Half Yearly Report

RNS Number : 7328Z

Aberdeen Asian Smaller Co's Inv Tst

21 March 2012

 



ABERDEEN ASIAN SMALLER COMPANIES INVESTMENT TRUST PLC

ANNOUNCEMENT OF UNAUDITED HALF YEARLY RESULTS

for the six months ended 31 January 2012

INTERIM BOARD REPORT

Background

In the six months to 31 January 2012, your Company's net asset value total return declined 3.6%. Although it is never pleasing to report a fall in assets, it is comforting to note that the decline was much less than those of the MSCI AC Asia Pacific ex Japan Index and MSCI AC Asia Pacific ex Japan Small Cap Index, which were 5.2% and 12.9% respectively, in sterling terms. The share price return fell 7.6% reflecting a widening of the discount from 1.9% to 6.1%.

The outperformance again reinforces your Manager's strength in seeking out quality holdings with healthy balance sheets, sound management and superior growth prospects. This helped steer the Company through what was a volatile period for global financial markets.

Overview

Over the review period, Asian markets reacted negatively to persistent threats of a disorderly sovereign default in Europe, the unprecedented downgrade of America's credit rating and stalling growth in the developed world, with its consequences for Asia's economic expansion which is still dependent on export-oriented industries.

As growth prospects diminished, central banks started loosening monetary policy. Slowing inflation gave Australia, Indonesia and Thailand the opportunity to lower interest rates. In November, China cut the cash reserve requirement ratio for lenders for the first time in three years. India followed suit in January, signalling a policy shift towards reviving growth after two years of fighting inflation. Its wholesale price index, the main measure of price pressures, eased from 9.11% year-on-year in November to 6.55% in January. (At the time of writing, China announced a second cut to cash reserve requirements while data showed the property sector continues to weaken.)

The prospect of looser policy, underscored by the US Federal Reserve's pledge to hold interest rates at their current low levels until 2014, revived market sentiment in the second half of the review period though not enough to erase earlier losses. In previous years, massive liquidity injections from two rounds of quantitative easing in the US had cushioned global equities against economic, political and policy uncertainties. The absence of a third round appeared to have taken away that support though share prices have rebounded since the review period ended.

Share Capital and Gearing

The Company remained geared throughout the period with net gearing of 4.7% at the period end, and £10.6 million drawndown in US dollars under the £20m multi-currency facility with the Royal Bank of Scotland.  The Board monitors the Company's gearing on a regular basis under advice from the Manager.

On 8 March 2012 the Company announced that it was exploring the possibility of issuing a convertible unsecured loan stock ("CULS") and we expect to be writing to shareholders in the near future with further details of the CULS and steps that can be taken to approve of, and participate in, the CULS issue.

Portfolio

Within the portfolio, consumer staple stocks did extremely well, outpacing the broader market given their defensive qualities. Among the noteworthy contributors to relative return were leading Indonesian brewer Multi Bintang, Thai cash-and-carry retailer Siam Makro and Malaysia's Guinness Anchor. Multi Bintang's cash flow remained healthy even though earnings weakened. New stores aided Siam Makro's sales while a better product mix boosted margins. Likewise, robust demand and increasing market share bolstered brewer Guinness Anchor.

Other positive contributors included Indian drugmaker Aventis Pharma and Australian car accessories manufacturer ARB, supported by good sales and earnings growth.  These are two examples of the kind of business in which the manager likes to invest. They are both well managed; they are exposed to regional growth prospects and are market leaders, backed either by a multinational (Aventis Pharma) or strong local ownership (ARB). Through its European parent, Aventis Pharma gains from superior technology transfer and product pipelines while ARB operates in a niche sector with few rivals.

Investments that disappointed included holdings in Hong Kong and Singapore. Several Hong Kong companies, including financial daily Hong Kong Economic Times and Kingmaker Footwear, were weighed down by higher costs. Hong Kong Economic Times was further depressed by the launch of a new publication, which could squeeze margins in the short term. In Singapore, Wheelock Properties and Hong Leong Finance were hurt by property cooling measures and worries over a moderating economy. Elsewhere, Thailand's Hana Microelectronics struggled to rebuild production after the recent floods inundated its Ayutthaya plant. Nevertheless, your Manager continues to like these companies because of their long-term prospects, which remain good.

