Half Yearly Results Announcement

RNS Number : 7631I

Aberdeen Asian Smaller Co's Inv Tst

30 March 2015

 



ABERDEEN ASIAN SMALLER COMPANIES INVESTMENT TRUST PLC

ANNOUNCEMENT OF UNAUDITED HALF YEARLY RESULTS

for the six months ended 31 January 2015

INTERIM BOARD REPORT

Background

I am pleased to report that your Company's net asset value ("NAV") total return was 5.9% in the six months to 31 January 2015. By comparison, the MSCI AC Asia Pacific ex Japan Index and MSCI AC Asia Pacific ex Japan Small Cap Index total returns were 5.9% and 3.8%, respectively. The share price declined by 3.0% over the period to reach 917.5p, reflecting a widening of the discount to NAVfrom 0.7% to 7.8%.

Gearing

The Company's net gearing at 31 January 2015 was 6.9%. The majority of the gearing is provided by the Convertible Unsecured Loan Stock redeemable in 2019 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 the facility at the period end. 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.

Overview

Over the review period, economic growth across the world was patchy. Apart from the US, where recovery became more evident, activity elsewhere struggled to gain momentum. China's GDP grew by 7.4% in 2014, the weakest pace in 24 years, albeit still impressive compared to expansion in developed nations. The slowdown is expected to continue as authorities attempt to transform the credit-fuelled, investment-led economic model into a more sustainable consumption-led one. Europe's situation was more dismal as the Continent veered towards recession amid heightened deflationary threats, exacerbated by tensions in Russia and Ukraine.

Unsurprisingly, monetary policy pursued by Central Banks deviated. As the Federal Reserve ended its asset purchases and hinted at an interest rate hike some time in 2015, the ECB embarked on its quantitative easing programme while Central Banks elsewhere, including China and India, cut rates. The sharp fall in global oil prices which is easing inflationary pressures, has also provided policymakers with more varied options to boost growth. India, Indonesia and Malaysia have cut hitherto budget-crippling fuel subsidies, freeing up resources for infrastructure spending. This has revived market confidence.

Encouragingly, the political backdrop in Asia stabilised. The new governments in both India and Indonesia, having triumphed on the promise of reform, will now have to deliver on their pledges to retain investors' confidence. In Thailand, the military coup brought back stability, but the impeachment of former prime minister, Yingluck Shinawatra, and a potential delay to elections are reminders of a still-polarised electorate.

Portfolio

The performance of your Company's Indian holdings was particularly impressive. Industrial and auto paints maker Kansai Nerolac Paints and lubricants producer Castrol India were lifted by a recovery in the domestic auto sector and optimism over increased discretionary spending. This was helped by lower input costs caused by the lower oil prices. In addition, the new administration's focus on infrastructure development as a keystone for economic revival aided the share prices of Ramco Cements and industrial gases supplier Linde India. Gujarat Gas performed well helped by plans to merge with sister company GSPC Gas, which should result in significant synergies.

We avoided having much exposure to energy and mining-related stocks, particularly in Australia, which were hurt by the plunge in global commodity prices to five-and-a-half-year lows. Your Manager maintains the view that the sector is highly cyclical with balance sheet risk, particularly among the small-cap producers, which tend to be less efficient and cannot derive the same economies of scale as their large-cap counterparts.

Consumer holdings Godrej Consumer Products and Jollibee Foods outperformed the market, supporting the case for investing in well-run small-cap businesses that have the potential to grow in tandem with the swelling middle class and rising consumer spending in the region. These companies are also expanding their businesses outside their home markets. The Philippines' Jollibee Foods is one of Asia's largest fast-food restaurant companies, and brisk sales and new store openings have buttressed earnings. In India, Godrej's bottom-line remained healthy given its leading position in the fast-moving consumer goods industry.

Not all consumer holdings did well, however. Aeon Co (Malaysia), the biggest holding in the Company's portfolio, saw its share price hurt by rising costs and subdued retail activity amid weaker consumer confidence ahead of Malaysia's implementation of the goods-and-services tax in April 2015. That said, retail spending could spike just before the tax is implemented as consumers try to circumvent it. The oil price crash also had an impact on local stocks as the country is a net energy exporter. Nevertheless, the retailer is a household name with solid brand equity, a wide network of stores and well regarded parentage. The share price of Singapore developer Bukit Sembawang Estates also fell. The weak results were expected given the sluggish local property market but the company is backed by a solid balance sheet and a decent land bank.

