Annual Financial Report

RNS Number : 6279D

Aberdeen Asian Smaller Co's Inv Tst

28 October 2015

ABERDEEN ASIAN SMALLER COMPANIES INVESTMENT TRUST PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 JULY 2015

STRATEGIC REPORT - COMPANY SUMMARY AND FINANCIAL HIGHLIGHTS

Financial Highlights

	31 July 2015	31 July 2014	% change
Total assets	£380,911,000	£405,840,000	-6.1
Total equity shareholders' funds (net assets)	£343,967,000	£369,118,000	-6.8
Net asset value per share (basic)	906.16p	968.89p	-6.5
Net asset value per share (diluted)	896.31p	952.52p	-5.9
Share price (mid market)	790.00p	946.00p	-16.5
Market capitalisation	£299,875,000	£360,396,000	-16.8
Discount to net asset value (diluted)	11.9%	0.7%
MSCI AC Asia Pacific ex Japan Index (currency adjusted, capital gains basis)	540.72	564.62	-4.2
MSCI AC Asia Pacific ex Japan Small Cap Index (currency adjusted, capital gains basis)	1,138.98	1,179.98	-3.5
Net gearing^A	8.8%	8.4%

Dividends and earnings
Total return per share (basic)^B	(50.13)p	(31.46)p
Revenue return per share (basic)	18.21p	11.43p	+59.3
Dividends per share^C	15.00p	13.00p	+15.4
Dividend cover	1.21	0.88	+37.5
Revenue reserves^D	£10,553,000	£8,568,000	+23.2

Operating costs
Ongoing charges ratio^E	1.46%	1.44%

^A Calculated in accordance with AIC guidance "Gearing Disclosures post RDR".
^B Measures the total earnings for the year divided by the weighted average number of Ordinary shares in issue (see note 8).
^C The figures for dividends per share reflect the dividends for the year in which they were earned.
^D Prior to payment of final and special dividends.
^E Ongoing charges ratio calculated in accordance with guidance issued by the AIC as the total of the investment management fee and administrative expenses divided by the average cum income net asset value throughout the year. Management fees are charged on the basis of the average net asset value of the Company over a rolling 24 month period.

STRATEGIC REPORT - CHAIRMAN'S STATEMENT

Results

During the last year, we have seen the collapse in energy and commodity prices, the rise and fall of the equity markets in China and the weakness in regional currencies across Asia.

Against this backdrop, the net asset value total return, in Sterling terms, fell by 4.7%. Approximately 1.3% of this fall is attributed to currency loss. This compared to a fall in the MSCI AC Asia Pacific ex Japan Index of -1.2% and the MSCI AC Asia Pacific ex Japan Small Cap Index's return of
-0.8%. During the same period, market uncertainty saw the discount widen with a consequent fall in the share price from 946.0p to 790.0p.

2015 is our 20th anniversary. In the brochure that will accompany the Annual Report (copies of which are available for download on the Company's website: asian-smaller.co.uk), we have attempted to chronicle the history of this Company in the context of the underlying story which has seen the Asia-Pacific region emerge to become amongst the most vibrant in the world. We have seen our net assets grow from £35m to over £380m but this has not happened in a straight line. Since 1995, there have been three periods of great economic and market uncertainty and 2015 looks as though it will be a fourth.

However, on each previous occasion, the companies in which we invest have continued to grow their businesses to the benefit of their shareholders. The fundamental reason for this goes to the heart of the investment philosophy that has been pursued by Hugh Young and his team at Aberdeen in Singapore since the Company's inception. It is based on carrying out fundamental research to establish that each company in which we invest has strong management, a robust balance sheet and excellent prospects. This philosophy has stood us in good stead in the past and both your Board and the management team at Aberdeen believe it will on this occasion.

While the accompanying brochure deals with the local economic background in greater depth, it is worth noting that amid all the current commentary on the slowdown in China, The Economist Intelligence Unit is projecting that "By 2050, the Asia-Pacific region is on track to constitute more than half of the global economy. In the process it will again transform beyond recognition". Underpinning this statement is the fact that Asia is home to some of the world's largest and fastest growing retail markets. "By 2018, retail sales in China will approximate those of the US, while sales in Indonesia will come close to matching those of Germany."

The smaller companies in the portfolio serve the local markets and therefore will enjoy the benefits of an emerging and economically powerful middle class across the region.

It is also important to closely monitor ongoing investments to ensure that they continue to meet the criteria on which the original investment decision was made. With its broad spread of offices in the region, Aberdeen is well placed to not only do this but also to identify potential new investments.

As we have seen, investing in a smaller company during its growth stages can reap outsized rewards. In serving niche markets with steady demand for their products and services, these companies are more likely to enjoy rapid growth compared to their larger counterparts operating in mature western markets. Small-cap stocks can be overlooked, as analysts typically focus on better-known large-cap names. A lack of research across such a broad sector means that there is more scope for market mispricing, which provides opportunities to purchase quality holdings at attractive valuations.

Overview

While the medium term continues to offer great opportunities, there were four short-term broad macroeconomic themes that dominated during the year.

The first was the collapse in energy prices. This has been largely positive for Asian countries, such as India, Indonesia and Thailand, as the bulk of these economies are net importers of energy and should therefore benefit from lower import prices. In addition, this presents an opportunity for governments to remove fuel subsidies that have been costly, while more importantly providing resources for spending on key areas such as infrastructure. Lower inflationary pressures from reduced energy prices also provided policymakers with more flexibility to boost growth. This will particularly help India regain some of the momentum lost under the previous Government.

The second was the collapse in commodity prices. Lower crude palm oil prices weighed on Malaysia, which is one of the world's largest exporters of palm oil. Concerns over the impact on the economy weighed on both its equity market and its currency, the ringgit, over the period. Our exposure to Malaysia's palm oil sector has hurt performance but we remain confident of the longer-term prospects of these holdings, which are backed by solid balance sheets. Meanwhile, iron ore prices sank to their lowest since the global financial crisis, hovering around US$50 a tonne. Australia felt the brunt of the fallout, as its trade deficit was worsened by sharply lower bulk commodity prices that drove a fall in export values, with the consequential impact on economic growth. We are underweight to Australia and have no exposure to commodity companies there, and hence, we have been sheltered from any negative impact on performance as a result.

The third was the rise and fall of the equity markets in China. During the review period, Chinese stocks rose to multi-year highs following Beijing's rate cuts and fresh initiatives to liberalise its capital markets. Companies became increasingly expensive against the backdrop of deteriorating macroeconomic conditions and fundamentals. The liquidity-fuelled rally, however, did not last long. Despite the government's supportive measures, stocks continued to fall in July, most notably with the Shanghai stock market posting the biggest one-day loss in eight years. The steep decline vindicated Aberdeen's disinclination to follow the herd and the importance of investing in companies with solid fundamentals. We continue to have little exposure to Chinese companies due to the challenges in finding companies that fit our quality investment criteria.

The fourth was the weakness in regional currencies across Asia. Regional currencies, such as the Australian dollar, Malaysian ringgit, Indonesian rupiah and Thai baht, weakened against the US dollar. Expectations of a Federal Reserve rate increase have fuelled a shift towards US-dollar assets. The Malaysian ringgit was further beset by deepening political problems and allegations of corruption.

Dividend

As I have advised in previous years, subject to market conditions, it is your Company's aim to maintain or increase the Ordinary dividend so that shareholders can rely on a consistent stream of income.

In the current year, we have seen a steady increase in both ordinary income and in the income that we receive as special dividends. Accordingly, the Board is pleased to recommend an increase in the Ordinary dividend by 0.5p to 10.5p (2014: 10.0p) and to recommend a special dividend of 4.5p (2014: 3.0p). If approved by shareholders at the Annual General Meeting of the Company on 1 December 2015, the final and special dividends will be paid on 4 December 2015 to shareholders on the register on 6 November 2015.

It is worth noting that in the last 20 years, the Board has recommended an increase in the dividend in all but seven years and has paid special dividends in nine of these years.

Gearing and Share Capital Management

The Company's year-end net gearing was 8.8%. The majority of the gearing is provided by the Convertible Unsecured Loan Stock of which approximately £33 million remains outstanding. The Company also has a £20 million loan facility with State Street and £5.0 million was drawn down under that facility at the year end. On 1 September 2015 the Board approved the drawing down of a further $9 million under the facility in order to allow the Manager to exploit on-going turbulence in the markets. The Directors monitor the Company's gearing on a regular basis in accordance with the Company's investment policy and under advice from the Manager.

During the year the Company purchased for treasury 142,000 Ordinary shares at a discount to the prevailing NAV. Subsequent to the period end a further 590,947 Ordinary shares have been purchased into treasury. Share buy backs can reduce the volatility of any discount as well as modestly enhancing the NAV for shareholders.

Annual General Meeting

The Annual General Meeting is scheduled to be held on 1 December 2015 at 11.30 a.m. In addition to the usual ordinary business, as special business the Board is seeking to renew its authority to issue new shares and sell treasury shares for cash at a premium without pre-emption rules applying and to renew its authority to buy back shares and either hold them in treasury for future resale (at a premium to the prevailing net asset value per share) or cancel them.

The Board is happy to take general questions on the Annual Report and financial statements at the meeting but would advise that questions of a technical nature should be addressed in writing to the Company Secretary, in advance.

We look forward to seeing as many shareholders as possible and very much hope that any, who wish, will stay for lunch afterwards.

Outlook

The story over the last twenty years has been remarkable. The Asia-Pacific region will continue as a key player in the global economic story. Your Board together with Hugh Young and his team believe that the portfolio is well positioned to benefit from strong growth across the region. While short term movements in the market are hard to judge, we remain confident that the companies in which we invest, will continue to prosper, grow their dividends and add value in the years to come.

On a more personal note, I would like to thank all those involved in the Company- shareholders, Directors, Managers or advisors, for all their enormous support and help during the last twenty years- it has been a great honour and pleasure to serve as your Chairman during this period.

Nigel Cayzer

Chairman

27 October 2015

STRATEGIC REPORT - OVERVIEW OF STRATEGY

Business Model

The business of the Company is that of an investment company which seeks to qualify as an investment trust for UK capital gains tax purposes.

The Company aims to maximise total return to shareholders over the long term from a portfolio of smaller quoted companies (with a market capitalisation of up to approximately US$1 billion at the time of investment) in the economies of Asia and Australasia, excluding Japan by following the investment policy described below. When it is in shareholders' interests to do so, the Company reserves the right to participate in the rights issue of an investee company notwithstanding that the market capitalisation of that investee may exceed the stated ceiling. The Directors do not envisage any change in this activity in the foreseeable future.

Investment Policy and Approach

The Company's assets are invested in a diversified portfolio of securities (including equity shares, preference shares, convertible securities, warrants and other equity-related securities) in quoted smaller companies spread across a range of industries and economies in the investment region including Australia, Bangladesh, China, Hong Kong, India, Indonesia, Korea, Malaysia, New Zealand, Pakistan, The Philippines, Singapore, Sri Lanka, Taiwan and Thailand, together with such other countries in Asia as the Directors may from time to time determine, (collectively, the "Investment Region").

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

Risk Diversification

The Company does not invest more than 15% of its gross assets at the time of investment either in other listed investment companies (including listed investment trusts), or in the shares of any one company. The Manager is authorised to invest up to 15% of the Company's gross assets in any single stock.

Gearing

The Board is responsible for determining the gearing strategy for the Company. Gearing is used selectively to leverage the Company's portfolio in order to enhance returns where and to the extent this is considered appropriate to do so. Gearing is subject to a maximum gearing level of up to 25% of adjusted NAV at the time of draw down.

Delivering the Investment Policy

The Directors are responsible for determining the investment policy and the investment objective of the Company. Day to day management of the Company's assets has been delegated, via the AIFM, to the Investment Manager, AAM Asia. AAM Asia invests in a diversified range of companies throughout the Investment Region in accordance with the investment policy. AAM Asia follows a bottom-up investment process based on a disciplined evaluation of companies through direct visits by its fund managers. Stock selection is the major source of added value. No stock is bought without the fund managers having first met management. The Investment Manager estimates a company's worth in two stages, quality then price. Quality is defined by reference to management, business focus, the balance sheet and corporate governance. Price is calculated by reference to key financial ratios, the market, the peer group and business prospects. Top-down investment factors are secondary in the Investment Manager's portfolio construction, with diversification rather than formal controls guiding stock and sector weights. Except for the maximum market capitalisation limit, little regard is paid to market capitalisation.

