve may be used to fund dividend distributions.

(m) New standards and interpretations effective in the current financial year
There are no new standards, interpretations or amendments, which became effective during the year that have had a material
impact on the Company.
At the date of approval of these financial statements, the following standards became effective during the year:
• IFRS 9, ‘Financial instruments’, effective 1 January 2018. IFRS 9 replaces IAS 39, ‘Financial Instruments: Recognition and
measurement’. It includes revised guidance on the classification and measurement of financial instruments, a new expected
credit loss model for calculating impairment of financial assets and new general hedge accounting requirements. It also carries

Aberdeen Emerging Markets Investment Company Limited 37


Financial Statements
Notes to the Financial Statements continued

forward the guidance from IAS 39 regarding recognition and derecognition of financial instruments. Based on the Board’s
assessment, this standard is not expected to have a material impact on the classification of financial assets and liabilities of
the Company because financial instruments currently measured at fair value through profit or loss (“FVTPL”) under IAS 39 are
designated into this category because they are managed on a fair value basis in accordance with a documented investment
strategy. Accordingly these financial instruments will be mandatorily measured at FVTPL under IFRS 9.
• IAS 7 ‘Statement of Cash Flows’, was amended by The International Accounting Standards Board (‘IASB’) with the intention to
clarify IAS 7 to improve information provided to users of financial statements about an entity’s financing activities. They are
effective for annual periods beginning on or after 1 January 2017, with earlier application being permitted.
The Board has considered the impact of the above standards and does not believe, the adoption of the standards do have
material impact on the Company’s financial statements apart from additional disclosure requirements.

4. Investments at fair value through profit or loss and classification of financial instruments

2018 2017
£’000 £’000
Quoted & listed closed end fund investments 172,449 212,562
Open ended fund and limited liability partnership investments 123,152 170,701
Total investments at fair value at 31 October 295,601 383,263
Movement during the year:
Opening balance of investments, at cost 278,903 244,833
Additions, at cost 27,668 91,451
Disposals, at cost (59,853) (57,381)
Cost of investments at 31 October 246,718 278,903
Revaluation of investments to fair value
Opening balance 104,360 73,880
Movement in revaluation of investments held (55,477) 30,480
Balance at 31 October 48,883 104,360
Fair value of investments at 31 October 295,601 383,263
(Losses)/gains on investments
Gains on disposal of investments 13,670 16,498
Movement in revaluation of investments held (55,477) 30,480
Balance at 31 October (41,807) 46,978
The table below sets out the classifications of the carrying amounts of the Company’s financial assets and financial liabilities into
categories of financial instruments.

Held at fair Loans and Other financial


value receivables liabilities Total
Financial instruments as at 31 October 2018 £’000 £’000 £’000 £’000
Investments at fair value through profit and loss 295,601 – – 295,601
Cash and cash equivalents – 1,037 – 1,037
Other receivables – 297 – 297
Other payables – – (379) (379)
Loans payable – – (20,000) (20,000)
Total 295,601 1,334 (20,379) 276,556

Held at Loans and Other financial


fair value receivables liabilities Total
Financial instruments as at 31 October 2017 £’000 £’000 £’000 £’000
Investments at fair value through profit and loss 383,263 – – 383,263
Cash and cash equivalents – 3,414 – 3,414
Sales for future settlement and other receivables – 186 – 186
Purchases for future settlement and other payables – – (357) (357)
Loans payable – – (25,035) (25,035)
Total 383,263 3,600 (25,392) 361,471

38 Annual Report 2018


5. Investment income

2018 2017
£’000 £’000
Dividends from UK Investments 2,388 2,747
Dividends from Overseas Investments 2,626 753
Other income 5 –
Total income 5,019 3,500

6. Management fee and other expenses

2018 2017
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Management fee 2,515 – 2,515 2,695 – 2,695
Administration fees 184 – 184 178 – 178
Depositary and custody service fees 130 – 130 134 – 134
Registration fees 31 – 31 37 – 37
Directors’ fees 140 – 140 135 – 135
Auditor’s fees:
Audit services 39 – 39 39 – 39
Non-audit services 15 – 15 14 – 14
Marketing fees 187 – 201 179 – 179
Broker fees 36 – 36 40 – 40
Miscellaneous expenses 124 – 110 101 – 101
Total other expenses 886 – 886 857 – 857
Total expenses 3,401 – 3,401 3,552 – 3,552

Management fee
The Management Agreement is terminable by either party there to 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.
The Manager is entitled to receive a basic fee from the Company for its services as Manager.
Basic fee
The Company’s basic management fee for the year ended 31 October 2018 was charged at an annualised rate of 0.8% of net
assets (2017: 1.0% of market capitalisation), reduced by the proportion of the Company’s net assets invested in funds which are
managed by Aberdeen Standard Investments (“Aberdeen Standard Funds”).
The basic fee is payable monthly in arrears (and pro rata for part of any month during which the management agreement is
in force).
Performance fee
The performance fee arrangement was removed with effect from 1 November 2017, therefore there was no performance fee
accrued in the year (2017: nil).
Promotional fee
The Company has agreed to pay a fee to ASFML for the provision of promotional activities at an annual rate of £160,000 with
effect from 1 July 2018 (prior to that, the fee was at an annual rate of £200,000). The balance outstanding at the year end was
£53,000 (2017: £17,000).

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, as well as the fees payable to the UK Administration Agent.

Aberdeen Emerging Markets Investment Company Limited 39


Financial Statements
Notes to the Financial Statements continued

UK Administration agent fees


PraxisIFM Fund Services (UK) Limited (“PraxisIFM”) is appointed by Vistra to act as administration agent in the United Kingdom.
PraxisIFM is appointed under a contract subject to not less than ninety days’ notice. The UK Administration Agent receives from
the Administrator a monthly fee equal to one twelfth of 0.1% of Net Asset Value subject to a maximum fee for the year ended
31 October 2018 of £143,846 (2017: £138,360) 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 (2017: £60,000). 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 fees payable for the year were £140,300 (2017: £135,100). There were no other emoluments.

8. Transaction charges

2018 2017
£’000 £’000
Transaction costs on purchases of investments 5 258
Transaction costs on sales of investments 6 63
Total transaction costs included in (losses)/gains on investments held at fair value
through profit or loss 11 321

9. Bank loan and finance costs


On 31 March 2017, the Company entered into an unsecured 12 month revolving loan facility with The Royal Bank of Scotland
plc (“RBS”), under which loans with a maximum aggregate value of £25 million may be drawn. The loan facility was renewed on
29 March 2018 for a further 12 month period. As at 31 October 2018, £20 million (2017: £25 million) was drawn down at an all-in
rate of 1.275% (2017: 0.82838%) per annum. The draw down matured on 29 November 2018 and was subsequently rolled over at
an all-in rate of 1.32225% per annum maturing on 29 March 2019. The Company has commenced discussions with RBS and the
Board expects to renew the facility on similar terms when it matures.

