Final Results

Aberdeen Asian Smaller Co's Inv Tst 11 October 2006 ABERDEEN ASIAN SMALLER COMPANIES INVESTMENT TRUST PLC PRELIMINARY ANNOUNCEMENT OF UNAUDITED RESULTS for the year ended 31 July 2006 Highlights • Diluted Net Asset Value Total Return +11.5% • Share Price Total Return +5.3% Results and Dividend I am pleased to present another year of good results for your Company. During the year under review, the Company's net asset value total return was 11.5%. This was despite fresh uncertainty over the direction of the global economy and consequently more volatile stock markets both worldwide and in SE Asia. During most of the year the price of the Ordinary shares traded at a premium to Net Asset Value but with the less certain state of the markets, this moved to a discount at the year end which resulted in a total share price return of only 5.3% for the year. It has been another very strong year for the Company's revenue account with the receipt of a number of special dividends from companies in the Far East. Accordingly, your Board has recommended the payment of a final dividend of 3.45 pence per share together with a special dividend of 2.7 pence per share, which compares favourably to last year's final dividend of 3.45 pence. If approved by shareholders at the Annual General Meeting of the Company, the dividends will be paid on 30 November 2006 to shareholders on the register on 20 October 2006. Gearing and Share Issuance During the year, your Board used the opportunity of the strong demand for shares in the Company to issue 1.825 million new Ordinary shares at a premium to the prevailing net asset value thus enhancing the net asset value per Ordinary share for shareholders. At the Annual General Meeting ("AGM") the Board is seeking to renew the authority to issue shares for cash and will continue to issue new shares as and when there is sufficient demand from the market. The Company is also seeking to renew its authority to buy back shares at a discount to net asset value and either cancel them or hold them in treasury. Shares would only be reissued from treasury at a premium to the prevailing net asset value in order to benefit shareholders. The Directors believe that the use of these powers is in the best interests of shareholders and recommends shareholders to vote in favour of these resolutions at the AGM. Your Board has successfully used gearing to enhance returns to shareholders in the rising markets over the longer term. With the increasing uncertainty in the markets, the Company's gearing has reduced from 9% to 4% at the year end. Overview Robust foreign inflows helped Asia's stock markets enjoy strong advances for most of the year. However, in May, concerns over inflation and interest rates saw gains pared in a widespread sell-off across the region. Since then, there has been some recovery with India, the Philippines, South Korea and Indonesia showing the strongest advances. The economies in the region continue to grow strongly. Export growth has been impressive, in part due to demand from China, which has been a boon for the region's commodity and supplier industries. India with its relatively closed economy is seeing strong growth in both consumption and investment. As in the rest of the world, nominal interest rates in South East Asia have risen as the increase in energy costs feeds into underlying inflation. Price controls, however, on staple foods have mitigated the effects of falling subsidies, which has ensured demand has been resilient. Rising currencies have helped to cushion import costs. Real interest rates therefore remain relatively low. While the economies of the region flourish, politically there has been more uncertainty. The recent coup in Thailand cannot be viewed as a positive step. Malaysia's current leadership has been under attack from a predecessor, compounding party squabbles which have slowed promised reforms. In Taiwan the President narrowly avoided a vote of no-confidence and Beijing is actively courting the opposition in the expectation of a change of government in due course. All told, these are the growing pains of democracies in transition. Interference in business has fallen and where it does occur it tends to be in the form of public debate: for example, how fast should India privatise; or should Malaysia's government-run companies be given more autonomy. Smaller companies typically fall under the radar of these 'bigger picture' issues. Portfolio The portfolio has changed little over the past year, the focus on companies with professional managements, resilient business models, strong balance sheets and good cashflows continues. In addition, our Managers have been looking at companies with strong domestic demand. During the year, Bursa Malaysia, Straits