Annual Financial Report

RNS Number : 4812T

Aberdeen All Asia Inv Tst PLC

08 June 2009

 



ABERDEEN ALL ASIA INVESTMENT TRUST PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 MARCH 2009

1.    CHAIRMAN'S STATEMENT

Your Company's purpose, to provide shareholders with a balanced and professionally managed portfolio of All Asian stocks, has continued to be met despite the financial turmoil of last year. Aberdeen All Asia's portfolio has not been immune from the global banking crisis and the severe economic recession, but its fundamental commitment to quality companies has delivered resilience. The robust portfolio spread across the whole Asian region, including Japan and Australia, positions the Company well for the diverse opportunities which will arise from economic recovery. This has been a testing year for investments, the management of gearing and the maintenance of the Company's share price at a time of general market dislocation. Volatility is likely to continue and will require vigilance from both the Board and the Manager, but the Company remains confident of the benefit of looking ahead to the strong underlying Asian growth story.

Performance

Equity markets in Asia and around the world experienced one of the most volatile periods on record during the year ended 31 March 2009. Although Asia's economies did not have the excessive leverage that characterised much of the developed world they were still very dependent on demand from the West and the bursting of the housing bubble in the US and certain Western European countries severely affected consumption and thus demand for Asian exports.

The Company's net asset value declined by 22.3% over the year ended 31 March 2009 compared with the benchmark MSCI AC Asia Pacific (including Japan) Index which fell by 17.1% in Sterling terms. The net asset value per share stood at 192.7p by the end of the year while the share price fell to 166.0p with the discount widening marginally from 13.6% to 13.8%. This disappointing performance reflects the extreme market volatility during the latter part of the year combined with the effect of the gearing which, in the short term, held back performance as markets fell.

However, as market values declined the Company's gearing increased during the period. The position at the year end, of just under 10% gearing, reflects the longer-term strength of the portfolio as Asian economies begin to recover.

The performance is more fully described in the Manager's Review and reflects your Manager's investment style with its bottom-up focus on management quality, balance sheet strength, long-term growth prospects and cash flow generation.

Revenue and Dividend

The Board is proposing to Shareholders a final dividend per share of 2.40 pence (2008 - nil) payable on 31 July 2009 to shareholders on the register as at close of business on 3 July 2009; the ex-dividend date will be 1 July 2009. This will be the first dividend paid to Shareholders since the establishment of the Company in its present form in 1999 and is the result of growing income in the portfolio which produced retained earnings in excess of the level allowed by its Investment Trust status.

Board

During the year David Price indicated his intention to step down as Chairman of the Company and it gave me great pleasure to take on this role, with the support of my fellow Directors, in September 2008. David remains a non-executive Director of the Company but will retire from the Board at the conclusion of the Annual General Meeting ('AGM') in July. David chaired the Company from its inception in 1998 and the Board benefited greatly from his leadership and experience throughout this period.

The Board continues to follow its plan for retirement and succession of Directors and, accordingly, Sir Robin McLaren retired from the Board on 31 March 2009. Sir Robin was our Senior Independent Director and had also been associated with the Company since its inception. I should like to place on record my appreciation of his wise counsel, in particular the insight he has been able to share with the Board in relation to the Asia-Pacific region in general, and China in particular. Kevin Pakenham has since taken on the role of Senior Independent Director. Robert (Bob) Jenkins was appointed a Director on 27 May 2009. Bob, who is Chairman of the Investment Management Association of the UK and recently retired as Chairman of F&C Group plc, previously worked in Japan and brings wide experience of investment in the Asia-Pacific region to your Board. Under the Articles of Association, Bob will retire and seek election as a Director at his first AGM; as it has been three years since my own re-election, I shall also retire and seek re-election at the AGM.

Investment Manager

The Board has undertaken a detailed review of the performance of the Manager. Given the performance and strengths of the Manager's investment team in the region, the Board believes that the continuing appointment of Aberdeen Asset Management Asia as Manager, on the present terms, is in the interests of shareholders as a whole.

Share Capital

During the year under review the Company bought in for cancellation 541,000 Ordinary shares at a weighted-average discount of 12.9% which leaves 15,732,367 Ordinary shares, with voting rights, in issue as at 31 March 2009. Such buy backs provide necessary liquidity to the market during difficult trading periods and enhance the net asset value for continuing shareholders. 

Outlook

A rebound in equity markets towards the end of the reporting period provided some relief to investors although it is uncertain whether the rally can be sustained in the immediate future. Asia has not experienced a credit bubble like that in the US and certain other developed countries but its economies are going through a very painful cyclical downturn as demand for exports collapses. That said, once the export-related adjustment is over, Asia's fundamentals are sound. Generally, it has huge foreign reserves, high savings rates and low debt, qualities in short supply in the West. These qualities will afford Asian governments the ability to pump-prime to help boost domestic consumers' spending power, and allow Asian economies to become less export-dependent. This crisis has served to emphasise the value of companies with well-managed operations and strong balance sheets, on which the Manager bases the Company's portfolio of investments.

Your Board remains optimistic both for the long-term prospects in Asia and for its portfolio of investments and therefore believes the Company is well-positioned to benefit when regional economies recover.

Neil Gaskell

Chairman

5 June 2009

  2.     MANAGER'S REVIEW

Overview

Asian equities fell sharply in the year under review, underperforming those in the US and other major developed markets. Hopes that the region could decouple from the West had buoyed markets initially. This optimism, however, could not be sustained. As the unfolding credit crisis gathered momentum and developed into a severe economic downturn, it became clear that Asia could not escape what began as a problem in the US subprime mortgage market.

The collapse of Lehman Brothers in September triggered a swift loss of confidence, paralysing credit markets. It was followed by a series of near bankruptcies of major financial companies in the US and Europe, forcing governments to mount unprecedented rescues. In October, global stock markets tumbled, and reached levels not seen for several years. 

