Half Yearly Report

RNS Number : 6139D

Aberdeen Asian Smaller Co's Inv Tst

31 March 2014

 



ABERDEEN ASIAN SMALLER COMPANIES INVESTMENT TRUST PLC

ANNOUNCEMENT OF UNAUDITED HALF YEARLY RESULTS

for the six months ended 31 January 2014

INTERIM BOARD REPORT

Background

Your Company's net asset value fell by 16.0% in the period ended 31 January 2014. This compares with falls in the MSCI AC Asia Pacific ex Japan Index and MSCI AC Asia Pacific ex Japan Small Cap Index of 5.8% and 4.8% respectively (all figures with income reinvested). In the same period the share price declined 20.6% to 784.25p as the valuation accorded by the stock market moved from a premium to net asset value of 0.7% to a discount of 6.2%.

The Board has looked carefully at the reasons behind this disappointing result to see if there is any cause for concern.  The Company's strategy is to invest in companies with good prospects, good management and strong balance sheets. The principal question that the shareholders need to know is whether the companies in which we are invested are showing any deterioration in trading that would merit this kind of correction. I am pleased to report that this is not the case.  On those results for the calendar year ending 31 December 2013, your Managers report no significant change in outlook from expectations. Our investments, in aggregate, boast strong balance sheets and a healthy earnings outlook. In local currency terms, our investments broadly performed in line with the local stock markets.

The relative strength of sterling over this period contributed over 9% of this fall in the NAV and the genesis of the weakness of both currencies and stock markets across the region can be traced to the announcement by US Federal Reserve Chairman Ben Bernanke in May 2013 of tapering the stimulus that is being applied to the US economy. The prospect of a reduction in global liquidity has led to money moving out of Asian equities, particularly the emerging markets with the consequential effect on local currencies.  As a matter of policy, we have never hedged against currency movements.

Whilst not pleasing to underperform at any time, it should be viewed in the context of a very long and impressive investment track record and given that the reasons were not to do with the underlying fundamentals of the companies in our portfolio, I can with confidence speak of there being today much better value on offer. Our aggregate portfolio now stands on a prospective price/earnings multiple for calendar 2014 of 14.5x and importantly the aggregate underlying balance sheet of the companies is in a net cash position.

Portfolio

Dealing with some of the specifics, consumer-related stocks, such as Multi Bintang in Indonesia and Aeon and Guinness Anchor in Malaysia, which have been key drivers of our prior performance, retreated on profit-taking.  Aeon is one of the largest mall operators in Malaysia and is a stable and well run business that is expanding its domestic footprint further, funded by the strength of its operational cash flow. Our Malaysian brewer, Guinness Anchor, is a dominant player in both the mass market and premium beer segments in what is essentially a duopoly market. In Indonesia, Multi Bintang's results have been consistently solid and, backed by its flagship Bintang Beer brand, it is well poised to benefit from double-digit consumption growth across the archipelago. The brewer has a near-monopoly domestically.

As illustrated above, there is a disconnect between the short term share price performances of these companies relative to their long term fundamental attractiveness, which, as long term stock pickers concentrating on fundamentals, presents our Manager with a buying opportunity. Therefore, for example, during the half year, your Manager supported the rights issues of Indonesia's Bank OCBC Nisp and Sri Lankan conglomerate John Keells. Bank OCBC Nisp will be provided with the capital flexibility to expand its local reach, while John Keells will fund a new integrated resort.

Share Capital and Gearing

At the beginning of the period under review, the Company continued the policy of issuing new shares for cash at a premium to the underlying NAV per share with the resultant benefit to the liquidity of the Company's shares and the resultant minor uplift to NAV per share.

The Company has structural gearing in the form of the Convertible Unsecured Loan Stock issued in 2012 which represents approximately 9.9% of the Company's assets.

Board

As mentioned in the Chairman's Statement in the Annual Report for the year ended 31 July 2013, Alan Kemp retired as a Director of the Company at the Annual General Meeting held on 3 December 2013. In January 2014, following a recruitment exercise undertaken in conjunction with an independent search consultancy, the Board was pleased to announce the appointment of Mr Philip Yea as an independent non executive Director of the Company.  Philip has extensive executive and non executive board level experience and brings significant further international business and technical experience to the Board.