2018 2017
£’000 £’000
Interest payable 273 110
Facility and arrangement fees and other charges 39 45
Total finance costs 312 155
At 31 October 2018, interest payable of £28,000 (2017: £35,000) was accrued in the Statement of Financial Position.

10. Earnings per share


Earnings per share is based on the total comprehensive income for the year ended 31 October 2018, being a loss of £40,984,000
(2017: gain of £46,726,000) attributable to the weighted average of 48,331,919 (2017: 51,346,725) Ordinary shares in issue
(excluding shares held in treasury) in the year ended 31 October 2018.

Supplementary information is provided as follows: revenue per share is based on the net revenue profit of £980,000 (2017: loss
of £348,000) and capital earnings per share is based on the net capital loss of £41,964,000 (2017: gain of £47,074,000) attributable
to the above Ordinary shares.

40 Annual Report 2018


11. Dividends paid

Dividends paid during the year ended 31 October 2018


Pence per Capital Revenue
Ordinary reserve reserve
Dividend type (in respect of the year) – Pay date Share £’000 £’000
Second interim (2017) - paid 29 December 2017 5.00 2,560 –
First interim (2018) - paid 29 March 2018 5.25 2,689 –
Second interim (2018) - paid 29 June 2018 5.25 2,417 –
Third interim (2018) - paid 28 September 2018 5.25 2,417 –
Total dividend 20.75 10,083 –
On 29 October 2018, the Board declared a fourth interim dividend in respect of the year of 5.25p per share, payable on
21 December 2018 to those shareholders on the register on 30 November 2018.

Dividend paid during the year ended 31 October 2017


Pence per Capital Revenue
Ordinary reserve reserve
Dividend type Share £’000 £’000
First interim (2017) - paid 29 September 2017 5.00 2,560 –
Total dividend 5.00 2,560 –

12. Share capital

Ordinary shares Ordinary shares


of 1 p nominal with voting
value Allotted, issued rights (excluding
For the year ended 31 October 2018 Authorised £’000 and fully paid treasury shares) Treasury shares
Opening number of shares Unlimited 546 54,618,507 51,196,729 3,421,778
Tender offer – – (5,119,633) 5,119,633
Purchase of own shares – – – (30,000) 30,000
Closing number of shares Unlimited 546 54,618,507 46,047,096 8,571,411

Ordinary shares Ordinary shares


of 1 p nominal with voting
value Allotted, issued rights (excluding
For the year ended 31 October 2017 Authorised £’000 and fully paid treasury shares) Treasury shares
Opening number of shares Unlimited 546 54,618,507 51,748,179 2,870,328
Purchase of own shares – – – (551,450) 551,450
Closing number of shares Unlimited 546 54,618,507 51,196,729 3,421,778

Purchases of own shares


There were 30,000 (2017: 551,450) Ordinary shares purchased during the year at an aggregate cost to the Company of £181,000
(2017: £2,910,000), all of which are held in treasury.

Tender offer
As described in the circular to shareholders dated 13 March 2018, the Company put forward proposals for a tender offer under
which shareholders had the ability to tender up to 10% of their Ordinary shares held.
A total of 5,119,633 shares were repurchased by the Company on 17 April 2018 under the terms of the Tender Offer and placed
in treasury. The Tender Price of 652.6487p per share reflected a discount of 3.5% to the prevailing NAV per share. Payments with
an aggregate value of £33,413,000 were made to shareholders in respect of validly tendered shares during the week commencing
23 April 2018.
Tender offer costs amounted to £254,000.

Aberdeen Emerging Markets Investment Company Limited 41


Financial Statements
Notes to the Financial Statements continued

Share capital account


The aggregate balance (including share premium) standing to the credit of the share capital account at 31 October 2018 was
£150,082,000 (2017: £183,930,000).

Ordinary shares
Voting rights
Holders of Ordinary shares are entitled to attend, speak and vote at general meetings of the Company. Each Ordinary share
(excluding shares in treasury) carries one vote. Treasury shares do not carry voting rights.
Dividends
The holders of Ordinary shares are entitled to such dividend as may be declared by the Company from time to time. Shares held
in treasury do not receive dividends.
Capital entitlement
On a winding up, the Ordinary shares (excluding treasury shares) shall rank pari passu for the nominal capital paid up thereon
and in respect of any surplus. Shares held in treasury have no capital entitlement on a winding up of the Company.

13. Capital reserve

2018 2017
£’000 £’000
Realised gains/(losses) on investments and other capital reserve movements
Opening balance 80,233 66,199
Dividends paid from capital reserves (10,083) (2,560)
Gains from disposal of investments* 15,748 16,805
Losses from disposal of investments* (2,078) (307)
Foreign exchange (losses)/gains (157) 96
Balance at 31 October 83,663 80,233
Investments held
Opening balance 104,360 73,880
Movement in unrealised gain on revaluation of investments held* 3,657 42,990
Movement in unrealised loss on revaluation of investments held* (59,134) (12,510)
Balance at 31 October 48,883 104,360
Capital reserve balance at 31 October 132,546 184,593
* Net losses on investments held at fair value through profit or loss figure for the year ended 31 October 2018 totalled
£41,807,000 (2017: net gains of £46,978,000).

14. Net asset value (“NAV”) per share


The NAV per share is based on net assets of £276,556,000 (2017: £361,471,000) divided by 46,047,096 (2017: 51,196,729) shares in
issue (excluding shares held in treasury) at the year end.
The below table is a reconciliation between the NAV per share announced on the London Stock Exchange and the NAV per share
disclosed in these financial statements.

2018 2017
£’000 pence £’000 pence
NAV per share as at the financial year end as published on
1 November 2018 (2017: as published on 1 November 2017) 276,494 600.46 361,540 706.18
Revaluation adjustments – delayed prices 62 0.13 (69) (0.14)
NAV per share as disclosed in these financial statements 276,556 600.59 361,471 706.04

42 Annual Report 2018


15. Reconciliation of operating (losses)/gain to net cash flow from operating activities

2018 2017
£’000 £’000
Operating (loss)/profit before finance costs and taxation (40,346) 47,022
Less: Tax deducted at source on income from investments (326) (141)
Add: Realisation of investments at book cost 59,853 57,381
Less: Purchase of investments (27,668) (91,451)
Less: Adjustment for unrealised losses/(gains) 55,477 (30,480)
Effect of foreign exchange 157 (122)
(Increase)/decrease in debtors (111) 1,612
Decrease in creditors (6) (2,014)
Net cash flow from/(used in) operating activities 47,030 (18,193)

16. Related party disclosures

Manager
Management fees payable are shown in profit or loss in the Statement of Comprehensive Income and Note 6. As the
performance fee arrangement was removed with effect from 1 November 2017, no performance fee accrual has been made in
the year under review (2017: £nil).
At 31 October 2018, management fees of £199,000 (2017: £255,000) were accrued in the Statement of Financial Position. Total
management fees for the year were £2,515,000 (2017: £2,695,000).