A detailed description of the investment process and risk controls employed by the Investment Manager is disclosed in the Annual Report. A comprehensive analysis of the Company's portfolio is disclosed on below including a description of the ten largest investments, the portfolio investments by value, sector/geographical analysis and currency/market performance. At the year end the Company's portfolio consisted of 78 holdings.

Comparative Indices

The Company does not have a benchmark. The Investment Manager utilises two general regional indices, the MSCI AC Asia Pacific ex Japan Index (currency adjusted) and the MSCI AC Asia Pacific ex Japan Small Cap Index (currency adjusted), as well as peer group comparisons for Board reporting. It is likely that performance will diverge, possibly quite dramatically in either direction, from these or any other indices. The Investment Manager seeks to minimise risk by using in depth research and does not see divergence from an index as risk.

Key Performance Indicators (KPIs)

The Board uses a number of financial performance measures to assess the Company's success in achieving its objective and determine the progress of the Company in pursuing its investment policy. The main KPIs identified by the Board in relation to the Company which are considered at each Board meeting are as follows:

KPI	Description
Performance and net asset value	The Board considers the Company's net asset value total return figures to be the best indicator of performance over time and is therefore the main indicator of performance used by the Board. The figures for this year and for the past 3, 5 and 10 years are set out in the annual Report.
Performance against comparative indices	The Board also measures performance against a combination of two regional indices - the MSCI AC Asia Pacific ex Japan Index (currency adjusted) and the MSCI AC Asia Pacific ex Japan Small Cap Index (currency adjusted) together with comparison against its peers. Graphs showing performance are shown in the Annual Report. The Board also monitors performance relative to competitor investment trusts over a range of time periods, taking into consideration the differing investment policies and objectives employed by those companies.
Share price (on a total return basis)	The Board also monitors the price at which the Company's shares trade relative to the MSCI Asia Pacific ex Japan Index (sterling adjusted) on a total return basis over time. A graph showing the total NAV return and the share price performance against the comparative index is shown in the Annual Report.
Discount/Premium to net asset value	The discount/premium relative to the net asset value per share represented by the share price is closely monitored by the Board. The objective is to avoid large fluctuations in the discount relative to similar investment companies investing in the region by the use of share buy backs subject to market conditions. A graph showing the share price premium/ (discount) relative to the NAV is also shown in the Annual Report.
Dividend	The Board's aim is to maintain or increase the Ordinary dividend so that shareholders can rely on a consistent stream of income. Dividends paid over the past 10 years are set out in the Annual Report.

Principal Risks and Uncertainties

There are a number of risks which, if realised, could have a material adverse effect on the Company and its financial condition, performance and prospects. The Board have identified the principal risks and uncertainties facing the Company at the current time in the table below together with a description of the mitigating actions taken by the Board. The principal risks associated with an investment in the Company's shares are published monthly on the Company's factsheet or they can be found in the pre-investment disclosure document published by the Manager, both of which are on the Company's website. The Board reviews the risks and uncertainties faced by the Company in the form of a risk matrix and heat map at its annual audit committee and a summary of the principal risks are set out below.

Description	Mitigating Action
Investment strategy and objectives - the setting of an unattractive strategic proposition to the market and the failure to adapt to changes in investor demand may lead to the Company becoming unattractive to investors, a decreased demand for shares and a widening discount	The Board keeps the level of discount at which the Company's shares trade as well as the investment objective and policy under review and in particular holds an annual strategy meeting where the Board reviews updates from the Investment Manager, investor relations reports and the Broker on the market. In particular, the Board is updated at each board meeting on the make up of and any movements in the shareholder register.
Investment portfolio, investment management - investing outside of the investment restrictions and guidelines set by the Board could result in poor performance and inability to meet the Company's objectives, as well as a weakening discount	The Board sets, and monitors, its investment restrictions and guidelines, and receives regular board reports which include performance reporting on the implementation of the investment policy, the investment process and application of the guidelines. The Investment Manager attends all Board meetings. The Board also monitors the Company's share price relative to the net asset value
Financial obligations - the ability of the Company to meet its financial obligations, or increasing the level of gearing, could result in the Company becoming over-geared or unable to take advantage of potential opportunities and result in a loss of value to the Company's shares. It could also result in the Company being unable to meet the interest repayments due on the CULS.	The Board sets a gearing limit and receives regular updates on the actual gearing levels the Company has reached from the Investment Manager together with the assets and liabilities of the Company and reviews these at each Board meeting. In addition, Aberdeen Fund Managers Limited, as alternative investment fund manager, has set an overall leverage limit of 2x on a commitment basis (2.5x on a gross notional basis) includes updates in its reports to the Board.
Financial and Regulatory - the financial risks associated with the portfolio could result in losses to the Company. In addition, failure to comply with relevant regulation (including the Companies Act, the Financial Services and Markets Act, the Alternative Investment Fund Managers Directive, Accounting Standards and the listing rules, disclosure and prospectus rules) may have an impact on the Company.	The financial risks associated with the Company include market risk, liquidity risk and credit risk, all of which are mitigated by the Investment Manager. Further details of the steps taken to mitigate the financial risks associated with the portfolio are set out in note 19 to the financial statements. The Board relies upon the Aberdeen Group to ensure the Company's compliance with applicable regulations and from time to time employs external advisers to advice on specific concerns.
Operational - the Company is dependent on third parties for the provision of all systems and services (in particular, those of Aberdeen Asset Management) and any control failures and gaps in these systems and services could result in a loss or damage to the Company	The Board receives reports from the Manager on internal controls and risk management at each board meeting. It receives assurances from all its significant service providers, as well as back to back assurances where activities are themselves sub-delegated to other third party providers with which the Company has no direct contractual relationship. Further details of the internal controls which are in place are set out in the Directors' Report.

Promoting the Company

The Board recognises the importance of promoting the Company to prospective investors both for improving liquidity and enhancing the value and rating of the Company's shares. The Board believes an effective way to achieve this is through subscription to and participation in the promotional programme run by the Aberdeen Group on behalf of a number of investment trusts under its management. The Company's financial contribution to the programme is matched by the Aberdeen Group. The Aberdeen Group Head of Brand reports quarterly to the Board giving analysis of the promotional activities as well as updates on the shareholder register and any changes in the make up of that register.

The purpose of the programme is both to communicate effectively with existing shareholders and to gain new shareholders with the aim of improving liquidity and enhancing the value and rating of the Company's shares. Communicating the long-term attractions of your Company is key and therefore the Company also supports the Aberdeen Group's investor relations programme which involves regional roadshows, marketing and public relations campaigns.

Board Diversity

The Board recognises the importance of having a range of skilled, experienced individuals with the right knowledge represented on the Board in order to allow the Board to fulfill its obligations. The Board also recognises the benefits, and is supportive, of the principle of diversity in its recruitment of new board members.

At 31 July 2015, there were six male Directors and one female Director on the Board.

Environmental, Social and Human Rights Issues

The Company has no employees as the Board has delegated day to day management and administrative functions to Aberdeen Fund Managers Limited. There are therefore no disclosures to be made in respect of employees. The Company's socially responsible investment policy is outlined below.

Socially Responsible Investment Policy

The Board acknowledges that there are risks associated with investment in companies which fail to conduct business in a socially responsible manner and has noted the Aberdeen Group's policy on social responsibility. The Investment Manager considers social, environmental and ethical factors which may affect the performance or value of the Company's investments as part of its investment process. In particular, the Investment Manager encourages companies in which investments are made to adhere to best practice in the area of Corporate Governance. They believe that this can best be achieved by entering into a dialogue with company management to encourage them, where necessary, to improve their policies in this area. The Company's ultimate objective, however, is to deliver superior investment return for its shareholders. Accordingly, whilst the Investment Manager will seek to favour companies which pursue best practice in the above areas, this must not be to the detriment of the return on the investment portfolio.

Global Greenhouse Gas Emissions

The Company has no greenhouse gas emissions to report from the operations of its business, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013.

Future

Many of the non-performance related trends likely to affect the Company in the future are common across all closed ended investment companies, such as the attractiveness of investment companies as investment vehicles, the impact of regulatory changes (including MiFID II and Packaged Retail Investment and Insurance Products) and the recent changes to the pensions and savings market in the UK. These factors need to be viewed alongside the outlook for the Company, both generally and specifically, in relation to the portfolio. The Board's view on the general outlook for the Company can be found in my Chairman's statement whilst the Investment Manager's views on the outlook for the portfolio are included below.

Nigel Cayzer

Chairman

27 October 2015

STRATEGIC REPORT - MANAGER'S REVIEW

Overview

Asian small-cap equities generally retreated during the year. Monetary policy easing supported sentiment, as growth weakened globally except in the US, where recovery appeared to gain traction. The US Federal Reserve contemplated policy normalisation. Elsewhere, the reverse was true, with Europe launching quantitative easing, while most Asian central banks trimmed interest rates. Tumbling oil prices soothed inflation fears and enabled the reduction or removal of fuel-subsidy cuts across Southeast Asia, diverting resources towards more productive infrastructure projects.

In early 2015, China's accelerated stimulus efforts drove heavy speculative buying in its domestic markets. Other Asian markets rode on the feel-good sentiment, rallying sharply through April. Market momentum, however, reversed dramatically thereafter. Most global asset classes suffered heightened volatility. This was driven by turbulence in Chinese equities, anxiety over Greece and a commodity rout. China's faltering economy and concerns over systemic risk sparked several stop-gap measures that granted markets only a temporary reprieve. Prices of many commodities sank to multi-year lows on the back of dwindling demand from China.

After the review period, China's central bank devalued the yuan, shaking regional stock and currency markets, as investors interpreted the move as a sign that the economy was in much worse shape than conveyed by official data.

Portfolio Review

The portfolio underperformed the regional small-cap benchmark over the period. We have heavy exposure to India, where we find quality companies that rank among the top in Asia. It is worth noting that our country weightings result from where we find the best companies. Our overweight position benefited the fund, as the Indian stockmarket was the best regional performer, buoyed by hopes that the new government under prime minister Narendra Modi would press ahead with much-needed reforms. Our Indian holdings also performed impressively relative to the domestic stock market. Optimism over consumer spending and a recovery in the domestic car sector boosted industrial and auto paints maker Kansai Nerolac Paints and lubricants producer Castrol India. Cement-maker Ramco Cements benefited from the government's focus on fixing creaky infrastructure. Gujarat Gas' plans to merge with sister company GSPC Gas were viewed positively by the market. Godrej Consumer Products also outperformed, given its healthy bottom line and leading position in the fast-moving consumer goods industry.

In China, we have long been apprehensive about the quality of domestic companies and, hence, remain underweight there. The dominant role of the state is also a deterrent. During the period, we saw irrational exuberance, as local speculators dominated the run-up and fundamentals proved inconsequential. The subsequent correction saw big state-owned entities engaging in national service by supporting the market. Our light exposure hurt performance, as the stockmarket was among the best performers despite the sell-off.

We prefer to gain exposure to China via smaller companies listed in Hong Kong that have operations on the mainland. The territory has the added advantage of better standards of accounting and transparency. The underlying holdings there, particularly Dah Sing Financial, benefited from the broader China rally.

Elsewhere, in North Asia, the lack of exposure to Taiwan added to performance, owing to expectations that slowing exports could hurt some of the country's core industries, such as electronics. But the underweight to Korea dampened returns, given that the market was the second-strongest regional performer after India, led by sizzling gains in health-care and internet stocks. The central bank cut interest rates to a record low of 1.75% in efforts to revitalise the economy. The portfolio has a small position in the country, because chaebol domination can make the business landscape less competitive, while moves to prevent hostile domestic takeovers have also raised concerns.

The plunge in commodity prices hurt stockmarkets and currencies of resources-exporting countries, such as Australia, Indonesia and Malaysia. Investors worried about the impact of shrinking revenues on government income and economic growth, although depreciating currencies could offer some cushion. The portfolio benefited from its light exposure to energy and mining-related stocks, particularly in Australia, which sold off heavily. We maintain our view that small-cap producers in the highly cyclical sector tend to be less efficient and unable to derive the same economies of scale as their large-cap peers. At the stock level, our holding in ARB - which makes and sells parts for four-wheel-drive vehicles - contributed to performance; its exports were boosted by the weak currency, while its domestic and Thai plants operated efficiently through the year.