Alternative Investment Fund Managers Directive ("AIFMD")

Shareholders may have heard of the AIFMD which creates a European-wide framework for regulating managers of alternative investment funds ("AIF"s). Listed investment companies fall within the definition of an AIF. The Directive is intended to reduce systemic risk created by the financial sector and aims to improve regulation, enhance transparency and investor protection, develop a single EU market for AIFs and implement effective mechanisms for micro- and macro-prudential oversight. The Directive came into force in July 2013 but a transitional period means that investment companies have until July 2014 to comply with the relevant regulations. Your Board has agreed in principle to appoint a subsidiary of Aberdeen Asset Management PLC to act as the Company's AIFM and we are currently in the process of finalising the appointment of a Depositary required by the Directive. Complying with the Directive will also require some technical amendments to our investment management agreement.

Outlook

While there may be further turbulence in the stock markets in the months ahead, as I have set out above, the story behind your Company's success is based on the old fashioned principle of working hard to understand the strategy, balance sheets and performance of the companies in which we invest. This has led to some outstanding performance in the past, which absent an economic shock to directly affect the performance of our portfolio, we would expect to see repeated in the future particularly with the emergence of good value following this recent stock market correction.

Principal Risks and Uncertainties

The principal risks and uncertainties affecting the Company are set out in detail on pages 3 to 6 of the Annual Report and Financial Statements for the year ended 31 July 2013 and have not changed. They can be summarised under the following headings:

-       General Market Risks

-       CULS Risks

-       Ordinary Share Risks

-       Risks Relating to the Company's Investments

-       Gearing Risks

-       Foreign Exchange Risks

-       Taxation Risks

-       Accounting Practices and Policies Risk

-       Risks relating to the Appointment of the Manager

-       Legal and Regulatory Risks

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

31 March 2014

Aberdeen Asian Smaller Companies Investment Trust PLC

Income Statement

	Six months ended			Six months ended
	31 January 2014			31 January 2013
		(unaudited)		(unaudited)
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
(Losses)/gains on investments	-	(62,592)	(62,592)	-	65,149	65,149
Income (note 3)	4,891	-	4,891	4,115	-	4,115
Exchange gains/(losses)	-	153	153	-	(10)	(10)
Investment management fees	(1,884)	-	(1,884)	(1,490)	-	(1,490)
Administrative expenses	(598)	-	(598)	(508)	-	(508)
	_______	_______	_______	_______	_______	_______
Net return on ordinary activities before finance costs and taxation	2,409	(62,439)	(60,030)	2,117	65,139	67,256
Finance costs	(721)	-	(721)	(743)	-	(743)
	_______	_______	_______	_______	_______	_______
Net return on ordinary activities before taxation	1,688	(62,439)	(60,751)	1,374	65,139	66,513
Taxation	(272)	74	(198)	(228)	47	(181)
	_______	_______	_______	_______	_______	_______
Return on ordinary activities after taxation	1,416	(62,365)	(60,949)	1,146	65,186	66,332
	_______	_______	_______	_______	_______	_______
Return per share (pence) (note 5):
Basic	3.73	(164.34)	(160.61)	3.22	183.32	186.54
	_______	_______	_______	_______	_______	_______
Diluted	n/a	(148.66)	(144.63)	n/a	163.91	167.38
	_______	_______	_______	_______	_______	_______
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 in the above statement derive from continuing operations.
No operations were acquired or discontinued during the period.

Aberdeen Asian Smaller Companies Investment Trust PLC

Income Statement

	Year ended
	31 July 2013
		(audited)
	Revenue	Capital	Total
	£'000	£'000	£'000
(Losses)/gains on investments	-	95,470	95,470
Income (note 3)	11,512	-	11,512
Exchange gains/(losses)	-	(186)	(186)
Investment management fees	(3,170)	-	(3,170)
Administrative expenses	(1,058)	-	(1,058)
	_______	_______	_______
Net return on ordinary activities before finance costs and taxation	7,284	95,284	102,568
Finance costs	(1,470)	-	(1,470)
	_______	_______	_______
Net return on ordinary activities before taxation	5,814	95,284	101,098
Taxation	(766)	142	(624)
	_______	_______	_______
Return on ordinary activities after taxation	5,048	95,426	100,474
	_______	_______	_______
Return per share (pence) (note 5):
Basic	13.84	261.59	275.43
	_______	_______	_______
Diluted	n/a	234.71	249.43
	_______	_______	_______