Investments held by the Company which are managed by the Standard Life Aberdeen plc group
As at 31 October 2018, the Company held investments in Aberdeen Asian Smaller Companies Investment Trust PLC and
Edinburgh Dragon Trust PLC. The valuation of these holdings at 31 October 2018 totalled £8,027,000 (As at 31 October 2017: the
Company held investments in Aberdeen Asian Smaller Companies Investment Trust PLC, Aberdeen Latin American Equity Fund
Inc and Edinburgh Dragon Trust PLC. The valuation of these holdings at 31 October 2017 totalled £25,722,000).

Directors
Total fees for the Directors in the year ended 31 October 2018 were £140,300 (2017: £135,100). There were no outstanding fees
due to the Directors at the year end (2017: nil). Details of Directors’ share holdings in the Company can be found on page 20.

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 below.

Market risks
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.

Aberdeen Emerging Markets Investment Company Limited 43


Financial Statements
Notes to the Financial Statements continued

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 risks


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 £1,656,000 (2017: £2,123,000) 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 31 March 2017, the Company entered into an unsecured 12 month revolving loan facility with RBS, under which loans with a
maximum aggregate value of £25 million may be drawn, The loan facility was renewed on 29 March 2018 for a further 12 month
period. As at 31 October 2018, £20 million was drawn down (2017: £25 million).
Movements in interest rates are likely to affect indirectly the value of the Company’s investments.
Interest rate risk sensitivity
Movements in interest rates would not directly affect the Company’s investments or other net assets, to a material extent, as
the majority of the assets are held in equity investments. Movements in interest rates are likely to affect indirectly the value of
the Company’s investments and directly affect bank loan interest payments and commitment fees. 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.
The Company’s financial assets and liabilities at 31 October comprised:

2018 2017
Cash flow Non Cash flow No
Interest interest Interest interest
rate risk rate risk Total % of net rate risk rate risk Total % of net
£’000 £’000 £’000 assets £’000 £’000 £’000 assets
Non-current asset investments at
fair value:
EUR denominated – 14,446 14,446 5.3 – 11,670 11,670 3.2
GBP denominated – 115,561 115,561 41.8 – 159,331 159,331 44.1
USD denominated – 165,594 165,594 59.9 – 212,262 212,262 58.7
Cash and cash equivalents –
Floating rate – GBP 125 – 125 – 2,940 – 2,940 0.8
Floating rate – USD 912 – 912 0.3 474 – 474 0.1
Short term receivables – 297 297 0.1 – 186 186 0.1
Loan and short term payables (20,028) (351) (20,379) (7.4) (25,035) (357) (25,392) (7.0)
Total (18,991) 295,547 276,556 100.0 (21,621) 383,092 361,471 100.0

44 Annual Report 2018


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
£29,560,000 (2017: £38,326,000) in the investments designated as fair value through profit or loss at the Statement of Financial
Position date, equivalent to 11% (2017: 11%) of the net assets attributable to equity holders. This analysis assumes that all other
variables remain constant.
Market concentration
At 31 October 2018, the largest five country concentrations on a look through basis were as follows:

2018 2017
% of net % of net
Country assets assets
China 26.4% 25.7%
Korea 14.3% 13.4%
Taiwan 10.9% 10.7%
Russia 10.4% 9.0%
Brazil 5.2% 6.2%

Liquidity risks
The majority of the Company’s investments are in 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 2018, 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 £1.0 million at
31 October 2018 (2017: £1.1 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 2018 2017


One month 63% 60%
Three months 85% 89%
One year 88% 94%
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 63% of its portfolio within one month.
The Company had £nil (2017: nil) purchase transactions and £nil (2017: nil) 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 2018
included £1,037,000 (2017: £3,182,000) 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.

Aberdeen Emerging Markets Investment Company Limited 45


Financial Statements
Notes to the Financial Statements continued

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 – – B
Short-term deposit/debt A-1 – F1+
Long-term deposit/debt A+ A2 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
2018 there were 46,047,096 (2017: 51,196,729) 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 RBS on 31 March 2017, under which loans with a maximum
aggregate value of £25 million may be drawn. During the year the Board announced the renewal of the loan facility for a further
year to 29 March 2019. As at 31 October 2018, £20 million was drawn down from RBS (2017: £25 million).
Restrictions imposed by RBS 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 15 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.

46 Annual Report 2018


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 2018 31 October 2017


£’000 £’000
Level 1 229,608 308,290
Level 2 64,994 73,840
Level 3 999 1,133
Total 295,601 383,263
The Company recognises transfers between levels of fair value hierarchy at the date the change occurred.
There were no investments that were transferred between levels during the year (2017: Investments with a total value of
£22,309,109 were transferred from level 2 to level 1 and £18,196,058 were transferred from level 1 to level 2).

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 All Equities Cayman (Series B) L.P. (“Tarpon”) 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.
The movement on the level 3 classified investments during the year is shown below:

2018 2017
£’000 £’000
Opening balance 1,133 837
Additions during the year – –
Disposals during the year – –
Profit or loss on disposals during the year – –
Valuation adjustments* (134) 296
Closing balance at 31 October 999 1,133
* Total (losses)/gains 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 Companies net assets attributable to equity
holders would be 0.02%. As at 31 October 2018, the Companies net assets attributable to equity holders would be adversely
affected by a maximum of 0.4% 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.

Aberdeen Emerging Markets Investment Company Limited 47


Financial Statements
Notes to the Financial Statements continued

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.
The exposure to investments in investee funds and products at fair value by strategy employed is disclosed in the following table.

Number of Fair value Weighted average Investment % of total


investee range fair value at fair value net assets of
Strategy funds £’000 £’000 £’000 underlying funds
Equity long-only 12 999 - 25,133 13,393 102,617 37.1%

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 9.1% (2017: 8.8%) 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 UK investment
(Fondul Proprietatea) which accounted for 13% (2017: 10%) of the total investment income receivable in the year.
At its financial year end, the Company had 225 registered shareholders. At 31 October 2018 there were three shareholders who
each held more than 10% of the issued share capital and their holdings were 29.8% (2017: 29.1%), 15.8% (2017: 24.8%) and 14.6%
(2017: 13.8%) respectively.

20. Post balance sheet events


On 21 December 2018 the Company paid a fourth interim dividend in respect of the year ended 31 October 2018 of 5.25p
per share, to shareholders who were register on 30 November 2018. The total payment amounted to £2,302,355 and will be
accounted for in the financial year ending 31 October 2019.

