Final Results

RNS Number : 5120V

Aberdeen Emerging Markets Inv Co Ld

31 January 2017

ABERDEEN EMERGING MARKETS INVESTMENT COMPANY LIMITED (Formerly Advance Developing Markets Fund Limited)

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

ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 OCTOBER 2016

INVESTMENT OBJECTIVE

The Company's investment objective is to achieve consistent returns for Shareholders in excess of the MSCI Emerging Markets Net Total Return Index in Sterling terms (the "Benchmark").

PERFORMANCE

For the year ended 31 October 2016

Net Asset Value ("NAV") per share¹	36.4%
Share price - mid market²	36.1%
MSCI Emerging Markets Net Total Return Index in Sterling terms	37.7%

As at 31 October 2016
NAV per share³	618.8p
Ordinary share price - mid market	545.0p
Net Assets	£320.2m

¹ Measured against a closing NAV at 31 October 2015 of 453.5p

² Measured against a closing mid-market ordinary share price at 31 October 2015 of 400.4p

³See note 7 for basis of calculation

The Annual Report can be downloaded in electronic format from aberdeenemergingmarkets.co.uk

CHAIRMAN'S STATEMENT

Performance

The Company generated strong returns for the year ended 31 October 2016. The net asset value ("NAV") total return for the year was 36.4%, slightly behind the total return of 37.7% from the benchmark index, the MSCI Emerging Markets Net Total Return Index (in sterling terms). The share price total return for the year was 36.1%.

Most of the returns were generated during the second half of the financial year, with a recovery in commodity prices and stabilising currencies helping to generate an increased appetite for the emerging markets asset class generally. Markets also benefited from the weakness seen in sterling following the result in the UK referendum held in June. A number of countries to which the Company is exposed recorded significant gains, including Brazil, Indonesia and Russia. Conversely, Mexico, in particular, was impacted by the uncertainties in advance of the US presidential elections in November 2016, causing it to be one of the weaker markets during the year.

The Company benefitted from the outperformance of a number of its Asian holdings. It also benefited from its underweight allocations to China and South Africa and its overweight exposure to Russia. A detailed explanation of performance for the year is provided in the Investment Manager's Report.

Discount and Share Buy Backs

The discount of the share price to the NAV at the year end was 11.9%, which compares to 11.7% at the end of the previous year. Although this was not a significant change for the year as a whole, the discount did stand at a wider level for much of the year. In order to help address this, the Company purchased 178,050 ordinary shares during the year to hold in treasury, at a cost of £885,000. A further 330,450 shares have been bought back since the year end. The Board believes that it is in shareholders' interests for the Company to have the ability to buy back shares when considered appropriate and, accordingly, will seek authority at the Annual General Meeting to renew this authority.

Board Composition

As previously announced, Helen Green joined the Board as an independent non-executive director on 1 July 2016 and became Chairman of the Audit Committee on 1 October 2016. Helen is a Chartered Accountant and has substantial experience in the investment company sector.

Having served as a Director since 2009, Terry Mahony retired as a Director on 30 January 2017. I would like to thank Terry for his significant contribution and wise counsel during his time as a Director. As previously announced, I will not be seeking re-election at the Annual General Meeting in April and will therefore retire from the Board at that time. I would like to thank my fellow Directors for their unstinting support during the four year period of my Chairmanship.

Mark Hadsley-Chaplin, who was appointed a Director in June 2012, will succeed me as Chairman. I wish him well in his new role.

Annual General Meeting

The Annual General Meeting will be held at the offices of Vistra Fund Services (Guernsey) Limited, 11 New Street, St Peter Port, Guernsey on 10 April 2017 at 11.00 am. The notice of the Annual General Meeting is contained on pages 48 to 51 of the Annual Report and Accounts. Shareholders who are unable to attend are encouraged to return their completed proxy forms to the Company's registrar in order that their votes can be represented at the meeting.

Outlook

Although the policies of the new Trump administration may well be more measured than some of the pre-election rhetoric promised, the combination of a more fiscally expansive US at the same time as monetary conditions tighten, creating the potential for further US Dollar strength, presents a challenging backdrop for emerging markets. Nonetheless, despite the recent rally, valuations of emerging market equities remain attractive relative to developed markets and there are a number of other factors that are supportive of the asset class; currencies are competitive, balance sheets are generally sound, corporate earnings have stabilised and economic growth appears to have bottomed out. With many investors under-exposed to the sector, there is the potential for further gains in the year ahead.

The portfolio is invested in funds run by talented managers with strong investment propositions, the majority of which trade at attractive discounts to their stated net asset values. The Board continues to believe that the diversification provided by the Company's approach of investing through a portfolio of such specialist funds is an attractive means for investors to benefit from the long term attractions of emerging markets.