One new holding was introduced during the review period: Singapore-listed Eu Yan Sang, a well-recognised brand name in the traditional Chinese medicine sector. It has a solid balance sheet and a cash flow generating business supported by a good franchise both locally and overseas, notably in Malaysia, Hong Kong and China.

Outlook

These are difficult times for global markets. Europe's debt crisis continues to unfold with no clear solution in sight even though Greece has finally secured a second bailout. Sub-par growth in the West amid ongoing austerity drives could further dent Asian exporters' prospects despite recent upbeat economic data from the US. At the corporate level, earnings growth is expected to be muted as companies continue to adopt a cautious stance and rein in costs. All this could cast a pall over markets in the medium term.

These headwinds, however, will make little difference to smaller companies that are well-run and financially sound. Furthermore, many tend to be domestically or regionally focused and thus less vulnerable to weakness at the global level. Indeed, tough times could provide them the opportunity to widen their reach and consolidate their market positions. I am confident that your Manager's focus on in-depth research and regular management visits will stand it in good stead to identify such quality companies, like those held in your Company's portfolio.

Principal Risk Factors

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. Further details of the risks attaching to the Company's shares are provided in note 19 to the Annual Report and financial statements for the year ended 31 July 2011. These risks include:

Ordinary Shares

The market price and the realisable value of the Ordinary shares, as well as being affected by their underlying net asset value, also take into account supply and demand, market conditions and general investor sentiment. As such, the market value and the realisable value of the Ordinary shares may fluctuate and vary considerably from their net asset value and investors may not be able to realise the full value of their original investment.

Dividends

The Company will only pay dividends on the Ordinary shares to the extent that it has profits available for that purpose. The ability of the Company to pay any dividends in respect of the Ordinary shares will depend primarily on the level of income received from its investments. Accordingly, the amount of the dividends paid to shareholders may fluctuate.

Borrowings

Whilst the use of borrowings should enhance the total return on the Ordinary shares where the return on the Company's underlying assets is rising and exceeds the cost of borrowing, it will have the opposite effect where the underlying return is less than the cost of borrowing, further reducing the total return on the Ordinary shares. The Company currently utilises gearing in the form of bank borrowings (see note 10 below).

Market Risks

The Company's investments are subject to normal market fluctuations and the risks inherent in the purchase, holding or selling of securities, and there can be no assurance that appreciation in the value of those investments will occur. Investment in emerging securities markets in the Asia Pacific region involves a greater degree of risk than that usually associated with investment in more developed securities markets including the risk of social, economic and political instability which may have an adverse effect on economic reforms or restrict investment opportunities.

Foreign Exchange Risks

The Company accounts for its activities and reports its results in sterling while investments are made and realised in other currencies. It is not the Company's present intention to engage in currency hedging, although it reserves the right to do so. Accordingly, the movement of exchange rates between sterling and the other currencies in which the Company's investments are denominated or its borrowings are drawn down may have a material effect, unfavourable as well as favourable, on the returns otherwise experienced  on the investments made by the Company.

Taxation and Exchange Controls

Any change in the Company's tax status or in taxation legislation (including the tax treatment of dividends or other investment income received by the Company) or failure to satisfy the conditions of Section 1158 of the Corporation Tax Act 2010 could affect the value of the investments held by the Company, affect the Company's ability to provide returns to shareholders or alter the post-tax returns to shareholders.

The Company may purchase investments that may be subject to exchange controls or withholding taxes in various jurisdictions. In the event that exchange controls or withholding taxes are imposed with respect to any of the Company's investments, the effect will generally be to reduce the income received by the Company on its investments and the capital value of the affected investments.

Going Concern

The Company's assets consist of a diverse portfolio of listed equities which in most circumstances are realisable within a short timescale. The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

Directors' Responsibility Statement

The Directors are responsible for preparing this half-yearly financial report in accordance with applicable law and regulations.  The Directors confirm that to the best of their knowledge:

-         the condensed set of financial statements contained within the half-yearly financial report has been prepared in accordance with the Accounting Standards Board's Statement "Half Yearly Financial Reports";

-         the Interim Board Report (constituting the interim management report) includes a fair review of the information  required by rule 4.2.7R of the UK Listing Authority Disclosure and Transparency Rules (being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year) and 4.2.8R (being related party transactions that have taken place during the first six months of the financial year and that have materially affected the financial position of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could so do).