In portfolio activity, Singapore-listed China property company First Sponsor Group was received as an in specie distribution from the existing holding in Millennium & Copthorne Hotels New Zealand, an arm of City Developments. One of its major shareholders is the Kwek family, who is also the largest stakeholder in City Developments, a leading large-cap real estate firm well known to your Manager. We also added New Zealand-listed CDL Investments, another company controlled by the Kwek family. The property investment and development firm is a subsidiary of Millennium & Copthorne. Your Manager supported the rights issues of Korea's DGB Financial given its regional market position, solid customer relationships and loan growth expectations; and of Singapore-listed Yoma Strategic, a Myanmar-focused developer with good real estate assets and a growing automotive division. In addition, the position in Pacific Basin Shipping was expanded. The operating environment remains tough but the company runs a solid operation in its core chartering business and has a robust balance sheet. Conversely, the rally in India provided the opportunity to take profits in some of the positions there.

Outlook

In the year ahead, global stock markets should still be awash with liquidity as major Central Banks are likely to maintain or extend loose monetary policy. The Federal Reserve could delay interest rate hikes given patchy wage growth and unemployment data. In China, authorities will likely announce more easing measures against the backdrop of restructuring and slower growth. Japan and Europe may expand stimulus amid tepid growth and elusive inflation targets. These actions would continue to artificially support asset prices, delaying a return to fundamentals. Meanwhile, global geopolitical risks, including the still-fraught discussions between Greece and its creditors, tensions between Russia and Ukraine, as well as violence in the Middle East, could keep the outlook uncertain. Further oil shocks would also buffet stock markets although consumers and businesses alike should benefit from lower energy costs.

Despite these uncertainties, Asia's longer-term outlook remains bright. Consumption is rising. Business and political frameworks are changing for the better. Finances at the government, corporate and consumer levels remain healthy and leverage well contained, even though household debt has crept higher. This is fertile ground for small-cap companies that have clear and sustainable growth strategies, are prudent and take a long-term view, which should buffer them against short-term headwinds.

As I have said on many occasions in the past, good management, strong balance sheets and good growth prospects are the key attributes of the companies in which we invest. These attributes prove resilient in times of uncertainty and allow them to benefit when growth is strong.

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 2014 and have not changed. They can be summarised under the following headings:

  General Market Risks

  CULS

  Ordinary Shares

  The Company's Investments

  Gearing

  Foreign Exchange

  Taxation

  Accounting Practices and Policies

  Risks relating to the Appointment of the Manager

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

27 March 2015

Aberdeen Asian Smaller Companies Investment Trust PLC

Income Statement

	Six months ended			Six months ended
	31 January 2015			31 January 2014
	(unaudited)			(unaudited)
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Gains/(losses) on investments	-	21,025	21,025	-	(62,592)	(62,592)
Income (note 2)	5,439	-	5,439	4,891	-	4,891
Exchange (losses)/gains	-	(11)	(11)	-	153	153
Investment management fees	(2,170)	-	(2,170)	(1,884)	-	(1,884)
Administrative expenses	(693)	-	(693)	(598)	-	(598)
	_______	_______	_______	_______	_______	_______
Net return on ordinary activities before finance costs and taxation	2,576	21,014	23,590	2,409	(62,439)	(60,030)
Finance costs	(640)	-	(640)	(721)	-	(721)
	_______	_______	_______	_______	_______	_______
Net return on ordinary activities before taxation	1,936	21,014	22,950	1,688	(62,439)	(60,751)
Taxation	(187)	(5)	(192)	(272)	74	(198)
	_______	_______	_______	_______	_______	_______
Return on ordinary activities after taxation	1,749	21,009	22,758	1,416	(62,365)	(60,949)
Return per share (pence) (note 4)	_______	_______	_______	_______	_______	_______
Basic	4.59	55.15	59.74	3.73	(164.34)	(160.61)
	_______	_______	_______	_______	_______	_______
Diluted	n/a	49.92	54.91	n/a	(148.66)	(144.63)
	_______	_______	_______	_______	_______	_______
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 2014
		(audited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Gains/(losses) on investments	-	(16,444)	(16,444)
Income (note 2)	11,427	-	11,427
Exchange (losses)/gains	-	103	103
Investment management fees	(3,907)	-	(3,907)
Administrative expenses	(1,147)	-	(1,147)
	_______	_______	_______
Net return on ordinary activities before finance costs and taxation	6,373	(16,341)	(9,968)
Finance costs	(1,457)	-	(1,457)
	_______	_______	_______
Net return on ordinary activities before taxation	4,916	(16,341)	(11,425)
Taxation	(572)	36	(536)
	_______	_______	_______
Return on ordinary activities after taxation	4,344	(16,305)	(11,961)
	_______	_______	_______
Return per share (pence) (note 4)
Basic	11.43	(42.89)	(31.46)
	_______	_______	_______
Diluted	n/a	n/a	n/a
	_______	_______	_______