The turmoil in the financial system soon spread to other parts of the global economy. Businesses failed as sales plummeted and access to credit was cut off. Job losses mounted and companies cut back on capital spending. With corporate and consumer confidence at all-time lows, consumption collapsed as households rushed to build savings and pay down debt. Asia, which had supplied developed markets with a wide range of goods, from unprocessed iron ore to laptop computers, saw demand for its exports plunge over the course of just a few months. Exporters of finished products, such as Singapore, Taiwan and Korea, were among the worst hit.

Although hopes that the newly-elected US government's financial sector rescue plan would stop the downward spiral had helped markets rebound at the start of the calendar year, its lack of details caused optimism to fade and market indices soon retested new lows. Towards the end of the review period, the announcement of the creation of the Public-Private Investment Program, with its clear mandate to buy up to US$2 trillion' worth of toxic assets from troubled lenders, lifted benchmarks again, along with hopes that economic recovery was around the corner.

Performance

Over the year ended 31 March 2009, the Portfolio's net asset value fell by 22.3% in sterling terms compared with a fall in the benchmark, the MSCI AC Asia Pacific Free Index, of 17.1% (see Results in Section 3). The underperformance was due primarily to the Portfolio's gearing, which hurt as markets fell. Share buybacks, on the other hand, boosted performance slightly.

Stock markets in Singapore and India, countries in which we have overweight positions, underperformed the region. However, this was compensated for by a number of our holdings in these countries outperforming their respective market index. In Singapore, ST Engineering, Singapore Airlines, SingTel and Oversea-Chinese Banking Corporation held up relatively well, while a number of major holdings in the Aberdeen Global - India Opportunities Fund, through which the Portfolio gains its Indian exposure, also outperformed. These included motorcycle maker Hero Honda, Aventis Pharma and GlaxoSmithKline Pharmaceuticals.

The Japanese market, where the Portfolio is underweight, outperformed the region, but only because of the strong yen (in local currency terms it underperformed). However, our holdings in Japan performed well relative to the local index, more than making up for the Portfolio's underweight position. Notable mentions include Shin-Etsu Chemical, Seven & I Holdings, Honda Motor, Takeda Pharmaceutical and Bank of Kyoto. Seven & I, for example, operates a chain of convenience stores that also provide fast food, a segment that is gaining popularity as the downturn forces consumers to be more frugal.

In Taiwan, our core holdings - Taiwan Mobile and Taiwan Semiconductor Manufacturing Co (TSMC) - did better than the market benchmark. TSMC, in particular, is worthy of a special mention, as it is a good example of a company that has thrived in the recent adversity. It is the global leader in its industry, in terms of market share, cost and technology, and boasts a high dividend payout. Despite the current tough operating environment, the company is gaining market share at the expense of weaker rivals. It has a strong balance sheet, helping it to weather the slowdown and position itself to catch the wave when the global economy recovers. It is also a company that will benefit hugely from growth in emerging markets in coming decades, particularly since those markets are as yet unable to seed their own semiconductor foundries.

We continue to underweight China, despite its market's recent strong recovery. We remain wary of mainland-listed companies because of our concern about issues such as transparency, business quality, and the amount of government intervention in a number of key industries. We will continue to gain exposure to China through Hong Kong stocks or Chinese companies listed in Hong Kong.

As for portfolio transaction activity, the recurring theme was the top slicing of holdings that had performed relatively well, using the cash raised to initiate positions in Japan's Fanuc and Hong Kong Exchanges and Clearing as well as adding to several existing positions. Fanuc is a leading robot maker with a diversified product portfolio and excellent long-term growth potential, while Hong Kong Exchanges and Clearing is a well-run business that derives the bulk of its turnover from the trading of Chinese companies listed in Hong Kong. Subsequent to the end of the review period, we sold the latter following a sharp run-up in its share price. For us, this was a rare example of a short-term holding period in exceptional circumstances.

Among the more notable divestments during the period was Australia's Leighton Holdings, whose valuation we felt had become stretched. Similarly, we sold Hong Kong-listed utility CLP, which had outperformed the broader market, and Kookmin Bank, accepting its repurchase offer linked to its conversion to a financial holding company. There were some disappointments as well. We sold China toll-road operator Zhejiang Expressway because of stagnating revenue growth and a lack of clear direction in its securities arm; Malaysian lender Maybank on concern regarding its aggressive overseas expansion; and Japan's Rohm. We also exited Taiwan's Fubon Financial, Korea's Hyundai Motor and Japanese regional bank Sapporo Hokuyo, given their worsening prospects, and Australia's Tabcorp because of an increasingly uncertain regulatory environment.

Outlook

Looking ahead, stock markets in Asia are likely to remain volatile. While there is reason to be optimistic about the longer run, given the region's solid fundamentals, there is also much to be cautious about in the short to medium term. This is because much of Asia's output is still destined for sale in US and European markets. Until such time as regional economies are able to wean themselves off their export dependency, their fates will continue to be tied to the West and its consumers, many of whom will continue to reduce spending in order to address problems relating to excessive borrowing.

In Asia, governments have begun to realise that they can no longer rely on the old export-driven economic model and must instead unlock potential in domestic consumption. This will take time, because of the region's propensity to save, a deeply ingrained value that will change only slowly. Cast in this light, the recent bout of buying in stock markets appears a little premature, although we remain very confident of the health of the companies in which we are invested.