Richard Bonsor

Chairman

30 January 2017

INVESTMENT MANAGER'S REPORT

While the Company's NAV total return for the year was 36.4% in sterling terms, a significant portion of that gain was a consequence of sterling weakness in the period following the result of the UK's referendum on continued membership of the European Union. Were the Company's NAV performance for the year to be stated in US dollar terms then the result would have been a total return of 8.3%.

In terms of performance attribution, the Company's NAV lagged the Benchmark by 1.3%. Marginal underperformance of the Benchmark during a period of rapidly rising markets is consistent with the diversified portfolio held by the Company. Fund selection made a small positive contribution to relative returns, with outperformance delivered by a number of the Company's Asian holdings countered by weaker performance from its Latin American investments. In Asia, the most notable positive contributors were the Thai focused Ton Poh Fund and Fidelity China Special Situations. The portfolio's exposure to Korean preferred shares proved a negative as Weiss Korea Opportunity Fund lagged the Korean market. In Latin America, the Company's holdings in Brazil struggled to keep pace with a liquidity driven rally. Asset allocation made a small negative contribution to relative performance, with underweight positions in Brazil and Taiwan detracting, as did an overweight allocation to Turkey. A number of markets contributed positively, including the Company's underweight allocations to China and South Africa along with an overweight position in Russia. Discount movements on closed end investments were a neutral factor during the period, with a significant positive contribution from JP Morgan Global Emerging Markets Income Trust offset by a slight widening of discounts across the rest of the closed end portfolio.

Performance attribution for the year ended 31 October 2016

Fund Selection		0.1%
	Asia	0.9%
	EMEA	0.1%
	Latin America	(0.9%)

Asset Allocation		(0.3%)
	Asia	(0.1%)
	EMEA	(0.0%)
	Latin America	(0.1%)
	Cash (direct and underlying)	(0.1%)

Discount Narrowing		(0.0%)

Fees and Expenses		(1.1%)

Net asset value under performance*		(1.3%)

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

Market Environment

After a poor start to the period, emerging markets staged a strong recovery with the Benchmark ending the year up 37.7%, outperforming developed markets by 12.2%. It should be highlighted that the absolute return was flattered by the weakness of sterling following the surprise result in the UK's referendum on continued membership of the European Union. However, emerging markets also benefitted from a recovery in interest and the resumption of inflows from foreign portfolio investors. The improvement in sentiment was supported by a stabilisation of emerging market currencies and a recovery in commodity prices.

Over the year, Latin America was the stand-out region, driven by a resurgence in the Brazilian currency and stock market, which rose by 115.1% in sterling terms. The swing in sentiment towards Brazil was prompted by a momentous shift in the political landscape, with the impeachment of President Rousseff followed by a move towards the more pro-market policies of President Temer. Municipal elections early in October confirmed the positive direction of travel, with the pro-market Brazilian Social Democracy Party comfortably defeating the Workers' Party across all regions. In contrast, Mexico was a significant laggard with the market gaining just 20.3% as US presidential election uncertainty weighed on sentiment towards local equities and the Mexican peso.

In Asia, the Indian market posted a gain of 31.0%, with the market remaining a favourite of foreign investors despite the strong economic story under Prime Minister Modi failing to translate into stronger corporate earnings. One long term positive development was the passing of the Goods and Services Tax Bill, which replaces all indirect taxes with a single tax. Thai equities performed better, rising by 41.4% in a year which saw the passing of the national constitutional referendum paving the way for elections in late 2017. However, the year concluded on a sombre note with the death of King Bhumibol in October. South Korea delivered a 32.5% return and ended the year embroiled in a political scandal linked to President Park. Taiwan fared better, gaining 48.5%, supported by strong results from its semiconductor and technology companies. China created fewer headlines than in recent years with the MSCI China Index rising by 28.0%.

In Eastern Europe, the Russian stock market rose by 49.5%. Both the market and currency appreciated in line with a recovery in energy prices. Turkey experienced a challenging year with an attempted coup in July eliciting an authoritarian response. The market was a significant underperformer, rising by just 17.9%. South Africa was another relative laggard, posting a gain of 27.9% as political concerns contributed to weak sentiment.

Chart 1. Emerging and developed market performance during year to 31 October 2016

Chart 2. Market performances during the year to 31 October 2016

See Annual Report for charts.

Portfolio

At the period end, the portfolio comprised 40 positions with the top 10 accounting for 47.8% of net assets. The balance of investments by structure is shown below.