Balance Sheet

	As at	As at	As at
	31 January 2014	31 January 2013	31 July 2013
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Non-current assets
Investments at fair value through profit or loss	345,959	359,512	398,361
Current assets
Debtors and prepayments	581	1,520	488
Cash and short term deposits	6,260	9,161	17,244
	_______	_______	_______
	6,841	10,681	17,732
	_______	_______	_______
Creditors: amounts falling due within one year
Other creditors	(1,071)	(654)	(1,473)
	_______	_______	_______
Net current assets	5,770	10,027	16,259
	_______	_______	_______
Total assets less current liabilities	351,729	369,539	414,620
	_______	_______	_______
Non-current liabilities
3.5% Convertible Unsecured Loan Stock 2019 (note 11)	(31,617)	(33,086)	(31,688)
	_______	_______	_______
Net assets	320,112	336,453	382,932
	_______	_______	_______
Capital and reserves
Called-up share capital (note 12)	9,793	9,397	9,712
Capital redemption reserve	2,062	2,062	2,062
Share premium account	39,593	24,595	36,617
Special reserve	11,715	11,715	11,715
Equity component of 3.5% Convertible Unsecured Loan Stock 2019 (note 11)	1,361	1,361	1,361
Capital reserve (note 7)	249,948	282,073	312,313
Revenue reserve	5,640	5,250	9,152
	_______	_______	_______
Equity shareholders' funds	320,112	336,453	382,932
	_______	_______	_______
Net asset value per share (pence) (note 6):
Basic	840.31	921.45	1,013.82
Diluted	836.29	908.31	992.81

Reconciliation of Movements in Shareholders' Funds

Six months ended 31 January 2014 (unaudited)
		Capital	Share		Equity
	Share	redemption	premium	Special	component	Capital	Revenue
	capital	reserve	account	reserve	CULS 2019	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 July 2013	9,712	2,062	36,617	11,715	1,361	312,313	9,152	382,932
Issue of own shares	75	-	2,789	-	-	-	-	2,864
Conversion of 3.5% Convertible Unsecured Loan Stock (note 11)	6	-	187	-	-	-	-	193
Net return on ordinary activities after taxation	-	-	-	-	-	(62,365)	1,416	(60,949)
Dividends paid (note 2)	-	-	-	-	-		(4,928)	(4,928)
	_____	______	______	_____	______	_____	______	_____
Balance at 31 January 2014	9,793	2,062	39,593	11,715	1,361	249,948	5,640	320,112
	_____	______	______	_____	______	_____	______	_____
Six months ended 31 January 2013 (unaudited)
		Capital	Share		Equity
	Share	redemption	premium	Special	component	Capital	Revenue
	capital	reserve	account	reserve	CULS 2019	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 July 2012	9,287	2,062	14,512	8,372	1,361	216,887	8,513	260,994
Issue of own shares	104	-	3,819	-	-	-	-	3,923
Issue of own shares from treasury	-	-	6,076	3,343	-	-	-	9,419
Conversion of 3.5% Convertible Unsecured Loan Stock (note 11)	6	-	188	-	-	-	-	194
Net return on ordinary activities after taxation	-	-	-	-	-	65,186	1,146	66,332
Dividends paid (note 2)	-	-	-	-	-	-	(4,409)	(4,409)
	_____	______	______	_____	______	_____	______	_____
Balance at 31 January 2013	9,397	2,062	24,595	11,715	1,361	282,073	5,250	336,453
	_____	______	______	_____	______	_____	______	_____
Year ended 31 July 2013 (audited)
		Capital	Share		Equity
	Share	redemption	premium	Special	component	Capital	Revenue
	capital	reserve	account	reserve	CULS 2019	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 July 2012	9,287	2,062	14,512	8,372	1,361	216,887	8,513	260,994
Issue of own shares	374	-	14,368	-	-	-	-	14,742
Issue of own shares from treasury	-	-	6,077	3,343	-	-	-	9,420
Issue of 3.5% Convertible Unsecured Loan Stock (note 11)	51	-	1,660	-	-	-	-	1,711
Net return on ordinary activities after taxation	-	-	-	-	-	95,426	5,048	100,474
Dividends paid (note 2)	-	-	-	-	-	-	(4,409)	(4,409)
	_____	______	______	_____	______	_____	______	_____
Balance at 31 July 2013	9,712	2,062	36,617	11,715	1,361	312,313	9,152	382,932
	_____	______	______	_____	______	_____	______	_____