Aberdeen Asset Management Asia Limited

Manager

5 June 2009

 3.    RESULTS

Financial Highlights

	31 March 2009	31 March 2008	% change
Total Assets	£35,133,000	£44,181,000	-20.5
Total Equity Shareholders' funds (Net Assets)	£30,311,000	£40,329,000	-24.8
Share price (mid market)	166.00p	214.00p	-22.4
Net Asset Value per share	192.67p	247.82p	-22.3
Discount to Net Asset Value	13.8%	13.6%
MSCI AC Asia Pacific (including Japan) Index (in Sterling terms){A}	56.46	70.11	-19.5
Actual gearing	9.8%	8.6%
Potential gearing	15.9%	19.1%
Operating costs
Total expense ratio	1.48%	1.22%
Earnings
Total return per share	(56.07)p	7.49p
Revenue return per share	3.50p	3.04p
Revenue reserves (prior to payment of proposed final dividend)	£548,000	(£15,000)
{A} Index figures stated on a capital only basis

Performance (total return)

	1 year  % return	3 year  % return	5 year  % return
Share price	-22.4%	-30.9%	0.6%
Net Asset Value	-22.3%	-25.5%	8.1%
MSCI AC Asia Pacific (including Japan) Index (in Sterling terms)	-17.1%	-19.7%	19.7%

Dividend

	Rate	xd date	Record date	Payment date
Proposed final dividend 2009	2.40p	1 July 2009	3 July 2009	31 July 2009

4.     BUSINESS REVIEW

A review of the Company's activities is given in the Chairman's Statement in Section 1 and the Manager's Review in Section 2. This includes a review of the business of the Company and its principal activities, recommended dividends and likely future developments of the business. The major risks associated with the Company are detailed in the section on "Principal Risks and Uncertainties".

The Company

The Company is an investment trust and its shares are listed on the London Stock Exchange. The Company is a member of the Association of Investment Companies.

Investment Objective

The investment objective of the Company is to generate capital growth from a concentrated portfolio of companies domiciled, operating or generating revenue in the Asia-Pacific region, including Japan.

Owing to the concentration of investments, the performance of the Company's investment portfolio may deviate significantly from its benchmark from time to time.

Investment Policy

The Company's assets may be invested in a selected portfolio of securities in quoted companies spread across a range of industries and economies in the investment region including Australia, China, Hong Kong, India, Japan, Korea, Malaysia, The Philippines, Singapore, Taiwan and Thailand together with such other countries in Asia as the Directors may from time to time determine (collectively, the "Investment Region").

The Company's portfolio comprises securities substantially in the form of equities or equity-related securities such as convertible securities and warrants.

The investment portfolio comprises companies of any market capitalisation, regardless of sector or country weightings, which show potential for outstanding growth. Due to the size of the Japanese economy, the Board would normally expect there to be a significant investment in Japan. 

Investments may also be made through collective investment schemes and in companies traded on stock markets outside the Investment Region provided that over 75 per cent. of their consolidated revenue is earned from trading in the Investment Region or they hold more than 75 per cent. of their consolidated net assets in the Investment Region.

Principal Risk and Uncertainties

The Board regularly reviews major strategic risks and sets out the delegated controls designed to manage those risks.  

Aside from the risks associated with investment in Asia, the key risks related to investment strategy, including inappropriate asset allocation or gearing, are managed through a defined investment policy, specific guidelines and restrictions and by the process of oversight at each board meeting as outlined above. 

Operational disruption, accounting and legal risks are also covered at least annually and regulatory compliance is reviewed at each board meeting.

 

The major risks associated with the Company are:

 

-        Resource risk: like most other investment trusts, the Company has no employees. The Company therefore relies on services provided by third parties, including, in particular, the Manager, to whom responsibility for the management of the Company’s portfolio has been delegated under an investment management agreement. The terms of the investment management agreement cover the necessary duties and conditions expected of the Manager. The Board reviews the performance of the Manager on a regular basis, and their compliance with the Agreement formally on an annual basis.

-        Investment and market risk: the Board continually monitors the investment policy of the Company, taking account of stockmarket factors, and reviews the Company’s performance compared to its benchmark index. Further details on other risks relating to the Company’s investment activities, including market price, interest rate, liquidity and foreign currency risks, are disclosed in Note 18 to the Financial Statements.

 

The particular risks of investment in Asia are:

 

-        greater risk of expropriation, confiscation, taxation, nationalisation and social, political and economic instability; the small current size of the markets for securities of emerging markets issuers and low volumes of trading, resulting in lack of liquidity and in price volatility;

-        certain national policies which may restrict the investment opportunities available in respect of a fund, including restrictions on investing in issuers or industries deemed sensitive to national interests; changes in taxation laws and/or rates which may affect the value of the Company’s investments;

-        the absence in some markets of developed legal structures governing private or foreign investment and private property leading to supervision and regulation; and changes in government which may have an adverse effect on economic reform. Companies in the Asia Pacific region are not, in all cases, subject to the equivalent accounting, auditing and financial standards of those in the United Kingdom; and

-        currency fluctuations which may affect the value of the Company’s investments and the income derived therefrom.

-        Gearing risk: the Company currently uses gearing in the form of bank loans of US$5,150,000 (equivalent to approximately £3,593,000) and JPY174,000,000 (equivalent to approximately £1,229,000) under its loan facility of £7,000,000.

-        Regulatory risk: the Company operates in a complex regulatory environment and faces a number of regulatory risks. Serious breaches of applicable regulations could lead to a number of detrimental outcomes and reputational damage. The Audit Committee monitors compliance with regulations by reviewing internal control reports from the Manager.

5.    STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual 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 UK Accounting Standards.  

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 judgments and estimates that are reasonable and prudent;  

-    state whether applicable UK 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 that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies Act 1985. 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.

The Directors are responsible for preparing the Annual Report in accordance with applicable law and regulations.  

Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that comply with that law and those regulations.

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

The Directors confirm to the best of their knowledge, that:

-    the Financial Statements have been prepared in accordance with UK Accounting Standards, give a true and fair view 
     of the assets, liabilities, financial position and return; and that

-    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.

