Interim Results

Aberdeen Asian Smaller Co's Inv Tst 31 March 2008 ABERDEEN ASIAN SMALLER COMPANIES INVESTMENT TRUST PLC ANNOUNCEMENT OF UNAUDITED HALF YEARLY RESULTS for the six months ended 31 January 2008 Highlights • Diluted NAV fell 2.9% • MSCI AC Asia Pacific Free ex Japan Index fell 2.2% • MSCI AC Asia Pacific Free ex Japan Small Cap Index fell 13.0% INTERIM BOARD REPORT Against the backdrop of the adverse conditions caused by turmoil in global credit markets, in the six months to 31 January 2008, the Company's diluted net asset value fell by 2.9% in capital terms. Historically, we have used the MSCI AC Asia Pacific Free ex. Japan Index, currency adjusted, for performance comparison purposes and over the period this fell by 2.2% in capital terms. Shareholders will be aware that, until recently, the Board has been of the opinion that there was not an appropriate benchmark against which to measure the Company's performance. On 1 June 2007 MSCI introduced the MSCI AC Asia Pacific Free ex. Japan Small Cap Index and, since then, we have been monitoring it in its currency adjusted form. We will continue to do so until our year end on 31 July 2008 when a decision will be made whether or not to adopt it as the Company's benchmark. However, it should be noted that the possible adoption of this benchmark would not be expected to change or affect the investment decisions made by Hugh Young and the investment team in Singapore. During the six months to 31 January 2008 the MSCI AC Asia Pacific Free ex. Japan Small Cap Index fell by 13.0% in capital terms. Overview Asian economies have been less affected than their western counterparts by the credit crunch that now dominates the news. The Asian banks have largely avoided investing in mortgage backed securities thereby avoiding large write offs with the consequent squeeze on credit. While inflation, as in the rest of the world, remains a threat, interest rates have remained stable with policymakers preferring currency appreciation, subsidies and credit measures to control costs. However Asian markets faced increasing volatility in the six months under review. Solid economic growth and robust corporate earnings supported stock prices at the start of the period, driving most indices to all-time highs. This soon gave way to a wave of selling across the region, triggered by fears that tight credit markets would lead to an economic slowdown. Despite aggressive US interest rate cuts, the correction in Asian markets continued into 2008. The Company's relative performance was helped by an underweight position in Taiwan and Korea, which were among the worst hit markets, and our exposure to India, where equity prices were partially insulated by hopes that the domestic demand-driven economy would not be affected by a US slowdown. In contrast, the Company's lack of exposure to Australia had a negative impact upon our relative performance. Smaller listed companies, which had lagged their peers during the momentum-based rally, bore the brunt of the selling pressure. This disproportionate treatment appears to reflect the perception that the sector is less able to weather a slowdown in growth because of company size and, perhaps, access to capital. Share Capital and Gearing The Company's Ordinary shares have continued to trade at a discount and this widened from 12.3% to 19.0% over the period, presenting the Company with the opportunity to purchase, for treasury, 708,205 Ordinary shares at discounts in excess of 15%. Also during the period 157,000 Warrants were purchased for cancellation. While the discount remains at these levels, your Board will continue to purchase shares and warrants as it has both a beneficial effect on the net asset value per share as well as helping to manage the discount. During most of the period, the net gearing of the Company has been broadly neutral. The Board has facilities in place to increase it to approximately 8%. This will only be used when the Manager feels that the market turbulence is subsiding and it can be utilised to acquire assets at attractive prices. Portfolio During the period, your Manager introduced two new companies into the portfolio: United Malacca, a Malaysian plantation company with improving yields and a strong cash position; and Aeon Thana, a Thai consumer finance company that is set to benefit from the stimulatory policies of the newly elected government. Among disposals, Malaysian stock exchange operator Bursa Malaysia was sold after a strong run-up in its share price. Other less prominent transactions