Balance Sheet

	As at	As at	As at
	31 January 2015	31 January 2014	31 July 2014
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Non-current assets
Investments at fair value through profit or loss	413,950	345,959	400,760
Current assets
Debtors and prepayments	1,099	581	227
Cash and short term deposits	9,937	6,260	5,685
	_______	_______	_______
	11,036	6,841	5,912
	_______	_______	_______
Creditors: amounts falling due within one year
Bank loans (note 6)	(5,000)	-	(5,000)
Other creditors	(1,213)	(1,071)	(832)
	_______	_______	_______
	(6,213)	(1,071)	(5,832)
	_______	_______	_______
Net current assets	4,823	5,770	80
	_______	_______	_______
Total assets less current liabilities	418,773	351,729	400,840
Non-current liabilities
3.5% Convertible Unsecured Loan Stock 2019 (note 7)	(31,821)	(31,617)	(31,722)
	_______	_______	_______
Net assets	386,952	320,112	369,118
	_______	_______	_______
Capital and reserves
Called-up share capital (note 8)	9,794	9,793	9,793
Capital redemption reserve	2,062	2,062	2,062
Share premium account	39,639	39,593	39,611
Special reserve	11,715	11,715	11,715
Equity component of 3.5% Convertible Unsecured Loan Stock 2019 (note 7)	1,361	1,361	1,361
Capital reserve (note 9)	317,017	249,948	296,008
Revenue reserve	5,364	5,640	8,568
	_______	_______	_______
Equity shareholders' funds	386,952	320,112	369,118
	_______	_______	_______
Net asset value per share (pence) (note 10)
Basic	1,015.61	840.31	968.89
	_______	_______	_______
Diluted	995.14	836.29	952.52
	_______	_______	_______

Reconciliation of Movements in Shareholders' Funds

Six months ended 31 January 2015 (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 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 (note 7)	1	-	28	-	-	-	-	29
Return on ordinary activities after taxation	-	-	-	-	-	21,009	1,749	22,758
Dividends paid (note 5)	-	-	-	-	-		(4,953)	(4,953)
	_____	______	______	_____	______	_____	______	_____
Balance at 31 January 2015	9,794	2,062	39,639	11,715	1,361	317,017	5,364	386,952
	_____	______	______	_____	______	_____	______	_____
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 7)	6	-	187	-	-	-	-	193
Return on ordinary activities after taxation	-	-	-	-	-	(62,365)	1,416	(60,949)
Dividends paid (note 5)	-	-	-	-	-		(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
	_____	______	______	_____	______	_____	______	_____
Year ended 31 July 2014 (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 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 7)	6	-	205	-	-	-	-	211
Return on ordinary activities after taxation	-	-	-	-	-	(16,305)	4,344	(11,961)
Dividends paid (note 5)	-	-	-	-	-	-	(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
	_____	______	______	_____	______	_____	______	_____