For and on behalf of the Board of Aberdeen All Asia Investment Trust PLC

Neil Gaskell

Chairman

5 June 2009

  INCOME STATEMENT 

		Year ended 31 March 2009			Year ended 31 March 2008
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
(Losses)/gains on investments	9	-	(8,298)	(8,298)	-	834	834
Income	2	1,242	-	1,242	1,202	-	1,202
Exchange losses	16	-	(1,253)	(1,253)	-	(77)	(77)
Investment management fee	3	(268)	-	(268)	(305)	-	(305)
VAT recoverable on investment management fees		17	-	17	-	-	-
Administrative expenses	4	(252)	(23)	(275)	(218)	(19)	(237)
		_______	_______	_______	_______	_______	_______
Net return before finance costs and taxation		739	(9,574)	(8,835)	679	738	1,417
Finance costs	5	(125)	-	(125)	(120)	-	(120)
		_______	_______	_______	_______	_______	_______
Net return on ordinary activities before taxation		614	(9,574)	(8,960)	559	738	1,297
Taxation on ordinary activities	6	(51)	-	(51)	(55)	-	(55)
		_______	_______	_______	_______	_______	_______
Net return on ordinary activities after taxation		563	(9,574)	(9,011)	504	738	1,242
		_______	_______	_______	_______	_______	_______
Return per Ordinary share (pence):	8	3.50	(59.57)	(56.07)	3.04	4.45	7.49
		_______	_______	_______	_______	_______	_______
The total column of this statement represents the profit and loss account of the Company. No Statement of Total Recognised Gains and Losses has been prepared as all gains and losses have been reflected in the Income Statement. All revenue and capital items in the above statement derive from continuing operations. The accompanying notes are an integral part of the financial statements.

  BALANCE SHEET

		As at	As at
		31 March 2009	31 March 2008
	Notes	£'000	£'000
Fixed assets
Investments designated at fair value through profit or loss	9	33,375	43,583
		___________	___________
Current assets
Debtors	10	209	320
Cash at bank and in hand		1,842	381
		___________	___________
		2,051	701
		___________	___________
Creditors: amounts falling due within one year
Foreign currency bank loans	11	(4,822)	(3,852)
Other creditors	11	(293)	(103)
		___________	___________
		(5,115)	(3,955)
		___________	___________
Net current liabilities		(3,064)	(3,254)
		___________	___________
Net assets		30,311	40,329
		___________	___________
Share capital and reserves
Called-up share capital	12	1,573	1,627
Special reserve		1,015	2,022
Capital redemption reserve		2,159	2,105
Capital reserve	13	25,016	34,590
Revenue reserve		548	(15)
		___________	___________
Equity Shareholders' funds		30,311	40,329
		___________	___________
Net asset value per Ordinary share (pence):	14	192.67	247.82
		___________	___________

  RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

For the year ended 31 March 2009
			Capital
	Share	Special	redemption	Capital	Revenue
	capital	reserve	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 March 2008	1,627	2,022	2,105	34,590	(15)	40,329
Purchase of own shares for cancellation	(54)	(1,007)	54	-	-	(1,007)
Return on ordinary activities after taxation	-	-	-	(9,574)	563	(9,011)
	_______	______	________	_______	_______	_______
Balance at 31 March 2009	1,573	1,015	2,159	25,016	548	30,311
	_______	______	________	_______	_______	_______
For the year ended 31 March 2008
			Capital
	Share	Special	redemption	Capital	Revenue
	capital	reserve	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 March 2007	1,669	2,961	2,063	33,852	(519)	40,026
Purchase of own shares for cancellation	(42)	(939)	42	-	-	(939)
Return on ordinary activities after taxation	-	-	-	738	504	1,242
	_______	______	________	_______	_______	_______
Balance at 31 March 2008	1,627	2,022	2,105	34,590	(15)	40,329
	_______	______	________	_______	_______	_______

  CASHFLOW STATEMENT

		Year ended		Year ended
		31 March 2009		31 March 2008
	Notes	£'000	£'000	£'000	£'000
Net cash inflow from operating activities	15		714		579
Servicing of finance
Bank and loan interest paid			(106)		(121)
Financial investment
Purchases of investments		(4,879)		(7,542)
Sales of investments		7,034		6,102
Expenses allocated to capital		(12)		(5)
		______		______
Net cash inflow/(outflow) from financial investment			2,143		(1,445)
			______		______
Net cash inflow/(outflow) before financing			2,751		(987)
Financing
Purchase of ordinary share capital		(1,007)		(939)
Loan drawn down		572		2,076
		______		______
Net cash (outflow)/inflow from financing			(435)		1,137
			______		______
Increase in cash	16		2,316		150
			______		______
Reconciliation of net cash flow to movements in net debt
Increase in cash as above			2,316		150
Increase in borrowings			(572)		(2,076)
			______		______
Change in net debt resulting from cash flows			1,744		(1,926)
Exchange movements			(1,253)		(77)
			______		______
Movement in net debt in the year			491		(2,003)
Opening net debt			(3,471)		(1,468)
			______		______
Closing net debt	16		(2,980)		(3,471)
			______		______

  NOTES :