48 Annual Report 2018


Corporate Information
Alternative Performance Measures (“APMs”) (unaudited)

Discount
The amount, expressed as a percentage, by which the share price is less that the NAV per Ordinary share.

As at
Page 31 October 2018
NAV per Ordinary share (in pence) a 2 600.59
Share price (in pence) b 2 515.00
Discount (b÷a)-1 14.3%

Gearing
A way to magnify income and capital returns, but which can also magnify losses. The revolving loan facility with RBS is a common
method of gearing.

As at
Page 31 October 2018
Total assets less cash/cash equivalents (£’000) a n/a 295,898
Net assets (£’000) b 31 276,556
Gearing (net) (a÷b)-1 6.99%

Leverage
Under the Alternative Investment Fund Managers Directive (“AIFMD”), leverage is any method by which the exposure
of an Alternative Investment Fund (“AIF”) is increased through borrowing of cash or securities or leverage embedded in
derivative positions.

Under AIFMD, leverage is broadly similar to gearing, but is expressed as a ratio between the assets (excluding borrowings) and
the net assets (after taking account of borrowing). Under the gross method, exposure represents the sum of the Company’s
positions after deduction of cash balances, without taking account of any hedging or netting arrangements. Under the
commitment method, exposure is calculated without the deduction of cash balances and after certain hedging and netting
positions are offset against each other.

Further details on the Company's leverage is provided on page 54.

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

Year end 31 October 2018 Page


Average NAV a n/a 331,773,300
Operating expenses b n/a 3,400,600
Ongoing charges figure (calculated using the AIC methodology) b÷a 1.02%

Total Return
A measure of performance that includes both income and capital returns. This takes into account capital gains and reinvestment
of dividends paid out by the Company into its Ordinary shares on the ex-dividend date.

Year end 31 October 2018 Page Share price NAV


Opening at 1 November 2017 (in pence) a 2 632.50 706.00
Closing at 31 October 2018 (in pence) b 2 515.00 600.59
Dividend adjustment factor c n/a 1.0353 1.0297
Adjusted closing (d = b x c) d n/a 533.18 618.43
Total return (d÷a)-1 -15.7% -12.4%

n/a = not applicable

Aberdeen Emerging Markets Investment Company Limited 49


Corporate Information
Information about the Investment Manager 

Aberdeen Asset Managers Limited excess of 50 years’ experience of investing in emerging markets
with a focus on conducting in depth manager research and the
The Company’s Investment Manager is Aberdeen Asset
analysis of discounts on closed end funds. Average tenure on
Managers Limited, a wholly-owned subsidiary of Standard Life
the team is in excess of 10 years. While the team is based in
Aberdeen pc. Assets under the management of the group’s
London, its members travel frequently to emerging markets to
investment division, Aberdeen Standard Investments, were
meet with existing managers and identify new prospects. Being
£557.1 billion at 30 June 2018.
part of a global asset management business, the team has the
Investment Team ability to draw on the expertise of the wider Aberdeen Standard
Investments group.
Aberdeen Standard Investment’s Closed End Fund Strategies
(“CEFS”) team is amongst the most experienced of any operating
globally with a similar strategy. The team’s members have in

Andrew Lister Bernard Moody Samir Shah Viktor Broczko


Senior Investment Manager Senior Investment Manager Investment Manager Investment Manager
Years in team: 17. Years in team: 12. Years in team: 7. Years in team: 15.
Years’ experience in Years’ experience in Years’ experience in Years’ experience in
emerging markets: 17. emerging markets: 19. emerging markets: 7. emerging markets: 15.

Investment Strategy and Process


The CEFS team seeks to achieve the Company’s objective by allocating to talented managers (‘Manager Selection’) who buy well
managed companies in markets that are themselves attractive (‘Asset Allocation’). Closed end funds are utilised to gain exposure
to managers and markets at a discount to their intrinsic value (‘Discount Opportunities’). The team is actively contrarian, meaning
that it will often allocate to out of favour markets and funds that, as a result, are trading at attractive valuation levels.
The team’s investment process includes three pillars:

• Identifying best of breed managers through extensive travel


Manager and networks Talented
• 400 - 500 manager meetings conducted per annum by CEFS team
selection • Focus on People, Process, Portfolio, Performance managers
• Actively negotiate the best fee structure possible

• Identifying the most attractive markets


Asset • Input from Aberdeen’s global strategy team and underlying managers Attractive
allocation • Quantitative model referenced for objectivity markets
• Contrarian mind-set

• Identifying attractive opportunities in the global universe of


Discount closed end funds Discounted
• Target investment in discounted assets with a catalyst for re-rating
opportunities • Active engagement with boards, managers shareholders, brokers valuation
• Capture the advantages of semi-permanent capital structure