Cash Flow Statement

	Six months ended		Six months ended	Year ended
	31 January 2014		31 January 2013	31 July 2013
	(unaudited)		(unaudited)	(audited)
	£'000		£'000	£'000
Net total return before finance costs and taxation	(60,030)		67,256	102,568
Adjustments for:
Losses/(gains) on investments	62,592		(65,149)	(95,470)
Effect of exchange rate movements	(153)		10	186
(Increase)/decrease in accrued income	(91)		128	145
Increase in other debtors	(6)		(23)	(6)
Increase in other creditors	73		7	357
Overseas withholding tax suffered	(198)		(181)	(624)
Stock dividend included in investment income	(31)		-	-
	___________		___________	___________
Net cash inflow from operating activities	2,156		2,048	7,156
Net cash outflow from servicing of finance	(590)		(663)	(1,288)
Net cash outflow from financial investment	(10,639)		(7,661)	(15,233)
Equity dividends paid (note 2)	(4,928)		(4,409)	(4,409)
	___________		___________	___________
Net cash outflow before financing	(14,001)		(10,685)	(13,774)
Financing
Issue of own shares	2,864		3,395	24,162
Issue of shares from treasury	-		9,419	-
	___________		___________	___________
Net cash inflow from financing activities	2,864		12,814	24,162
	___________		___________	___________
(Decrease)/increase in cash	(11,137)		2,129	10,388
	___________		___________	___________
Reconciliation of net cash flow to movements in net debt
(Decrease)/increase in cash as above		(11,137)	2,129	10,388
Effect of exchange rate movements		153	(10)	(186)
Other non-cash movements		71	77	1,475
		___________	___________	___________
Movement in net debt in the period		(10,913)	2,196	11,677
Net debt at start of period		(14,444)	(26,121)	(26,121)
		___________	___________	___________
Net debt at end of period		(25,357)	(23,925)	(14,444)
		___________	___________	___________
Represented by:
Cash and short term deposits		6,260	9,161	17,244
Debt falling due in more than one year		(31,617)	(33,086)	(31,688)
		___________	___________	___________
Net debt		(25,357)	(23,925)	(14,444)
		___________	___________	___________

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 2013 have been applied.
	(b)	Dividends payable
		Dividends are recognised in the period in which they are paid.

2.		Six months ended	Six months ended	Year ended
		31 January 2014	31 January 2013	31 July 2013
	Dividends	£'000	£'000	£'000
	Final dividend for 2013 - 10.00p (2012 - 9.50p)	3,791	3,351	3,351
	Special dividend for 2013 - 3.00p (2012 - 3.00p)	1,137	1,058	1,058
		___________	___________	___________
		4,928	4,409	4,409
		___________	___________	___________

3.		Six months ended	Six months ended	Year ended
		31 January 2014	31 January 2013	31 July 2013
	Income	£'000	£'000	£'000
	Income from investments
	UK dividend income	-	31	109
	Overseas dividends	4,852	4,077	11,385
	Stock dividends	31	-	-
		___________	___________	___________
		4,883	4,108	11,494
		___________	___________	___________
	Other income
	Deposit interest	8	7	18
		___________	___________	___________
	Total income	4,891	4,115	11,512
		___________	___________	___________