Trading, Aeon and Pacific Basin Shipping were added to the portfolio. The recent volatility has also provided opportunities to trim or exit holdings where share prices have run up too far. Directorate We regret to announce that Iain Saunders has resigned as a Director of the Company. I would like to take this opportunity to thank him for his contribution over the last two years. Outlook The stock market correction in May was not wholly unexpected or undesirable. The dramatic surge of interest in Asian stock markets had started to push up valuations to unsustainable levels - most notably in India. But if the catalyst for a global sell-off then was global inflation, this worry has not entirely dissipated. On the contrary, global price pressures appear to be increasing - and central bank tightening all the more synchronous - at a time when other key indicators, chiefly US housing, are weakening fast. Despite this, Asian stock markets have since recovered most of their falls. In their favour, Asian fundamentals remain attractive, certainly on a relative basis. The presence of long-term institutional investors in the region provides a measure of stability which may have helped broaden interest away from the more liquid large companies thus closing the longstanding discount of smaller companies. However, as we have often cited in the past, this may purely be an acknowledgement of the quality that exists in the sector in which your Company is invested. The key question now is how far the global earnings cycle has run and whether in Asia there are structural factors that will compensate for any slackening in growth. The portfolio is not heavily reliant on companies dependent on export markets. The price earnings ratio for the portfolio for calendar 2006 is projected to be 15.3 falling to 13.8 in 2007 with a gross dividend yield of 5% (before taxes and expenses) and strong asset backing. Accordingly, we continue to view the future with confidence. Nigel Cayzer Chairman 10 October 2006 Unaudited Income Statement Year ended 31 July 2006 Year ended 31 July 2005 (restated) Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Gains on investments - 6,968 6,968 - 25,391 25,391 Income 5,080 - 5,080 3,473 - 3,473 Exchange gains/(losses) - 490 490 - (258) (258) Investment management fees (941) - (941) (708) - (708) Administrative expenses (584) - (584) (465) (4) (469) _________ _________ _________ _________ _________ _________ Net return on ordinary activities before interest payable and taxation 3,555 7,458 11,013 2,300 25,129 27,429 Finance costs (421) - (421) (352) - (352) _________ _________ _________ _________ _________ _________ Return on ordinary activities before taxation 3,134 7,458 10,592 1,948 25,129 27,077 Taxation (904) - (904) (701) - (701) _________ _________ _________ _________ _________ _________ Return on ordinary activities after taxation 2,230 7,458 9,688 1,247 25,129 26,376 _________ _________ _________ _________ _________ _________ Return per share (pence): Basic 7.25 24.23 31.48 4.54 91.39 95.93 _________ _________ _________ _________ _________ _________ Diluted 6.57 21.96 28.53 4.00 80.57 84.57 _________ _________ _________ _________ _________ _________ The total column of this statement represents the profit and loss account of the Company. The financial statements for the year to 31 July 2005 have been restated to reflect the changes to accounting practices as set out in note 1. The effect of these changes has been to increase revenue reserves by £995,000 and to decrease capital reserves by £497,000. 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. Unaudited Balance Sheet As at As at 31 July 2006 31 July 2005 (restated) £'000 £'000 Non-current assets Investments at fair value through profit or loss 103,101 89,650 ____________ ____________ Current assets Debtors and prepayments 427 1,509 Cash and short term deposits 3,970 1,145 ____________ ____________ 4,397 2,654 ____________ ____________ Creditors: amounts falling due within one year Bank loans (8,012) (8,509) Other creditors (763) (654) ____________ ____________ (8,775) (9,163) ____________ ____________ Net current liabilities (4,378) (6,509) ____________ ____________ Total assets less current liabilities 98,723 83,141 Provisions for liabilities and charges (54) (59) ____________ ____________ Net assets 98,669 83,082 ____________ ____________ Capital and reserves Called-up share capital 8,047 7,214 Capital redemption reserve 2,062 2,062 Share premium account 10,259 4,194 Special reserve 14,990 14,990 Warrant reserve 1,785 2,275 Capital reserve - realised 27,211 17,581 Capital reserve - unrealised 31,334 33,016 Revenue reserve 2,981 1,750 ____________ ____________ Equity Shareholders' funds 98,669 83,082 ____________ ____________ Net asset value per share (pence): Basic 306.56 287.94 ____________ ____________ Diluted 276.45 251.25 ____________ ____________ Unaudited Reconciliation of Movements in Shareholders' Funds For the year ended 31 July 2006 Capital Share Capital Capital Share redemption premium Special Warrant reserve - reserve - Revenue capital reserve account reserve reserve realised unrealised reserve Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 July 2005 as 7,214 2,062 4,194 14,990 2,275 17,581 33,513 755 82,584 originally reported Restatements - - - - - - (497) 995 498 _______ _______ _______ _______ _______ _______ _______ _______ ______ Balance at 31 July 2005 (restated) 7,214 2,062 4,194 14,990 2,275 17,581 33,016 1,750 83,082 Dividends paid - - - - - - - (999) (999) Issue of shares 456 - 4,935 - - - - - 5,391 Exercise of warrants 377 - 1,130 - (490) 490 - - 1,507 Return on ordinary activities after taxation - - - - - 9,140 (1,682) 2,230 9,688 _______ _______ _______ _______ _______ _______ _______ _______ ______ Balance at 31 July 2006 8,047 2,062 10,259 14,990 1,785 27,211 31,334 2,981 98,669 _______ _______ _______ _______ _______ _______ _______ _______ ______ For the year ended 31 July 2005 Capital Share Capital Capital Share redemption premium Special Warrant reserve - reserve - Revenue capital reserve account reserve reserve realised unrealised reserve Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 July 2004 as 6,689 2,062 - 14,990 2,275 14,409 11,404 503 52,332 originally reported Restatements - - - - - - (345) 829 484 _______ _______ _______ _______ _______ _______ _______ _______ ______ Balance at 31 July 2004 (restated) 6,689 2,062 - 14,990 2,275 14,409 11,059 1,332 52,816 Dividends paid - - - - - - - (829) (829) Issue of shares 525 - 4,194 - - - - - 4,719 Return on ordinary activities after taxation - - - - - 3,172 21,957 1,247 26,376 _______ _______ _______ _______ _______ _______ _______ _______ ______ Balance at 31 July 2005 (restated) 7,214 2,062 4,194 14,990 2,275 17,581 33,016 1,750 83,082 _______ _______ _______ _______ _______ _______ _______ _______ ______ Unaudited Cash Flow Statement Year ended Year ended 31 July 2006 31 July 2005 £'000 £'000 £'000 £'000 Net cash inflow from operating activities 3,451 1,900 Servicing of finance Bank and loan interest paid (421) (370) Taxation Net taxation paid (592) (338) Financial investment Purchases of investments (19,909) (12,573) Sales of investments 13,142 8,676 Net cash outflow from financial investment _______ (6,767) _______ (3,897) Equity dividends paid (999) (829) _______ _______ Net cash outflow before financing (5,328) (3,534) Financing Issue of shares 8,160 3,456 Expenses of share issue charged to capital - (4) Drawdown of loans - 84,692 Repayment of loans - (84,777) _______ Net cash inflow from financing activities 8,160 3,367 _______ _______ Increase/(decrease) in cash and cash equivalents 2,832 (167) _______ _______ Reconciliation of net cash flow to movements in net debt Increase/(decrease) in cash as above 2,832 (167) Cash inflow from drawdown of loans - 85 Exchange movements 490 (258) _______ _______ Movement in net debt in the year 3,322 (340) Net debt at 1 August (7,364) (7,024) _______ _______ Net debt at 31 July (4,042) (7,364) _______ _______ Notes: 1. Accounting policies (a) Basis of preparation and going concern The financial statements have been prepared on the going concern basis in accordance with applicable UK Accounting Standards and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' (issued January 2003 and revised in December 2005). They have also been prepared on the assumption that approval as an investment trust will continue to be granted. The financial statements, and the net asset value per share figures, have been prepared in accordance with UK Generally Accepted Accounting Practice ("UK GAAP"). The new Financial Reporting Standards, issued as part of the programme to converge UK GAAP with International Financial Reporting Standards (IFRS), were applicable for the accounting period ended 31 July 2006 and the financial statements for the twelve months ended 31 July 2005 have also been restated. The main changes arising from these revisions to UK GAAP, in relation to the Company's financial statements, are that investments are valued at bid price and dividends to shareholders declared after the balance sheet date are now shown in the period of payment rather than in the reporting period. Dividends were previously recognised in the Statement of Total Return (now Income Statement). These are now dealt with as an appropriation of equity and are taken directly through equity in the Reconciliation of Movements in Shareholders' Funds. Changes in the value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Income Statement as "Gains or losses on investments held at fair value through profit or loss". Also included within this figure are transaction costs in relation to the purchase or sale of investments, including the difference between the purchase price of an investment and its bid price at the date of purchase. (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 as 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 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 - unrealised. (c) Income Dividends receivable on equity shares are brought into account on the ex-dividend date. 