included the topping up of Pos Malaysia, Unilever Pakistan, Asian Terminals, FJ Benjamin, Siam Makro and property developer Cebu, and taking partial profits in dry bulk shipper Pacific Basin, whose shares had become over-extended, Korean Reinsurance, plantations company MP Evans, and Distilleries of Sri Lanka. Aeon Stores and Hong Kong Economic Times in Hong Kong were among the stronger performers during the period on the back of good results. Robinson & Co in Singapore returned over 40% on the back of a bid for the company. The Company's holdings in Thailand were weak during the period with Hana Microelectronics and Regional Container Lines posting declines of over 20% on the back of the weaker technology sector and lower freight rates respectively. In Singapore, Bukit Sembawang corrected sharply as sentiment in the Singapore property sector turned negative following its previous strong run. Finally, Pos Malaysia performed poorly on lacklustre results and write offs relating to its investment in Transmile. Outlook In October, we said that the effects of the credit crisis could spread to Asian markets. This has happened with stock markets in Asia facing unusual volatility and nervous investor sentiment. Asian fundamentals - of countries, companies and households - are indisputably better than in previous cycles but despite talk of decoupling from the world economy, this is unlikely to be reflected in reality. As our portfolio has a bias towards companies with a domestic focus, it may be partially protected from a world economic slowdown and could benefit from counter-cyclical measures from local governments. The portfolio is trading on an estimated price-earnings multiple of 15.2 times projected 2007 earnings and 14.6 times projected 2008 earnings, with strong balance sheets and a healthy dividend yield. While the valuation discount of smaller companies has narrowed substantially over the past few years, companies in this sector remain reasonably valued on a relative basis. With the rigorous research undertaken by your Manager to ensure that the portfolio only consists of companies that are well managed, have good prospects and robust balance sheets, your Board believes your Company is in a good position to weather the current uncertainty and take advantage of more realistic asset prices when economic and market conditions improve. Principal Risks and Uncertainties The principal risks and uncertainties faced by the Company fall into six broad categories: (i) Ordinary share market risk, (ii) Dividends, (iii) Borrowings, (iv) Market risk, (v) Foreign exchange risk, and (vi) taxation and exchange controls. Information on each of these areas is given in the Directors' Report within the Annual Report and Accounts for the year ended 31 July 2007. Directors' Responsibility Statement The Directors are responsible for preparing this half-yearly financial report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge: • the condensed set of interim financial statements contained within the half yearly financial report have been prepared in accordance with the Accounting Standards Board's statement "Half-Yearly Financial Reports"; and, • the Interim Board Report includes a fair review of the information required by 4.2.7R and 4.2.8R of the FSA's Disclosure and Transparency Rules. The half yearly report includes a fair review of the information required on material transactions with related parties and changes since the Annual Report. For and on behalf of the Board of Aberdeen Asian Smaller Companies Investment Trust PLC Nigel Cayzer Chairman 31 March 2008 Aberdeen Asian Smaller Companies Investment Trust PLC Income Statement (unaudited) Six months ended Six months ended 31 January 2008 31 January 2007 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 (Losses)/gains on investments - (2,802) (2,802) - 18,379 18,379 Income 2,024 - 2,024 2,643 - 2,643 Investment management fees (730) - (730) (581) - (581) Administrative expenses (316) - (316) (308) - (308) Exchange gains/(losses) - 73 73 (19) 384 365 Net return on ordinary activities before 978 (2,729) (1,751) 1,735 18,763 20,498 finance costs and taxation Finance costs (172) - (172) (227) - (227) Net return on ordinary activities before 806 (2,729) (1,923) 1,508 18,763 20,271 taxation Taxation (227) (271) (498) (428) - (428) Net return on ordinary activities after 579 (3,000) (2,421) 1,080 18,763 19,843 taxation Return per Ordinary share (pence): Basic 1.79 (9.26) (7.47) 3.34 58.10 61.44 Diluted 1.63 (8.43) (6.80) 3.01 52.31 55.32 Aberdeen Asian