Aberdeen Frontier Markets Invtmnt : Mkts Inv Co Ltd - Half-year Report

Aberdeen Frontier Markets Investment Company Limited

A UK-listed closed-end fund, offering diversified access to up-and-coming frontier markets

Half-Yearly Financial Report
31 December 2018

Financial Highlights

For the six month period ended 31 December 2018

Investment Objective

The investment objective of the Company is to generate long-term capital growth primarily from investment in equity and equity related securities of companies listed in, or operating in, Frontier Markets.

Frontier Market countries may include constituents of the MSCI Frontier Markets Index or additional countries that the Manager deems to be, or displays similar characteristics to, Frontier Market countries.

Management

The Company's Manager is Aberdeen Standard Fund Managers Limited ('ASFML', the 'AIFM' or the 'Manager') which has delegated the investment management of the Company to Aberdeen Asset Managers Limited ('AAML' or the 'Investment Manager'). Both companies are wholly owned subsidiaries of Standard Life Aberdeen plc, which was formed by the merger of Aberdeen Asset Management PLC and Standard Life plc on 14 August 2017. Aberdeen Standard Investments is a brand of the investment business of the merged entity.

Net Asset Value ('NAV') total return per share (in US dollar terms) 1, 3			NAV per share (in US dollars)
-14.6%			$0.6818
six months to 31 December 2018			As at 31 December 2018
Share price total return (in US dollar terms) 2, 3			NAV per share (in GB Pounds)
-16.7%			£0.5344
six months to 31 December 2018			As at 31 December 2018
Net Assets (in US dollars)			Share price (in GB pounds)
$49.0 million			£0.4730
As at 31 December 2018			As at 31 December 2018

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

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

³These are considered to be Alternative Performance Measures ('APMs').

In add to these APMs, details of other performance measures used by the Company can be found in the APMs section of this report.

Overview

On behalf of your Board, I present to you the Half-Yearly Financial Report for Aberdeen Frontier Markets Investment Company Limited (the 'Company') for the six months ended 31 December 2018.

Background and Performance

In line with global equities, frontier markets endured a torrid six months ended 31 December 2018. Investments, ranging from technology stocks in the developed world to Chinese equities suffered as investors turned away on concerns over trade issues between the US and China, weakening levels of economic activity and continued withdrawal of stimulus by the US Federal Reserve. As a result, frontier markets witnessed reduced fund flows, lower trading volumes and trimmed valuations.

During the six month period under review to 31 December 2018, the Company reported net asset value ('NAV') per share and share price total returns of -14.6% and -16.7%, respectively, in US Dollar terms. This compared to a fall of 6.2% for the MSCI Frontier Markets Net Total Return Index (the 'Index') and a decrease of 8.5% for the MSCI Emerging Markets Net Total Return Index.

The Company's under-performance against the Index resulted, primarily, from two country-specific portfolio positions. The longstanding large underweight to stocks in Kuwait and Bahrain held back relative performance as these two countries, with a hard currency peg including the US dollar, fared comparatively well within the overall otherwise negative frontier markets context. The Manager continues to struggle to find quality companies in Kuwait where valuations are considered expensive. Equally, the portfolio's overweight exposure to Pakistan was a disappointment with delays in restructuring the economy following the election contributing to declining market levels and an all-time low in international investor participation. This is further explained in the Manager's Report.

Discount and Share Buybacks

Further to the tender offer announced on 20 September 2018, the Company bought back and cancelled 12,689,991 Ordinary shares on 19 October 2018 resulting in issued Ordinary share capital at 31 December 2018 of 71,910,117 Ordinary shares with voting rights and an additional 1,302,450 Ordinary shares held in treasury. No further shares have been bought back by the Company between 1 January 2019 and the latest practicable date prior to the publication of this Report.

The discount to NAV at which the Company's shares trade widened from 9.0% to 11.5% over the period. The Board keeps the share price discount to net asset value under constant review and the Company may purchase its own shares through the market for cash where the Directors believe that such purchases will enhance Shareholder value and are likely to assist in narrowing any discount to NAV at which the Ordinary shares may trade.