50 Annual Report 2018


Corporate Information
Investor Information

Alternative Investment Fund Managers Directive Dividend Tax Allowance


(“AIFMD”) and Pre-Investment Disclosure Document The annual tax-free personal allowance for dividend income
(“PIDD”) for UK investors is £2,000 for the 2018/19 tax year. Above
The Company has appointed Aberdeen Standard Fund this amount, individuals pay tax on their dividend income
Managers Limited as its alternative investment fund manager at a rate dependent on their income tax bracket and
and Northern Trust (Guernsey) Limited as its Depositary under personal circumstances. The Company provides registered
the AIFMD. shareholders with a confirmation of dividends paid and this
should be included with any other dividend income received
The AIFMD requires Aberdeen Standard Fund Managers when calculating and reporting to HMRC total dividend income
Limited, as the Company’s AIFM, to make available to investors received. It is the shareholder’s responsibility to include all
certain information prior to such investors’ investment in the dividend income when calculating any tax liability.
Company. Details of the leverage and risk policies which the
Company is required to have in place under the AIFMD are
How to Invest
published in the Company’s PIDD which can be found on its
website: aberdeenemergingmarkets.co.uk. Investors can buy and sell shares in the Company directly
through a stockbroker or indirectly through a lawyer,
Investor Warning: Be alert to share fraud and boiler accountant or other professional adviser. Alternatively, for
retail clients, shares can be bought directly through the
room scams
Aberdeen Standard Investment Trust Share Plan, Investment
Aberdeen Standard Investments has been contacted by Trust Individual Savings Account (“ISA”) or Investment Plan for
investors informing it that they have received telephone Children.
calls and emails from people who have offered to buy
their investment company shares, purporting to work for Aberdeen Standard Investment Trust Share Plan
Aberdeen Standard Investments or for third party firms.
Aberdeen Standard Investments has also been notified of Aberdeen Standard Investments operates an Investment Trust
emails claiming that certain investment companies under Share Plan (the “Plan”) through which shares in the Company
its management have issued claims in the courts against can be purchased. There are no dealing charges on the initial
individuals. These may be scams which attempt to gain your purchase of shares, although investors will suffer the bid-
personal information with which to commit identity fraud or offer spread, which can, on some occasions, be a significant
could be ‘boiler room’ scams where a payment from you is amount. Lump sum investments start at £250, while regular
required to release the supposed payment for your shares. savers may invest from £100 per month. Investors simply
These callers/senders do not work for Aberdeen Standard pay Government Stamp Duty (currently 0.5%) on entry where
Investments and any third party making such offers/claims has applicable. Selling costs are £10 + VAT. There is no restriction
no link with Aberdeen Standard Investments. on how long an investor need invest in a Plan, and regular
savers can stop or suspend participation by instructing
Aberdeen Standard Investments does not ‘cold-call’ investors Aberdeen Standard Investments in writing at any time.
in this way. If you have any doubt over the veracity of a caller,
do not offer any personal information, end the call and contact Aberdeen Standard Investment Trust ISA
our Customer Services Department.
Aberdeen Standard Investments operates an Investment Trust
The Financial Conduct Authority provides advice with ISA (“ISA”) through which an investment may be made of up to
respect to share fraud and boiler room scams at: fca.org.uk/ £20,000 in the 2018/19 tax year.
consumers.
There are no brokerage or initial charges for the ISA, although
investors will suffer the bid-offer spread, which can be a
Shareholder Enquiries
significant amount. Investors only pay Government Stamp
For queries regarding shareholdings, lost certificates, dividend Duty (currently 0.5%) on purchases where applicable. Selling
payments, registered details and related matters, shareholders costs are £15 + VAT. The annual ISA administration charge
holding their shares directly in the Company are advised to is £24 + VAT, calculated annually and applied on 31 March
contact the Registrars (see Contact Addresses). Changes of (or the last business day in March) and collected soon
address must be notified to the Registrars in writing. thereafter either by direct debit or, if there is no valid direct
If you have any general questions about your Company, the debit mandate in place, from the available cash in the ISA
Manager or performance, please telephone the Aberdeen prior to the distribution or reinvestment of any income, or,
Standard Investments Customer Services Department on 0808 where there is insufficient cash in the ISA, from the sale
500 4000, send an email to inv.trusts@aberdeenstandard.com of investments held in the ISA. Under current legislation,
or write to: investments in ISAs can grow free of Capital Gains Tax.

Aberdeen Standard Investment Trusts


PO Box 11020
Chelmsford
Essex CM99 2DB

Aberdeen Emerging Markets Investment Company Limited 51


Corporate Information
Investor Information continued

ISA Transfer Literature Request Service


Investors can choose to transfer previous tax year investments For literature and application forms for Aberdeen Standard
to Aberdeen Standard Investments, which can be invested in Investment’s investment trust products, please contact:
the Company while retaining their ISA wrapper. The minimum
invtrusts.co.uk or contact:
lump sum for an ISA transfer is £1,000 and is subject to a
minimum per company of £250. Email: aam@lit-request.com
Telephone: 0808 500 4000
Aberdeen Standard Investment Plan for Children Or write to:-
Aberdeen Standard Investments operates an Investment
Aberdeen Standard Investment Trusts
Plan for Children (the “Children’s Plan”) which covers a
PO Box 11020
number of investment companies under its management,
Chelmsford
including the Company. Anyone can invest in the Children’s
Essex CM99 2DB
Plan (subject to the eligibility criteria as stated within the
terms and conditions), including parents, grandparents and
family friends. All investments are free of dealing charges on Terms and Conditions
the initial purchase of shares, although investors will suffer Terms and conditions for Aberdeen Standard Investments
the bid-offer spread, which can, on some occasions, be a managed savings products can also be found under the
significant amount. Lump sum investments start at £150 Literature section of our website at: invtrusts.co.uk.
per company, while regular savers may invest from £30
per month. Investors simply pay Government Stamp Duty Online Dealing
(currently 0.5%) on entry where applicable. Selling costs are
There are a number of online dealing platforms for private
£10 + VAT. There is no restriction on how long an investor
investors that offer share dealing, ISAs and other means to
need invest in the Children’s Plan, and regular savers can stop
invest in the Company. Real-time execution-only stockbroking
or suspend participation by instructing Aberdeen Standard
services allow you to trade online, manage your portfolio and
Investments in writing at any time.
buy UK listed shares. These sites do not give advice. Some
comparison websites also look at dealing rates and terms.
Nominee Accounts and Voting Rights
All investments in the Aberdeen Standard Investments Discretionary Private Client Stockbrokers
Children’s Plan, Investment Trust Share Plan and Investment
If you have a large sum to invest, you may wish to contact a
Trust ISA are held in nominee accounts and investors are
discretionary private client stockbroker. They can manage
provided with the equivalent of full voting and other rights of
your entire portfolio of shares and will advise you on your
share ownership.
investments. To find a private client stockbroker visit The
Personal Investment Management & Financial Advice
Keeping You Informed Association at: pimfa.co.uk.
Further information about the Company may be found on
its dedicated website: aberdeenemergingmarkets.co.uk. Financial Advisers
This provides access to information on the Company’s share To find an adviser who recommends on investment
price performance, capital structure, London Stock Exchange companies, visit: unbiased.co.uk.
announcements, current and historic Annual and Half-Yearly
Regulation of Stockbrokers
Reports, and the latest monthly factsheet on the Company
Before approaching a stockbroker, always check that they are
issued by the Manager.
regulated by the Financial Conduct Authority:
Alternatively, please call 0808 500 0040 (Freephone) or email
Tel: 0800 111 6768 or
inv.trusts@aberdeenstandard.com or write to the address for
at fca.org.uk/firms/systems-reporting/register/search
Aberdeen Standard Investment Trusts stated above.
Email: register@fca.org.uk
Details are also available at: invtrusts.co.uk.
The Company’s Ordinary share price appears under the
heading ‘Investment Companies’ in the Financial Times.

Key Information Document (“KID”)


The KID relating to the Company and published by the
Manager can be found on the Manager’s website at:
invtrusts.co.uk/en/investmenttrusts/literature-library.

52 Annual Report 2018


Note
Please remember that past performance is not a guide to
the future. Stock market and currency movements may
cause the value of shares and the income from them to fall
as well as rise and investors may not get back the amount
they originally invested.
As with all equity investments, the value of investment
companies purchased will immediately be reduced by the
difference between the buying and selling prices of the
shares, the market maker’s spread.
Investors should further bear in mind that the value of any
tax relief will depend on the individual circumstances of
the investor and that tax rates and reliefs, as well as the tax
treatment of ISAs, may be changed by future legislation.
The information on pages 50 to 53 has been approved for the
purposes of Section 21 of the Financial Services and Markets Act
2000 (as amended by the Financial Services Act 2012) by Aberdeen
Asset Managers Limited which is authorised and regulated by the
Financial Conduct Authority in the United Kingdom.