Smaller Companies Investment Trust PLC Income Statement (audited) Year ended 31 July 2007 Revenue Capital Total £'000 £'000 £'000 (Losses)/gains on investments - 32,355 32,355 Income 5,485 - 5,485 Investment management fees (1,243) - (1,243) Administrative expenses (612) - (612) Exchange gains/(losses) - 536 536 Net return on ordinary activities before finance 3,630 32,891 36,521 costs and taxation Finance costs (448) - (448) Net return on ordinary activities before taxation 3,182 32,891 36,073 Taxation (919) - (919) Net return on ordinary activities after taxation 2,263 32,891 35,154 Return per Ordinary share (pence): Basic 6.98 101.40 108.38 Diluted 6.34 92.13 98.47 The total column of this statement represents the profit and loss account of the Company. A Statement of Total Recognised Gains and Losses has not been presented as all gains and losses are recognised in the Income Statement. All revenue and capital items are derived from continuing operations. Balance Sheet As at 31 January As at 31 January As at 31 July 2007 2008 2007 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Non-current assets Investments at fair value through profit or loss 126,662 122,063 133,792 Current assets Loans and receivables 352 208 432 Cash at bank and in hand 3,110 3,669 5,884 3,462 3,877 6,316 Creditors: amounts falling due within one year Bank loans (4,132) (7,626) (7,338) Other creditors (1,092) (826) (979) (5,224) (8,452) (8,317) Net current liabilities (1,762) (4,575) (2,001) Total assets less current liabilities 124,900 117,488 131,791 Provision for liabilities and charges (29) (29) (112) Net assets 124,871 117,459 131,679 Capital and reserves Called-up share capital 8,163 8,145 8,145 Share premium account 11,140 11,087 11,087 Special reserve 12,875 14,990 14,990 Warrant reserve 1,502 1,738 1,576 Capital redemption reserve 2,062 2,062 2,062 Capital reserve - realised 42,152 31,151 37,021 Capital reserve - unrealised 45,137 46,204 53,533 Revenue reserve 1,840 2,082 3,265 Equity Shareholders' funds 124,871 117,459 131,679 Net asset value per Ordinary share (pence): Basic 390.92 360.53 404.18 Diluted 354.16 323.79 364.77 Reconciliation of Movements in Shareholders' Funds Six months ended 31 January 2008 (unaudited) Share Capital Capital Capital Share premium Special Warrant redemption reserve - reserve - Revenue capital account reserve reserve reserve realised unrealised reserve Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 July 2007 8,145 11,087 14,990 1,576 2,062 37,021 53,533 3,265 131,679 Net return on ordinary - - - - - 5,396 (8,396) 579 (2,421) activities after taxation Dividends paid - - - - - - - (2,004) (2,004) Purchase of own shares - - (2,115) - - - - - (2,115) Exercise of warrants 18 53 - (23) - 23 - - 71 Buyback of warrants - - - (51) - (288) - - (339) Balance at 31 January 2008 8,163 11,140 12,875 1,502 2,062 42,152 45,137 1,840 124,871 Six months ended 31 January 2007 (unaudited) Share Capital Capital Capital Share premium Special Warrant redemption reserve - reserve - Revenue capital account reserve reserve reserve realised unrealised reserve Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 July 2006 8,047 10,259 14,990 1,785 2,062 27,211 31,334 2,981 98,669 Net return on ordinary - - - - - 3,893 14,870 1,080 19,843 activities after taxation Dividends paid - - - - - - - (1,979) (1,979) Issue of Ordinary shares 62 721 - - - - - - 783 Exercise of Warrants 36 107 - (47) - 47 - - 143 Balance at 31 January 2007 8,145 11,087 14,990 1,738 2,062 31,151 46,204 2,082 117,459 Year ended 31 July 2007 (audited) Share Capital Capital Capital Share premium Special Warrant redemption reserve - reserve - Revenue capital account reserve reserve reserve realised unrealised reserve Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 July 2006 8,047 10,259 14,990 1,785 2,062 27,211 31,334 2,981 98,669 Net return on ordinary - - - - - 10,692 22,199 2,263 35,154 activities after taxation Dividends paid - - - - - - - (1,979) (1,979) Issue of shares 62 720 - - - - - - 782 Exercise of warrants 36 108 - (47) - 47 - - 144 Buyback of warrants - - - (162) - (929) - - (1,091) Balance at 31 July 2007 8,145 11,087 14,990 1,576 2,062 37,021 53,533 3,265 131,679 Cash Flow Statement Six months ended Six months ended Year ended 31 January 2008 31 January 2007 31 July 2007 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Return on ordinary activities before finance costs (1,751) 20,498 36,521 and taxation Adjustments for: Realised gains on investments (5,594) (3,509) (10,156) Unrealised losses/(gains) on