At an Extraordinary General Meeting held on 17 October 2018, Shareholders approved a new discount management policy whereby Shareholders will be given the opportunity to fully exit their investment in the Company for cash at the then prevailing NAV less applicable direct costs, including any realisation costs of underlying investments, in the event that the Share Price Total Return (in sterling terms) for the two year period from 1 July 2018 to 30 June 2020 fails to exceed the portfolio's reference benchmark, being the MSCI Frontier Markets Index (in sterling terms).

Dividend

Further to shareholder approval at the Company's Annual General Meeting on 12 December 2018, a final dividend of 0.761615p per Ordinary share was paid on 19 December 2018 to shareholders on the register on 16 November 2018. This was the Sterling equivalent of a dividend of 1.0 cent per share previously announced for the year ended 30 June 2018 based on a USD/GBP exchange rate of 1.312999. The Board expects to declare an interim dividend in May 2019, for the year ending 30 June 2019, payable in June.

Ongoing Charges

The Board remains very mindful of the costs incurred in managing an investment company and the fact that a decrease in net assets will lead to a higher overall ongoing charges ratio (''OCR''). The Board previously reported that it had secured agreement from the Manager to seek to limit the Company's OCR to no more than 2% when calculated annually as at 30 June.

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

Future prospects

We continue to believe, alongside the Manager, that frontier markets offer good value. An increasingly uncertain outlook for more developed markets and a more dovish US Federal Reserve stance should entice international investors to start to rediscover the merits of frontier markets with their different return drivers and attractively valued markets and companies.

At the stock level, our Manager believes that valuations remain appealing, supported by an improving outlook for corporate earnings. The Manager remains convinced of its fundamental, stock-picking approach which is benchmark aware, but never benchmark driven, and which seeks to minimise risk through in-depth company research and visiting potential investee companies regularly to meet with management and assess opportunities. Divergence from the Index, particularly as regards country weightings, continues to be a feature of the Manager's strategy with a view to generating shareholder returns over the longer term.

I conclude by thanking my colleagues on the Board for their diligence and professionalism, the Manager for its continued efforts and importantly our shareholders for their continued support and belief in the future prospects for frontier markets and our relative portfolio positioning.

John Whittle
14 February 2019

Market environment

The six months to 31 December 2018 was another challenging period for frontier market equities, as it was for equities globally. The headline return for the benchmark was -6.2% in USD terms, which although negative still outperformed the returns of emerging markets as well as most developed markets. That said, the index's resilience was supported by the strong relative performance contribution of Kuwait, a 23% index weighting, which rose 7.6%, starkly bucking the direction of markets globally, without which the frontier markets benchmark would have retreated an estimated 9.5%.

A confluence of concerns have weighed on market sentiment, chief among them being the trade spat between the US and China, softening global production and export numbers, and the Federal Reserve's apparent commitment to reducing its balance sheet. Investors thus witnessed a broad sell-off, albeit led by highly-priced technology stocks in the case of developed markets, and a continued correction of equity markets in China.

In such an environment, one might have expected frontier market equities to have fared much better, given their relative disjuncture from global supply chains, as well as their historically low correlation with global equities. That was not the case, however. Excepting the benchmark's two key markets, Kuwait and Vietnam, which have enjoyed a better funds flow backdrop and maintained relatively elevated valuations, almost all other frontier markets continued to flounder.

Fund flows, trading volumes and valuations have waned to levels that indicate deep investor antipathy for the asset class. Flows for the actively managed frontier asset class recorded negative data points every month during the period and, as a whole, assets under management have declined to approximately US$9.7 billion (Source: EPFR Global, as at 30 November 2018), registering a five-year low. Outside of Kuwait and Vietnam, valuation levels suggest deep value territory. This is reflected in the valuation of the Company's portfolio at the end of the period: a forward Price/Earnings ratio of 9.1x, representing a material derating since a year ago, and as compared to the index's level of 9.7x.

Herein lies the opportunity. Firstly, performance of the market, and more-so the portfolio, do not reflect the fundamentals as we see them. Secondly, as we enter a period of heightened uncertainty for economies and corporate earnings in the advanced world, we expect investors will turn their attention to frontier markets as a source of uncorrelated returns, supported by cyclical drivers and valuations.