	October 2016	October 2015
Closed ended investment funds	60.7%	57.7%
Open ended investment funds	36.4%	36.5%
Market access products	2.5%	4.8%
Cash and other net assets	0.4%	1.0%

The average discount on the closed end portion of the portfolio was 11.5% at the end of the period compared with 10.5% at the start of the period. The allocation to closed end funds increased from 57.7% to 60.7% as we took advantage of opportunities to add to favoured holdings trading on attractive discounts. Such additions included BlackRock Emerging Europe plc, JPMorgan Russian Securities, Baring Vostok Investments Limited and Schroder AsiaPacific Fund. In August, we exercised the Company's subscription shares in India Capital Growth Fund and, in so doing, acquired shares on a discount to net asset value of over 30%.

Several new closed end holdings were introduced to the portfolio. One such investment was Utilico Emerging Markets Limited ("Utilico") where shares were purchased in early May at a discount of 12.7%. Utilico invests in utility and infrastructure companies across the emerging world. The manager focuses on buying high quality companies operating in markets where regulated or semi-regulated businesses can operate without adverse government interference. This strategy has served investors well over the years, with the fund delivering consistent outperformance combined with an attractive dividend yield. A position was also initiated in Romanian closed end fund Fondul Proprietatea, which offers a portfolio dominated by energy and utilities in one of the best managed economies of Eastern Europe. Fondul conducts regular tender offers and pays a 6.5% dividend yield. The shares were acquired at a 30% discount.

The allocation to open ended funds was broadly unchanged at 36.4% although there was some rotation in the underlying holdings. We invested in several new open ended funds which provide exposure to markets where there are few viable closed end funds or where we view the open ended alternative to be of significantly higher quality. One such investment was Findlay Park Latin American Fund. After an extremely challenging period in Latin America, it is possible to buy certain high quality companies at material discounts to their long term average valuations and this provides a fertile environment for experienced stock pickers (like the team at Findlay Park) to generate future outperformance. We also introduced the Schroder Taiwan Fund to the portfolio. The fund is managed by a strong team whose process and philosophy have helped deliver a strong long term track record.

Additions were also made to open ended funds in Eastern Europe as a consequence of a continuing improvement in the outlook for the region. Thus, in the first half of the year we made a strategic allocation to the region (ex Russia) through an investment in Avaron Emerging Europe Fund, a best-of-breed open ended vehicle managed by an experienced team based in Estonia. Towards the year end we added to the portfolio's Russian exposure via Verno Capital Growth Fund, our preferred manager in that market. Our conviction in the outlook for the Russian market was buoyed by time spent in-country, where the economy is recovering, the ruble is undervalued and political relations with the West continued to improve.

Cash to fund purchases of both open and closed end investments was provided by exits from a number of exchange traded funds and open ended funds based on asset allocation grounds. These included a reduction in Neuberger Berman China Equity Fund and exits from Goldman Sachs India Equity Portfolio, Ashmore Middle East Equity Fund and GBM Mexico Fund.

The Company's geographic allocation is shown on page 6 of the Annual Report and Accounts. The period saw the Company's allocation to Asia fall by 4.8% as we reduced exposure to China, India and Korea while adding to Taiwan. Eastern Europe was the recipient of additional funds. Latin America's weighting increased modestly over the period as a consequence of strong performance in Brazil.

Market Outlook

As we look ahead to 2017, the implications of the UK's decision to leave the European Union and Donald Trump's victory in the US Presidential Election remain unclear. What is likely is that these, and other unforeseen events, will create occasional bouts of risk aversion that, whilst painful to experience, create attractive long-term entry points for emerging market investors.

We take comfort from the fact that despite the rally in emerging market equities over the last year, valuations remain attractive. At the time of writing, the MSCI Emerging Markets Index trades on trailing price to earnings and price to book ratios of 14.3x and 1.5x, 34.6% and 32.5% lower respectively than the same measures for developed markets. Headwinds to earnings growth including currency weakness and low commodity prices have turned to tail winds in many instances. This is being reflected in a recent moderation of downward earnings revisions, a trend which, if it continues, may soon give way to positive earnings surprises. Further evidence of a recovery in earnings in what is an inexpensive asset class to which global investors are quite under-exposed would be welcome, and could be a catalyst for further gains.

At a bottom up level, we continue to see interesting investment opportunities. Identifying talented managers with strong investment propositions is a key component of our approach and we are happy with the stable of managers with which the Company is invested. Whilst discount changes contributed little to our returns in the period, we see pockets of value within the closed end fund universe and will continue to add selectively. The combination of these factors should provide Shareholders with a diversified portfolio of emerging market investments with the potential to deliver the Company's objective over the long term.