1.    Accounting policies
(a)	Basis of accounting and going concern
	The financial statements have been prepared under the historical cost convention, as modified to include the revaluation of investments and in accordance with the applicable UK Accounting Standards and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (issued in January 2009 and adopted early). The early adoption of the January 2009 SORP had no effect on the financial statements of the Company, other than the requirement to separately disclose capital reserves that relate to the revaluation of investments held at the reporting date. These are disclosed in note 13. This new requirement replaces the previous requirement to disclose the value of the capital reserve that was unrealised. They have also been prepared on the assumption that approval as an investment trust will continue to be granted. The financial statements have been prepared on a going concern basis.
(b)	Valuation of investments
	The Company's business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance with a documented investment strategy, and information about the portfolio is provided internally on that basis to the Company's Board of Directors. Accordingly, upon initial recognition the Company designates the investments 'at fair value through profit or loss'. Fair value is taken to be the investments cost at the trade date (excluding expenses incidental to the acquisition which are written off in the Income Statement, and allocated to 'capital' at the time of acquisition).
	Subsequent to initial recognition, investments continue to be designated at fair value through profit or loss, which is deemed to be bid prices, where the bid price is available, or otherwise at fair value based on published price quotations.
(c)	Income
	Dividends (other than special dividends), including taxes deducted at source, are included in revenue by reference to the date on which the investment is quoted ex-dividend. Special dividends are reviewed on a case-by-case basis and may be credited to capital, if circumstances dictate. Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account when the Company's right to receive payment is established. Fixed returns on non-equity shares are recognised on a time apportioned basis so as to reflect the effective interest rate on shares. Other returns on non-equity shares are recognised when the right to return is established. The fixed return on a debt security, if material, is recognised on a time apportioned basis so as to reflect the effective yield on each security. Where the Company has elected to receive its dividends in the form of additional shares rather than cash, the amount of the cash dividend is recognised as income. Any excess in the value of the shares received over the amount of the cash dividend is recognised in capital reserves. Interest receivable on bank balances is dealt with on an accruals basis.
	Where applicable the dividend income is disclosed net of irrecoverable Malaysian and Singaporean taxes deducted at source.
(d)	Expenses
	All expenses are accounted for on an accruals basis. Expenses are allocated to revenue in the Income Statement except as follows:
	-     expenses which are incidental to the acquisition or disposal of an investment are allocated to capital in the Income Statement and separately identified and disclosed in note 8; and
	-     expenses are allocated and borne by capital where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In this respect performance fees are charged 100% to the capital reserve.
(e)	Taxation
	The charge for taxation is based on the revenue return for the financial period.
	Deferred taxation
	Deferred taxation is provided on all timing differences, that have originated but not reversed at the Balance Sheet date, where transactions or events that result in an obligation to pay more or a right to pay less tax in future have occurred at the Balance Sheet date, measured on an undiscounted basis and based on enacted tax rates. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the accounts which are capable of reversal in one or more subsequent periods. Due to the Company's status as an investment trust company, and the intention to continue to meet the conditions required to obtain approval for the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.
(f)	Capital reserve
	Gains and losses on realisation of investments and changes in fair values of investments which are readily convertible to cash, without accepting adverse terms, are transferred to the capital reserve.
(g)	Foreign currencies
	Transactions involving foreign currencies are converted at the rate ruling at the date of the transaction.
	Translation of all other foreign currency balances including foreign assets and foreign liabilities is at the middle rates of exchange at the year end. Differences arising from translation are treated as capital gain or loss to capital or revenue within the Income Statement depending upon the nature of the gain or loss.
(h)	Dividends payable
	Final dividends are recognised in the financial statements in the period in which they are paid.
(i)	Borrowings
	All secured borrowings are initially recognised at cost, being the fair value of the consideration received, less issue costs where applicable, after initial recognition, all interest bearing borrowings are subsequently measured at amortised cost.

		2009	2008
2.	Income	£'000	£'000
	Income from investments designated at fair value through profit and loss
	UK dividend income	59	37
	Overseas dividends	1,175	1,156
	Stock dividends	1	1
		_________	_________
		1,235	1,194
		_________	_________
	Other income
	Underwriting commission	2	-
	Deposit interest	5	8
		_________	_________
		7	8
		_________	_________
	Total income	1,242	1,202
		_________	_________

		2009			2008
		Revenue	Capital	Total	Revenue	Capital	Total
3.	Investment management fee	£'000	£'000	£'000	£'000	£'000	£'000
	Investment management fee	268	-	268	305	-	305
		_______	______	_____	_______	______	______
	During the year the management fee was payable monthly in arrears and was based on an annual amount of 0.75% of total assets less current liabilities of the Company valued monthly. The agreement is terminable on six months notice. The balance due to AAM Asia at the year end was £38,000 (2008 - £50,000). The Company's investment in Aberdeen Global - India Opportunities Fund is excluded from the calculation of the investment management fee.
	The total value of commonly managed funds, on a bid basis (basis on which management fee is calculated), at the year end was £3,782,000 (2008 - £4,110,000).
	In addition, AAM Asia is entitled to a performance related fee of up to 15% of the portfolio's outperformance of the MSCI AC Asia Pacific (including Japan) Index (in Sterling terms).
	In the event that the Company outperforms this benchmark but the year end net asset value per Ordinary share is less than at the previous year end, the performance fee is capped at 0.25% of year end net asset value. The performance fee is only payable where the final net asset value on which the fee is calculated exceeds the net asset value on which any performance fee was paid in the previous three years.
	There was no performance fee due to AAM Asia for the year ended 31 March 2009 (2008 - £nil).

			2008			2008
		Revenue	Capital	Total	Revenue	Capital	Total
4.	Administrative expenses	£'000	£'000	£'000	£'000	£'000	£'000
	Investor relations/Marketing initiative	33	-	33	31	-	31
	Directors' fees	73	-	73	61	-	61
	Safe custody fees	13	12	25	18	5	23
	Transaction costs on investment purchases	-	11	11	-	14	14
	Auditors' remuneration:
	- audit of the financial statements{A}	18	-	18	21	-	21
	- non-audit services	2	-	2	1	-	1
	- other services relating to taxation	-	-	-	1	-	1
	Other	113	-	113	85	-	85
		________	_______	_____	________	_______	_____
		252	23	275	218	19	237
		________	_______	_____	________	_______	_____
	{A} Includes work carried out on the Directors' Remuneration Report, Corporate Governance Statement and Directors' Report.
	The Company has an agreement with Aberdeen Asset Managers Limited ("AAM") for the provision of marketing services in relation to the Company's participation in the Aberdeen Investment Trust Share Plan and ISA. The total fees paid and payable under the agreement were £33,000 (2008 - £31,000) and the accrual to AAM at the year end was £nil (2008 - £nil).
	No pension contributions were made in respect of any of the Directors.
	The Company does not have any employees.