Most of our markets are seeing stable or accelerating economic activity, which contrasts with the decelerating trend of advanced economies. In the case of the two outliers, Argentina and Pakistan, they are undergoing policy-induced slowdowns to remedy current account and fiscal imbalances, important for longer term stability, and their market valuations price in the near term challenges. But as a whole, we expect corporate earnings in frontier regions to make further progress during 2019, with consensus forecasts indicating greater than 15% earnings growth for the asset class. Such momentum compares very favourably with the lower than 10% forecast for emerging markets and advanced economies. Given the region's relatively weak linkages with the global economy, and idiosyncratic drivers such as the timing of various International Monetary Fund (IMF) supported programmes, we see a relatively low risk of disappointment, not least because earnings expectations are emerging from a very low base already.

Further adjustments to the frontier markets benchmark by MSCI are expected, notably the upcoming upgrade of Argentina to emerging market status at the end of May, and a possible review of Kuwait's position following that, which will see constituent changes. Against the more positive fundamental backdrop, the primary challenge for the asset class remains to attract further foreign investor interest and positive fund flows again. The softening of the US Federal Reserve's interest rate tightening stance should, we believe, provide a more supportive environment for our companies, as will slowing corporate earnings in the advanced economies. This will encourage investors to again turn their attention to certain frontier market regions they have overlooked in recent years.

Performance

Aberdeen Frontier Markets Investment Company Limited

Cumulative performance in USD for the periods ended 31 December 2018

	6 Months	1 Year	3 Years	3 Years
	%	%	%	%
NAV Total Return	-14.6	-24.4	-11.4	-27.4
Share Price Total Return	-16.7	-27.0	-12.4	-28.6

Source: Aberdeen Standard Investments, Bloomberg

Returns assume dividends are reinvested. All performance numbers are

total returns with dividends reinvested as of the ex-dividend date

In USD total return terms the Company's NAV declined 14.6% during the period under review, underperforming the benchmark's decrease of 6.2% by 8.4 percentage points.

The primary detractor of relative performance was the fund's long-standing underweight to Kuwait and Bahrain. During a period of increased volatility, risk aversion, and US dollar strength, these two Gulf markets, which peg their currencies to a basket of hard currencies, held characteristically firm. Kuwait has also enjoyed domestic retail inflows in response to its upgrade by FTSE International to emerging market status, thus enjoying additional technical support.

The other notable detractor of relative performance was the fund's overweight exposure to Pakistan. This market declined 23.6% in sterling terms given still problematic twin deficits (current and fiscal), slow policy making in the run up to parliamentary elections, and, ultimately, further necessary currency devaluations. The market steadily retreated on declining volumes, with foreign investor participation reaching historically low levels. We believe there is a high likelihood that Pakistan will agree an IMF support package during the first half of 2019. This, in conjunction with the new government's formidable political will to pursue lasting economic reforms, should position the market for a recovery from oversold levels over the coming year.

The portfolio's exposure to a host of other frontier economies outside of the Gulf region also detracted from relative performance: Egypt, Ghana, Kenya, and Tanzania in Africa, and Bangladesh and Sri Lanka in Asia, all witnessed market declines on faltering trade volumes and foreign investor outflows.

Portfolio positioning

As at the end of December 2018 the portfolio had 50 investments, providing exposure to more than 20 frontier market economies. As a comparator the MSCI Frontier Markets Index captures large and mid-cap representation across 29 countries and included 114 constituents covering approximately 85% of the free float-adjusted market capitalisation in each country.

During the period under review the Company raised exposure to Frontier Asia to 44.5%, primarily as a result of an additional allocation to Vietnam and the introduction of London-listed ASA International, a micro-lending institution with strong ethical credentials. The company originated in Bangladesh but today has operations across frontier-Asia as well as Africa.

The Company also introduced Humansoft, its first position in Kuwait, and Pampa Energia, an energy conglomerate in Argentina. Humansoft owns and operates the American University of the Middle East, a leading private university in Kuwait that has attractive long-term growth prospects, both organic as well as in respect of expansion opportunities elsewhere in the Gulf region. Pampa Energia is a leading vertically integrated energy company in Argentina, which we believe is well-positioned to benefit from continued liberalisation of the domestic energy sector.