Nigel Cayzer

Chairman

20 March 2012

Aberdeen Asian Smaller Companies Investment Trust PLC

Income Statement (unaudited)

	Six months ended			Six months ended
	31 January 2012			31 January 2011
	(unaudited)			(unaudited)
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
(Losses)/gains on investments	-	(10,341)	(10,341)	-	25,970	25,970
Income (note 3)	3,784	-	3,784	2,862	-	2,862
Foreign exchange (losses)/gains	-	(299)	(299)	-	144	144
Investment management fees	(1,274)	-	(1,274)	(939)	-	(939)
Administrative expenses	(457)	-	(457)	(421)	-	(421)
	_______	_______	_______	_______	_______	_______
Net return on ordinary activities before finance costs and taxation	2,053	(10,640)	(8,587)	1,502	26,114	27,616
Finance costs	(109)	-	(109)	(25)	-	(25)
	_______	_______	_______	_______	_______	_______
Net return on ordinary activities before taxation	1,944	(10,640)	(8,696)	1,477	26,114	27,591
Taxation	(296)	102	(194)	88	(55)	33
	_______	_______	_______	_______	_______	_______
Net return on ordinary activities after taxation	1,648	(10,538)	(8,890)	1,565	26,059	27,624
	_______	_______	_______	_______	_______	_______
Return per share (pence) (note 5):
Basic	4.71	(30.14)	(25.43)	4.83	80.42	85.25
	_______	_______	_______	_______	_______	_______
The total column of this statement represents the profit and loss account of the Company. A Statement of Total Recognised Gains and Losses has not been presented as all gains and losses are recognised in the Income Statement. All revenue and capital items are derived from continuing operations. No operations were acquired or discontinued during the period.

Aberdeen Asian Smaller Companies Investment Trust PLC

Income Statement (audited)

	Year ended
	31 July 2011
	(audited)
	Revenue	Capital	Total
	£'000	£'000	£'000
(Losses)/gains on investments	-	41,022	41,022
Income (note 3)	8,380	-	8,380
Foreign exchange (losses)/gains	-	260	260
Investment management fees	(2,065)	-	(2,065)
Administrative expenses	(790)	-	(790)
	_______	_______	_______
Net return on ordinary activities before finance costs and taxation	5,525	41,282	46,807
Finance costs	(71)	-	(71)
	_______	_______	_______
Net return on ordinary activities before taxation	5,454	41,282	46,736
Taxation	(262)	(39)	(301)
	_______	_______	_______
Net return on ordinary activities after taxation	5,192	41,243	46,435
	_______	_______	_______
Return per share (pence) (note 5):
Basic	15.42	122.49	137.91
	_______	_______	_______

The total column of this statement represents the profit and loss account of the Company. A Statement of Total Recognised Gains and Losses has not been presented as all gains and losses are recognised in the Income Statement. All revenue and capital items are derived from continuing operations. No operations were acquired or discontinued during the period.

Balance Sheet

	As at	As at	As at
	31 January 2012	31 January 2011	31 July 2011
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Non-current assets
Investments at fair value through profit or loss	235,873	222,855	241,502
Current assets
Debtors and prepayments	677	270	641
Cash and short term deposits	1,681	3,955	3,580
	_________	_________	_________
	2,358	4,225	4,221
	_________	_________	_________
Creditors: amounts falling due within one year
Bank loan (note 10)	(10,646)	(5,494)	(5,361)
Other creditors	(810)	(432)	(397)
	_________	_________	_________
	(11,456)	(5,926)	(5,758)
	_________	_________	_________
Net current liabilities	(9,098)	(1,701)	(1,537)
	_________	_________	_________
Net assets	226,775	221,154	239,965
	_________	_________	_________
Capital and reserves
Called-up share capital (note 11)	9,287	9,287	9,287
Capital redemption reserve	2,062	2,062	2,062
Share premium account	14,512	14,512	14,512
Special reserve	8,372	8,372	8,372
Warrant reserve	-	-	-
Capital reserve (note 7)	186,988	182,342	197,526
Revenue reserve	5,554	4,579	8,206
	_________	_________	_________
Equity shareholders' funds	226,775	221,154	239,965
	_________	_________	_________
Net asset value per share (pence) (note 6):
Basic	648.67	632.59	686.39
	_________	_________	_________