Conversely, the heavy exposure to Indonesia and Malaysia detracted from performance. Aside from commodity weakness, country-specific risks also eroded sentiment. In Indonesia, delays to government projects weighed on investment activity and confidence, with questions over the ability of president Joko Widodo to navigate the political waters and boost the economy. He has since realigned his cabinet, bringing in former central bank governor, Darmin Nasution, and a close ally, Luhut Panjaitan. Among our holdings, cement-maker Holcim Indonesia's shares fell in tandem with other cement stocks, as president Jokowi requested state-owned producers to cut prices. Our view is that as infrastructure projects kick off in the second half of 2015, cement demand should begin to rise. Another weak performer was Multi Bintang, as the brewer reported weaker results amid a tightening regulatory environment.

Elsewhere, the political storm over alleged misuse of funds at state-owned 1MDB caused the ringgit to plumb new multi-year lows, amid concerns over the deterioration of sovereign governance. Some of our holdings lagged over the period. Retailer Aeon Co (Malaysia), a core holding, was hurt by higher store-opening costs and weaker consumer confidence after the goods and services tax was implemented in April. We continue to hold it because of its established brand, wide store network and pipeline of new malls. Despite share price weakness, Shangri-La Hotel (Malaysia)'s results were decent and the weak ringgit could boost tourist arrivals.

Portfolio Activity

A few companies caught our eye on quality and valuation grounds, and we initiated positions in their stocks. Among them was Singapore-listed Chinese property company First Sponsor Group. It has a solid balance sheet, enabling it to fund its development pipeline targeting the mass market. One of its key shareholders is the Kwek family, who also owns the biggest stake in City Developments (CDL), an established large-cap real estate group that we know well. The stock was received as an in-specie distribution from an existing holding, Millennium & Copthorne Hotels New Zealand, a CDL unit. We subsequently added to our position. Our confidence in the Kwek stewardship also led us to initiate a position in New Zealand-listed property firm CDL Investments, a subsidiary of Millennium & Copthorne.

We also introduced Manulife Malaysia, an insurer with a growing domestic franchise. It is backed by a strong parent in Canadian-based financial services group Manulife Financial. Another new holding was MayAir Group, as we participated in its initial public offering on London's AIM market. MayAir supplies air-filtration systems for industrial cleanrooms and is a leading brand in China, the biggest market for cleanrooms. Since it was founded in 2001, MayAir has been profitable, owing to a healthy order book and recurring revenues from filter replacements. We also invested in Malaysia's Riverstone Holdings, the global leader in cleanroom gloves used in semiconductor manufacturing. It has decent operating margins, strong operating cash flow and a net-cash balance sheet.

In addition, we supported the rights issues of Korea's DGB Financial, given its regional market position, solid customer relationships and loan growth expectations, and Yoma Strategic, a Singapore-listed conglomerate with businesses in property, agriculture and tourism in Myanmar. Both issues were priced at an attractive discount. We also added to our position in Pacific Basin Shipping. The operating environment remains tough, but the company runs a solid operation in its core chartering business.

Conversely, we capitalised on the Indian market's rally to take profits in several holdings, such as Castrol India, Godrej Consumer, Gujarat Gas and Kansai Nerolac.

Outlook

We expect conditions to remain difficult across Asia and, hence, are cautious about the earnings outlook in the year ahead, although valuations remain reasonable with the Company's portfolio trading at a forward multiple of around 15.9 times for the financial year 2015 (as of end-July). Your Chairman has highlighted key challenges for the region. In such a climate, we are sticking to our knitting. We invest in companies with sustainable competitive advantages, capable management and solid financials. These attributes stand out even more in tough times, acting as a buffer against fierce headwinds. They also enable the opportunistic capturing of market share by the merging with or acquiring of more highly leveraged rivals. We will continue to do what we have been doing well: identify good-quality stocks at a reasonable price and hold them. We believe that our investment approach, based on company due diligence, is key to generating good long-term returns. This is backed by our track record. Over five years and longer, the portfolio has consistently outperformed the benchmark. On a broader level, we remain convinced of Asia's growth potential, underpinned by increasing domestic consumption on the back of a growing middle class.

Aberdeen Asset Management Asia Limited

Investment Manager

27 October 2015

STRATEGIC REPORT - RESULTS

	1 year	3 year	5 year	10 year	% Since
	% return	% return	% return	% return	inception
Share price	-15.4	+10.9	+72.4	+267.2	+1051.0
Net asset value per Ordinary share - diluted	-4.7	+25.2	+72.3	+318.7	+1103.1
MSCI AC Asia Pacific ex Japan Index (currency adjusted)	-1.2	+18.1	+29.6	+143.0	+204.6
MSCI AC Asia Pacific ex Japan Small Cap Index (currency adjusted)	-0.8	+19.9	+18.1	+135.2	n/a

Source: Aberdeen Asset Management PLC, Fundamental Data, Factset & Russell Mellon

Dividends

	Rate	xd date	Record date	Payment date
Proposed final 2015	10.50p	5 November 2015	6 November 2015	4 December 2015
Proposed special 2015	4.50p	5 November 2015	6 November 2015	4 December 2015
	15.00p

Final 2014	10.00p	6 November 2014	11 November 2014	5 December 2014
Special 2014	3.00p	6 November 2014	11 November 2014	5 December 2014
	13.00p

Ten Year Financial Record

Year to 31 July	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015
Total revenue (£'000)	5,080	5,485	5,021	4,954	6,103	8,380	9,168	11,512	11,427	14,746
Per share (p)
Net revenue return	7.25	6.98	5.88	6.75	12.85	15.42	13.18	13.84	11.43	18.21
Total return	31.48	108.38	(50.80)	48.21	236.82	137.91	68.56	275.43	(31.46)	(50.13)
Net ordinary dividends paid/proposed	3.45	3.45	4.00	5.00	8.20	9.50	9.50	10.00	10.00	10.50
Net special dividends paid/proposed	2.70	2.70	1.00	-	1.90	2.80	3.00	3.00	3.00	4.50
Net asset value per share (p)
Basic	306.56	404.18	347.24	390.96	619.37	686.39	746.55	1013.82	968.89	906.16
Diluted	276.45	364.77	316.46	355.95	562.57	n/a	n/a	922.81	952.52	896.31
Shareholders' funds (£'000)	98,669	131,679	109,829	121,963	192,851	239,965	260,994	382,932	369,118	343,967

INVESTMENT PORTFOLIO

As at 31 July 2015

Investment Portfolio - Ten Largest Investments

			Valuation	Total	Valuation
			2015	assets	2014
Company	Industry	Country	£'000	%	£'000
LPI Capital Berhad
Malaysia-based insurance company involved in underwriting fire, motor, marine, aviation, transit and miscellaneous insurance.	Insurance	Malaysia	11,372	3.0	10,319
AEON Co (M)
Operator of general merchandise stores, supermarkets and convenience stores.	Multiline Retail	Malaysia	10,865	2.8	17,358
AEON Credit Service (M)^A
Subsidiary company of Aeon Credit Japan that provides shariah compliant consumer financial services in Malysia.	Consumer Finance	Malaysia	10,802	2.8	9,307
Dah Sing Financial Holdings
A conservative medium-sized Hong Kong based bank with exposure to both Hong Kong and China. The bank offers appealing valuation and strong asset quality.	Banks	Hong Kong	10,409	2.7	8,379
Shangri-La Hotels Malaysia
Operator of hotels, beach resorts, property management and investment, and commercial laundry.	Hotels, Restaurants & Leisure	Malaysia	9,444	2.5	12,793
Bank OCBC NISP
Indonesian subsidiary of Singapore-based OCBC Bank.	Banks	Indonesia	9,384	2.5	11,351
Asian Terminals
One of the Philippines' main port operators. ATI manages and operates Port of Manila South Harbour Container Terminal, Port of Batangas, Port of General Santos and the Inland Clearance Depot yard in Calamba, Laguna.	Transportation Infrastructure	Philippines	9,155	2.4	7,397
CMC
A subsidiary of Tata Consultancy Services, it is an IT services provider to global clients.	IT Services	India	9,122	2.4	8,711
Gujarat Gas Co
One of India's largest gas distributors that is based in the State of Gujarat.	Gas Utilities	India	9,086	2.4	6,251
Bukit Sembawang Estates
Singapore-based residential property developer with a large land bank.	Real Estate Management & Development	Singapore	8,968	2.4	11,570
Top ten investments			98,607	25.9

^A Holding includes investment in both common and non-voting depositary receipt lines.

Investment Portfolio - Other Investments

			Valuation	Total	Valuation
			2015	assets	2014
Company	Industry	Country	£'000	%	£'000
Hana Microelectronics (Foreign)	Electronic Equipment, Instruments & Components	Thailand	8,776	2.3	9,939
First Sponsor	Real Estate Management & Development	Singapore	8,545	2.2	7,895
Cebu Holdings	Real Estate Management & Development	Philippines	8,219	2.2	7,606
Tisco Financial Group^B	Banks	Thailand	7,943	2.1	7,898
AEON Thana Sinsap (Thailand)^B	Consumer Finance	Thailand	7,742	2.0	11,201
Yoma Strategic Holdings	Real Estate Management & Development	Singapore	7,265	1.9	6,878
Public Financial Holdings	Banks	Hong Kong	7,213	1.9	6,327
Ramco Cements	Construction Materials	India	6,943	1.8	5,439
Jollibee Foods Corporation	Hotels, Restaurants & Leisure	Philippines	6,812	1.8	6,166
United Plantations	Food Products	Malaysia	6,788	1.8	8,020
Top twenty investments			174,853	45.9
Sanofi India	Pharmaceuticals	India	6,767	1.8	4,545
Giordano International	Specialty Retail	Hong Kong	6,514	1.7	6,991
Hong Kong Economic Times Holdings	Media	Hong Kong	6,293	1.7	5,186
Eastern Water Resources Development and Management (Foreign)	Water Utilities	Thailand	6,233	1.6	6,049
Multi Bintang Indonesia	Beverages	Indonesia	6,150	1.6	9,488
ARB Corporation	Auto Components	Australia	6,132	1.6	5,664
Linde India	Chemicals	India	6,127	1.6	5,999
M.P. Evans Group	Food Products	United Kingdom	5,987	1.6	6,838
Thai Stanley Electric (Foreign)	Auto Components	Thailand	5,940	1.6	7,358
Castrol India	Chemicals	India	5,936	1.5	5,238
Top thirty investments			236,932	62.2
Kansai Nerolac Paints	Chemicals	India	5,761	1.5	5,459
Straits Trading Company	Metals & Mining	Singapore	5,672	1.5	6,332
Commercial Bank of Ceylon	Banks	Sri Lanka	5,607	1.5	4,458
Millennium & Copthorne Hotels New Zealand^C	Hotels, Restaurants & Leisure	New Zealand	5,360	1.4	5,404
Guinness Anchor	Beverages	Malaysia	5,353	1.4	5,638
Convenience Retail Asia	Food & Staples Retailing	Hong Kong	5,080	1.3	5,593
YHN Property	Real Estate Management & Development	Malaysia	4,977	1.3	6,146
Thaire Life Assurance (Foreign)	Insurance	Thailand	4,794	1.3	6,080
Tasek Corporation	Construction Materials	Malaysia	4,757	1.2	4,950
Cabcharge Australia	Commercial Services & Supplies	Australia	4,439	1.2	6,755
Top forty investments			288,732	75.8

			Valuation	Total	Valuation
			2015	assets	2014
Company	Industry	Country	£'000	%	£'000
United International Enterprises	Food Products	Denmark	4,308	1.1	3,977
Wheelock Properties (S)	Real Estate Management & Development	Singapore	4,051	1.1	4,497
Green Dragon Gas	Oil, Gas & Consumable Fuels	China	3,936	1.0	6,459
Kingmaker Footwear Holdings	Textiles, Apparel & Luxury Goods	Hong Kong	3,886	1.0	1,799
John Keells Holdings^D	Industrial Conglomerates	Sri Lanka	3,815	1.0	3,850
DFCC Vardhana Bank	Banks	Sri Lanka	3,693	1.0	2,919
Godrej Consumer Products	Personal Products	India	3,677	1.0	7,974
Holcim Indonesia	Construction Materials	Indonesia	3,592	0.9	4,103
Jammu & Kashmir Bank	Banks	India	3,548	0.9	5,294
Asia Satellite Telecommunications Holdings	Diversified Telecommunication Services	Hong Kong	3,449	0.9	5,035
Top fifty investments			326,687	85.7