Aberdeen Fund Managers Limited

30 January 2017

PRINCIPAL RISKS AND UNCERTAINTIES

Together with the issues discussed in the Chairman's Statement and the Investment Manager's Report, the Board considers that the main risks and uncertainties faced by the Company fall into the following categories:

(i) General market risks associated with the Company's investments

Changes in economic conditions, interest rates, foreign exchange rates and inflationary pressures, industry conditions, competition, political and diplomatic events, tax, environmental and other laws and other factors can substantially and either adversely or favourably affect the value of the securities in which the Company invests and, therefore, the Company's performance and prospects.

The Company's investments are subject to normal market fluctuations and the risks inherent in the purchase, holding or selling of securities, and there can be no assurance that appreciation in the value of those investments will occur. There can be no guarantee that any realisation of an investment will be on a basis which necessarily reflects the Company's valuation of that investment for the purposes of calculating the net asset value.

The Company's investments, although not made into developed economies, are not entirely sheltered from the negative impact of economic slowdowns, decreasing consumer demands and credit shortages in such developed economies which, amongst other things, affects the demand for the products and services offered by the companies in which the Company directly or indirectly invests.

A proportion of the Company's portfolio may be held in cash or cash equivalent investments from time to time. Such proportion of the Company's assets will be out of the market and will not benefit from positive stock market movements, but may give some protection against negative stock market movements.

(ii) Developing markets

The funds selected by the Investment Manager invest in developing markets. Investing in developing markets involves certain risks and special considerations not typically associated with investing in other more established economies or securities markets. In particular there may be: (a) the risk of nationalisation or expropriation of assets or confiscatory taxation; (b) social, economic and political uncertainty including war and revolution; (c) dependence on exports and the corresponding importance of international trade and commodities prices; (d) less liquidity of securities markets; (e) currency exchange rate fluctuations; (f) potentially higher rates of inflation (including hyper-inflation); (g) controls on foreign investment and limitations on repatriation of invested capital and a fund manager's ability to exchange local currencies for pounds Sterling; (h) a higher degree of governmental involvement and control over the economies; (i) government decisions to discontinue support for economic reform programmes and imposition of centrally planned economies; (j) differences in auditing and financial reporting standards which may result in the unavailability of material information about economies and issuers; (k) less extensive regulatory oversight of securities markets; (l) longer settlement periods for securities transactions; (m) less stringent laws regarding the fiduciary duties of officers and directors and protection of investors; and (n) certain consequences regarding the maintenance of portfolio securities and cash with sub-custodians and securities depositories in developing markets.

(iii) Other portfolio specific risks

(a) Small cap stocks

The underlying investee funds selected by the Investment Manager may have significant investments in smaller to medium sized companies of a less seasoned nature whose securities are traded in an "over-the-counter" market. These "secondary" securities often involve significantly greater risks than the securities of larger, better-known companies, due to shorter operating histories, potentially lower credit ratings and, if they are not listed companies, a potential lack of liquidity in their securities. As a result of lower liquidity and greater share price volatility of these "secondary" securities, there may be a disproportionate effect on the value of the investee funds and, indirectly, on the value of the Company's portfolio.

(b) Liquidity of the portfolio

The fact that a share is traded does not guarantee its liquidity and the Company's investments may be less liquid than other listed and publicly traded securities. The Company may invest in securities that are not readily tradable or may accumulate investment positions that represent a significant multiple of the normal trading volumes of an investment, which may make it difficult for the Company to sell its investments. Investors should not expect that the Company will necessarily be able to realise its investments, within a period which they would otherwise regard as reasonable, and any such realisations that may be achieved may be at a considerably lower price than prevailing indicative market prices. The Company has an overdraft facility in place which may be utilised to assist in the management of liquidity. The borrowing facility is described later in this Directors' Report.

Liquidity of the portfolio is further discussed in note 16 to the financial statements.

It is not the Company's present policy to engage in currency hedging. Accordingly, the movement of exchange rates between Sterling and the other currencies in which the Company's investments are denominated or its borrowings are drawn down may have a material effect, unfavourable or favourable, on the returns otherwise experienced on the investments made by the Company.

Movements in the foreign exchange rate between Sterling and the currency applicable to a particular shareholder may have an impact upon that shareholder's returns in their own currency of account.

Management or mitigation of the above risks

Risk

Management or mitigation of risk

General market risks associated with the Company's investments

These risks are largely a consequence of the Company's investment strategy but the Investment Manager attempts to mitigate such risks by maintaining an appropriately diversified portfolio by number of holdings, fund structure, geographic focus, investment style and market capitalisation focus.

Liquidity, risk and exposure measures are produced on a monthly basis by the Investment Manager and monitored against internal limits.