		2009			2008
		Revenue	Capital	Total	Revenue	Capital	Total
5.	Finance costs	£'000	£'000	£'000	£'000	£'000	£'000
	Interest on bank loans and overdrafts	125	-	125	120	-	120
		_______	______	______	______	______	______

		2009			2008
		Revenue	Capital	Total	Revenue	Capital	Total
6.	Taxation on ordinary activities	£'000	£'000	£'000	£'000	£'000	£'000
	(a)    Analysis of charge for the year
	Corporation tax	49	-	49	22	-	22
	Irrecoverable overseas taxation	51	-	51	55	-	55
		_______	_______	_____	_______	_______	_____
		100	-	100	77	-	77
	Relief for overseas taxation	(49)	-	(49)	(22)	-	(22)
		_______	_______	_____	_______	_______	_____
	Current taxation	51	-	51	55	-	55
		_______	_______	_____	_______	_______	_____
	(b)    Factors affecting current tax charge for the year
	The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The differences can be explained below:
						2009	2008
						£'000	£'000
	Net return on ordinary activities before taxation					(8,960)	1,297
						_______	_______
	Net return on ordinary activities multiplied by standard rate of corporation tax in the UK of 28% (2008 - 19%)					(2,509)	246
	Effects of:
	UK dividend income					(17)	(7)
	Losses/(gains) on investments not taxable					2,324	(159)
	Currency losses not taxable					351	15
	Tax on capitalised expenses					6	4
	Irrecoverable overseas withholding tax suffered					51	55
	Relief for overseas taxation					(49)	(22)
	Timing differences on taxation of income					14	(15)
	Excess management expenses used in period					(120)	(62)
						_______	_______
	Current tax charge for the year					51	55

7.	Dividends
	In order to comply with the requirements of Section 842 ICTA 1988 ("Section 842") and with company law, the Company is required to make a final dividend distribution.
	The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability.
	The table below sets out the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of Section 842 are considered. The revenue available for distribution by way of dividend for the year is £548,000 (2008 - £nil).
		2009	2008
		£'000	£'000
	Proposed final dividend for 2009 - 2.4p per Ordinary share (2008 - nil)	378	-
		_______	_______
	The proposed final dividend will be paid on 31 July 2009 to shareholders on the register at the close of business on 3 July 2009.

		2009	2009	2008	2008
8.	Return per Ordinary share	p	£'000	p	£'000
	The return per Ordinary share is based on the following figures:
	Revenue return	3.50	563	3.04	504
	Capital return	(59.57)	(9,574)	4.45	738
		_______	_______	_______	_______
	Total return	(56.07)	(9,011)	7.49	1,242
		_______	_______	_______	_______
	Weighted average Ordinary shares in issue		16,070,688		16,591,260

			Listed	Listed
			overseas	in UK	Total
9.	Investments designated at fair value through profit or loss		£'000	£'000	£'000
	Opening book cost		40,677	1,373	42,050
	Opening investment holding gains		760	773	1,533
			________	________	________
	Opening fair value		41,437	2,146	43,583
	Movements in the year:
	Purchases at cost (excluding transaction costs)		4,463	581	5,044
	Sales	- proceeds (net of transaction costs)	(6,884)	(70)	(6,954)
		- realised (losses)/gains on sales	(1,514)	38	(1,476)
	Decrease in investment holding losses		(5,663)	(1,159)	(6,822)
			________	________	________
	Closing fair value		31,839	1,536	33,375
			________	________	________
			Listed	Listed
			overseas	in UK	Total
			£'000	£'000	£'000
	Closing book cost		36,742	1,922	38,664
	Closing investment holding losses		(4,903)	(386)	(5,289)
			________	________	________
			31,839	1,536	33,375
			________	________	________
				2009	2008
				£'000	£'000
	Investments listed on a recognised investment exchange			33,375	43,583
				________	________
				2009	2008
	(Losses)/gains on investments			£'000	£'000
	Realised (losses)/gains on sales			(1,476)	682
	Decrease in investment holding (losses)/gains			(6,822)	152
				________	________
				(8,298)	834
				________	________
	Transaction costs
	During the year expenses were incurred in acquiring or disposing of investments designated as fair value through profit or loss. Expenses incurred in acquiring investments have been expensed through capital and are included within administration expenses in the Income Statement, whilst expenses incurred in disposing of investments have been expensed through capital and are included within gains on investments in the Income Statement. The total costs were as follows:
				2009	2008
				£'000	£'000
	Purchases			11	14
	Sales			16	10
				________	________
				27	24
				________	________

		2009	2008
10.	Debtors	£'000	£'000
	Amounts due from brokers	4	84
	Prepayments and accrued income	203	234
	Other loans and receivables	2	2
		________	________
		209	320
		________	________

			2009	2008
11.	Creditors: amounts falling due within one year		£'000	£'000
	(a)	Foreign currency bank loans	4,822	3,852
			________	________
		In January 2009, the Company entered into a one year £7,000,000 multi-currency revolving credit facility with Standard Chartered Bank. At the year end, US$5,150,000 (2008 - US$5,700,000, drawn down from a facility with ING Bank N.V.) equivalent to £3,593,000 (2008 - £2,868,000) had been drawn down from Standard Chartered Bank at an all-in interest rate of 2.73% (2008 - 3.30%) which matured on 30 April 2009. At the year end, JPY174,000,000 (2008 - JPY194,700,000, drawn down from a facility with ING Bank) equivalent to £1,229,000 (2008 - £984,000) had been drawn down from Standard Chartered Bank at an all-in interest rate of 2.02% (2008 - 1.67%) which matured on 30 April 2009.
		On 30 April 2009, the principal amounts of the two loans were partly repaid which resulted in loans of US$3,875,000 and JPY128,000,000 being drawn down at all-in interest rates of 2.59% and 1.90%, respectively, until maturity on 30 July 2009.
		The terms of the loan facility with Standard Chartered Bank contain a covenant that total borrowings should not exceed 25% of the net asset value of the Company at any time and that the net asset value should not fall below £15,000,000 at any time. The Company met this covenant throughout the period from January 2009.
		Prior to January 2009, the Company operated a £7,000,000 multi-currency loan facility with ING Bank N.V. The terms of the loan facility with ING N.V. contained a covenant that the total borrowings should not exceed 35% of the adjusted net asset value of the Company at any time and that the adjusted net asset value should not fall below £17,000,000 at any time. Adjusted net assets was defined as net assets less an amount equal to the aggregate of four elements being the value of unlisted investments, any unrated or sub-investment grade bonds, and where any single investment (excluding cash and UK government stock) represents more than 5% of the total assets, the amount by which the value of such investments exceeds 5% of the total assets and, finally, the value of any investments in those countries with long-term foreign currency sovereign ratings by Standard & Poors lower than A. The Company met this covenant throughout the period for which there was a loan drawn down from ING Bank N.V.
			2009	2008
	(b)	Other creditors	£'000	£'000
		Amounts due to brokers	176	-
		Other creditors	117	103
			________	________
			293	103