Pacific Basin Shipping	Marine	Hong Kong	3,398	0.9	1,405
Pos Malaysia	Air Freight & Logistics	Malaysia	3,390	0.9	5,365
AEON Stores Hong Kong	Multiline Retail	Hong Kong	3,275	0.9	2,570
United Malacca	Food Products	Malaysia	3,122	0.8	4,213
The Hong Kong & Shanghai Hotels	Hotels, Restaurants & Leisure	Hong Kong	3,057	0.8	3,036
Chevron Lubricants Lanka	Oil, Gas & Consumable Fuels	Sri Lanka	2,700	0.7	3,831
Eu Yan Sang International	Pharmaceuticals	Singapore	2,359	0.6	4,001
DGB Financial Group	Banks	South Korea	2,214	0.6	2,896
National Development Bank	Banks	Sri Lanka	2,178	0.6	1,624
Hong Leong Finance	Consumer Finance	Singapore	2,141	0.6	2,376
Top sixty investments			354,521	93.1
Cafe de Coral Holdings	Hotels, Restaurants & Leisure	Hong Kong	2,136	0.6	2,000
SBS Transit	Road & Rail	Singapore	2,098	0.5	2,095
ORIX Leasing Pakistan	Consumer Finance	Pakistan	1,868	0.5	864
CDL Hospitality Trusts	Real Estate Investment Trusts	Singapore	1,790	0.5	2,035
Haad Thip (Foreign)	Beverages	Thailand	1,778	0.5	1,654
Riverstone Holdings	Commercial Services & Supplies	Singapore	1,760	0.5	-
Goodyear (Foreign)	Auto Components	Thailand	1,653	0.4	1,762
Aitken Spence & Co	Industrial Conglomerates	Sri Lanka	1,620	0.4	1,655
Mayfair Group	Machinery	United Kingdom	1,350	0.4	-
City e-Solutions	Hotels, Restaurants & Leisure	Hong Kong	1,221	0.3	1,268
Top seventy investments			371,795	97.7

			Valuation	Total	Valuation
			2015	assets	2014
Company	Industry	Country	£'000	%	£'000
Hung Hing Printing	Containers & Packaging	Hong Kong	698	0.2	717
FJ Benjamin Holdings	Specialty Retail	Singapore	482	0.1	926
Wintermar Offshore Marine	Marine	Indonesia	479	0.1	2,797
CDL Investments	Real Estate Investment Trusts	New Zealand	413	0.1	-
Riverview Rubber Estates	Food Products	Malaysia	304	0.1	385
Mustika Ratu	Personal Products	Indonesia	203	-	367
Manulife Holdings	Insurance	Malaysia	59	-	-
Greka Engineering & Technology	Energy Equipment & Services	China	27	-	131
Total investments			374,460	98.3
Net current assets (before deducting prior charges)			6,451	1.7
Total assets			380,911	100.0

^B Holding includes investment in both common and non-voting depositary receipt lines.
^C Holding includes investment in both common and preference lines.
^D Holding includes investment in both common and convertible warrant lines.

All investments are in equities.

DIRECTORS' REPORT EXTRACTS

The Directors present their Report and the audited financial statements for the year ended 31 July 2015.

Results and Dividends

Details of the Company's results and proposed dividends are shown under Financial Highlights above.

Investment Trust Status

The Company has been accepted by HM Revenue & Customs as an investment trust subject to the Company continuing to meet the relevant eligibility conditions of Section 1158 of the Corporation Tax Act 2010 and the ongoing requirements of Part 2 Chapter 3 Statutory Instrument 2011/2999 for all financial years commencing on or after 1 August 2012. The Directors are of the opinion that the Company has conducted its affairs for the year ended 31 July 2015 so as to enable it to comply with the ongoing requirements for investment trust status.

Individual Savings Accounts

The Company has conducted its affairs so as to satisfy the requirements as a qualifying security for Individual Savings Accounts. The Directors intend that the Company will continue to conduct its affairs in this manner.

Capital Structure, Buybacks and Issuance

The Company's capital structure is summarised in note 13 to the financial statements. At 31 July 2015, there were 37,958,890 fully paid Ordinary shares of 25p each (2014 - 38,096,807 Ordinary shares) in issue with a further 1,218,290 Ordinary shares of 25p held in treasury (2014 - 1,076,290 treasury shares). During the year 142,000 Ordinary shares were purchased in the market for treasury. Subsequent to the period a further 590,947 Ordinary shares have been purchased in the market for treasury. During the period and up to the date of this report no new Ordinary shares were issued for cash at a premium to the prevailing net asset value per share and no shares were sold from treasury.

On 12 December 2014, 29,188 units of Convertible Unsecured Loan Stock were converted into 3,510 new Ordinary shares and on 12 June 2015, 4,790 units of CULS were converted into 573 new Ordinary shares. In accordance with the terms of the CULS Issue, the conversion price of the CULS was determined at 830.0 pence nominal of CULS for one Ordinary share.

Voting Rights

Ordinary shareholders are entitled to vote on all resolutions which are proposed at general meetings of the Company. The ordinary shares carry a right to receive dividends. On a winding up, after meeting the liabilities of the Company, the surplus assets will be paid to Ordinary shareholders in proportion to their shareholdings.

CULS holders have the right to attend but not vote at general meetings of the Company. A separate resolution of CULS holders would be required to be passed before any modification or compromise of the rights attaching to the CULS can be made.

Borrowings

During the year the Company agreed a new £20 million multi currency loan facility with State Street Bank and Trust Company and at the year end £5.0 million had been drawn down under the facility.

Management Agreement

The Company has appointed Aberdeen Fund Managers Limited, a wholly owned subsidiary of Aberdeen Asset Management PLC, as its alternative investment fund manager. Under the management arrangements with AFML, management of the Company's portfolio has been delegated to Aberdeen Asset Management Asia Limited by way of a group delegation agreement in place between AFML and AAM Asia.

Similarly, company secretarial services are provided by Aberdeen and accounting and administrative services are delegated to Aberdeen Asset Managers Limited, which then outsources those arrangements to BNP Paribas Securities Services Limited. Aberdeen Asset Managers also operates the Aberdeen Group's promotional programme.

The management agreement may be terminated by either the Company or the Manager on the expiry of twelve months' written notice. On termination, the Manager would be entitled to receive fees which would otherwise have been due to that date. Details of the fees payable by the Company to the Aberdeen Group companies for the provision of management, secretarial and promotional services are shown in notes 3 and 4 to the financial statements.

The management engagement committee review the terms of the management agreement on a regular basis and have confirmed that, due to the long-term relative performance, investment skills, experience and commitment of the investment management team, in their opinion the continuing appointment of AFML and AAM Asia is in the interests of shareholders as a whole.

Political and Charitable Donation

The Company does not make political donations (2014 - nil).

During the year the Company made no charitable donations (2014 £10,000 was donated to the British Red Cross Typhoon Haiyan Appeal in the Philippines.)

Risk Management

Details of the financial risk management policies and objectives relative to the use of financial instruments by the Company are set out in note 19 to the financial statements.

The Board

The current Directors, Messrs N K Cayzer, Randal McDonnell (Viscount Dunluce), M J Gilbert (alternate H Young), M Hadsley-Chaplin, C S Maude, P Yea (appointed to the Board on 23 January 2014) and Ms H Fukuda were the only Directors who served during the year. Messrs Gilbert, Cayzer and Ms Fukuda have each served on the Board for more than nine years and, in accordance with corporate governance best practice, will retire at the Annual General Meeting on 1 December 2015 and, being eligible, offer themselves for re-election.

The Board considers that there is a balance of skills and experience within the Board relevant to the leadership and direction of the Company and that all the Directors contribute effectively.

In common with most investment trusts, the Company has no employees. Directors' & Officers' liability insurance cover has been maintained throughout the year at the expense of the Company.

Corporate Governance

The Company is committed to high standards of corporate governance. The Board is accountable to the Company's shareholders for good governance and, as required by the Listing Rules of the UK Listing Authority, has applied the principles identified in the UK Corporate Governance Code (published in September 2012) for the year ended 31 July 2015. For the year ending 31 July 2016 the company will be required to comply with the UK Corporate Governance Code (published in September 2014) which is effective for financial years commencing on or after 1 October 2014). The UK Corporate Governance Codes are available on the Financial Reporting Council's website: www.frc.org.uk.

The Board has considered the principles and recommendations of the AIC Code of Corporate Governance (AIC Code) by reference to the AIC Corporate Governance Guide for Investment Companies (AIC Guide). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in the UK Corporate Governance Code, as well as setting out additional principles and recommendations on issues which are of specific relevance to the Company. Both the AIC Code and the AIC Guide are available on the AIC's website: www.theaic.co.uk.

The Company has complied throughout the accounting period with the relevant provisions contained within the AIC Code and the relevant provisions of the UK Corporate Governance Code except as set out below.

The UK Corporate Governance Code includes provisions relating to:

- the role of the chief executive (A.1.2);

- executive directors' remuneration (D.2.1 and D.2.2);

- and the need for an internal audit function (C.3.5).

For the reasons set out in the AIC Code, and as explained in the UK Corporate Governance Code, the Board considers that these provisions are not relevant to the position of the Company, being an externally-managed investment company. In particular, all of the Company's day-to-day management and administrative functions are outsourced to third parties. As a result, the Company has no executive directors, employees or internal operations. The Company has therefore not reported further in respect of these provisions. The full text of the Company's Corporate Governance Statement can be found on the Company's website, www.asian-smaller.co.uk.

Policy on Tenure

The Board's policy on tenure is that Directors need not serve on the Board for a limited period of time only. The Board does not consider that the length of service of a Director is as important as the contribution he or she has to make, and therefore the length of service will be determined on a case-by-case basis. In accordance with corporate governance best practice, Directors who have served for more than nine years or who are non-independent voluntarily offer themselves for re-election on an annual basis.

Board Committees

Audit Committee

The Audit Committee Report contained in the Annual Report.

Nomination Committee

All appointments to the Board of Directors are considered by the Nomination Committee which comprises the entire Board and is chaired by Nigel Cayzer. The Board's overriding priority in appointing new Directors to the Board is to identify the candidate with the best range of skills and experience to complement existing Directors. The Board also recognises the benefits of diversity and its policy on diversity is referred to in the Strategic Report.

Remuneration Committee

Under the UK Listing Authority rules, where an investment trust has only non-executive directors, the Code principles relating to directors' remuneration do not apply. Accordingly, matters relating to remuneration are dealt with by the full Board, which acts as the Remuneration Committee, and is chaired by Nigel Cayzer.

The Company's remuneration policy is to set remuneration at a level to attract individuals of a calibre appropriate to the Company's future development. Further information on remuneration is disclosed in the Directors' Remuneration Report.

Terms of Reference

The terms of reference of all the Board Committees may be found on the Company's website www.asian-smaller.co.uk and copies are available from the Company Secretary upon request. The terms of reference are reviewed and re-assessed by the Board for their adequacy on an annual basis.

Going Concern

In accordance with the Financial Reporting Council's guidance on Going Concern and Liquidity Risk issued in October 2009 the Directors have undertaken a rigorous review of the Company's ability to continue as a going concern. The Board has set limits for borrowing and regularly reviews the level of any gearing, cash flow projections and compliance with banking covenants.

The Directors are mindful of the principal risks and uncertainties disclosed above and have reviewed forecasts detailing revenue and liabilities and they believe that the Company has adequate financial resources to continue its operational existence for the foreseeable future and at least 12 months from the date of this Annual Report. Accordingly, the Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the Financial Statements.

Management of Conflicts of Interest

The Board has a procedure in place to deal with a situation where a Director has a conflict of interest. As part of this process, the Directors prepare a list of other positions held and all other conflict situations that may need to be authorised either in relation to the Director concerned or his connected persons. The Board considers each Director's situation and decides whether to approve any conflict, taking into consideration what is in the best interests of the Company and whether the Director's ability to act in accordance with his wider duties is affected. Each Director is required to notify the Company Secretary of any potential, or actual, conflict situations that will need authorising by the Board. Authorisations given by the Board are reviewed at each Board meeting.

No Director has a service contract with the Company although Directors are issued with letters of appointment upon appointment. The Directors' interests in contractual arrangements with the Company are as shown in note 18 to the financial statements. No other Directors had any interest in contracts with the Company during the period or subsequently.

The Board has adopted appropriate procedures designed to prevent bribery. The Company receives periodic reports from its service providers on the anti-bribery policies of these third parties. It also receives regular compliance reports from the Manager.

Accountability and Audit

The respective responsibilities of the Directors and the auditor in connection with the financial statements are set out in the Annual Report.

Each Director confirms that:

- so far as he or she is aware, there is no relevant audit information of which the Company's auditor is unaware, and

- each Director has taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

Additionally there have been no important events since the year end.