To fund these purchases, we exited Moroccan telecommunications company Maroc Telecom and energy firm Total Nigeria. We also trimmed our position in Romanian lender BRD - Groupe Societe Generale on concerns over the rising tax burden on Romanian banks. We also reduced Sri Lankan conglomerate John Keells after its share price staged a partial recovery.

Market outlook

While news flow continues to be mixed, we see reason to be more optimistic about the near future. Firstly, from an economic as well as political point of view, many of our core markets continue to progress various structural reforms, several under the direct auspices of the IMF, which is very encouraging. This provides an element of policy clarity to the cyclical recovery that is underway across a number of our markets. Secondly, while foreign investor participation in most of our markets has fallen to very low levels, such a lack of engagement will have to revert in due course, and in the meantime valuations are at very attractive levels in absolute terms, underpinned by a reasonable corporate earnings outlook. As discussed above, we believe that rising volatility in advanced markets, which is a symptom of an increasingly uncertain outlook for the world's largest economies as well as corporate earnings, and a weakening US dollar, could provide a more conducive environment for frontier markets as investors seek uncorrelated and absolute return opportunities. We expect the frontier region to be rediscovered as global investors recognise the attractiveness of the asset class's idiosyncratic drivers, cyclical positioning and attractively valued markets.

As ever, the portfolio retains its clear quality bias, which is reflected in the portfolio's statistics: a high blended return-on-equity, low corporate leverage and double digit corporate earnings growth. In all, we believe these fundamentals provide cause to be optimistic about the coming year.

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

Aberdeen Asset Managers Limited
14 February 2019

Portfolio

As at 31 December 2018

Company	Country	Value $'000	% of net assets
BBVA Banco Frances	Argentina	2,614	5.3
Mobile World Investment Corp	Vietnam	2,589	5.3
FPT Corp	Vietnam	2,398	4.9
Zenith Bank	Nigeria	1,880	3.8
Square Pharmaceuticals	Bangladesh	1,593	3.2
Guaranty Trust Bank	Nigeria	1,562	3.2
Humansoft Holding Co	Kuwait	1,424	2.9
John Keells Holdings	Sri Lanka	1,343	2.7
Shell Pakistan	Pakistan	1,336	2.7
Equity Group Holdings	Kenya	1,308	2.7
Safaricom	Kenya	1,226	2.5
GrameenPhone	Bangladesh	1,197	2.4
Copa Holdings	Panama	1,173	2.4
Vietnam Dairy Products	Vietnam	1,156	2.4
Vietnam Technological & Commercial Joint Stock Bank	Vietnam	1,150	2.3
Commercial International Bank	Egypt	1,040	2.1
ASA International Group	UK	1,039	2.1
Juhayna Food Industries	Egypt	1,030	2.1
Commercial Bank of Ceylon	Sri Lanka	1,021	2.1
Masan Group Corp	Vietnam	996	2.0
Top twenty holdings		29,075	59.1
Other holdings		18,959	38.9
Total holdings		48,034	98.0
Cash and other net assets		994	2.0
Net assets		49,028	100.0

Relative Country Positions
	Fund	Reference Benchmark	Difference
Country	%	%	%
Africa & Middle East	31.0	55.5	-24.5
Bahrain	-	4.1	-4.1
Egypt	5.2	-	5.2
Ghana	1.3	-	1.3
Ivory Coast	-	0.1	-0.1
Jordan	-	1.1	-1.1
Kenya	6.5	4.7	1.8
Kuwait	2.9	23.0	-20.1
Lebanon	0.7	2.6	-1.9
Mauritius	-	1.7	-1.7
Morocco	-	8.2	-8.2
Nigeria	9.8	7.1	2.7
Oman	1.3	1.6	-0.3
Senegal	-	0.6	-0.6
South Africa	1.8	-	1.8
Tanzania	1.5	-	1.5
Tunisia	-	0.7	-0.7
Asia Pacific ex Japan	44.5	19.0	25.5
Bangladesh	6.6	2.8	3.8
Myanmar	1.0	-	1.0
Pakistan	10.3	-	10.3
Sri Lanka	5.7	0.8	4.9
Thailand	1.1	-	1.1
Vietnam	19.8	15.4	4.4
Europe ex UK	6.8	9.0	-2.2
Croatia	-	1.7	-1.7
Estonia	-	0.4	-0.4
Georgia	3.1	-	3.1
Kazakhstan	-	0.8	-0.8
Lithuania	-	0.2	-0.2
Romania	3.7	3.9	-0.2
Serbia	-	0.2	-0.2
Slovenia	-	1.8	-1.8
Latin America	13.3	16.5	-3.2
Argentina	10.9	16.5	-5.6
Panama	2.4	-	2.4
Cash	2.3	-	2.3
Other	2.1	-	2.1
Total	100.0	100.0	-