Reconciliation of Movements in Shareholders' Funds

Six months ended 31 January 2012 (unaudited)
			Capital	Share
		Share	redemption	premium	Special	Capital	Revenue
		capital	reserve	account	reserve	reserve	reserve	Total
		£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 July 2011		9,287	2,062	14,512	8,372	197,526	8,206	239,965
Net return on ordinary activities after taxation		-	-	-	-	(10,538)	1,648	(8,890)
Dividends paid (note 2)		-	-	-	-	-	(4,300)	(4,300)
		______	______	______	______	______	______	______
Balance at 31 January 2012		9,287	2,062	14,512	8,372	186,988	5,554	226,775
		______	______	______	______	______	______	______
Six months ended 31 January 2011 (unaudited)
		Capital	Share
	Share	redemption	premium	Special	Warrant	Capital	Revenue
	capital	reserve	account	reserve	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 July 2010	8,331	2,062	11,644	8,372	1,243	155,040	6,159	192,851
Net return on ordinary activities after taxation	-	-	-	-	-	26,059	1,565	27,624
Dividends paid (note 2)	-	-	-	-	-	-	(3,145)	(3,145)
Exercise of Warrants (note 11)	956	-	2,868	-	(1,243)	1,243	-	3,824
	______	______	______	______	______	______	______	______
Balance at 31 January 2011	9,287	2,062	14,512	8,372	-	182,342	4,579	221,154
	______	______	______	______	______	______	______	______
Year ended 31 July 2011 (audited)
		Capital	Share
	Share	redemption	premium	Special	Warrant	Capital	Revenue
	capital	reserve	account	reserve	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 July 2010	8,331	2,062	11,644	8,372	1,243	155,040	6,159	192,851
Net return on ordinary activities after taxation	-	-	-	-	-	41,243	5,192	46,435
Dividends paid (note 2)	-	-	-	-	-	-	(3,145)	(3,145)
Exercise of Warrants (note 11)	956	-	2,868	-	(1,243)	1,243	-	3,824
	______	______	______	______	______	______	______	______
Balance at 31 July 2011	9,287	2,062	14,512	8,372	-	197,526	8,206	239,965
	______	______	______	______	______	______	______	______

Cash Flow Statement

	Six months ended	Six months ended	Year ended
	31 January 2012	31 January 2011	31 July 2011
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Net total return before finance costs and taxation	(8,587)	27,616	46,807
Adjustments for:
Losses/(gains) on investments	10,341	(25,970)	(41,022)
Effect of foreign exchange rate movements	299	(144)	(260)
(Increase)/decrease in accrued income	(30)	413	12
(Increase)/decrease in other debtors	(6)	(44)	2
(Decrease)/increase in other creditors	(3)	50	8
Overseas withholding tax suffered	(194)	(175)	(509)
Stock dividend included in investment income	-	-	(22)
	___________	___________	___________
Net cash inflow from operating activities	1,820	1,746	5,016
Net cash outflow from servicing of finance	(111)	(22)	(76)
Net cash outflow from financial investment	(4,294)	(3,834)	(7,408)
Equity dividends paid (note 2)	(4,300)	(3,145)	(3,145)
	___________	___________	___________
Net cash outflow before financing	(6,885)	(5,255)	(5,613)
Financing
Exercise of Warrants (note 11)	-	3,824	3,824
Drawdown of loan	5,017	-	-
	___________	___________	___________
Net cash inflow from financing activities	5,017	3,824	3,824
	___________	___________	___________
Decrease in cash	(1,868)	(1,431)	(1,789)
	___________	___________	___________
Reconciliation of net cash flow to movements in net debt
Decrease in cash	(1,868)	(1,431)	(1,789)
Effect of foreign exchange rate movements	(299)	144	260
Drawdown of loan	(5,017)	-	-
	___________	___________	___________
Movement in net debt in the period	(7,184)	(1,287)	(1,529)
Net debt at start of period	(1,781)	(252)	(252)
	___________	___________	___________
Net debt at end of period	(8,965)	(1,539)	(1,781)
	___________	___________	___________
Represented by:
Cash	1,681	3,955	3,580
Debt due within one year	(10,646)	(5,494)	(5,361)
	___________	___________	___________
	(8,965)	(1,539)	(1,781)
	___________	___________	___________