Developing markets

Other portfolio specific risks

(a) Small cap risks

(b) Liquidity of the portfolio

The investment management of the Company has been delegated to the Company's Investment Manager. The Investment Manager's investment process takes into account the material risks associated with the Company's portfolio and the markets and holdings in which the Company is invested. The Board monitors the portfolio and the performance of the Investment Manager at regular Board meetings.

(iv) Internal risks

Poor allocation of the Company's assets to both markets and investee funds by the Investment Manager, poor governance, compliance or administration, could result in shareholders not making acceptable returns on their investment in the Company.

Management or mitigation of internal risks

The Board monitors the performance of the Investment Manager and the other key service providers at regular Board meetings. The Investment Manager provides reports to the Board on compliance matters and the Administrator provides reports to the Board on compliance and other administrative matters. The Board has established various committees to ensure that relevant governance matters are addressed by the Board.

The management or mitigation of internal risks is described in detail in the Corporate Governance Statement on pages 13 to 17 of the Annual Report and Accounts.

The Directors are aware that there is now an additional uncertainty to those outlined above. The United Kingdom decision in the EU referendum held on 23 June 2016 to leave the EU may introduce potentially significant new uncertainties and instability in financial markets as the United Kingdom negotiates the terms of its exit from the EU.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with International Financial Reporting Standards and applicable law.

The financial statements are required by law to give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these financial statements, the directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and estimates that are reasonable and prudent;

· state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

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

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies (Guernsey) Law, 2008. They 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.

Disclosure of information to auditor

The directors who held office at the date of approval of this Directors' Report confirm that, so far as they are each aware, there is no relevant audit information of which the Company's auditor is unaware; and each director has taken all the steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website, and for the preparation and dissemination of the Company's financial statements. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors' responsibility statement in respect of the Annual Report and Financial Statements

The directors confirm that to the best of their knowledge and belief, the Annual Report and Financial Statements taken as a whole, is fair, balanced and understandable and provides the information necessary to assess the Company's performance, business model and strategy. During the course of this assessment, the directors have received input from the Audit Committee, the Investment Manager, the Company Secretary and the UK Administration Agent.

Directors' responsibility statement under the disclosure guidance and transparency rules 4.1.12

The directors confirm that to the best of their knowledge and belief;

(a) the financial statements, prepared in accordance with International Financial Reporting Standards give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

(b) the management report (comprising the Chairman's Statement, the Investment Manager's Report and the Directors' Report) includes a fair review of the development and performance of the business and the position of the Company together with a description of the principal risks and uncertainties that the Company faces.

Helen Green - Director

William Collins - Director

30 January 2017

STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 October 2016

	Revenue	2016 Capital	Total	Revenue	2015 Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000

Gains/(losses) on investments designated as fair value through profit or loss	-	85,180	85,180	-	(19,622)	(19,622)
Gains/(losses) on currency movements	-	654	654	-	(140)	(140)
Net investment gains/(losses)	-	85,834	85,834	-	(19,762)	(19,762)
Investment income	2,792	-	2,792	2,243	-	2,243
	2,792	85,834	88,626	2,243	(19,762)	(17,519)
Investment management fees	(2,107)	-	(2,107)	(2,252)	-	(2,252)
Other expenses	(736)	-	(736)	(745)	-	(745)
Operating gains/(loss) before finance costs and taxation	(51)	85,834	85,783	(754)	(19,762)	(20,516)
Finance costs	(46)	-	(46)	(41)	-	(41)
Operating gains/(loss) before taxation	(97)	85,834	85,737	(795)	(19,762)	(20,557)
Withholding tax expense	(136)	-	(136)	(188)	-	(188)
Total profit/(loss) and comprehensive income/(loss) for the year	(233)	85,834	85,601	(983)	(19,762)	(20,745)

Earnings per ordinary share
- Basic and diluted	(0.45p)	165.37p	164.92p	(1.89p)	(38.06p)	(39.95p)

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.

STATEMENT OF FINANCIAL POSITION

At 31 October 2016


	2016 £'000	2015 £'000
Non-current assets
Investments designated as fair value through profit or loss	318,713	233,110

Current assets
Cash and cash equivalents	2,110	1,996
Sales for future settlement	1,526	573
Other receivables	272	116
	3,908	2,685

Total assets	322,621	235,795

Current liabilities
Purchases for future settlement	2,027	53
Other payables	379	243
Total liabilities	2,406	296

Net assets	320,215	235,499

Equity
Share capital	186,840	187,725
Capital reserve	140,079	54,245
Revenue reserve	(6,704)	(6,471)
Total equity	320,215	235,499