Cash Flow Statement

	Six months ended	Six months ended	Year ended
	31 January 2015	31 January 2014	31 July 2014
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Net total return before finance costs and taxation	23,590	(60,030)	(9,968)
Adjustments for:
(Gains)/losses on investments	(21,025)	62,592	16,444
Effect of exchange rate movements	11	(153)	(103)
(Increase)/decrease in prepayments and accrued income	(160)	(91)	270
Decrease/(increase) in other debtors	1	(6)	(9)
Increase/(decrease) in other creditors	445	73	(243)
Overseas withholding tax suffered	(192)	(198)	(536)
Stock dividends included in investment income	(504)	(31)	(130)
	___________	___________	___________
Net cash inflow from operating activities	2,166	2,156	5,725
Net cash outflow from servicing of finance	(506)	(590)	(1,212)
Net cash inflow/(outflow) from financial investment	7,556	(10,639)	(19,111)
Equity dividends paid (note 5)	(4,953)	(4,928)	(4,928)
	___________	___________	___________
Net cash inflow/(outflow) before financing	4,263	(14,001)	(19,526)
Financing
Issue of own shares	-	2,864	2,864
Drawdown of loan	-	-	5,000
Net cash inflow from financing activities	-	2,864	7,864
	___________	___________	___________
Increase/(decrease) in cash	4,263	(11,137)	(11,662)
	___________	___________	___________
Reconciliation of net cash flow to movements in net debt
Increase/(decrease) in cash as above	4,263	(11,137)	(11,662)
Drawdown of loan	-	-	(5,000)
Effect of exchange rate movements	(11)	153	103
Other non-cash movements	(99)	71	(34)
	___________	___________	___________
Movement in net debt in the period	4,153	(10,913)	(16,593)
Net debt at start of period	(31,037)	(14,444)	(14,444)
	___________	___________	___________
Net debt at end of period	(26,884)	(25,357)	(31,037)
	___________	___________	___________
Represented by:
Cash and short term deposits	9,937	6,260	5,685
Debt falling due in less than one year	(5,000)	-	(5,000)
Debt falling due in more than one year	(31,821)	(31,617)	(31,722)
	___________	___________	___________
Net debt	(26,884)	(25,357)	(31,037)
	___________	___________	___________

Notes to the Financial Statements

For the period ended 31 January 2015

1.	Accounting policies
	(a)	Basis of accounting
		The financial statements 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 2014 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 2015	31 January 2014	31 July 2014
2.	Income	£'000	£'000	£'000
	Income from investments
	Overseas dividends	4,931	4,852	11,287
	Stock dividends	504	31	130
		___________	___________	___________
		5,435	4,883	11,417
		___________	___________	___________
	Other income
	Deposit interest	4	8	10
		___________	___________	___________
	Total income	5,439	4,891	11,427
		___________	___________	___________

3.	Taxation
	The taxation charge for the period has been calculated at an annualised tax rate of 20.67% (31 January 2014 - 22.33%; 31 July 2014 - 22.33%) and reflects the tax on offshore funds without reporting fund status and the subsequent transfer to income for the use of excess expenses.

		Six months ended	Six months ended	Year ended
		31 January 2015	31 January 2014	31 July 2014
4.	Return per Ordinary share	p	p	p
	Basic
	Revenue return	4.59	3.73	11.43
	Capital return	55.15	(164.34)	(42.89)
		___________	___________	___________
	Total return	59.74	(160.61)	(31.46)
		___________	___________	___________
	The figures above are based on the following:
		£'000	£'000	£'000
	Revenue return	1,749	1,416	4,344
	Capital return	21,009	(62,365)	(16,305)
		___________	___________	___________
	Total return	22,758	(60,949)	(11,961)
		___________	___________	___________
		Six months ended	Six months ended	Year ended
		31 January 2015	31 January 2014	31 July 2014
	Weighted average number of shares in issue{A}	38,097,818	37,947,365	38,020,666
	Diluted{B}	p	p	p
	Revenue return	-	-	-
	Capital return	49.92	(148.66)	-
		___________	___________	___________
	Total return	54.91	(144.63)	-
		___________	___________	___________
	The figures above are based on the following:
		£'000	£'000	£'000
	Revenue return	2,097	1,689	5,314
	Capital return	21,009	(62,365)	(16,305)
		___________	___________	___________
	Total return	23,106	(60,676)	(10,991)
		___________	___________	___________
	Number of dilutive shares	3,984,182	4,004,463	3,995,716
		___________	___________	___________
	Diluted shares in issue{A}	42,082,000	41,951,828	42,016,382
		___________	___________	___________
	{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 3,984,182 (31 January 2014 - 4,004,463; 31 July 2014 - 3,995,716) to 42,082,000 (31 January 2014 - 41,951,828; 31 July 2014 - 42,016,382) Ordinary shares.
	For the period ended 31 January 2015 and 31 January 2014 there was no dilution to the revenue return per Ordinary share. For the period ended 31 July 2014 the assumed conversion for the potential Ordinary shares was non-dilutive due to a capital loss being reported and 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.