The Directors have reviewed the level of non-audit services provided by the independent auditor during the year, together with the independent auditor's procedures in connection with the provision of such services, and remain satisfied that the auditor's objectivity and independence is being safeguarded.

Independent Auditor

The auditor, Ernst & Young LLP, has indicated its willingness to remain in office. The Directors will place a resolution before the Annual General Meeting to re-appoint Ernst & Young LLP as auditor for the ensuing year, and to authorise the Directors to determine its remuneration.

Internal Control

The Board is ultimately responsible for the Company's system of internal control and for reviewing its effectiveness and confirms that there is an ongoing process for identifying, evaluating and managing the significant risks faced by the Company. This process has been in place for the year under review and up to the date of approval of this Annual Report and Accounts. It is regularly reviewed by the Board and accords with the FRC Guidance.

The Board has reviewed the effectiveness of the system of internal control. In particular, it has reviewed and updated the process for identifying and evaluating the significant risks affecting the Company and policies by which these risks are managed.

The Directors have delegated the investment management of the Company's assets to the Aberdeen Group within overall guidelines, and this embraces implementation of the system of internal control, including financial, operational and compliance controls and risk management. Internal control systems are monitored and supported by the Aberdeen Group's internal audit function which undertakes periodic examination of business processes, including compliance with the terms of the management agreement, and ensures that recommendations to improve controls are implemented.

Risks are identified and documented through a risk management framework by each function within the Aberdeen Group's activities. Risk includes financial, regulatory, market, operational and reputational risk. This helps the internal audit risk assessment model identify those functions for review. Any weaknesses identified are reported to the Board, and timetables are agreed for implementing improvements to systems. The implementation of any remedial action required is monitored and feedback provided to the Board.

The significant risks faced by the Company have been identified as being financial; operational; and compliance-related.

The key components of the process designed by the Directors to provide effective internal control are outlined below:

- the Aberdeen Group prepares forecasts and management accounts which allow the Board to assess the Company's activities and review its performance;

- the Board and Investment Manager have agreed clearly defined investment criteria, specified levels of authority and exposure limits. Reports on these issues, including performance statistics and investment valuations, are regularly submitted to the Board and there are meetings with the Manager and Investment Manager as appropriate;

- as a matter of course the Aberdeen Group's compliance department continually reviews the Aberdeen Group's operations;

- the Board has considered the need for an internal audit function but, because of the compliance and internal control systems in place within the Aberdeen Group, has decided to place reliance on the Aberdeen Group's systems and internal audit procedures; and

- at its September 2015 meeting, the Audit Committee carried out an annual assessment of internal controls for the year ended 31 July 2015 by considering documentation from the Manager, Investment Manager and the Depositary, including the internal audit and compliance functions and taking account of events since 31 July 2015. The results of the assessment, that internal controls are satisfactory, were then reported to the Board at the next Board meeting.

Internal control systems are designed to meet the Company's particular needs and the risks to which it is exposed. Accordingly, the internal control systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and by their nature can only provide reasonable and not absolute assurance against mis-statement and loss.

The UK Stewardship Code and Proxy Voting

The purpose of the UK Stewardship Code is to enhance the quality of engagement between institutional investors and companies to help improve long-term returns to shareholders and assist institutional investors with the efficient exercise of their governance responsibilities.

The Company's investments are held in nominee names. The Board has delegated responsibility for actively monitoring the activities of portfolio companies, including the exercise of voting powers on its behalf, to the Manager who has in turn delegated this responsibility to the Investment Manager.

The Investment Manager is responsible for reviewing, on a regular basis, the annual reports, circulars and other publications produced by the portfolio company and for attending company meetings. The Investment Manager, in the absence of explicit instruction from the Board, is empowered to use discretion in the exercise of the Company's voting rights.

In exercising the Company's voting rights, the Aberdeen Group follows a number of principles which set out the framework on corporate governance, proxy voting and shareholder engagement in relation to the companies in which the Aberdeen Group has invested or is considering investing. The Board has reviewed these principles together with the Aberdeen Group's Disclosure Response to the UK Stewardship Code, and is satisfied that the exercise of delegated voting powers by the Investment Manager is being properly executed. The Aberdeen Group's Corporate Governance Principles together with the Aberdeen Group's Disclosure Response to the UK Stewardship Code may be found on the Aberdeen Group's website, at http://www.aberdeen-asset.com/aam.nsf/AboutUs/governancestewardship.

The Board recognises and supports the Aberdeen Group's policy of active engagement with investee companies and the voting of all of the shares held by the Company. The Board receives regular reports on the exercise of the Company's voting rights and discusses any issues arising with the Investment Manager. It is the Board's view that having an active voting policy and a process for monitoring the Investment Manager's exercise of those votes, especially in relation to controversial issues, aids the efficient exercise of the Company's governance responsibilities.

Relations with Shareholders

The Directors place a great deal of importance on communication with shareholders. The Annual Report is widely distributed to other parties who have an interest in the Company's performance. Shareholders and investors may obtain up to date information on the Company through the Manager's freephone information service and the Company's website (www.asian-smaller.co.uk). The Company responds to letters from shareholders on a wide range of issues.

The Board's policy is to communicate directly with shareholders and their representative bodies without the involvement of the Aberdeen Group (either the Company Secretary or the Manager) in situations where direct communication is required and usually a representative from the Board meets with major shareholders on an annual basis in order to gauge their views.

The Notice of the Annual General Meeting, included within the Annual Report and Accounts, is sent out at least 20 working days in advance of the meeting. All shareholders have the opportunity to put questions to the Board or the Aberdeen Group, either formally at the Company's Annual General Meeting or at the subsequent buffet luncheon for shareholders. The Company Secretary is available to answer general shareholder queries at any time throughout the year.

By order of the Board

Aberdeen Asset Management PLC - Secretaries

Bow Bells House

1 Bread Street

London EC4M 9HH

27 October 2015

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and 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 the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law).

Under Company law the Directors must not approve the financial statements unless they are satisfied that they 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; and

- state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements.

The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Company's transactions and which 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 2006. They are also responsible 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.

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

The financial statements are published on www.asian-smaller.co.uk which is a website maintained by the Company's Manager. 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 listed in the Annual Report, being the persons responsible, hereby confirm to the best of their knowledge that:

- the financial statements, prepared in accordance with the applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;

- that in the opinion of the Directors, the Annual Report and financial statements taken as a whole, is fair, balanced and understandable and it provides the information necessary to assess the Company's performance, business model and strategy. In reaching this conclusion the Board has assumed that the reader of the Annual Report and financial statements would have a reasonable level of general investment knowledge, and in particular, of investment trusts; and

- the Strategic Report and Directors' Report include 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 Aberdeen Asian Smaller Companies Investment Trust PLC

Nigel Cayzer

Chairman

27 October 2015

INCOME STATEMENT

		Year ended 31 July 2015			Year ended 31 July 2014
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Losses on investments	9	-	(26,196)	(26,196)	-	(16,444)	(16,444)
Income	2	14,746	-	14,746	11,427	-	11,427
Exchange (losses)/gains		-	(131)	(131)	-	103	103
Investment management fees	3	(4,381)	-	(4,381)	(3,907)	-	(3,907)
Administrative expenses	4	(1,108)	-	(1,108)	(1,147)	-	(1,147)
		_______	_______	_______	_______	_______	_______
Net return on ordinary activities before finance costs and taxation		9,257	(26,327)	(17,070)	6,373	(16,341)	(9,968)
Finance costs	5	(1,522)	-	(1,522)	(1,457)	-	(1,457)
		_______	_______	_______	_______	_______	_______
Return on ordinary activities before taxation		7,735	(26,327)	(18,592)	4,916	(16,341)	(11,425)
Taxation	6	(797)	294	(503)	(572)	36	(536)
		_______	_______	_______	_______	_______	_______
Return on ordinary activities after taxation		6,938	(26,033)	(19,095)	4,344	(16,305)	(11,961)
		_______	_______	_______	_______	_______	_______
Return per share (pence):
Basic	8	18.21	(68.34)	(50.13)	11.43	(42.89)	(31.46)
		_______	_______	_______	_______	_______	_______

For the years ended 31 July 2015 and 31 July 2014 the conversion option for potential Ordinary shares within the Convertible Unsecured Loan Stock was non-dilutive due to a capital loss being reported and no dilution to the revenue return per Ordinary share.
The total column of this statement represents the profit and loss account of the Company.
All revenue and capital items in the above statement derive from continuing operations.
No operations were acquired or discontinued in the year.
A Statement of Total Recognised Gains and Losses has not been prepared as all gains and losses are recognised in the Income Statement.
The accompanying notes are an integral part of the financial statements.

BALANCE SHEET

		As at	As at
		31 July 2015	31 July 2014
	Notes	£'000	£'000
Non-current assets
Investments at fair value through profit or loss	9	374,460	400,760
		__________	__________
Current assets
Debtors and prepayments	10	1,010	227
Cash and short term deposits	17	6,678	5,685
		__________	__________
		7,688	5,912
		__________	__________
Creditors: amounts falling due within one year
Bank loans	11	(5,000)	(5,000)
Other creditors	11	(1,237)	(832)
		__________	__________
		(6,237)	(5,832)
		__________	__________
Net current assets		1,451	80
		__________	__________
Total assets less current liabilities		375,911	400,840

Non-current liabilities
3.5% Convertible Unsecured Loan Stock 2019	12	(31,944)	(31,722)
		__________	__________
Net assets		343,967	369,118
		__________	__________
Capital and reserves
Called-up share capital	13	9,794	9,793
Capital redemption reserve		2,062	2,062
Share premium account		39,644	39,611
Special reserve		10,578	11,715
Equity component of 3.5% Convertible Unsecured Loan Stock 2019	12	1,361	1,361
Capital reserve	14	269,975	296,008
Revenue reserve	14	10,553	8,568
		__________	__________
Equity shareholders' funds		343,967	369,118
		__________	__________
Net asset value per share (pence):
Basic	15	906.16	968.89
		__________	__________
Diluted	15	896.31	952.52
		__________	__________

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

For the year ended 31 July 2015
			Capital	Share		Equity
		Share	redemption	premium	Special	Component	Capital	Revenue
		capital	reserve	account	reserve	CULS 2019	reserve	reserve	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 August 2014		9,793	2,062	39,611	11,715	1,361	296,008	8,568	369,118
Conversion of 3.5% Convertible Unsecured Loan Stock 2019	12	1	-	33	-	-	-	-	34
Purchase of own shares to treasury	13	-	-	-	(1,137)	-	-	-	(1,137)
Return on ordinary activities after taxation		-	-	-	-	-	(26,033)	6,938	(19,095)
Dividends paid	7	-	-	-	-	-	-	(4,953)	(4,953)
		______	_______	______	______	______	______	______	______
Balance at 31 July 2015		9,794	2,062	39,644	10,578	1,361	269,975	10,553	343,967
		______	_______	______	_____	______	______	______	_____

For the year ended 31 July 2014
			Capital	Share		Equity
		Share	redemption	premium	Special	Component	Capital	Revenue
		capital	reserve	account	reserve	CULS 2019	reserve	reserve	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 August 2013		9,712	2,062	36,617	11,715	1,361	312,313	9,152	382,932
Conversion of 3.5% Convertible Unsecured Loan Stock 2019	12	6	-	205	-	-	-	-	211
Issue of own shares	13	75	-	2,789	-	-	-	-	2,864
Return on ordinary activities after taxation		-	-	-	-	-	(16,305)	4,344	(11,961)
Dividends paid	7	-	-	-	-	-	-	(4,928)	(4,928)
		______	_______	______	_____	______	______	______	_____
Balance at 31 July 2014		9,793	2,062	39,611	11,715	1,361	296,008	8,568	369,118
		______	_______	______	_____	______	______	______	_____

The accompanying notes are an integral part of the financial statements.