Net assets per ordinary share	618.79p	453.53p

Number of ordinary shares in issue (excluding shares held in treasury)	51,748,179	51,926,229

Approved by the Board of Directors on 30 January 2017 and signed on their behalf by:

Helen Green - Director

William Collins - Director

STATEMENT OF CHANGES IN EQUITY

For the year ended 31 October 2016


	Share capital account	Capital reserve	Revenue reserve	Total
	£'000	£'000	£'000	£'000

Balance at 1 November 2015	187,725	54,245	(6,471)	235,499
Profit/(loss) for the year	-	85,834	(233)	85,601
Share buybacks	(885)	-	-	(885)
Balance at 31 October 2016	186,840	140,079	(6,704)	320,215

For the year ended 31 October 2015


	Share capital account	Capital reserve	Revenue reserve	Total
	£'000	£'000	£'000	£'000

Balance at 1 November 2014	187,725	74,007	(5,488)	256,244
Loss for the year	-	(19,762)	(983)	(20,745)
Balance at 31 October 2015	187,725	54,245	(6,471)	235,499

STATEMENT OF CASH FLOW

For the year ended 31 October 2016


	2016 £'000	2015 £'000

Cash flows from operating activities
Cash inflow from investment income and bank interest	2,642	2,238
Cash outflow from management expenses	(2,685)	(3,027)
Cash inflow from disposal of investments	90,430	98,887
Cash outflow from purchase of investments	(89,591)	(97,754)
Cash outflow from taxation	(136)	(188)
Net cash flow from operating activities	660	156

Cash flows from financing activities
Borrowing commitment fee and interest charges	(46)	(41)
Share buy backs	(885)	-
Net cash flow used in financing activities	(931)	(41)

Net (decrease)/increase in cash and cash equivalents	(271)	115

Effect of foreign exchange	385	(137)
Cash and cash equivalents at 1 November 2015	1,996	2,018
Cash and cash equivalents at 31 October 2016	2,110	1,996

NOTES TO THE FINANCIAL STATEMENTS

1. REPORTING ENTITY

Aberdeen Emerging Markets Investment Company Limited (formerly Advance Developing Markets Fund 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 2016.

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.

Investment Manager

Since 1 June 2016, Aberdeen Fund Managers Limited ("AFML") has been appointed as the Company's investment manager. Prior to that date, the investment activities of the Company were managed by Aberdeen Emerging Capital Limited (formerly Advance Emerging Capital Limited) ("AECL").

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 2016.

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 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 and 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 30 January 2017.

This report will be sent to shareholders and copies will be made available to the public at the Company's registered office of the Company. It will also be made available on the Company's website: aberdeenemergingmarkets.co.uk

(b) Going concern

The directors have adopted the going-concern basis in preparing the financial statements. The Board formally considered the Company's going concern status at the time of the publication of these financial statements and a summary of the assessment is provided below.

The directors have a reasonable expectation that the Company has adequate operational 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 2016, the Company held £2.1m in cash and £318.7m in investments. It is estimated that approximately 64% of the investments held at the year end could be realised in one month. The total operating expenses for the year ended 31 October 2016 were £2.8m, which represented approximately 1.1% of average net assets during the year. At the date of approval of this document, based on the aggregate of investments and cash held, the Company has substantial operating expenses cover. The Company's net assets at 31 December 2016 were £303,8m.

The directors are satisfied that it is appropriate to adopt the going concern basis in preparing the financial statements and, after due consideration, the directors consider that the Company is able to continue for a period of at least twelve months from the date of approval of the financial statements.

The financial statements have been prepared on the historical cost basis except for financial instruments 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 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 the capital column of the Statement of Comprehensive Income and allocated to the capital reserve.

(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 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.

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 any 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 17 and fair value may not represent actual realisable value for those investments.

Allocation of investments to fair value hierarchy

IFRS 13 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 13 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 13 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);

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.

The determination of what constitutes 'observable' requires significant judgement by the Company. The Company considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary and provided by independent sources that are actively involved in the relevant market.

3. SIGNIFICANT ACCOUNTING POLICIES

(a) Investments

As the Company's business is investing in financial assets with a view to profiting from their total return in the form of increases in fair value, financial assets are designated as fair value through profit or loss on initial recognition. These investments are recognised on the trade date of their acquisition at which the Company becomes a party to the contractual provisions of the instrument. At this time, the best evidence of the fair value of the financial assets is the transaction price. Transaction costs that are directly attributable to the acquisition or issue of the financial assets are charged to 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 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.

vi) 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 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/(losses) on currency movements" line.

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 method.