		Six months ended	Six months ended	Year ended
		31 January 2015	31 January 2014	31 July 2014
5.	Dividends	£'000	£'000	£'000
	Final dividend for 2014 - 10.00p (2013 - 10.00p)	3,810	3,791	3,791
	Special dividend for 2014 - 3.00p (2013 - 3.00p)	1,143	1,137	1,137
		___________	___________	___________
		4,953	4,928	4,928
		___________	___________	___________

6.	Bank loan
	In June 2014 the Company entered into a £20 million multi-currency revolving loan facility with State Street Bank and Trust Company. The agreement contains a covenant that total debt shall not exceed 25% of the adjusted net asset value of the Company, where total debt is the sum of total borrowings including loan stock excluding any liabilities under derivative instruments which would otherwise be included on the basis that such a contract or instrument was being closed out on the date of calculation.
	The adjusted net asset value is defined as the net asset value of the borrower adjusted by deducting:
	market value of any investments not quoted on an internationally recognised exchange;
	total market value of investments in Sub-Investment Grade or Unrated Corporate Bonds;
	amount by which the market value of investments in a single issuer exceeds 5% of the Net Asset Value;
	amount by which the market value of the largest twenty holdings exceeds 65% of the Net Asset Value;
	the amount by which market value of investments in any one country exceeds 25% of the Net Asset Value; or
	the amount by which market value of investments in any Sub-Investment Grade Country exceeds 30%.
	The Company met this covenant for the period of which the loan was utilised with State Street.
	As at 31 January 2015, £5,000,000 (31 January 2014 - Royal Bank of Scotland - £nil; 31 July 2014 - State Street - £5,000,000) had been drawn down at an all-in rate of 1.40% (31 January 2014 - Royal Bank of Scotland - nil; 31 July 2014 - State Street - 1.40%) which matured on 26 February 2015. On 26 February 2015 the £5,000,000 was rolled over at an all-in interest rate of 1.40% until maturity on 26 March 2015.

7.	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 period	33,077	31,722	1,361
	Conversion of CULS into Ordinary shares	(29)	(29)	-
	Notional interest on CULS transferred to revenue reserve	-	90	-
	Amortisation of discount and issue expenses	-	38	-
		__________	__________	__________
	Balance at end of period	33,048	31,821	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 until 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. 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.
	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 period ended 31 January 2015 the holders of £29,188 of CULS exercised their right to convert their holdings into Ordinary shares. Following the receipt of the exercise instructions, the Company converted £29,188 (31 January 2014 - £192,896; 31 July 2014 - £211,293) nominal amount of CULS into 3,510 (31 January 2014 - 23,228; 31 July 2014 - 25,438) Ordinary shares.
	As at 31 January 2015, there was £33,047,933 (31 January 2014 - £33,095,518; 31 July 2014 - 33,077,121) nominal amount of CULS in issue.

8.	Called-up share capital
	During the six months ended 31 January 2015 an additional 3,510 (31 January 2014 - 23,228; 31 July 2014 - 25,438) Ordinary shares were issued after £29,188 (31 January 2014 - £192,896; 31 July 2014 - £211,293) nominal amount of 3.5% Convertible Unsecured Loan Stock 2019 were converted at 830.0p each. The total consideration received was £nil (31 January 2014 - £nil; 31 July 2014 - £nil).
	During the six months ended 31 January 2015 nil (31 January 2014 - 300,000; 31 July 2014 - 300,000) additional new shares were issued by the Company. The total consideration received was £nil (31 January 2014 - £2,864,000: 31 July 2014 - £2,864,000).
	At the end of the period there were 38,100,317 (31 January 2014 - 38,094,597; 31 July 2014 - 38,096,807) Ordinary shares in issue, of which 1,076,290 (31 January 2014 and 31 July 2014 - same) were held in treasury.