4.	Taxation
	The taxation charge for the period has been calculated at an annualised tax rate of 22.33% (31 January 2013 - 23.67%; 31 July 2013 - 23.67%) 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 2014	31 January 2013	31 July 2013
5.	Return per Ordinary share	p	p	p
	Basic
	Revenue return	3.73	3.22	13.84
	Capital return	(164.34)	183.32	261.59
		___________	___________	___________
	Total return	(160.61)	186.54	275.43
		___________	___________	___________
	The figures above are based on the following:
		£'000	£'000	£'000
	Revenue return	1,416	1,146	5,048
	Capital return	(62,365)	65,186	95,426
		___________	___________	___________
	Total return	(60,949)	66,332	100,474
		___________	___________	___________
	Weighted average number of shares in issue{A}	37,947,365	35,558,836	36,478,795
		___________	___________	___________
	Diluted{B}	p	p	p
	Revenue return	-	-	-
	Capital return	(148.66)	163.91	234.71
		___________	___________	___________
	Total return	(144.63)	167.38	249.43
		___________	___________	___________
	The figures above are based on the following:
		£'000	£'000	£'000
	Revenue return	1,689	1,378	5,985
	Capital return	(62,365)	65,186	95,426
		___________	___________	___________
	Total return	(60,676)	66,564	101,411
		___________	___________	___________
	Number of dilutive shares	4,004,463	4,209,540	4,178,059
	Diluted shares in issue{A}	41,951,828	39,768,376	40,656,854
	{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 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 4,004,463 (31 January 2013 - 4,209,540; 31 July 2013 - 4,178,059) to 41,951,828 (31 January 2013 - 39,768,376; 31 July 2013 - 40,656,854) Ordinary shares.
	For the period ended 31 January 2014 and 31 July 2013 there was no dilution to the revenue return per Ordinary share.  Where dilution occurs, the net returns are adjusted for items relating to the CULS.  Total earnings for the period are tested for dilution.  Once dilution has been determined individual revenue and capital earnings are adjusted.  Accrued CULS finance costs for the period and unamortised issues expenses are reversed.

		As at	As at	As at
6.	Net asset value per Ordinary share	31 January 2014	31 January 2013	31 July 2013
	Basic
	Net assets attributable	£320,112,000	£336,453,000	£382,932,000
	Number of Ordinary shares in issue{A}	38,094,597	36,513,582	37,771,369
	Net asset value per Ordinary share	840.31p	921.45p	1,013.82p
		___________	___________	___________
	Diluted{B}
	Net assets attributable	£351,929,000	369,746,000	414,815,000
	Number of Ordinary shares	42,082,009	40,707,054	41,782,021
	Net asset value per Ordinary share	836.29p	908.31p	992.81p
		___________	___________	___________
	{A}    Excludes shares in issue held in treasury.
	{B}    The diluted net asset value per Ordinary share has been calculated on the assumption that the 33,095,518 3.5% Convertible Unsecured Loan Stock 2019 ("CULS") are converted at 830.0p per share, giving a total of 42,082,009 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 bond instruments are deemed to be 'in the money' if the cum income (debt at fair value) net asset value ("NAV") exceeds the conversion price of 830.0p per share. In such circumstances a net asset value is produced and disclosed assuming the convertible debt is fully converted. At 31 January 2014 the cum income NAV was 840.31p and thus the CULS were 'in the money' (31 January 2013 - 921.45p, 'in the money'; 31 July 2013 - 1,013.82p, 'in the money').

7.	Capital reserve
	The capital reserve reflected in the Balance Sheet at 31 January 2014 includes gains of £136,611,000 (31 January 2013 - gains of £209,937,000; 31 July 2013 - gains £208,810,000), 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 2014	31 January 2013	31 July 2013
		£'000	£'000	£'000
	Purchases	44	31	103
	Sales	15	-	63
		___________	___________	___________
		59	31	166
		___________	___________	___________

9.	Transactions with the Manager
	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 £1,884,000 (31 January 2013 - £1,490,000; 31 July 2013 - £3,170,000) of management fees were earned by the Manager, with a balance of £648,000 (31 January 2013 - £257,000; 31 July 2013 - £586,000) 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 £85,000 (31 January 2013 - £80,000; 31 July 2013 - £82,000). During the period £42,000 (31 January 2013 - £40,000; 31 July 2013 - £82,000) of fees were earned, with a balance of £21,000 (31 January 2013 - £20,000; 31 July 2013 - £41,000) payable to AAM at the period end.
	The marketing fee is based on a current annual amount of £250,000 (31 January 2013 - £206,000; 31 July 2013 - £215,000), payable quarterly in arrears. During the period £125,000 (31 January 2013 - £98,000; 31 July 2013 - £215,000) of fees were earned, with a balance of £83,000 (31 January 2013 - £18,000; 31 July 2013 - £21,000) being payable to AAM at the period end.