Special dividends and distributions described as capital distributions are assessed on their individual merits and may be credited to the capital reserve if considered to be closely linked to reconstructions of the investee company or other capital transactions. Bank interest receivable is accounted for on a time apportionment basis and is based on the prevailing variable interest rates for the Company's bank accounts.

(d) Treasury shares

Where the Company purchases its own share capital, the consideration paid, which includes any directly attributable costs, is recognised as a deduction from equity shareholders' funds through the Company's reserves. When such shares are subsequently sold or re-issued to the market any consideration received, net of any directly attributable incremental transaction costs, is recognised as an increase in equity shareholders' funds through the share capital account. Shares held in treasury are excluded from calculations when determining NAV per share.

(e) Cash and cash equivalents

Cash comprises cash at hand and demand deposits. Cash equivalents, which include bank overdrafts, are short term, highly liquid investments that are readily convertible to known amounts of cash, are subject to insignificant risks of changes in value, and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.

(f) Investment management fees and finance costs

Investment management fees and finance costs are charged to the Statement of Comprehensive Income as a revenue item and are accrued monthly in arrears. Finance costs include interest payable and direct loan costs. Performance-related fees, if any, are payable directly by reference to the capital performance of the Company and are therefore charged to 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 at fair value through profit or loss are measured initially at fair value, with transaction costs recognised in the Statement of Comprehensive Income.

(h) Taxation

The Company applied for exempt status under the Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989 and is charged an annual exemption fee of £1,200 (2015: £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 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.

(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 held in the Company's portfolio. The Company does not consider its investments in listed funds to be structured entities but does consider its investments in unlisted funds to be investments in structured entities because the voting rights in such entities are limited to administrative tasks and are not the dominant factor in deciding who controls those entities.

Changes in fair value of investments, including structured entities, are included in the Statement of Comprehensive Income.

(l) New standards and interpretations effective in the current financial year

In the opinion of the directors, there are no new standards that became effective during the year that had a material impact on the financial statements.

At the date of approval of these financial statements, the following standard, which has not been applied in these financial statements, was in issue but not yet effective:

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

The Board is currently considering the impact of the above standard. Based on the initial assessment, the standard is not expected to have a material impact on the Company's financial statements.

INVESTMENT INCOME

Income from investments:

2016

£'000

2015

£'000

Dividend income

2,792

2,243

5.	INVESTMENT MANAGEMENT FEES AND OTHER EXPENSES		2016			2015
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000

	Investment management fees	2,107	-	2,107	2,252	-	2,252
	Administration fees	176	-	176	175	-	175
	Depositary and custody service fees	112	-	112	100	-	100
	Registration fees	29	-	29	18	-	18
	Directors' fees	133	-	133	173	-	173
	Auditor's fees	53	-	53	52	-	52
	Marketing fees	61	-	61	31	-	31
	Broker fees	40	-	40	40	-	40
	Other expenses	132	-	132	156	-	156
	Total other expenses	736		736	745		745
	Total expenses	2,843	-	2,843	2,997	-	2,997

Details of the investment management fee and agreement are provided below.

The Investment Management Agreement is terminable by either party thereto 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 Investment Manager is entitled to receive from the Company for its services as Investment Manager a basic fee and, in certain circumstances, a performance fee. The basic fee is payable monthly in arrears (and pro rata for part of any month during which the investment management agreement is in force). This monthly fee is equivalent to one twelfth of one per cent. of the Company's Adjusted Market Capitalisation. The investment management agreement defines the "Company's Adjusted Market Capitalisation" as the aggregate closing mid-market price of the ordinary shares on the last business day of the month or part of a month for which the basic fee is being calculated plus the aggregate amount, if any, paid by the Company in purchasing its own ordinary shares at a discount in the twelve month period ending on such business day.

Since 1 January 2016, in calculating the monthly management fees, the Company's Adjusted Market Capitalisation has been reduced by the proportion of the Company's net assets invested in funds held which are managed by Aberdeen Asset Management PLC at the end of such month.

The Investment Manager may receive, in addition to the basic fee, a performance fee in respect of each Relevant Period ending 31 October. It is based on the outperformance of NAV per share (before deducting the performance fee) over the Benchmark NAV per share. The Benchmark NAV per share is the Base NAV per share for the Relevant Period, increased or reduced by the percentage, if any, by which the MSCI Emerging Markets Net Total Return Index in Sterling terms (Bloomberg ticker: NDUEEGF Index) has increased or reduced over the Relevant Period. The Base NAV is the NAV at the commencement of business on the first day of such Relevant Period, adjusted for the number of ordinary shares to be issued during such Relevant Period pursuant to the exercise of subscription shares prior to the commencement of such Relevant Period.