CASH FLOW STATEMENT

			Year ended		Year ended
			31 July 2015		31 July 2014
	Notes		£'000	£'000	£'000	£'000
Net cash inflow from operating activities	16			7,347		5,725

Servicing of finance
Interest paid				(1,266)		(1,212)

Financial investment
Purchases of investments			(18,074)		(34,044)
Sales of investments			18,794		14,933
				_______		_______
Net cash inflow/(outflow) from financial investment				720		(19,111)

Equity dividends paid	7			(4,953)		(4,928)
				_______		_______
Net cash inflow/(outflow) before financing				1,848		(19,526)

Financing
Issue of own shares	13		-		2,864
Purchase of own shares to treasury	13		(724)		-
Drawdown of loan	11		-		5,000
				_______		_______
Net cash (outflow)/inflow from financing activities				(724)		7,864
				_______		_______
Increase/(decrease) in cash				1,124		(11,662)
				_______		_______

Reconciliation of net cash flow to movements in net debt
Increase/(decrease) in cash as above				1,124		(11,662)
Drawdown of loan				-		(5,000)
Other non-cash movements				(222)		(34)
Exchange movements				(131)		103
				_______		_______
Movement in net debt				771		(16,593)
Net debt at 1 August				(31,037)		(14,444)
				_______		_______
Net debt at 31 July		17		(30,266)		(31,037)
				_______		_______


The accompanying notes are an integral part of the financial statements.

NOTES TO THE FINANCIAL STATEMENTS

For the Year Ended 31 July 2015

1.	Accounting policies
	(a)	Basis of preparation and going concern
		The financial statements have been prepared 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'.

		The financial statements 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. The Directors believe this is appropriate for the reasons outlined in the Directors' Report.

		The financial statements, and the net asset value per share figures, have been prepared in accordance with UK Generally Accepted Accounting Practice ('UK GAAP').

	(b)	Valuation of investments
		Listed investments have been designated upon initial recognition as fair value through profit or loss. Investments are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require delivery within the time frame established by the market concerned, and are initially measured at cost. Subsequent to initial recognition, investments are valued at fair value. For listed investments, this is deemed to be bid market prices. Gains and losses arising from changes in fair value and disposals are included in net profit or loss for the period as a capital item in the Income Statement and are ultimately recognised in the capital reserve.

	(c)	Borrowings
		Interest-bearing bank loans and overdrafts are initially recognised at cost, being the fair value of the consideration received, net of any issue expenses. Subsequently, they continue to be valued at fair value, which is determined by aggregating the expected future cash flows for that loan or overdraft at a rate comprising the borrower's margin plus an average of market rates applicable to loans or overdrafts of a similar period of time and currency. Finance charges are accounted for on an accruals basis using the effective interest rate method and are charged 100% to revenue.

	(d)	Income
		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 yield 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.

	(e)	Expenses
		All expenses are accounted for on an accruals basis. Expenses, including management fees and finance costs, are charged 100% through the revenue column of the Income Statement with the exception of transaction costs incurred on the purchase and disposal of investments which are charged to the capital column of the Income Statement and are separately identified and disclosed in note 9 within gains on investments.

	(f)	Taxation
		The charge for taxation is based on the profit for the year.

		Deferred tax
		The charge for taxation is based on the profit for the year and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes. Deferred taxation is provided using the liability method on all timing differences, calculated at the rate at which it is anticipated the timing differences will reverse. Deferred tax assets are recognised only when, on the basis of available evidence, it is more likely than not that there will be taxable profits in future against which the deferred tax asset can be offset.

	(g)	Capital reserve
		The capital reserve reflects the following:
		- gains and losses on the sale of investments and changes in fair values of investments held are transferred to the capital reserve; and
		- applicable capital tax charges.

	(h)	Foreign currency
		Overseas monetary assets are converted into Sterling at the rate of exchange ruling at the Balance Sheet date. Transactions during the year involving foreign currencies are converted at the rate of exchange ruling at the transaction date. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in the capital reserve or in the revenue account depending on whether the gain or loss is of a capital or revenue nature respectively.

	(i)	3.5% Convertible Unsecured Loan Stock 2019
		Convertible Unsecured Loan Stock ("CULS") issued by the Company is regarded as a compound instrument, comprising of a liability component and an equity component. At the date of issue, the fair value of the liability component was estimated by assuming that an equivalent non-convertible obligation of the Company would have a coupon rate of 4.662%. The fair value of the equity component, representing the option to convert liability into equity, is derived from the difference between the issue proceeds of the CULS and the fair value assigned to the liability. The liability component is subsequently measured at amortised cost using the effective interest rate and the equity component remains unchanged.

		Direct expenses associated with the CULS issue are allocated to the liability and equity components in proportion to the split of the proceeds of the issue. Expenses allocated to the liability component are amortised over the life of the instrument using the effective interest rate.

		The interest expense on the CULS is calculated according to the effective interest rate method by applying the assumed rate of 4.662% to the liability component of the instrument.

		On conversion of CULS, equity is issued and the liability component is derecognised. The original equity component recognised at inception remains in equity. No gain or loss is recognised on conversion.

		When CULS is repurchased for cancellation, the fair value of the liability at the redemption date is compared to its carrying amount, giving rise to a gain or loss on redemption that is recognised through profit or loss. The amount of consideration allocated to equity is recognised in equity with no gain or loss being recognised.

		2015	2014
2.	Income	£'000	£'000
	Income from investments
	Overseas dividends	14,060	11,287
	Stock dividends	677	130
		_______	_______
		14,737	11,417
		_______	_______
		2015	2014
		£'000	£'000
	Other income
	Deposit interest	9	10
		_______	_______
	Total income	14,746	11,427
		_______	_______

		2015	2014
3.	Investment management fees	£'000	£'000
	Investment management fees	4,381	3,907
		_______	_______

	The Company has an agreement with Aberdeen Fund Managers Limited for the provision of management services, which has been delegated to Aberdeen Asset Management Asia Limited.

	During the year the management fee was payable monthly in arrears and is 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. The management fee is calculated by reference to the value of the Company's net assets (gross assets less liabilities excluding the amount of any loan facilities or overdraft facilities drawn down). The balance due to the Manager at the year end was £366,000 (2014 - £347,000). The agreement is terminable on one year's notice.

		2015	2014
4.	Administrative expenses	£'000	£'000
	Administration fees	86	84
	Directors' fees	171	168
	Promotional activities	230	240
	Auditor's remuneration:
	- fees payable to the auditor for the audit of the annual accounts	25	24
	- fees payable to the auditor and its associates for other services:
	- interim review	7	6
	- taxation and iXBRL tagging services (all compliance)	13	11
	Custodian charges	260	283
	Other expenses	316	331
		_______	_______
		1,108	1,147
		_______	_______

	The Company has a management agreement with Aberdeen Fund Managers Limited ("AFML") for inter alia the provision of administration services which are, in turn, delegated to Aberdeen Asset Management PLC. The administration fee is payable quarterly in advance and based on an index-linked annual amount of £87,000 (2014 - £85,000) and there was an accrual of £22,000 (2014 - £21,000) at the year end. The agreement is terminable on six months' notice.

	Under the management agreement, the Company has also appointed AFML to provide promotional activities to the Company by way of its participation in the Aberdeen Investment Trust Share Plan and ISA. AFML has delegated this role to Aberdeen Asset Managers Limited ("AAML"). The total fee paid and payable under the agreement in relation to promotional activities was £230,000 (2014 - £240,000) and there was a £83,000 (2014 - £73,000) balance due to AAML at the year end.

	No pension contributions were made in respect of any of the Directors.

		2015	2014
5.	Finance costs	£'000	£'000
	Loans repayable in less than 1 year	109	50
	Interest on 3.5% Convertible Unsecured Loan Stock 2019	1,157	1,162
	Notional interest on 3.5% Convertible Unsecured Loan Stock 2019	181	170
	Amortisation of 3.5% Convertible Unsecured Loan Stock 2019 issue expenses	75	75
		_______	_______
		1,522	1,457
		_______	_______

			2015			2014
			Revenue	Capital	Total	Revenue	Capital	Total
6.	Taxation		£'000	£'000	£'000	£'000	£'000	£'000
	(a)	Analysis of charge for the year
		Overseas taxation	503	-	503	536	-	536
			_______	______	_____	_______	______	_____
		Current taxation	503	-	503	536	-	536
		Movement on deferred taxation	294	(294)	-	36	(36)	-
			_______	______	______	_______	______	______
		Total tax	797	(294)	503	572	(36)	536
			_______	______	_____	_______	______	_____

		At 31 July 2015 the Company had surplus management expenses and loan relationship deficits with a tax value of £4,972,000 (2014 - £3,540,000) in respect of which a deferred tax asset has not been recognised. This is due to the Company having sufficient excess management expenses available to cover the potential liability and the Company is not expected to generate taxable income in the future in excess of deductible expenses.

	(b)	Factors affecting the tax charge for the year
		The tax assessed for the year is lower than the effective rate of corporation tax in the UK for a large company of 20.67% (2014 - 22.33%). The differences are explained below:

			2015			2014
			Revenue	Capital	Total	Revenue	Capital	Total
			£'000	£'000	£'000	£'000	£'000	£'000
		Return on ordinary activities before taxation	7,735	(26,327)	(18,592)	4,916	(16,341)	(11,425)

		Return on ordinary activities multiplied by the effective UK standard tax rate of corporation tax of 20.67% (2014 - 22.33%)	1,599	(5,442)	(3,843)	1,098	(3,649)	(2,551)
		Effects of:
		Losses on investments not taxable	-	5,415	5,415	-	3,672	3,672
		Exchange losses/(gains)	-	27	27	-	(23)	(23)
		Overseas tax	503	-	503	536	-	536
		Non-taxable dividend income	(3,012)	-	(3,012)	(2,525)	-	(2,525)
		Movement in unutilised management expenses	1,101	-	1,101	1,104	-	1,104
		Movement in unutilised loan relationship deficits	312	-	312	323	-	323
			_______	______	______	_______	______	______
		Current tax charge for the year	503	-	503	536	-	536
			_______	______	______	_______	______	______

		2015	2014
7.	Dividends	£'000	£'000
	Final dividend for 2014 - 10.00p (2013 - 10.00p)	3,810	3,791
	Special dividend for 2014 - 3.00p (2013 - 3.00p)	1,143	1,137
		_______	_______
		4,953	4,928
		_______	_______

	Proposed final and special dividends are subject to approval by shareholders at the Annual General Meeting and are not included as a liability in the financial statements.

	We set out below the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of Sections 1158 - 1159 of the Corporation Tax Act 2010 are considered. The revenue available for distribution by way of dividend for the current year is £7,160,000 (2014 - £4,344,000).

		2015	2014
		£'000	£'000
	Proposed final dividend for 2015 - 10.50p (2014 - 10.00p)	3,938	3,810
	Proposed special dividend for 2015 - 4.50p (2014 - 3.00p)	1,688	1,143
		_______	_______
	Total	5,626	4,953
		_______	_______

		2015			2014
8.	Return per Ordinary share	Revenue	Capital	Total	Revenue	Capital	Total
	Basic
	Return on ordinary activities after taxation (£'000)	6,938	(26,033)	(19,095)	4,344	(16,305)	(11,961)
	Weighted average number of shares in issue^A			38,094,721			38,020,666
	Return per Ordinary share (p)	18.21	(68.34)	(50.13)	11.43	(42.89)	(31.46)
		_______	______	_______	_______	______	_______

		2015			2014
	Diluted	Revenue	Capital	Total	Revenue	Capital	Total
	Return on ordinary activities after taxation (£'000)	7,990	(26,033)	(18,043)	5,314	(16,305)	(10,991)
	Weighted average number of shares in issue^B			42,077,584			42,016,382
	Return per Ordinary share (p)	n/a	n/a	n/a	n/a	n/a	n/a
		_______	______	_______	_______	______	_______

	^A Calculated excluding shares held in treasury.
	^B The calculation of the diluted total, revenue and capital returns per Ordinary share are carried out in accordance with Financial Reporting Standard 22, "Earnings per Share". For the purpose of calculating total, revenue and capital returns per Ordinary share, the number of Ordinary shares used is the weighted average number used in the basic calculation plus the number of Ordinary shares deemed to be issued for no consideration on exercise of all 3.5% Convertible Unsecured Loan Stock 2019 (CULS). The calculations indicate that the exercise of CULS would result in an increase in the weighted average number of Ordinary shares of 3,982,863 (2014 - 3,995,716) to 42,077,584 (2014 - 42,016,382) Ordinary shares.

	For the period ended 31 July 2015 the assumed conversion for potential Ordinary shares was non-dilutive due to a capital loss being reported and no dilution to the revenue return per Ordinary share. For the period ended 31 July 2014 there was also no dilution to the revenue return per Ordinary share. Where dilution occurs, the net returns are adjusted for items relating to the CULS. Accrued CULS finance costs for the period and unamortised issues expenses are reversed. Total earnings for the period are tested for dilution. Once dilution has been determined individual revenue and capital earnings are adjusted.