investments 8,396 (14,870) (22,199) Effect of foreign exchange rate movements (73) (384) (536) Decrease/(increase) in accrued income 179 16 (205) Increase in other debtors (41) (56) (3) (Decrease)/increase in other creditors (145) 21 236 Overseas withholding tax suffered (4) (2) (215) Stock dividend included in investment income - - (66) Net cash inflow from operating activities 967 1,714 3,377 Net cash outflow from servicing of finance (269) (108) (332) Net tax paid (334) (433) (728) Net cash inflow/(outflow) from financial investment 4,382 (419) 1,879 Equity dividends paid (2,004) (1,979) (1,979) Net cash inflow/(outflow) before financing 2,742 (1,225) 2,217 Financing Purchase of own shares (2,115) - - Issue of shares - 782 782 Exercise of warrants 71 144 144 Buyback of warrants (339) - (1,091) Repayment of loan (3,206) - - Net cash (outflow)/inflow from financing activities (5,589) 926 (165) (Decrease)/increase in cash (2,847) (299) 2,052 Reconciliation of net cash flow to movements in net debt (Decrease)/increase in cash (2,847) (299) 2,052 Effect of foreign exchange rate movements 73 384 536 Repayment of loan 3,206 - - Movement in net debt in the period 432 85 2,588 Net debt at start of period (1,454) (4,042) (4,042) Net debt at end of period (1,022) (3,957) (1,454) Represented by: Cash 3,110 3,669 5,884 Debt due within one year (4,132) (7,626) (7,338) (1,022) (3,957) (1,454) Notes to the Financial Statements 1. Accounting policies The accounts have been prepared in accordance with applicable UK Accounting Standards, with pronouncements on half-yearly reporting issued by the Accounting Standards Board and with the Statement of Recommended Practice for 'Financial Statements of Investments Trust Companies' (December 2005). They have also been prepared on the assumption that approval as an investment trust will continue to be granted. The financial statements and the net asset value per share figures have been prepared in accordance with UK Generally Accepted Accounting Practice ('UK GAAP'). The same accounting policies used for the year ended 31 July 2007 have been applied. Six months ended Six months ended Year 31 January 2008 31 January 2007 ended 31 July 2007 £'000 £'000 £'000 2. Dividends Final dividend for 2007 - 3.45p (2006 - 3.45p) 1,124 1,110 1,110 Special dividend for 2007 - 2.70p (2006 - 2.70p) 880 869 869 2,004 1,979 1,979 Six months ended Six months ended Year 31 January 2008 31 January 2007 ended 31 July 2007 3. Income £'000 £'000 £'000 Income from investments UK dividend income 16 34 73 Overseas dividends 1,851 2,538 5,194 Stock dividend - - 66 1,867 2,572 5,333 Other income Deposit interest 157 71 152 Total income 2,024 2,643 5,485 4. The taxation charge for the period has been calculated at an expected effective annual tax rate of 29.3%. This is below the corporation tax rate of 30% due to the change in the corporation tax rate from 30% to 28% on 31 March 2008. Six months ended Six months ended Year ended 31 January 2008 31 January 2007 31 July 2007 5. Return per Ordinary share p p p Basic Revenue return 1.79 3.34 6.98 Capital return (9.26) 58.10 101.40 Total return (7.47) 61.44 108.38 The figures above are based on the following: £'000 £'000 £'000 Revenue return 579 1,080 2,263 Capital return (3,000) 18,763 32,891 Total return (2,421) 19,843 35,154 Weighted average number of shares in issue* 32,410,446 32,293,727 32,435,487 Diluted p p p Revenue return 1.63 3.01 6.34 Capital return (8.43) 52.31 92.13 Total return (6.80) 55.32 98.47 Number of dilutive shares* 3,194,608 3,575,507 3,264,294 Diluted shares in issue* 35,605,054 35,869,234 35,699,781 * Calculated excluding shares held in treasury. The calculation of the diluted total, revenue and capital returns per Ordinary share are carried out in accordance with Financial Reporting Standard No. 22, "Earnings per Share". For the purposes of calculating diluted total, revenue and capital returns per Ordinary share, the number of Ordinary shares is the weighted average used in the basic calculation plus the number of Ordinary shares deemed to be issued for no consideration on exercise of all Warrants by reference to the average share price of the Ordinary shares during the period. The calculations indicate that the exercise of Warrants would result in an increase in the weighted average number of Ordinary shares of 3,194,608 (31 January 2007 - 3,575,507; 31 July 2007 - 3,264,294) to 35,605,054 (31 January 2007 - 35,869,234; 31 July 2007 - 35,699,781) Ordinary shares. As at As at As at 6. Net asset value 31 January 2008 31 January 2007 31 July 2007 Attributable net assets (£'000) 124,871 117,459 131,679 Number of Ordinary shares in issue* 31,942,939 32,579,597 32,579,597 Net asset value per Ordinary share (p): Basic 390.92 360.53 404.18 Diluted 354.16 323.79 364.77 * Excludes shares in issue held in treasury. The diluted net asset value per Ordinary share has been calculated on the assumption that 4,620,356 (31 January 2007 - 5,348,903 and 31 July 2007 - 4,848,903) Warrants in issue were exercised on the first day of the financial year at 100p per share, giving a total of 36,563,295 (31 January 2007 - 37,928,500; 31 July 2007 - 37,428,500) Ordinary shares. 