As at 31 October 2016 the NAV per share was 618.79p (2015: 453.53p). The performance fee is 10% of the outperformance of the NAV per share over the Benchmark NAV per share, provided that the NAV per ordinary share has increased since the end of the last period in respect a performance fee was payable, i.e. the High Water Mark of 559.24p per share (2015: 559.24p). The performance fee calculation is based on figures taken from the audited financial statements.

The performance fee in respect of a particular Relevant Period will not exceed 2% of the Company's Net Asset Value at the close of business on the final Business Day of the Relevant Period to which such fees relate. There was no performance fee in the current year (2015: nil).

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.

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 2016 of £135,591 (2015: £134,650) 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.

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 £60,000. Northern Trust (Guernsey) Limited also receives a fee for custody services comprising an account fee of £2,500 per account per annum, principal/income split of £1,250 per account per annum and single line items (unit trust) reporting of £500 per line per annum. It also receives an asset based fee equal to between 1.00 basis points and 40.00 basis points of the value of the assets of the Company. Transaction based fees are also payable of between £10 and £125 per transaction. The variable fees are dependent on the countries in which the individual holdings are registered.

The Company's ongoing charges for the year ended 31 October 2016, calculated using the Association of Investment Companies methodology were 1.10% (2015: 1.20%).

6. EARNINGS PER SHARE

Earnings per share is based on the total comprehensive income for the year ended 31 October 2016, being a gain of £85,601,000 (2015: loss of £20,745,000) attributable to the weighted average of 51,904,033 (2015: 51,926,229) ordinary shares in issue (excluding shares held in treasury) in the year ended 31 October 2016.

Supplementary information is provided as follows: revenue per share is based on the net revenue loss of £233,000 (2015: loss £983,000) and capital earnings per share is based on the net capital gain of £85,834,000 (2015: loss of £19,762,000) attributable to the above ordinary shares.

7. NET ASSET VALUE PER SHARE

Net assets per share is based on net assets of £320,215,000 (2015: £235,499,000) divided by 51,748,179 (2015: 51,926,229) shares (excluding shares held in treasury) in issue at the Statement of Financial Position date.

8. RELATED PARTY DISCLOSURES

Investment Manager

Investment management fees payable are shown in the statement of comprehensive income. As at 31 October 2016, no performance fee accrual has been made (2015: £nil).

At 31 October 2016, investment management fees of £213,025 (2015: £178,395) were accrued in the statement of financial position. Total investment management fees for the year were £2,107,317 (2015: £2,251,798).

Funds held at 31 October 2016 which are managed by Aberdeen Asset Management PLC

As at 31 October 2016, the Company held investments in Aberdeen Asian Smaller Companies Investment Trust PLC, Aberdeen Latin American Equity Fund Inc, Edinburgh Dragon Trust PLC and The India Fund Inc. The valuation of these holdings at 31 October 2016 totalled £29,964,000. Since 1 January 2016, the monthly investment management fees have been reduced by the proportion of the Company's net assets invested in funds held which are managed by Aberdeen Asset Management PLC at the end of such month.

As at 31 October 2016, members of the AFML investment management team with responsibilities relevant to the Company had, in aggregate, direct or indirect interests in 9,566 ordinary shares in the Company. As at 31 October 2015, the investment management team at AECL had, in aggregate, direct or indirect interests in 7,644 ordinary shares in the Company.

Directors

Total fees for the Directors in the year ended 31 October 2016 were £133,100 (2015: £172,500). Of this amount £128,700 (2015: £172,500) had been paid at the year end, with an accrual of £4,400 (2015: £nil) outstanding.

9. ANNUAL GENERAL MEETING

The Company's Annual General Meeting will be held at the Company's registered office at 11:00 a.m. on 10 April 2017.

10. FINANCIAL INFORMATION

The annual report was approved by the Board of directors on 30 January 2017. The information in this announcement has been extracted from the annual report on which the Company's auditors have given an unqualified report. The annual report will be posted to shareholders and will be made available on the Investment Manager's website at aberdeenemergingmarkets.co.uk. It will also be available from the registered office of Company and the UK Administration Agent.

This announcement contains regulated information under the Disclosure Guidance and Transparency Rules of the FCA.

A copy of the annual report will be submitted to the National Storage Mechanism and will shortly be available at: http://www.morningstar.co.uk/uk/NSM

Registered office

11 New Street

St Peter Port

Guernsey GY1 2PF

Enquiries:

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

Andrew Lister / Bernard Moody Tel: +44 (0)20 7618 1440

Stockdale Securities Limited (Financial adviser and stockbroker)

Alastair Moreton Tel: +44 (0)20 7601 6118

Vistra Fund Services (Guernsey) Limited (Company Secretary)