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 is recognised on a time apportioned basis so as, if material, to reflect the effective yield on each such security. Where the Company has elected to receive its dividends in the form of additional shares rather than in 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. Income is charged 100% to the revenue account. (d) Expenses All expenses are accounted for on an accrual basis. Expenses, including management fees and finance charges, are charged 100% through the revenue account with the exception of transaction costs incurred on the purchase and disposal of investments which are recognised as a capital expense in the Income Statement. (e) Taxation The charge for taxation is based on the revenue return 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. (f) Capital reserves Capital reserve - realised The following are accounted for in this reserve: - gains and losses on the realisation of investments; and - realised exchange differences of a capital nature. Capital reserve - unrealised The following are accounted for in this reserve: - increases and decreases in the valuation of investments held at the year-end; and - unrealised exchange differences of a capital nature. (g) 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. 2006 2005 2. Income £'000 £'000 Income from investments UK dividend income 105 101 Overseas dividends 4,880 3,317 _______ _______ 4,985 3,418 _______ _______ Other income Deposit interest 95 55 _______ _______ Total income 5,080 3,473 _______ _______ 3. Return per Ordinary share 2006 2005 (restated) Basic Revenue Capital Total Revenue Capital Total Net revenue on ordinary activities after taxation (£'000) 2,230 7,458 9,688 1,247 25,129 26,376 ________ ________ ________ ________ ________ ________ Weighted average shares in 30,773,921 30,773,921 30,773,921 27,496,292 27,496,292 27,496,292 issue ________ ________ ________ ________ ________ ________ Basic return per Ordinary share 7.25 24.23 31.48 4.54 91.39 95.93 (p) ________ ________ ________ ________ ________ ________ Diluted Number of dilutive shares 3,183,540 3,183,540 3,183,540 3,694,366 3,694,366 3,694,366 ________ ________ ________ ________ ________ ________ Diluted shares in issue 33,957,461 33,957,461 33,957,461 31,190,658 31,190,658 31,190,658 ________ ________ ________ ________ ________ ________ Diluted return per Ordinary 6.57 21.96 28.53 4.00 80.57 84.57 share (p) ________ ________ ________ ________ ________ ________ The calculation of the diluted total, revenue and capital returns per Ordinary share are carried out in accordance with Financial Reporting Standard No. 22, "Earnings per Share". For the purposes of calculating diluted total, revenue and capital returns per Ordinary share, the number of Ordinary shares is the weighted average used in the basic calculation plus the number of Ordinary shares deemed to be issued for no consideration on exercise of all Warrants by reference to the average share price of the Ordinary shares during the year. The calculations indicate that the exercise of Warrants would result in an increase in the Weighted average number of Ordinary shares of 3,183,540 (2005 - 3,694,366) to 33,957,461 (2005 - 31,190,658) Ordinary shares. 4. The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 July 2006 or 2005. The financial information for 2005 is derived from the statutory accounts for 2005 which have been delivered to the Registrar of Companies. The auditors have reported on the 2005 accounts; their report was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985. The statutory accounts for 2006 will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies in due course. 5. Copies of the Annual Report will be posted to Shareholders shortly and further copies may be obtained from the registered office, One Bow Churchyard, Cheapside, London EC4M 9HH. 6. This preliminary announcement was approved by the Board of Directors on 10 October 2006. Aberdeen Asset Management PLC, Secretaries. 10 October 2006 This information is provided by RNS The company news service from the London Stock Exchange

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