		Listed	Listed
		in UK	overseas	Total
9.	Investments	£'000	£'000	£'000
	Fair value through profit or loss:
	Opening book cost	6,248	212,397	218,645
	Opening fair value gains on investments held	7,180	174,935	182,115
		_______	_______	_______
	Opening fair value	13,428	387,332	400,760
	Movements in year:
	Purchases at cost	1,395	17,303	18,698
	Sales - proceeds	(16)	(18,786)	(18,802)
	Sales - gains on sales	10	16,094	16,104
	Movement in fair value gains on investments held	(3,517)	(38,783)	(42,300)
		_______	_______	_______
	Closing fair value	11,300	363,160	374,460
		_______	_______	_______

	Closing book cost	7,637	227,008	234,645
	Closing fair value gains on investments held	3,663	136,152	139,815
		_______	_______	_______
		11,300	363,160	374,460
		_______	_______	_______
	(Losses)/gains on investments
	Gains on sales	10	16,094	16,104
	Movement in fair value gains on investments held	(3,517)	(38,783)	(42,300)
		_______	_______	_______
		(3,507)	(22,689)	(26,196)
		_______	_______	_______

	Transaction costs
	During the year expenses were incurred in acquiring or disposing of investments classified as fair value through 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:

			2015	2014
			£'000	£'000
	Purchases		37	52
	Sales		77	23
			_______	_______
			114	75
			_______	_______

		2015	2014
10.	Debtors: amounts falling due within one year	£'000	£'000
	Amounts due from brokers	8	-
	Other debtors	11	30
	Prepayments and accrued income	991	197
		_______	_______
		1,010	227
		_______	_______

	None of the above amounts are past their due date or impaired (2014 - nil).

		2015	2014
11.	Creditors: amounts falling due within one year	£'000	£'000
	Bank loans	5,000	5,000
	Amounts due to brokers	30	83
	Amount due for the purchase of own shares to treasury	413	-
	Other creditors	794	749
		_______	_______
		6,237	5,832
		_______	_______

	As at 31 July 2015, £5,000,000 (2014 - £5,000,000) had been drawn down at an all-in rate of 1.4% (2014 - 1.4%) which matured on 28 August 2015. On 28 August 2015 the principal amount was rolled over at an all-in interest rate of 1.4% until maturity on 28 September 2015, when the principal amount was rolled over at an all-in interest rate of 1.4% until maturity on 28 October 2015. Further, an additional US$9,000,000 was drawn down on 1 September 2015 at an all-in rate of 1.1% until maturity on 28 September 2015, when the principal amount was rolled over at an all-in rate of 1.1% until maturity on 28 October 2015.

12.	Non-current liabilities	Number of	Liability	Equity
		units	component	component
	3.5% Convertible Loan Stock 2019	£'000	£'000	£'000
	Balance at beginning of year	33,077	31,722	1,361
	Conversion of 3.5% Convertible Unsecured Loan Stock 2019	(34)	(34)	-
	Notional interest on CULS transferred to revenue reserve	-	181	-
	Amortisation and issue expenses	-	75	-
		_______	_______	_______
	Balance at end of year	33,043	31,944	1,361
		_______	_______	_______

	The 3.5% Convertible Unsecured Loan Stock 2019 ("CULS") can be converted at the election of holders into Ordinary shares during the months of May and November each year throughout their life, commencing 30 November 2012 to 31 May 2019 at a rate of 1 Ordinary share for every 830.0p nominal of CULS. Interest is paid on the CULS on 31 May and 30 November each year, commencing 30 November 2012. 100% of the interest is charged to revenue in line with the Board's expected long-term split of returns from the investment portfolio of the Company.

	The CULS has been constituted as an unsecured subordinated obligation of the Company by the Trust Deed between the Company and the Trustee, the Law Debenture Trust Corporation p.l.c., dated 17 May 2012. The Trust Deed details the CULS holders' rights and the Company's obligations to the CULS holders and the trustee oversees the operation of the Trust Deed. In the event of a winding-up of the Company the rights and claims of the Trustee and CULS holders would be subordinate to the claims of all creditors in respect of the Company's secured and unsecured borrowings, under the terms of the Trust Deed.

	During the year ended 31 July 2015 the Company converted £33,978 (31 July 2014 - £211,293) nominal amount of CULS into 4,083 (31 July 2014 - 25,438) Ordinary shares.

	As at 31 July 2015, there was £33,043,143 (2014 - £33,077,121) nominal amount of 3.5% Convertible Unsecured Loan Stock 2019 in issue.

			2015	2014
13.	Called up share capital		£'000	£'000
	Allotted, called-up and fully paid
	Ordinary shares of 25p		9,490	9,524
	Treasury shares		304	269
			_______	_______
			9,794	9,793
			_______	_______

		Ordinary shares	Treasury shares	Total
		Number	Number	Number
	At 31 July 2014	38,096,807	1,076,290	39,173,097
	Conversion of CULS	4,083	-	4,083
	Buyback of own shares	(142,000)	142,000	-
		_______	_______	_______
	At 31 July 2015	37,958,890	1,218,290	39,177,180
		_______	_______	_______

	During the year 142,000 Ordinary shares of 25p were purchased by the Company (2014 - 300,000 Ordinary shares issued) at a total cost of £1,137,000 (2014 - total consideration of £2,864,000), all of which were held in treasury (2014 - none). At the year end 1,218,290 (2014 - 1,076,290) shares were held in treasury, which represents 3.11% (2014 - 2.75%) of the Company's total issued share capital at 31 July 2015. During the year there were a further 4,083 Ordinary shares issued as a result of CULS conversion (2014 - 25,438).

	Since the year end a further 590,947 Ordinary shares of 25p have been purchased by the Company at a total cost of £4,322,000, all of which were held in treasury.

		2015	2014
14.	Retained earnings	£'000	£'000
	Capital reserve
	At 31 July	296,008	312,313
	Movement in investment holdings fair value	(42,300)	(26,695)
	Gains on realisation of investments at fair value	16,104	10,251
	Foreign exchange movement	(131)	103
	Capital tax charge	294	36
		_______	_______
	At 31 July	269,975	296,008
		_______	_______

		2015	2014
	Revenue reserve	£'000	£'000
	At 31 July	8,568	9,152
	Revenue	6,938	4,344
	Dividends paid	(4,953)	(4,928)
		_______	_______
	At 31 July	10,553	8,568
		_______	_______

15.	Net asset value per equity share	2015	2014
	Basic
	Net assets attributable	£343,967,000	£369,118,000
	Number of Ordinary shares in issue^A	37,958,890	38,096,807
	Net asset value per Ordinary share	906.16p	968.89p

		2015	2014
	Diluted
	Net assets attributable	£375,911,000	£400,840,000
	Number of Ordinary shares in issue (excluding shares held in treasury)^A	41,939,992	42,082,002
	Net asset value per Ordinary share^B	896.31p	952.52p

	^A Calculated excluding shares held in treasury
	^B The diluted net asset value per Ordinary share has been calculated on the assumption that the 33,043,143 (2014 - 33,077,121) 3.5% Convertible Unsecured Loan Stock 2019 ("CULS") are converted at 830.00p per share, giving a total of 41,939,992 (2014 - 42,082,002) Ordinary shares. Where dilution occurs, the net assets are adjusted for items relating to the CULS.

	Net asset value per share - debt converted
	In accordance with the Company's understanding of the current methodology adopted by the AIC, convertible financial instruments are deemed to be 'in the money' if the cum income net asset value ("NAV") exceeds the conversion price of 830.00p per share. In such circumstances a net asset value is produced and disclosed assuming the convertible debt is fully converted. At 31 July 2015 the cum income NAV was 906.16p (31 July 2014 - 968.89p) and thus the CULS were 'in the money'.

16.	Reconciliation of net return before finance costs and	2015	2014
	taxation to net cash inflow from operating activities	£'000	£'000
	Net returns before finance costs and taxation	(17,070)	(9,968)
	Adjustments for:
	Losses on investments	26,196	16,444
	Effect of foreign exchange rate losses/(gains)	131	(103)
	(Increase)/decrease in prepayments and accrued income	(794)	270
	Decrease/(increase) in other debtors	19	(9)
	Increase/(decrease) in other creditors	45	(243)
	Overseas withholding tax suffered	(503)	(536)
	Stock dividends included in investment income	(677)	(130)
		_______	_______
	Net cash inflow from operating activities	7,347	5,725
		_______	_______

					Other
		1 August	Cash	Exchange	non-cash	31 July
		2014	flow	movements	movements	2015
17.	Analysis of changes in net debt	£'000	£'000	£'000	£'000	£'000
	Cash and short term deposits	5,685	1,124	(131)	-	6,678
	Debt falling due within one year	(5,000)	-	-	-	(5,000)
	Debt falling due in more than one year	(31,722)	-	-	(222)	(31,944)
		_______	_______	_______	_______	_______
	Net debt	(31,037)	1,124	(131)	(222)	(30,266)
		_______	_______	_______	_______	_______

18.	Related Party Transactions and Transactions with the Manager
	Fees payable during the year to the Directors and their interests in shares of the Company are considered to be related party transactions and are disclosed within the Directors' Remuneration Report in the Annual Report. The balance of fees due to Directors at the year end was £2,000 (2014 - £2,000).

	Mr Gilbert and his alternate Director, Mr Young are both directors of Aberdeen Asset Management PLC ("AAM") and its subsidiary Aberdeen Asset Management Asia Limited ('AAM Asia') which has been delegated, under an agreement with Aberdeen Fund Managers Limited, to provide management services to the Company, the terms of which are outlined in note 3. Neither Mr Gilbert nor Mr Young are directors of AFML.

19.	Financial instruments
	Risk management
	The Company's investment activities expose it to various types of financial risk associated with the financial instruments and markets in which it invests. The Company's financial instruments comprise equities 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 Board has delegated the risk management function to Aberdeen Fund Managers Limited ("AFML") under the terms of its management agreement with AFML (further details of which are included under note 3 and in the Directors' Report), however, it remains responsible for the risk and control framework and operation of third parties. The Board regularly reviews and agrees policies for managing each of the key financial risks identified with the Manager. The types of risk and the Manager's approach to the management of each type of risk, are summarised below. Such approach has been applied throughout the year and has not changed since the previous accounting period. The numerical disclosures exclude short-term debtors and creditors.

	Risk management framework
	The directors of Aberdeen Fund Managers Limited collectively assume responsibility for AFML's obligations under the AIFMD including reviewing investment performance and monitoring the Company's risk profile during the year.

	AFML is a fully integrated member of the Aberdeen Group, which provides a variety of services and support to AFML in the conduct of its business activities, including in the oversight of the risk management framework for the Company. The AIFM has delegated the day to day administration of the investment policy to Aberdeen Asset Management Asia Ltd, which is responsible for ensuring that the Company is managed within the terms of its investment guidelines and the limits set out in its pre-investment disclosures to investors (details of which can be found on the Company's website). The AIFM has retained responsibility for monitoring and oversight of investment performance, product risk and regulatory and operational risk for the Company.

	The Group's Internal Audit Department is independent of the Risk Division and reports directly to the Group CEO and to the Audit Committee of the Group's Board of Directors. The Internal Audit Department is responsible for providing an independent assessment of the Group's control environment.

	The Manager conducts its risk oversight function through the operation of the Group's risk management processes and systems which are embedded within the Group's operations. The Group's Risk Division supports management in the identification and mitigation of risks and provides independent monitoring of the business. The Division includes Compliance, Business Risk, Market Risk, Risk Management and Legal. The team is headed up by the Group's Head of Risk, who reports to the Chief Executive Officer of the Group. The Risk Division achieves its objective through embedding the Risk Management Framework throughout the organisation using the Group's operational risk management system ("SWORD").

	The Group's corporate governance structure is supported by several committees to assist the board of directors of Aberdeen, its subsidiaries and the Company to fulfil their roles and responsibilities. The Group's Risk Division is represented on all committees, with the exception of those committees that deal with investment recommendations. The specific goals and guidelines on the functioning of those committees are described in the committees' terms of reference.

	Risk management
	The main risks the Company faces from these financial instruments are (i) market risk (comprising interest rate, foreign currency and other price risk), (ii) liquidity risk and (iii) credit risk.

	Market 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 three elements - interest rate risk, currency risk and other price risk.

	Interest rate risk
	Interest rate movements may affect:
	- the level of income receivable on cash deposits;
	- interest payable on the Company's variable rate borrowings;
	- valuation of debt securities in the portfolio.