At 31 December 2018, the benchmark index was composed of 114 companies across 29 countries (source MSCI).

Financial Statements

Condensed Unaudited Statement of Comprehensive Income
		Six months to 31 December 2018				Six months to 31 December 2017
		Revenue	Capital	Total		Revenue	Capital	Total
	Notes	$'000	$'000	$'000		$'000	$'000	$'000
(Losses)/gains on investments		-	(9,757)	(9,757)		-	1,149	1,149
Capital (losses)/gains on currency movements		-	(170)	(170)		-	115	115
Net investment (losses)/gains		-	(9,927)	(9,927)		-	1,264	1,264
Investment income		715	-	715		641	-	641
Total (losses)/gains		715	(9,927)	(9,212)		641	1,264	1,905
Investment management fees		(97)	(195)	(292)		(131)	(261)	(392)
Other expenses		(357)	-	(357)		(411)	-	(411)
Operating (loss)/profit before finance costs and taxation		261	(10,122)	(9,861)		99	1,003	1,102
Finance costs		(15)	-	(15)		(15)	-	(15)
Operating (loss)/profit before taxation		246	(10,122)	(9,876)		84	1,003	1,087
Withholding tax expense	5	(72)	-	(72)		(84)	-	(84)
Total (loss)/profit after taxation		174	(10,122)	(9,948)		-	1,003	1,003
Earnings per Ordinary share	6	0.22c	(12.73c)	(12.51c)		-	1.17c	1.17c

The total column of this statement represents the Company's Statement of Comprehensive Income, prepared under IFRS as adopted by the European Union. The revenue and capital columns, including the revenue and capital earnings per share data, are supplementary information prepared under guidance published by the Association of Investment Companies.

The Company does not have any income or expenses that are not included in the (loss)/profit for the period and therefore the 'Net (loss)/profit after taxation' is also the total comprehensive income for the period.

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period.

The notes form an integral part of these financial statements.

Financial Statements Condensed Unaudited Statement of Financial Position
		As at		As at		As at
		31 December 2018		31 December 2017		30 June 2018
	Notes	$'000		$'000		$'000
Non-current assets
Investments at fair value through profit or loss	4	48,034		77,350		66,931
Current assets
Cash and cash equivalents		1,107		2,240		719
Sales for future settlement		74		-		855
Other receivables		37		87		76
		1,218		2,327		1,650
Total assets		49,252		79,677		68,581
Current liabilities
Purchases for future settlement		-		27		-
Other payables		224		203		141
Tender offer liabilities		-		423		-
		224		653		141
Net assets		49,028		79,024		68,440
Capital and reserves attributable to equity holders
Share capital and share premium account		3,798		12,557		12,543
Capital reserve		45,056		66,284		55,546
Revenue reserve		174		183		351
Total equity		49,028		79,024		68,440
Net assets per Ordinary Share (US cents)	8	68.18c		92.48c		80.90c
Exchange rate GBP/USD (mid market)		0.78380		0.74030		0.75735
Net assets per Ordinary Share (pence)		53.44p		68.46p		61.27p