9.	Capital reserve
	The capital reserve reflected in the Balance Sheet at 31 January 2015 includes gains of £189,049,000 (31 January 2014 - gains of £136,611,000; 31 July 2014 - gains £182,115,000), which relate to the revaluation of investments held at the reporting date.

		As at	As at	As at
10.	Net asset value per Ordinary share	31 January 2015	31 January 2014	31 July 2014
	Basic
	Net assets attributable	£386,952,000	£320,112,000	£369,118,000
	Number of Ordinary shares in issue{A}	38,100,317	38,094,597	38,096,807
	Net asset value per Ordinary share	1,015.61p	840.31p	968.89p
		___________	___________	___________
	Diluted{B}
	Net assets attributable	£418,773,000	351,929,000	400,840,000
	Number of Ordinary shares	42,081,996	42,082,009	42,082,002
	Net asset value per Ordinary share	995.14p	836.29p	952.52p
		___________	___________	___________
	{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 £33,047,933 3.5% (31 January 2014 - £33,095,518; 31 July 2014 - £33,077,121) Convertible Unsecured Loan Stock 2019 ("CULS") are converted at 830.0p per share, giving a total of 42,081,996 (31 January 2014 - 42,082,009; 31 July 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 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 2015 the cum income NAV was 1,015.61p and thus the CULS were 'in the money' (31 January 2014 - 840.31p, 'in the money'; 31 July 2014 - 968.89p, 'in the money').

11.	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 gains/(losses) on investments in the Income Statement. The total costs were as follows:
		Six months ended	Six months ended	Year ended
		31 January 2015	31 January 2014	31 July 2014
		£'000	£'000	£'000
	Purchases	13	44	52
	Sales	67	15	23
		___________	___________	___________
		80	59	75
		___________	___________	___________

12.	Transactions with the Manager
	Mr M J Gilbert and his alternate Director, Mr H 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 ('AFML'), to provide investment management services to the Company. Neither Mr Gilbert nor Mr Young are directors of AFML.
	The investment management fee is payable monthly in arrears 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 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). During the period £2,170,000 (31 January 2014 - £1,884,000; 31 July 2014 - £3,907,000) of investment management fees were charged, with a balance of £737,000 (31 January 2014 - £648,000; 31 July 2014 - £347,000) being payable to AFML at the period end. Investment management fees are charged 100% to revenue.
	The Company also has a management agreement with AFML for, inter alia, the provision of both administration and promotional activities services which are, in turn, delegated to AAM and Aberdeen Asset Managers Limited ('AAML') respectively.
	The administration fee is payable quarterly in advance and is based on a current annual amount of £87,000 (31 January 2014 - £85,000; 31 July 2014 - £85,000). During the period £43,000 (31 January 2014 - £42,000; 31 July 2014 - £85,000) of fees were charged, with a balance of £22,000 (31 January 2014 - £21,000; 31 July 2014 - £21,000) payable to AAM at the period end.
	The promotional activities costs are based on a current annual amount of £220,000 (31 January 2014 - £250,000; 31 July 2014 - £240,000), payable quarterly in arrears. During the period £110,000 (31 January 2014 - £125,000; 31 July 2014 - £240,000) of fees were charged, with a balance of £73,000 (31 January 2014 - £83,000; 31 July 2014 - £73,000) being payable to AAML at the period end.

13.	Related party disclosures
	There were no related party transactions during the period.

14.	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 2014 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 2015 pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information.

15.	This Half-Yearly Report was approved by the Board and authorised for issue on 27 March 2015.

Copies of the Company's Half Yearly Report for the six months ended 31 January 2015 will be posted to shareholders in April 2015 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

27 March 2015

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 2015 which comprises the Income Statement, Balance Sheet, Reconciliation of Movements in Shareholders' Funds, Cash Flow Statement and the related notes 1 to 15. 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 2015 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

27 March 2015

 

END

 

 

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