	Management of the risk
	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 risk profile
	The interest rate risk profile of the Company's financial assets and liabilities, excluding equity holdings which are all non-interest bearing, at the Balance Sheet date was as follows:


	Weighted average	Weighted
	period for which	average	Fixed	Floating
	rate is fixed	interest rate	rate	rate
At 31 July 2015	Years	%	£'000	£'000
Assets
Sterling	-	-	-	6,675
Thailand Baht	-	-	-	3
	_______	_______	_______	_______
	-	-	-	6,678
	_______	_______	_______	_______

Liabilities
Bank loan	0.08	1.4	5,000	-
3.5% Convertible Loan Stock 2019	3.83	3.5	31,944	-
	_______	_______	_______	_______
	-	-	36,944	-
	_______	_______	_______	_______

	Weighted average	Weighted
	period for which	average	Fixed	Floating
	rate is fixed	interest rate	rate	rate
At 31 July 2014	Years	%	£'000	£'000
Assets
Hong Kong Dollar	-	-	-	184
Sterling	-	-	-	5,498
Thailand Baht	-	-	-	3
	_______	_______	_______	_______
	-	-	-	5,685
	_______	_______	_______	_______
Liabilities
Bank loan	0.08	1.4	5,000	-
3.5% Convertible Loan Stock 2019	4.83	3.5	31,722	-
	_______	_______	_______	_______
	-	-	36,722	-
	_______	_______	_______	_______

The weighted average interest rate is based on the current yield of each asset, weighted by its market value. The weighted average interest rate on bank loans is based on interest payable, weighted by the value of the loan. Details of the Company's loan are shown in note 11 to the financial statements.
The floating rate assets consist of cash deposits on call earning interest at prevailing market rates.
The Company's equity portfolio and short term debtors and creditors (excluding bank loans) have been excluded from the above tables.


Maturity profile
The maturity profile of the Company's financial assets and liabilities at 31 July was as follows:
							2015				2014
							£'000				£'000
Assets
In less than one year							6,678				5,685
							_______				_______
							2015				2014
Liabilities							£'000				£'000
In less than one year							5,000				5,000
In more than one year							31,944				31,722
							_______				_______
							36,944				36,722
							_______				_______

All the other financial assets and liabilities do not have a maturity date. The full contractual liability for the CULS assuming no further conversion is £37,091,000 (2014 - £38,869,000).

Interest rate sensitivity
Movements in interest rates would not significantly affect net assets attributable to the Company's shareholders and total profit.

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.

Management of the risk
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 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 by currency of denomination:

	31 July 2015					31 July 2014
		Net monetary		Total						Net monetary			Total
	Overseas investments	assets/ (liabilities)		currency exposure		Overseas Investments				assets/ (liabilities)			currency exposure
	£'000	£'000		£'000		£'000				£'000			£'000
Australian Dollar	10,571	-		10,571		12,419				-			12,419
Danish Krona	4,308	-		4,308		3,977				-			3,977
Hong Kong Dollar	56,629	-		56,629		54,210				-			54,210
Indian Rupee	56,967	-		56,967		54,910				184			55,094
Indonesian Rupiah	19,808	-		19,808		28,106				-			28,106
Korean Won	2,214	-		2,214		2,896				-			2,896
Malaysian Ringgit	71,233	-		71,233		84,494				-			84,494
New Zealand Dollar	5,772	-		5,772		5,404				-			5,404
Pakistan Rupee	1,868	-		1,868		864				-			864
Philippine Peso	24,186	-		24,186		21,169				-			21,169
Singapore Dollar	45,131	-		45,131		48,605				-			48,605
Sri Lankan Rupee	19,612	-		19,612		18,337				-			18,337
Thailand Baht	44,861	3		44,864		51,941				3			51,944
	_______	_______		_______		_______				_______			_______
	363,160	3		363,163		387,332				187			387,519
Sterling	11,300	(30,269)		(18,969)		13,428				(31,224)			(17,796)
	_______	_______		_______		_______				_______			_______
Total	374,460	(30,266)		344,194		400,760				(31,037)			369,723
	_______	_______		_______		_______				_______			_______

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 security price risk sensitivity analysis so as to show the overall level of exposure. Due consideration is paid to foreign currency risk throughout the investment process.

Other price risk
Other price risks (ie changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments.

Investment in Far East equities or those of companies that derive significant revenue or profit from the Far East involves a greater degree of risk than that usually associated with investment in the securities in major securities markets. The securities that the Company owns may be considered speculative because of this higher degree of risk. It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular country or sector. Both the allocation of assets and the stock selection process, act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Company are listed on various stock exchanges worldwide.

Other price risk sensitivity
If market prices at the Balance Sheet date had been 10% (2014 - 10%) higher or lower while all other variables remained constant, the return attributable to Ordinary shareholders for the year ended 31 July 2015 would have increased/(decreased) by £37,446,000 (2014 - increased/(decreased) by £40,076,000)) and equity reserves would have increased/(decreased) by the same amount.

Liquidity risk
This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.

Management of the risk
The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a regular basis. Gearing comprises both bank loans and convertible unsecured loan stock. The Board has imposed a maximum gearing level, measured on the most stringent basis of calculation after netting off cash equivalents, of 25%. Details of borrowings at the 31 July 2015 are shown in notes 11 and 12.

Liquidity risk is not considered to be significant as the Company's assets comprise mainly readily realisable securities, which can be sold to meet funding commitments if necessary. Short-term flexibility is achieved through the use of a loan facility, details of which can be found in note 11. Under the terms of the loan facility, the Manager provides the lender with loan covenant reports on a monthly basis, to provide the lender with assurance that the terms of the facility are not being breached. The Manager will also review the credit rating of a lender on a regular basis. Details of the Board's policy on gearing are shown in the investment policy section of the Annual Report.

Liquidity risk exposure
At 31 July 2015 the Company had borrowings in the form of the £33,043,143 (2014 - £33,077,121) nominal of 3.5% Convertible Unsecured Loan Stock 2019.

At 31 July 2015 the Company's bank loan, amounting to £5,000,000 (2014 - £5,000,000), was due for repayment or roll-over within 1 month. The maximum exposure during the year was £5,000,000 (2014 - £5,000,000) and the minimum exposure during the year was £nil (2014 - £nil).

The maturity profile of the Company's existing borrowings is is`` set out below.

									Due
						Due			between
				Expected		within			3 months			Due after
				cashflows		3 months			and 1 year			1 year
				£'000		£'000			£'000			£'000
3.5% Convertible Unsecured Loan Stock 2019				37,091		-			1,157			35,934
Bank loans				5,000		5,000			-			-
				_______		_______			_______			_______
				42,091		5,000			1,157			35,934
				_______		_______			_______			_______

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.

Management of the risk
- investment transactions are carried out with a large number of brokers, whose credit-standing is reviewed periodically by the Investment Manager, and limits are set on the amount that may be due from any one broker. Settlement of investment transactions are also done on a delivery versus payment basis;
- the risk of counterparty exposure due to failed trades causing a loss to the Company is mitigated by the review of failed trade reports on a monthly basis. In addition, the third party administrator carries out a stock reconciliation to Custodian records on a monthly basis to ensure discrepancies are picked up on a timely basis. The Manager's compliance department carries out periodic reviews of the Custodian's operations and reports its finding to the Manager's risk management committee. This review will also include checks on the maintenance and security of investments held; and
- cash is held only with reputable banks with high quality external credit ratings.

None of the Company's financial assets is secured by collateral or other credit enhancements.

Credit risk exposure
In summary, compared to the amounts in the Balance Sheet, the maximum exposure to credit risk at 31 July was as follows:

			2015					2014
			Balance		Maximum			Balance				Maximum
			Sheet		exposure			Sheet				exposure
Current assets			£'000		£'000			£'000				£'000
Debtors			1,010		1,010			212				212
Cash and short term deposits			6,678		6,678			5,685				5,685
			_______		_______			_______				_______
			7,688		7,688			5,897				5,897
			_______		_______			_______				_______

None of the Company's financial assets is past due or impaired.

Fair values of financial assets and financial liabilities
Investments held at fair value through profit or loss are valued at their quoted bid prices which equate to their fair values. The Directors are of the opinion that the other financial assets and liabilities, excluding CULS which are held at amortised cost, are stated at fair value in the Balance Sheet and considered that this approximates to the carrying amount.

20.	Fair value hierarchy
	FRS 29 'Financial Instruments: Disclosures' requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

	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 assets or liability, either directly (ie as prices) or indirectly (ie derived from prices); and
	Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

	The financial assets and liabilities measured at fair value in the Balance Sheet are grouped into the fair value hierarchy at 31 July 2015 as follows:
			Level 1	Level 2	Level 3	Total
	As at 31 July 2015	Note	£'000	£'000	£'000	£'000
	Financial assets and liabilities at fair value through profit or loss
	Quoted equities	a)	365,374	-	-	365,374
	Unquoted equities	b)	-	9,086	-	9,086
	CULS	c)	(37,174)	-	-	(37,174)
			_______	_______	_______	_______
	Net fair value		328,200	9,086	-	337,286
			_______	______	______	______

			Level 1	Level 2	Level 3	Total
	As at 31 July 2014	Note	£'000	£'000	£'000	£'000
	Financial assets and liabilities at fair value through profit or loss
	Quoted equities	a)	400,760	-	-	400,760
	CULS	c)	(38,204)	-	-	(38,204)
			_______	______	______	______
	Net fair value		362,556	-	-	362,556
			_______	______	______	______
	a) Quoted equities
	The fair value of the Company's investments in quoted equities have been determined by reference to their quoted bid prices at the reporting date. Quoted equities included in Fair Value Level 1 are actively traded on recognised stock exchanges.

	b) Unquoted equities
	Equities included in Fair Value Level 2 are assets that do not have regular market pricing, but whose fair value can be readily determined based on other data values or market prices.

	c) Convertible Unsecured Loan Stock ("CULS")
	The Company's CULS are actively traded on a recognised stock exchange. The fair value of the CULS have therefore been deemed Level 1. The carrying value of the CULS is disclosed in note 12.

21.	Capital management policies and procedures
	The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt (comprising bank borrowings and CULS) and equity balance.

	The Company's capital comprises the following:
		2015	2014
		£'000	£'000
	Equity
	Equity share capital	9,794	9,793
	Reserves	334,173	359,325
	Liabilities	_______	_______
	CULS	31,944	31,722
		_______	_______
		375,911	400,840
		_______	_______

	The Board's policy is to utilise gearing when the Manager believes it appropriate to do so, up to a maximum of 25% geared at the time of drawdown. Gearing for this purpose is defined as the excess amount above shareholders' funds of total assets (including net current assets/liabilities) less cash/cash equivalents, expressed as a percentage of the shareholders' funds. If the amount so calculated is negative, this is shown as a 'net cash' position.

		2015	2014
		£'000	£'000
	Investments at fair value through profit or loss	374,460	400,760
	Current assets excluding cash	1,010	227
	Current liabilities excluding bank loans	(1,237)	(832)
		_______	_______
	Total assets	374,233	400,155
		_______	_______
	Net assets	343,967	369,118
		_______	_______
	Gearing (%)	8.8	8.4
		_______	_______
	The Board monitors and reviews the broad structure of the Company's capital on an ongoing basis. The review includes:
	the planned level of gearing which takes account of the Manager's views on the market;
	the level of equity shares in issue;
	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.

	The Company does not have any externally imposed capital requirements.

The Annual General Meeting will be held at 11.30 a.m. on 1 December 2015 at Bow Bells House, 1 Bread Street, London EC4M 9HH.

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.

The Annual Financial Report Announcement is not the Company's statutory accounts. The above results for the year ended 31 July 2015 are an abridged version of the Company's full financial statements, which have been approved and audited with an unqualified report. The 2014 and 2015 statutory accounts received unqualified reports from the Company's auditors and did not include any reference to matters to which the auditors drew attention by way of emphasis without qualifying the reports, and did not contain a statement under s.498(2) or 498(3) of the Companies Act 2006. The financial information for 2014 is derived from the statutory accounts for 2014 which have been delivered to the Registrar of Companies. The 2015 financial statements will be filed with the Registrar of Companies in due course.

The audited Annual Report and financial statements will be posted to shareholders in early November. Copies may be obtained during normal business hours from the Company's Registered Office, Bow Bells House, 1 Bread Street, London EC4M 9HH or from the Company's website, www.asian-smaller.co.uk*

* Neither the content of the Company's website nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of this announcement.

By Order of the Board

Aberdeen Asset Management PLC

Secretary

27 October 2015

This information is provided by RNS

The company news service from the London Stock Exchange

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