Aberdeen Emerging Markets Investment Company Limited 53


Corporate Information
AIFMD Disclosures (unaudited)

Aberdeen Standard Fund Managers Limited (“ASFML“) and the Company are required to make certain disclosures available to
investors in accordance with the Alternative Investment Fund Managers Directive (“AIFMD”). Those disclosures that are required
to be made pre-investment are included within a pre-investment disclosure document (“PIDD”) which may be found on the
Company’s website. There have been no material changes to the disclosures contained within the PIDD since its most recent
update in February 2018.
The periodic disclosures as required under the AIFMD to investors are made below:
• information on the investment strategy, geographic and sector investment focus and principal stock exposures is included in
the Investment Manager’s Report on pages 6 to 10;
• none of the Company’s assets are subject to special arrangements arising from their illiquid nature;
• the Investment Manager’s Report on pages 6 to 10, note 17 to the financial statements and the PIDD, together set out the risk
profile and risk management systems in place. There have been no changes to the risk management systems in place in the
period under review and no breaches of any of the risk limits set, with no breach expected;
• there are no new arrangements for managing the liquidity of the Company or any material changes to the liquidity
management systems and procedures employed by ASFML;
• all authorised Alternative Investment Fund Managers are required to comply with the AIFMD Remuneration Code. In
accordance with the Remuneration Code, the AIFM’s remuneration policy is available from the Company’s Manager, Aberdeen
Standard Fund Managers Limited, on request and the remuneration disclosures in respect of the AIFM’s relevant reporting
period for the year ended 30 September 2018 will be made available on the Company’s website.

Leverage
The table below sets out the current maximum permitted limit and actual level of leverage for the Company:

Gross Commitment
Method Method
Maximum level of leverage 1.15:1 1.15:1
Actual level at 31 October 2018 1.07:1 1.07:1

There have been no breaches of the maximum level during the period and no changes to the maximum level of leverage
employed by the Company. There have been no changes to the circumstances in which the Company may be required to post
assets as collateral and no guarantees granted under the leveraging arrangement. Changes to the information contained either
within this Annual Report or the PIDD in relation to any special arrangements in place; the maximum level of leverage which
ASFML may employ on behalf of the Company; the right of use of collateral or any guarantee granted under any leveraging
arrangement; or any change to the position in relation to any discharge of liability by the Depositary will be notified via a
regulatory news service without undue delay in accordance with the AIFMD.
The information on this page has been approved for the purposes of Section 21 of the Financial Services and Markets Act 2000 (as
amended by the Financial Services Act 2012) by Aberdeen Standard Fund Managers Limited which is authorised and regulated by the
Financial Conduct Authority in the United Kingdom.

54 Annual Report 2018


Corporate Information
Glossary of Terms and Definitions

AIC The Association of Investment Companies


Alternative Investment An investment vehicle under AIFMD. Under AIFMD (see below) the Company is classified as an AIF.
Fund or “AIF”
Alternative Investment The Alternative Investment Fund Managers Directive. The AIFMD is European legislation which created a
Fund Managers European-wide framework for regulating managers of ‘alternative investment funds’ (“AIFs”). It is designed to
Directive or “AIFMD” regulate any fund which is not a UCITS fund and which is managed and/or marketed in the EU. The Company
has been designated as an AIF.
Annual General A meeting held once a year which shareholders can attend and where they can vote on resolutions to be put
Meeting or “AGM” forward at the meeting and ask directors questions about the company in which they are invested.
Benchmark Index A basket of stocks which is considered to replicate a particular stock market or sector.
Custodian An entity that is appointed to safeguard a company’s assets.
Discount The amount, expressed as a percentage, by which the share price is less than the net asset value per share.
Depositary Certain AIFs must appoint depositaries under the requirements of AIFMD. A depositary’s duties include, inter
alia, safekeeping of the Company’s assets and cash monitoring. Under AIFMD the Depositary is appointed
under a strict liability regime.
Dividend Income receivable from an investment in shares.
Ex-dividend date The date from which you are not entitled to receive a dividend which has been declared and is due to be paid
to shareholders.
Financial Conduct The independent body that regulates the financial services industry in the UK.
Authority or “FCA”
Gearing A way to magnify income and capital returns, but which can also magnify losses. A bank loan is a common
method of gearing.
Investment company A company formed to invest in a diversified portfolio of assets.
Investment Manager or Aberdeen Asset Managers Limited is a wholly owned subsidiary of Standard Life Aberdeen plc and acts as the
“AAML” Company’s investment manager. It is authorised and regulated by the FCA.
Key Information The Packaged Retail and Insurance-based Investment Products (“PRIIPS”) Regulation requires the Manager, as
Document or “KID” the Company’s PRIIP ‘manufacturer’, to prepare a Key Information Document in respect of the Company. This
KID must be made available by the Manager to retail investors prior to them making any investment decision
and is available via the Company’s website. The Company is not responsible for the information contained in
the KID and investors should note that the procedures for calculating the risks, costs and potential returns are
prescribed by law. The figures in the KID may not reflect the expected returns for the Company and anticipated
performance returns cannot be guaranteed.
Leverage An alternative word for “Gearing”.
Under AIFMD, leverage is any method by which the exposure of an 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.
Liquidity The extent to which investments can be sold at short notice.
Manager, “AIFM” or Aberdeen Standard Fund Managers Limited (formerly Aberdeen Fund Managers Limited) is a wholly owned
“ASFML” subsidiary of Standard Life Aberdeen plc and acts as the Alternative Investment Fund Manager for the
Company. It is authorised and regulated by the FCA.
Net assets An investment company’s assets less its liabilities
Net asset value (“NAV”) Net assets divided by the number of Ordinary shares in issue (excluding any shares held in treasury)
per Ordinary share
Ongoing charges A measure, expressed as a percentage of average net assets, of the regular, recurring annual costs of running an
investment company.
Ordinary shares The Company’s ordinary shares in issue.
Portfolio A collection of different investments held in order to deliver returns to shareholders and to spread risk.
Premium The amount, expressed as a percentage, by which the share price is more than the net asset value per share.
Share buyback A purchase of a company’s own shares. Shares can either be bought back for cancellation or held in treasury.
Share price The price of a share as determined by a relevant stock market.
Standard Life The Standard Life Aberdeen plc group of companies.
Aberdeen Group
Total return A measure of performance that takes into account both income and capital returns.
Tracking error A measure, expressed as a percentage, of how closely a portfolio follows an index over a period of time.
Treasury shares A company’s own shares which are available to be sold by a company to raise funds.
Value at risk A statistical technique used to measure and quantify the level of financial risk within a portfolio over a specific
time frame.
Volatility A measure of how much a share moves up and down in price over a period of time.