10.	Bank loan
	On 27 May 2011 the Company entered into a £20 million 3 year multi currency revolving advance loan facility with The Royal Bank of Scotland. The amount available under this facility was reduced to £2 million from 1 June 2012. The agreement contains covenants requiring that the on-going gearing ratio (Gross Borrowings divided by Adjusted Assets) shall not exceed 25%. Gross Borrowings are calculated by deducting from the Company's assets (Portfolio Value plus cash) (1) the value of any unquoted investments; (2) the value of any bonds rated below investment grade or which are unrated; (3) the extent to which the value of any single security or asset exceeds 5% of Investment Portfolio Value; (4) the extent to which the aggregate value of the 20 largest securities or assets exceeds 65% of Investment Portfolio Value; (5) the extent to which the aggregate value of securities or assets in any one country exceeds 25% of Investment Portfolio Value; (6) the extent to which the aggregate value of securities or assets in countries with a S&P foreign sovereign debt rating lower than BBB- exceeds 30% of Investment Portfolio Value. The Company met these covenants throughout the year and up to the date that this Report was signed.
	During the six months ended 31 January 2014 no amount was drawn down under the facility.

11.	Non-current liabilities - 3.5% Convertible Unsecured Loan Stock 2019 ("CULS")
		Number of units	Liability component	Equity component
		£'000	£'000	£'000
	Balance at beginning of year	33,288	31,688	1,361
	Conversion of CULS into Ordinary shares	(193)	(193)	-
	Notional interest on CULS transferred to revenue reserve	-	85	-
	Amortisation of discount and issue expenses	-	37	-
		___________	__________	___________
	Balance at end of period	33,095	31,617	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 one 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.
	During the period ended 31 January 2014 the holders of £192,896 of CULS exercised their right to convert their holdings into Ordinary shares. Following the receipt of the exercise instructions, the Company converted £192,896 (31 January 2013 - £194,182; 31 July 2013 - £1,711,586) nominal amount of CULS into 23,228 (31 January 2013 - 23,372; 31 July 2013 - 206,159) Ordinary shares.
	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.
	As at 31 January 2014, there was £33,095,518 nominal amount of CULS in issue (31 January 2013 - £34,805,818; 31 July 2013 - 33,288,414).

12.	Called-up share capital
	During the six months ended 31 January 2014 an additional 23,228 (31 January 2013 - 23,372; 31 July 2013 - 206,159) Ordinary shares of 25p each were issued after £192,896 (31 January 2013 - 194,182; 31 July 2013 - 1,711,586) nominal amount of 3.5% Convertible Unsecured Loan Stock 2019 were converted at 830.0p each. The total consideration received was £nil.
	In addition, during the six months ended 31 January 2014 an additional 300,000 (31 January 2013 - 420,000; 31 July 2013 - 2,605,000) new Ordinary shares of 25p each were issued. The total consideration received was £2,864,000 (31 January 2013 - £3,923,000; 31 July 2013 - £24,162,000).
	In addition, during the six months ended 31 January 2014 an additional nil (31 January 2013 - 1,110,000; 31 July 2013 - 1,110,000) Ordinary shares from treasury of 25p each were issued. The total consideration received was £nil (31 January 2013 - £9,419,000; 31 July 2013 - £9,419,000).
	At the end of the period there were 38,094,597 (31 January 2013 - 36,513,582; 31 July 2013 - 37,771,369) Ordinary shares in issue, of which 1,076,290 (31 January 2013 and 31 July 2013 - same) were held in treasury.

13.	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 2013 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 2014 pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information.

14.	This Half-Yearly Report was approved by the Board and authorised for issue on 31 March 2014.

Copies of the Company's Half Yearly Report for the six months ended 31 January 2014 will be posted to shareholders in early April 2014 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

31 March 2014

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 2014 which comprises the Income Statement, Balance Sheet, Reconciliation of Movements in Shareholders' Funds, Cash Flow Statement and the related notes 1 to 14. 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 Conduct 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 2014 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 Conduct Authority.

Ernst & Young LLP

Edinburgh

31 March 2014

 

END

 

 

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