Condensed Unaudited Statement of Changes in Equity
For the six months to 31 December 2018	Note	Share capital and share premium account $'000	Capital reserve $'000	Revenue reserve $'000	Total $'000
Balance at 1 July 2018		12,543	55,546	351	68,440
Tender offer	7	(8,745)	-	-	(8,745)
(Loss)/profit for the period		-	(10,122)	174	(9,948)
Equity dividends paid		-	(368)	(351)	(719)
Balance at 31 December 2018		3,798	45,056	174	49,028
For the six months to 31 December 2017		Share capital and share premium account $'000	Capital reserve $'000	Revenue reserve $'000	Total $'000
Balance at 1 July 2017		12,254	66,135	1,037	79,426
Tender offer	7	303	-	-	303
Profit for the period		-	1,003	-	1,003
Equity dividends paid		-	(854)	(854)	(1,708)
Balance at 31 December 2017		12,557	66,284	183	79,024
For the year ended 30 June 2018		Share capital and share premium account $'000	Capital reserve $'000	Revenue reserve $'000	Total $'000
Balance at 1 July 2017		12,254	66,135	1,037	79,426
Revaluation of Tender offer		289	-	-	289
Purchase of own shares	7	-	(679)	-	(679)
(Loss)/profit for the period		-	(9,055)	1,016	(8,039)
Equity dividends paid		-	(855)	(1,702)	(2,557)
Balance at 30 June 2018		12,543	55,546	351	68,440

The notes form an integral part of these financial statements.

Condensed Unaudited Statement of Cash Flow
		Six months to		Six months to		Year ended
		31 December 2018		31 December 2017		30 June 2018
	Notes	$'000		$'000		$'000
Operating activities
Cash inflow from investment income and bank interest		731		974		2,671
Cash outflow from management expenses		(543)		(771)		(1,601)
Cash (outflow)/inflow from foreign exchange movements		(170)		99		228
Cash outflow from taxation	5	(72)		(84)		(233)
Net cash flow (used in)/ from operating activities		(54)		218		1,065
Investing activities
Cash inflow from disposal of investments		21,016		26,805		39,869
Cash outflow from purchase of investments		(10,937)		(27,907)		(41,355)
Net cash flow from/(used in) investing activities		10,079		(1,102)		(1,486)
Net cash flow from/(used in) operating and investing activities		10,025		(884)		(421)
Financing activities
Finance charges and interest paid		(15)		(15)		(26)
Purchase of own shares	7	-		-		(679)
Tender offer costs		(158)		-		(8)
Tender offer distributions paid	7	(8,745)		-		(437)
Equity dividends paid	9	(719)		(1,708)		(2,557)
Net cash flow used in financing activities		(9,637)		(1,723)		(3,707)
Net increase/(decrease) in cash and cash equivalents		388		(2,607)		(4,128)
Cash and cash equivalents opening balance		719		4,847		4,847
Cash and cash equivalents balance at 31 December		1,107		2,240		719

Notes to the Financial Statements For the six month period ended 31 December 2018

1. Company information

Aberdeen Frontier Markets Investment Company Limited (the 'Company') is a UK-listed closed-ended investment company incorporated and resident in Guernsey, offering diversified access to up-and-coming frontier markets. Its Ordinary shares are quoted on AIM. The Company's registered office is 11 New Street, St Peter Port, Guernsey, GY1 2PF.

Manager

The investment activities of the Company were managed by Aberdeen Standard Fund Managers Limited ('ASFML') during the six month period ended 31 December 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

The interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They are unaudited and do not include all of the information required for full annual financial statements. These interim financial statements should be read in conjunction with the financial statements of the Company as at and for the year ended 30 June 2018. The financial statements of the Company as at and for the year ended 30 June 2018 were prepared in accordance with International Financial Reporting Standards ('IFRS') and received an unqualified audit report. The accounting policies used by the Company are the same as those applied by the Company in its financial statements for the year ended 30 June 2018.

Under IFRS, the Statement of Recommended Practice (SORP) issued by the Association of Investment Companies has no formal status, but the Company has taken the guidance of the SORP into account to the extent that it is deemed appropriate and compatible with IFRS and the Company's circumstances.

Investments have been classified as 'fair value through profit and loss'.

After initial recognition such investments are valued at fair value which is determined by reference to:

(i) primarily market bid price for investments quoted on recognised stock exchanges (market mid or last trade price will be used where deemed to more appropriately reflect fair value);

(ii) net asset value per individual investee funds' administrators for unquoted open-end funds; and

(iii) by using other valuation techniques to establish fair value for any other unquoted investments.