7. Transaction costs During the period expenses were incurred in acquiring or disposing of investments classified as fair value though profit or loss. These have been expensed through capital and are included within (losses)/gains on investments in the Income Statement. The total costs were as follows: Six months ended Six months ended Year ended 31 January 2008 31 January 2007 31 July 2007 £'000 £'000 £'000 Purchases 13 21 48 Sales 24 27 58 37 48 106 8. Related party transactions Mr M J Gilbert is a director of Aberdeen Asset Management PLC and its subsidiary Aberdeen Asset Management (Asia) Ltd. Mr Gilbert is also a director of Aberdeen Asset Managers Ltd. AAM Asia has an agreement to provide management services to the Company and AAM has an agreement to provide both administration and marketing services to the Company. The management fee is payable monthly in arrears based on an annual amount of 1.2% calculated on the average net asset value of the Company over a 24 month period, valued monthly. During the period £730,000 (2007 - £581,000) of management fees were paid and payable, with a balance of £249,000 (2007 - £203,000) being payable to AAM Asia at the period end. The investment management fees are charged 100% to revenue. The marketing fee is based on a current annual amount of £90,000, payable quarterly in arrears. During the period £45,000 (2007 - £39,000) of fees were paid and payable, with a balance of £8,000 (2006 - £7,000) being payable to AAM at the period end. 9. The financial information for the six months ended 31 January 2008 and 31 January 2007 comprises non-statutory accounts within the meaning of Section 240 of the Companies Act 1985. The financial information for the year ended 31 July 2007 has been extracted from published accounts that have been delivered to the Registrar of Companies and on which the report of the auditors was unqualified and did not contain a Statement under either Section 237(2) or 237(3) of the Companies Act 1985. The auditors have reviewed the financial information for the six months ended 31 January 2008 pursuant to the Auditing Practices Board guidance on Review of Financial Information. The report of the auditors is contained within this announcement. Copies of the Interim Report will be posted to Shareholders in April and further copies will be available from the registered Office of the Company, One Bow Churchyard, Cheapside, London EC4M 9HH Aberdeen Asset Management PLC Secretaries 31 March 2008 Independent Review Report to Aberdeen Asian Smaller Companies Investment Trust PLC Introduction We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 January 2008 which comprises the Income Statement, Balance Sheet, Reconciliation of Movements in Shareholders Funds, Cash Flow Statement and the related notes 1 to 9. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. This report is made solely to the Company in accordance with guidance contained in ISRE 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed. Directors' Responsibilities The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. As disclosed in note 1, the annual financial statements of the Company are prepared in accordance with United Kingdom Generally Accepted Accounting Practice. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the Accounting Standards Board Statement "Half-Yearly Financial Reports". Our Responsibility Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. Scope of Review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 January 2008 is not prepared, in all material respects, in accordance with the Accounting Standards Board Statement " Half-Yearly Financial Reports" and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. Ernst & Young LLP London 31 March 2008 This information is provided by RNS The company news service from the London Stock Exchange

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