		2009		2008
			Issued and		Issued and
		Authorised	fully paid	Authorised	fully paid
12.	Called-up share capital	£'000	£'000	£'000	£'000
	Ordinary shares of 10p each	60,000	1,573	60,000	1,627
		__________	__________	__________	__________
	During the year, 541,000 (2008 - 413,800) Ordinary shares of 10p each (representing 3.3% of the issued Ordinary share capital at 31 March 2009) were bought back for cancellation at a total cost of £1,007,000 (2008 - £939,000) including expenses.

		2009	2008
13.	Capital reserve	£'000	£'000
	At 31 March	34,590	33,852
	Movement in investment holdings fair value losses	(6,822)	152
	Losses on realisation of investments at fair value	(1,476)	682
	Exchange losses	(1,253)	(77)
	Administrative expenses	(23)	(19)
		________	________
	At 31 March	25,016	34,590
		________	________
	The capital reserve includes investment holding losses amounting to £5,289,000 (2008 - gains - £1,533,000) as disclosed in note 9.

14.	Net asset value per share
	The net asset value per share and the net asset values attributable to Ordinary Shareholders at the year end calculated in accordance with the Articles of Association were as follows:
		Net asset value			Net asset values
		per share			attributable
		2009	2008		2009	2008
		p	p		£'000	£'000
	Ordinary shares	192.67	247.82		30,311	40,329
		________	________		________	________
	The movements during the year of the assets attributable to the Ordinary shares were as follows:-
					2009	2008
					£'000	£'000
	Net assets attributable at 1 April				40,329	40,026
	Buyback of ordinary shares (including expenses)				(1,007)	(939)
	Capital return for the year				(9,574)	738
	Revenue on ordinary activities after taxation				563	504
					________	________
	Net assets attributable at 31 March				30,311	40,329
					________	________
	The net asset value per Ordinary share is based on net assets, and on 15,732,367 (2008 - 16,273,367) Ordinary shares, being the number of Ordinary shares in issue at the year end.

15.	Reconciliation of net return before finance costs and taxation	2009	2008
	to net cash inflow from operating activities	£'000	£'000
	Return on ordinary activities before finance costs and taxation	(8,835)	1,417
	Adjustments for:
	Losses/(gains) on investments	8,298	(834)
	Expenses taken to capital reserve	23	19
	Foreign exchange movements	1,253	77
		________	________
		739	679
	Decrease/(increase) in accrued income	31	(80)
	Decrease in other debtors	9	27
	(Decrease)/increase in other creditors	(5)	3
	Overseas withholding tax suffered	(60)	(50)
		________	________
	Net cash inflow from operating activities	714	579
		________	________

		1 April	Cash	Exchange	31 March
		2008	flow	movements	2009
16.	Analysis of changes in net debt	£'000	£'000	£'000	£'000
	Cash at bank	381	2,316	(855)	1,842
	Debts falling due within one year	(3,852)	(572)	(398)	(4,822)
		________	________	________	________
	Net debt	(3,471)	1,744	(1,253)	(2,980)
		________	________	________	________

17.	Related party disclosures
	During the course of the year, the Company has held investments in other funds managed by the same manager. These holdings are disclosed in note 3.

18.	Financial instruments
	Risk management
	The Company's financial instruments comprise securities and other investments, cash balances, loans and debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and debtors for accrued income.
	The main financial risks that the Company faces from its financial instruments are market price risk, interest rate risk, liquidity risk and credit risk.
	The Board has established policies for managing each of these risks and reviews regularly their implementation by the Manager. The Company's policies for managing these risks are summarised below and have been applied throughout the year.
	Market price risk
	The fair value of or future cash flows from a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises two elements - security price risk and currency risk.
	Security price risk
	Changes in market prices for the Company's portfolio of securities directly affect their reported value in the Balance Sheet.
	It is the Board's investment policy for the Company's assets to be invested in a selected portfolio of securities in quoted companies. The Manager has a dedicated investment management process, which ensures that the risk inherent in this investment policy is controlled. Underlying the process is the belief that risk is not that individual stock prices fluctuate in the short term, or that movement in the value of the portfolio deviates from the benchmark but that risk is investment in poorly managed expensive companies which the Manager does not understand. In depth research and stock selection procedures are in place based on this risk control philosophy. The portfolio is reviewed on a periodic basis by the Manager's Investment Committee and by the Board.
	Security price sensitivity
	If market prices at the Balance Sheet date had been 10% higher or lower while all other variables remained constant, the return attributable to Ordinary Shareholders for the year ended 31 March 2009 would have increased/decreased by £3,338,000 (2008 increased/decreased by £4,358,000) and equity reserves would have increased/decreased by the same amount.
	Foreign currency risk
	All of the Company's investment portfolio is invested in overseas securities and the Balance Sheet, therefore, can be significantly affected by movements in foreign exchange rates. It is not the Company's policy to hedge this risk on a continuing basis but the Company may, from time to time, match specific overseas investment with foreign currency borrowings. The Company's borrowings, as detailed in note 10, are also in foreign currency.
	The revenue account is subject to currency fluctuation arising on dividends paid in foreign currencies. The Company does not hedge this currency risk.
	Foreign currency risk exposure (excluding short-term debtors and creditors) by currency of denomination:

		31 March 2009			31 March 2008
			Net	Total		Net	Total
		Overseas	monetary	currency	Overseas	monetary	currency
		investments	assets	exposure	investments	assets	exposure
		£'000	£'000	£'000	£'000	£'000	£'000
	Australian Dollar	987	-	987	1,669	-	1,669
	Hong Kong Dollar	4,788	(120)	4,668	6,168	-	6,168
	Japanese Yen	9,029	(1,229)	7,800	10,589	(984)	9,605
	Korean Won	1,750	4	1,754	3,895	84	3,979
	Malaysian Ringgit	1,450	-	1,450	2,152	-	2,152
	Philippine Peso	573	-	573	683	-	683
	Singaporean Dollar	5,372	(56)	5,316	6,944	-	6,944
	Sterling	5,318	164	5,482	6,255	61	6,316
	Taiwanese Dollar	1,459	139	1,598	2,449	302	2,751
	Thailand Baht	1,134	-	1,134	1,512	-	1,512
	US Dollar	1,515	(2,054)	(539)	1,267	(2,850)	(1,583)
		________	________	________	________	________	________
	Total	33,375	(3,152)	30,223	43,583	(3,387)	40,196
		________	________	________	________	________	________

	Foreign currency sensitivity
	There is no sensitivity analysis included as the Company's significant foreign currency financial instruments are in the form of equity investments, which have been included within the other price risk sensitivity analysis so as to show the overall level of exposure.
	Interest rate risk
	Interest rate movements may affect:
	- the level of income receivable on cash deposits; and
	- interest payable on the Company's variable rate borrowings.
	The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions.
	Interest rate sensitivity
	Movements in interest rates would not significantly affect net assets attributable to the Company's Shareholders and total profit.
	Liquidity risk
	This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. Liquidity risk is not considered to be significant as the Company's assets mainly comprise readily realisable securities which can be sold to meet funding requirements if necessary and short-term flexibility is achieved through the use of loan facilities, details of which may be found in note 10.
	Liquidity risk exposure
	At 31 March 2009 and 31 March 2008 the Company's bank loans, amounting to £4,822,000 and £3,852,000, respectively, were both due for repayment or roll-over within six months along with interest due on the amount of the principal at the same time.
	Credit risk
	This is the risk of failure of the counterparty to a transaction to discharge its obligations under that transaction that could result in the Company suffering a loss.
	The risk is not significant given the relatively small amounts involved, and is managed as follows:
	-	investment transactions are carried out with a large number of brokers of good quality credit standing; and
	-	cash is held only with reputable banks with high quality external credit enhancements.
	None of the Company's financial assets is secured by collateral or other credit enhancements and none are past due or impaired.
	Credit risk exposure
	The amount of cash at bank and in hand of £1,842,000 (2008 - £381,000) and debtors of £209,000 (2008 - £320,000) in the Balance Sheet represent the maximum exposure to credit risk at 31 March.

19.	Capital management policies and procedures
	The Company's capital management objectives are:
	- to ensure that the Company will be able to continue as a going concern, and
	- to maximise the income and capital return to its equity shareholders through an appropriate balance of equity capital and debt. The Board normally seeks to limit gearing to 15% of net assets.
	The Board monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes the nature and planned level of gearing, which takes account of the Manager's views on the market and the extent to which revenue in excess of that which is required to be distributed should be retained.
	The Company's objectives, policies and processes for managing capital are unchanged from the preceding accounting period.

20.	Contingent liabilities
	Cash balances held in India amounting to the equivalent of £409,000 (2008 - £373,000) have been blocked since 2001 pending resolution of an action by an agency of the Indian Government in relation to a closed investment transaction. Additionally, as an extension of this action, regulatory action in India may be initiated against various parties including the Company which, inter alia, may seek to repatriate investment proceeds from the UK. These issues affect some 20 foreign institutional investors. The Company has ceased to recognise any value in these balances for the purpose of these accounts.
	The Company is defending itself strenuously against this potential action. The Company has commenced proceedings in the Indian High Court seeking an order lifting the blocking order imposed on the Company's bank account and, as an interim protective measure, a direction that the blocked funds should not be taken arbitrarily. These proceedings are continuing.
	The Company had no other contingent liabilities at 31 March 2009.

21.	Subsidiary undertaking
	Mountain View Securities Limited, a wholly owned subsidiary, was dissolved by the Registrar of Companies on 20 August 2008.

Additional notes for Annual Financial Report:

This Annual Financial Report announcement is not the Company's statutory accounts. The statutory accounts for the year ended 31 March 2008 have been delivered to the Registrar of Companies. The statutory accounts for the years ended 31 March 2008 and 31 March 2009 received an audit report which was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not include a statement under either section 237(2) or 237(3) of the Companies Act 1985. The statutory accounts for the financial year ended 31 March 2009 have been approved by the Board and audited but will not be filed with the Registrar of Companies until after the Company's Annual General Meeting which will be held at 11.00am on 28 July 2009 at One Bow Churchyard, Cheapside, London EC4M 9HH.

The Annual Report will be posted to shareholders in June 2009 and copies will be available from the Manager or from the Company's website (www.all-asia.co.uk).

Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise and may be affected by exchange rate movements. Investors may not get back the amount they originally invested.

For Aberdeen All Asia Investment Trust PLC

Aberdeen Asset Management PLC, Secretaries

END

 

END

 

 

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