The Company's shares were issued in US dollars and this is considered to be the functional currency of the Company. Therefore, it is the Company's policy to present the accounts in US dollars. The Company's shares are traded in sterling on AIM.

Unless otherwise stated the comparative figures for the prior year stated in these notes are in respect of the six months ended 31 December 2017.

3. Going concern status

The directors have adopted the going-concern basis in preparing these interim financial statements. The directors formally considered the Company's going concern status at the time of the publication of these interim 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 existence for at least twelve months from the date of approval of the interim financial statements. In reaching this conclusion, the directors have considered the liquidity of the Company's portfolio of investments as well as its cash position, income, expenses and other outflows. The Company has substantial operating expenses cover.

The directors are satisfied that it is appropriate to adopt the going concern basis of accounting in preparing these interim financial statements.

4. Fair value estimation

IFRS requires the Company to classify its investments in a 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 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.
The classification of the Company's investments at fair value through profit or loss is detailed below:
Investment at fair value through profit or loss:	31 December 2018	31 December 2017	30 June 2018
	$'000	$'000	$'000
Level 1	47,590	76,534	66,295
Level 2	444	506	-
Level 3	-	310	636
Total	48,034	77,350	66,931
There were no transfers between levels during the period. Level 1 classification basis
Investments whose values are based on quoted market prices in active markets, and therefore classified within Level 1, include active listed equities. The Company does not adjust the quoted price for these instruments. Level 2 classification basisInvestments 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 funds. Level 3 classification basisInvestments classified within Level 3 have significant unobservable inputs as they trade infrequently. As at the period end, there were no level 3 classified investments. Tarpon All Equities Fund and Global MENA Financial Assets were sold during the financial year ended 30 June 2018.

5. Taxation

The charge for taxation relates to tax suffered on dividends received from overseas investments.

6. Earnings per Ordinary share

Earnings per Ordinary share is based on the loss of $9,948,000 (2017: profit of $1,003,000) attributable to the weighted average of 79,496,525 ordinary shares in issue during the six months to 31 December 2018 (2017: 85,452,608).

7. Share capital

Six months to 31 December 2018	Authorised	Allotted, issued	Treasury shares
		and fully paid
Opening number of shares as at 1 July 2018	Unlimited	84,600,108	1,302,500
Purchase of own shares	-	-	-
Validly tendered shares for cancellation		(12,689,991)	-
Closing number of shares as at 31 December 2018	Unlimited	71,910,117	1,302,500
Six months to 31 December 2017	Authorised	Allotted, issued	Treasury shares
		and fully paid
Opening number of shares as at 1 July 2017	Unlimited	85,452,608	450,000
Purchase of own shares	-	-	-
Closing number of shares as at 31 December 2017	Unlimited	85,452,608	450,000
Year ended 30 June 2018	Authorised	Allotted, issued	Treasury shares
		and fully paid
Opening number of shares as at 1 July 2017	Unlimited	85,452,608	450,000
Purchase of own shares	-	(852,500)	852,500
Closing number of shares as at 30 June 2018	Unlimited	84,600,108	1,302,500

Voting rights

At General Meetings of the Company, every member present in person or by proxy shall have one vote for every Ordinary Share of which they are the registered holder.

Tender offer

On 17 October 2018, the Company received valid tenders for 12,689,991 Ordinary Shares.

Following the implementation of the Tender Offer, the Company has 73,212,617 Ordinary Shares in issue (including 1,302,500 Shares of which will be held in treasury and for which the exercise of voting rights will be suspended). The total number of Ordinary Shares with voting rights in the Company will be 71,910,117 and this figure may be used by Shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company.

The total value of validly tendered Ordinary Shares in the period was $8,745,000. The distribution to Shareholders who had validly tendered shares took place during the week commencing 29 October 2018.

Other purchases of own shares

There were no Ordinary Shares purchased during the period (31 December 2017: nil and 30 June 2018: 852,500 Ordinary Shares).

8. Net asset value per share

Undiluted net asset value per Ordinary Share is based on net assets of $49,028,000 (31 December 2017: $79,024,000 and 30 June 2018: $68,440,000) divided by 71,910,117 at the period end (31 December 2017: 85,452,608 and 30 June 2018: 85,452,608) Ordinary Shares in issue (excluding shares held in treasury).