Aberdeen Emerging Markets Investment Company Limited 55


Corporate Information
Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Company will be held at 11 New Street, St Peter Port, Guernsey,
GY1 2PF at 12 noon on 16 April 2019 for the purpose of considering and, if thought fit, passing the following resolutions:

Ordinary Resolutions
1. To receive and adopt the financial statements for the year ended 31 October 2018, with the reports of the Directors and
auditor thereon.
2. To approve the Directors’ Remuneration Report (excluding the Directors’ Remuneration Policy) included in the Annual Report
for the year ended 31 October 2018.
3. To approve a dividend policy to declare four interim dividends each year and to authorise the Directors to declare such
dividends subject to compliance with applicable law.
4. To re-elect Mr M Hadsley-Chaplin as a Director of the Company.
5. To re-elect Mr J Hawkins as a Director of the Company.
6. To re-appoint KPMG Channel Islands Limited as auditor of the Company to hold office until the conclusion of the next AGM of
the Company at which audited accounts are laid before the Company.
7. To authorise the Directors to determine the remuneration of the auditor for the year ended 31 October 2019.
8. THAT the Company be and is hereby authorised in accordance with section 315 of the Companies (Guernsey) Law, 2008 to
make market purchases (within the meaning of section 316 of the Companies (Guernsey) Law, 2008 of its shares, provided
that:
a) the maximum number of Ordinary shares hereby authorised to be acquired is 14.99%. of the issued Ordinary share
capital of the Company (excluding treasury shares) as at the date of this AGM;
b) the minimum price (exclusive of expenses) which may be paid for a share is £0.01;
c) the maximum price to be paid per share shall be the higher of: (a) 105% of the average of the closing market value of
the shares for the five business days immediately preceding the date of the relevant purchase; (b) the price of the last
independent trade; and (c) the highest current independent bid on the trading venues where the purchase is carried out;
d) the authority hereby conferred shall expire at the earlier of the conclusion of the AGM of the Company to be held in
2020 and the date being 18 months from the date of this resolution, unless previously renewed, varied or revoked by the
Company in general meeting; and
e) the Company may make a contract to purchase its shares under the authority hereby conferred prior to the expiry of such
authority, which contract will or may be executed wholly or partly after the expiry of such authority, and may purchase its
shares in pursuance of any such contract
9. THAT the Directors be and are hereby generally and unconditionally authorised pursuant to Article 5 of the Articles of
Incorporation of the Company to allot and issue up to 2,302,354 shares or, if less, the number of shares representing 5% of
the issued Ordinary share capital of the Company as at the date of the passing of this resolution. This authority shall expire
at the conclusion of the AGM of the Company to be held in 2020 (unless renewed, varied or revoked by the Company prior to
or on such date) save that the Company may before such expiry make any offer or agreement which would or might require
shares to be allotted or issued after such expiry and the Directors may allot and issue shares in pursuance of any such offer
or agreement as if the authority conferred hereby had not expired.

Special Resolution
10. THAT the shareholders hereby waive, with respect to any allotment and issue of shares pursuant to the authority granted
by Resolution 9, any and all rights of pre-emption or similar rights which they may have, whether under the Articles of
Incorporation of the Company (including, without limitation, Article 6.2(a)) or otherwise. This waiver will expire at the
conclusion of the AGM in 2020.

By order of the Board


Vistra Fund Services (Guernsey) Limited

Registered Office:
11 New Street
St Peter Port
Guernsey GY1 2PF

31 January 2019

56 Annual Report 2018


Corporate Information
Notice of Annual General Meeting continued

Notes: 8. In order for a proxy appointment or instruction made


using the CREST service to be valid, the appropriate CREST
1. A shareholder entitled to attend and vote may appoint
message (a “CREST Proxy Instruction”) must be properly
a proxy to attend, speak and vote instead of him/her. A
authenticated in accordance with Euroclear UK & Ireland
shareholder may appoint more than one proxy in relation to
Limited’s specifications and must contain the information
the AGM provided that each proxy is appointed to exercise
required for such instructions, as described in the CREST
the rights attached to a different share or shares held by
Manual. The message, regardless of whether it constitutes
the shareholder. A proxy need not be a shareholder of the
the appointment of a proxy or an amendment to the
Company.
instruction given to a previously appointed proxy must, in
2. To appoint more than one proxy to vote in relation to order to be valid, be transmitted so as to be received by the
different shares within your holding you may photocopy Company’s Registrar (CREST ID is RA10) by the latest time(s)
the Form of Proxy. Please indicate the proxy holder’s name for receipt of proxy appointments specified in the notice
and the number of shares in relation to which they are of the meeting. For this purpose, the time of receipt will
authorised to act as your proxy (which, in aggregate, should be taken to be the time (as determined by the timestamp
not exceed the number of shares held by you). Please applied to the message by the CREST Application Host)
also indicate if the proxy instruction is one of multiple from which the Company’s agent is liable to retrieve the
instructions being given. All Forms of Proxy must be signed message by enquiry to CREST in the manner prescribed by
and should be returned together in the same envelope. CREST. After this time any change of instructions to proxies
appointed through CREST should be communicated to the
3. Forms of Proxy duly completed, together with any power of
appointee through other means.
attorney or other authority (if any) under which it is signed
or a notarially certified copy of such power or authority 9. CREST members and, where applicable, their CREST
must be deposited with the Company’s registrar, Link sponsors or voting service providers should note that
Asset Services at PXS, The Registry, 34 Beckenham Road, Euroclear UK & Ireland Limited does not make available
Beckenham, Kent, BR3 4TU, not later than 12 noon on special procedures in CREST for any particular messages.
12 April 2019 or not less than 48 hours (excluding non- Normal system timings and limitations will therefore
working days) before the time appointed for the holding of apply in relation to the input of CREST Proxy Instructions.
any adjourned AGM or, in the case or a poll taken more than It is the responsibility of the CREST member concerned
48 hours after it was demanded, 24 hours before the time to take, (or, if the CREST member is a CREST personal
appointed for the taking of a poll, or in the case of a poll member or sponsored member or has appointed a voting
taken not more than 48 hours after it was demanded, the service provider(s), to procure that his CREST sponsor
time at which the poll was demanded. or voting service provider(s) take(s)) such action as shall
be necessary to ensure that a message is transmitted by
4. A Form of Proxy is included for use by shareholders to
means of the CREST system by any particular time. In this
complete, sign and return. Completion and return of
connection, CREST members and, where applicable, their
the Form of Proxy will not prevent a shareholder from
CREST sponsor’s or voting service providers are referred, in
subsequently attending the AGM or any adjournments and
particular, to those sections of the CREST Manual concerning
voting in person if he/she so wishes.
practical limitations of the CREST systems and timings.
5. Entitlement to attend and vote at the AGM (or any
10. The Company may treat as invalid a CREST Proxy Instruction
adjournment thereof) and the number of votes which may
in the circumstances set out in Regulation 35(5)(a) of the
be cast thereat will be determined by reference to the
Uncertificated Securities Regulations 2001.
Company’s register of shareholders as at close of business
on 12 April 2019.
6. To allow effective continuation of the meeting, if it is
apparent to the Chairman that no shareholders will be
present in person or by proxy, other than by proxy in the
Chairman’s favour, the Chairman may appoint a substitute
to act as proxy in his stead for any shareholder provided
that such substitute proxy shall vote on the same basis as
the Chairman.
7. CREST members who wish to appoint a proxy or proxies
through the CREST electronic proxy appointment service
may do so for the AGM to be held on the above date
and any adjournment(s) thereof by using the procedures
described in the CREST Manual. CREST personal members
or other CREST sponsored members, and those CREST
members who have appointed a voting service provider(s),
should refer to their CREST sponsor or voting service
provider(s), who will be able to take the appropriate action
on their behalf.