Notes to the Financial Statements

1.	Accounting policies
	(a)	Basis of Accounting
		The accounts have been prepared in accordance with applicable UK Accounting Standards (United Kingdom Generally Accepted Accounting Practice), with pronouncements on half yearly reporting issued by the Accounting Standards Board and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts'. They have also been prepared on the assumption that approval as an investment trust will continue to be granted. The financial statements have been prepared on a going concern basis.
		The same accounting policies used for the year ended 31 July 2011 have been applied.
	(b)	Dividends payable
		Dividends are recognised in the period in which they are paid.

		Six months ended	Six months ended	Year ended
		31 January 2012	31 January 2011	31 July 2011
2.	Dividends	£'000	£'000	£'000
	Final dividend for 2011 - 9.50p (2010 - 8.20p)	3,321	2,553	2,553
	Special dividend for 2011 - 2.80p (2010 - 1.90p)	979	592	592
		___________	___________	___________
		4,300	3,145	3,145
		___________	___________	___________

		Six months ended	Six months ended	Year ended
		31 January 2012	31 January 2011	31 July 2011
3.	Income	£'000	£'000	£'000
	Income from investments
	UK dividend income	27	22	83
	Overseas dividends	3,755	2,840	8,272
	Stock dividends	-	-	22
	Fixed interest	-	(3)	(3)
		___________	___________	___________
		3,782	2,859	8,374
		___________	___________	___________
	Other income
	Deposit interest	2	3	6
		___________	___________	___________
		2	3	6
		___________	___________	___________
	Total income	3,784	2,862	8,380
		___________	___________	___________

4.	Taxation
	The taxation charge for the period has been calculated at an expected effective annual tax rate of 26% and reflects the tax on offshore funds without distributor status and the subsequent transfer to income for the use of excess expenses.

		Six months ended	Six months ended	Year ended
		31 January 2012	31 January 2011	31 July 2011
5.	Return per Ordinary share	p	p	p
	Basic
	Revenue return	4.71	4.83	15.42
	Capital return	(30.14)	80.42	122.49
		___________	___________	___________
	Total return	(25.43)	85.25	137.91
		___________	___________	___________
	The figures above are based on the following:
		£'000	£'000	£'000
	Revenue return	1,648	1,565	5,192
	Capital return	(10,538)	26,059	41,243
		___________	___________	___________
	Total return	(8,890)	27,624	46,435
		___________	___________	___________
	Weighted average number of shares in issue{A}	34,960,210	32,404,220	33,671,711
		___________	___________	___________
	{A}Calculated excluding shares held in treasury

		As at	As at	As at
6.	Net asset value per equity share	31 January 2012	31 January 2011	31 July 2011
	Basic
	Net assets attributable	£226,775,000	£221,154,000	£239,965,000
	Number of Ordinary shares in issue{A}	34,960,210	34,960,210	34,960,210
	Net asset value per Ordinary share:
	Basic	648.67p	632.59p	686.39p
		___________	___________	___________
	{A}Excludes shares in issue held in treasury.

7.	Capital reserve
	The capital reserve reflected in the Balance Sheet at 31 January 2012 includes gains of £121,660,000 (31 January 2011 - gains of £124,448,000; 31 July 2011 - gains £136,808,000), which relate to the revaluation of investments held at the reporting date.