9. Dividends

A final dividend for the year ended 30 June 2018 of 1 cent (2017: 1 cent), sterling equivalent of 0.761615 (2017: 0.766947) pence per Ordinary Share was paid on 19 December 2018 to Shareholders on the register at the close of business on 16 November 2018.

Dividends are paid in sterling from the Company's distributable reserves.

10. Investment management fees

Fees payable to the Manager are shown in the Unaudited Statement of Comprehensive Income. At 31 December 2018, Manager's fees of $40,856 (2017: $67,577) were accrued in the Statement of Financial Position.

11. Post balance sheet events

There are no post balance sheet events other than as disclosed in these financial statements.

12. Status of this report

These interim financial statements are not the Company's statutory accounts. They are unaudited. This report will be sent to Shareholders and copies will be made available to the public at the registered office of the Company. It is also available on the Company's website, aberdeenfrontiermarkets.co.uk.

This Half-yearly financial report was approved by the Board of directors on 14 February 2019.

Alternative Performance Measures ('APMs')
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.
Six months to 31 December 2018				Share price		NAV
Opening at 1 July 2018 (in US dollars)	a			0.7361		0.8090
Closing at 31 December 2018 (in US dollars)	b			0.6035		0.6818
Dividend adjustment factor	c			1.0161		1.0130
Adjusted closing (d = b x c)	d			0.6132		0.6906
Total return	(d÷a)-1			-16.7%		-14.6%
n/a = not applicable
Ongoing Charges
A measure, expressed as a percentage of average NAV, of the regular, recurring annual costs of running an investment company
Discount
The amount, expressed as a percentage, by which the share price is less that the NAV per Ordinary Share.
			As at 31 December 2018 (GB Pounds equivalent)		As at 31 December 2018 (US Dollar equivalent)
NAV per Ordinary Share	a		0.5344		0.6818
Share price	b		0.4730		0.6035
Discount	(b÷a)-1		11.5%		11.5%

Corporate Information

Directors, Manager and Advisers

Directors John Whittle (Chairman) David Warr Lynne Duquemin Company secretary and Administrator Vistra Fund Services (Guernsey) Limited 11 New Street St Peter Port Guernsey GY1 2PF Nominated adviser Grant Thornton UK LLP 30 Finsbury Square London EC2P 2YU Broker Numis Securities Limited The London Stock Exchange Building 10 Paternoster Square London EC4M 7LT Auditor Grant Thornton Limited Lefebvre House Lefebvre Street St Peter Port Guernsey GY1 3TF Registrar Link Market Services Limited Mont Crevelt House Bulwer Avenue St Sampson Guernsey GY2 4LH Registered office* 11 New Street St Peter Port Guernsey GY1 2PF Company registration number * Incorporated in Guernsey with registered number 46809 Website www.aberdeenfrontiermarkets.co.uk

Manager Aberdeen Standard Fund Managers Limited Bow Bells House 1 Bread Street London EC4M 9HH www.aberdeenstandard.com UK administration agent PraxisIFM Fund Services (UK) Limited 3rd Floor, Mermaid House 2 Puddle Dock London, EC4V 3DB Solicitors as to English law Gowling WLG 4 More London Riverside London SE1 2AU Advisers as to Guernsey law Mourant Royal Chambers St Julian's Avenue St Peter Port Guernsey GY1 4HP Depositary services and custodian Northern Trust (Guernsey) Limited Trafalgar Court Les Banques St Peter Port Guernsey GY1 3DA United States Internal Revenue Service FATCA Registration Number ('GIIN') 35VBTN.99999.SL.831 Legal Entity Identifier ('LEI') 213800X9N731I4IPK361

Enquiries:

Aberdeen Standard Fund Managers Limited (Investment Manager to Aberdeen Frontier Markets Investment Company Limited)

William Hemmings / Gary Jones

Tel: [phone]

Grant Thornton UK LLP (Nominated Adviser)

Philip Secrett

Tel: [phone]

Numis Securities Limited (Nominated Broker)

David Benda

Tel: [phone]

14 February 2019

END