Aberdeen Emerging Markets Investment Company Limited 57


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Corporate Information
Form of Proxy 

Aberdeen Emerging Markets Investment Company Limited

I/We                      of                      (BLOCK CAPITALS PLEASE)

being (a) member(s) of Aberdeen Emerging Markets Investment Company Limited (the “Company”) appoint the Chairman
of the meeting or (see note 1)
                        of                                

as my/our proxy to attend and vote for me/us and on my/our behalf at the AGM of the Company to be held at 11 New
Street, St Peter Port, Guernsey, GY1 2PF on 16 April 2019 at 12 noon and at any adjournment thereof.
Please indicate with an “X” in the spaces provided how you wish your votes to be cast on the resolutions specified.

Resolution For Against Withheld


1. To receive and adopt the financial statements for the year ended 31 October   
2018, with the reports of the Directors and auditor thereon.
2. To approve the Directors’ Remuneration Report (excluding the Directors’   
Remuneration Policy) for the year ended 31 October 2018.
3. To approve a dividend policy to declare four interim dividends each year and   
to authorise the Directors to declare such dividends.
4. To re-elect Mr M Hadsley-Chaplin as a Director   
5. To re-elect Mr J Hawkins as a Director.   
6. To re-appoint KPMG Channel Islands Limited as auditor to the Company.   
7. To authorise the Directors to determine the remuneration of the auditor for   
the forthcoming financial year.
8. To give the Company the authority to purchase its own shares.   
9. To give the Company the authority to allot new shares.   
10. To waive shareholders’ rights of pre-emption or similar rights which they   
may have under the Company’s Articles of Incorporation or otherwise.

Subject to any voting instructions so given the proxy will vote, or may abstain from voting, on any resolution as he may
think fit.
Signature _____________________________________ Dated this ______________________ day of _____________________ 2019
Notes
1. If you so desire you may delete the words “Chairman of the meeting” and insert the name of your own choice of proxy, who need
not be a member of the Company. Please initial such alteration.
2. The Form of Proxy must be lodged at the Company’s Registrars, Link Asset Services, not less than 48 hours (excluding
non-working days) before the time fixed for the meeting. In default the proxy cannot be treated as valid.
3. Alternatively, in the case of CREST members, voting may be effected by using the CREST electronic proxy appointment service.
CREST members who wish to utilise the CREST service may do so by following the procedures described in the CREST Manual.
CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a voting service
provider, should refer to their CREST sponsor or voting service provider, who will be able to take the appropriate action on their behalf.
In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message must be transmitted so as to be
received by the Company’s agent, Link Asset Services (whose CREST ID is RA10) by the specified latest time for receipt of proxy
appointments. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message
by the CREST Applications Host) from which the Company’s agent is able to retrieve the message by enquiry to CREST in the manner
prescribed.
4. A corporation must execute the proxy under its common seal or under the hand of an officer or attorney duly authorised.
5. If this Form of Proxy is executed under a power of attorney or other authority, such power of attorney or other authority or a
notarially certified copy thereof must be lodged with the Registrars with the Form of Proxy.
6. In the case of joint holders the vote of the senior shall be accepted to the exclusion of the other joint holders, seniority being
determined by the order in which the names stand in the register in respect of the joint holding.
Your completed and signed Form of Proxy should be posted, in the enclosed reply paid envelope, to the Company’s
Registrars, Link Asset Services, PXS, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU, so as to arrive
before 12 noon on 12 April 2019.

Aberdeen Emerging Markets Investment Company Limited 59


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Contact Addresses

Directors Alternative Investment Fund Manager


Mark Hadsley-Chaplin (Chairman) Aberdeen Standard Fund Managers Limited
William Collins (Formerly Aberdeen Fund Managers Limited)
Helen Green Bow Bells House
John Hawkins 1 Bread Street
Mark Barker (resigned 4 October 2018) London EC4M 9HH

Company Secretary and Administrator Investment Manager


Vistra Fund Services (Guernsey) Limited Aberdeen Asset Managers Limited
11 New Street Bow Bells House
St Peter Port 1 Bread Street
Guernsey GY1 2PF London EC4M 9HH

Financial Adviser and Stockbroker UK Administration Agent


Stockdale Securities Limited PraxisIFM Fund Services (UK) Limited
100 Wood Street 3rd Floor, Mermaid House
London EC2V 7AN 2 Puddle Dock
London EC4V 3DB
Independent Auditor
KPMG Channel Islands Limited Advisers as to Guernsey law
Glategny Court Mourant Ozannes
Glategny Esplanade 1 Le Marchant Street
St Peter Port St Peter Port
Guernsey GY1 1WR Guernsey GY1 4HP

Registrars Depositary Services and Custodian


Link Asset Services Northern Trust (Guernsey) Limited
Longue Hougue House Trafalgar Court
St Sampson Les Banques
Guernsey GY2 4JN St Peter Port
Guernsey GY1 3DA
Registered Office
11 New Street Customer Services Department,
St Peter Port Children’s Plan, Share Plan and ISA enquiries
Guernsey GY1 2PF Aberdeen Standard Investment Trusts
PO Box 11020
Company Registration Number Chelmsford
Essex CM99 2DB
Incorporated in Guernsey Number 50900

Freephone: 0808 500 0040


United States Internal Revenue Service FATCA
(open Monday to Friday, 9.00 a.m. – 5.00 p.m.)
Registration Number (“GIIN”) Email: inv.trusts@aberdeenstandard.com
WLL8YJ.99999.SL.831

Legal Entity Identifier (“LEI”)


213800RIA1NX8DP4P938

Website
aberdeenemergingmarkets.co.uk

Aberdeen Emerging Markets Investment Company Limited 61


Visit us online
aberdeenemergingmarkets.co.uk

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