8.	Transaction costs
	During the period expenses were incurred in acquiring or disposing of investments classified as fair value though profit or loss. These have been expensed through capital and are included within (losses)/gains on investments in the Income Statement. The total costs were as follows:
		Six months ended	Six months ended	Year ended
		31 January 2012	31 January 2011	31 July 2011
		£'000	£'000	£'000
	Purchases	31	9	28
	Sales	14	1	18
		___________	___________	___________
		45	10	46
		___________	___________	___________

9.	Related party transactions
	Mr M J Gilbert and his alternate, Mr H Young are directors of Aberdeen Asset Management PLC and its subsidiary Aberdeen Asset Management (Asia) Ltd ("AAM Asia"). Mr Gilbert is also a director of Aberdeen Asset Managers Ltd ("AAM"). AAM Asia has an agreement to provide management services to the Company and AAM has an agreement to provide both administration and marketing services to the Company.
	The management fee is payable monthly in arrears based on an annual amount of 1.2% calculated on the average net asset value (being gross assets less liabilities but excluding from such liabilities the amount of any loan facilities drawn down) of the Company over a 24 month period, valued monthly. During the period £1,274,000 (31 January 2011 - £939,000; 31 July 2011 - £2,065,000) of management fees were earned by the Manager, with a balance of £264,000 (31 January 2011 - £335,000; 31 July 2011 - £200,000) being payable to AAM Asia at the period end.
	The investment management fees are charged 100% to revenue.
	The administration fee is payable quarterly in advance and is based on a current annual amount of £80,000 (31 January 2011 - £75,000; 31 July 2011 - £75,000). During the period £39,000 (31 January 2011 - £38,000; 31 July 2011 - £75,000) of fees were earned, with a balance of £1,000 (31 January 2011 - £18,000 prepaid; 31 July 2011 - £19,000 prepaid) payable to AAM at the period end.
	The marketing fee is based on a current annual amount of £173,000 (31 January 2011 - £141,000; 31 July 2011 - £173,000), payable quarterly in arrears. During the period £86,000 (31 January 2011 - £70,000; 31 July 2011 - £149,000) of fees were earned, with a balance of £15,000 (2011 - £12,000 prepaid; 31 July 2011 - £55,000) being payable to AAM at the period end.

10.	Bank loan
	The Company has a £20 million multi currency credit facility with Royal Bank of Scotland which is due to expire on 26 May 2014 (the "Credit Facility"). During the six months ended 31 January 2012 the amount drawn under the Credit Facility was US$16,800,000. This balance had been rolled over to 12 April 2012 at an all in rate of 1.59639%.

11.	Called-up share capital
	During the six months ended 31 January 2012 no Ordinary shares of 25p each were repurchased by the Company (31 January 2011 - nil, 31 July 2011 - nil).
	During the six months ended 31 January 2011 an additional 3,823,595 Ordinary shares of 25p each were issued after the remaining 3,823,595 Warrants were exercised at 100p. The total consideration received was £3,823,595. As a result of the exercise the Warrant reserve was extinguished.

12.	Half-Yearly Report
	The financial information in this report does not comprise statutory accounts within the meaning of Section 434 - 436 of the Companies Act 2006. The financial information for the year ended 31 July 2011 has been extracted from published accounts that have been delivered to the Registrar of Companies and on which the report of the auditors was unqualified and contained no statement under Section 498 (2), (3) or (4) of the Companies Act 2006. The interim accounts have been prepared using the same accounting policies as the preceding annual accounts.
	Ernst & Young LLP has reviewed the financial information for the six months ended 31 January 2012 pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information.

13.	This Half-Yearly Report was approved by the Board and authorised for issue on 20 March 2012.

Copies of the Company's Half Yearly Report for the six months ended 31 January 2012 will be posted to shareholders in early April 2012 and will be available thereafter on the Company's website:
www.asian-smaller.co.uk* and from the registered office, 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.

* 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.

Aberdeen Asset Management PLC

Secretaries

20 March 2012

Independent Review Report to Aberdeen Asian Smaller Companies Investment Trust PLC

Introduction

We have been engaged by Aberdeen Asian Smaller Companies Investment Trust PLC ("the Company") to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 January 2012 which comprises the Income Statement, Balance Sheet, Reconciliation of Movements in Shareholders Funds, Cash Flow Statement and the related notes 1 to 13. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the Company are prepared in accordance with United Kingdom Generally Accepted Accounting Practice. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the Accounting Standards Board Statement "Half-Yearly Financial Reports".

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 January 2012 is not prepared, in all material respects, in accordance with the Accounting Standards Board Statement "Half-Yearly Financial Reports" and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Ernst & Young LLP

Edinburgh

20 March 2012

 

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