Final Results

RNS Number : 7440Y

Aberdeen New Dawn Invest Trust PLC

10 July 2008

 



ABERDEEN NEW DAWN INVESTMENT TRUST PLC

ANNUAL FINANCIAL REPORT

for the year ended 30 April 2008

1. CHAIRMAN’S STATEMENT

Background 

I am pleased to report that your Company's performance was satisfactory during the period under review. Over the year to 30 April 2008, the Company's net assets produced a total return of 18.9% in sterling terms, versus the MSCI AC Asia Pacific (ex Japan) Index's total return of 19.1%. The share price increased 10.8% to 570p, with the discount having widened from 6.3% to 11.8% although this has since narrowed to 9.4% at the time of writing. We are proposing to raise the dividend this year to 6.0p which equates to an increase of 8.1%. If approved by Shareholders at the Annual General Meeting, the final dividend will be paid on 1 September 2008 to Ordinary Shareholders on the register on 8 August 2008.

Overview 

The 12 months under review were extremely volatile, but, for the most part, Asian stock markets maintained their momentum, even as the credit crunch continued to cast a pall over global financial markets. After the initial euphoria that saw regional equities rise to record highs in the first half of the year, investors became increasingly risk averse, as the drawn out credit squeeze turned into a full-blown financial crisis. The US Federal Reserve's unprecedented actions eventually brought some relief to the banking system itself, but failed to assuage fears that slower US growth would at some point impact Asian economies and corporate profits.

Economic news over the period was generally encouraging. Most regional economies continued to expand at pace, although a resurgence of inflation in the form of higher oil and food prices has left policymakers in a quandary. Some countries have extended generous subsidies, while others preferred a gradual appreciation of currencies to raising interest rates. 

Looking at the portfolio, it remains well spread across the region with the exception of China, where it was a challenge to get access to Chinese stocks at reasonable prices. The Manager continues to maintain an underweight to Australia and Taiwan, where much of the stock market consists of companies involved in cyclical industries, such as petrochemicals and electronic components. 

In terms of the Company's net asset value performance, the year can be viewed as two distinct periods: the Company initially lagged the benchmark index, as the Manager's strategy of 'buy and hold,' with a focus on quality and value, was not rewarded in the liquidity-driven rally up to October last year. Conversely, since the correction the Manager has had very little cause to re-adjust positions - the Company is seeing the value of maintaining this discipline being rewarded in terms of outperformance against the benchmark. 

AGM Special Business

As special business at the AGM we are proposing to renew the authority to allot up to 10% of the Company's issued share capital without pre-emption rights applying, and the authority to buy in shares, and either hold them in treasury for future resale (at asset value or above) or cancel them. During the year the Board has selectively bought in a total of 477,731 Ordinary shares for holding in treasury. Each purchase has been made at a significant discount to the prevailing net asset value per Ordinary share. 

The Directors are also proposing to amend the Articles of Association as a result of the on-going implementation of the Companies Act 2006. Amongst other things, these changes will enable the Board from 1 October 2008 to approve at its discretion potential conflicts that may arise between the Directors and the Company on a case by case basis.

The Annual General Meeting of the Company will be held on Thursday 28 August 2008 at 12.30 pm in London and your Board looks forward to meeting as many Shareholders as possible at both the AGM and the subsequent lunch.

Directorate

Mr Clough will be retiring as a Director from the conclusion of this year's Annual General Meeting. Mr Clough has been on the Board since the launch of the Company in 1989 and was Chairman from 2003 to 2006. I would like to take this opportunity of thanking Richard for his valuable contribution to the success of the Company over the last nineteen years. 

Outlook

The world's equity markets remain nervous. Weakening housing markets in key developed markets, coupled with high levels of consumer debt, may restrain growth generally and hit demand for Asian exports. I have already mentioned commodity and food price inflation, these have resulted in real interest rates around the region turning negative, the implication being that sustained tightening is required to turn them positive; this may, in turn, impact upon consumers' spending capacity, as well as wage expectations. 

In the longer term, however, Asia's outlook remains favourable. Wealth, as measured by GDP per capita, remains relatively low in much of Asia and this, combined with the now entrenched espousal of a market system, will drive high levels of growth for years to come. Additionally, investors are benefiting from improving corporate governance, as regulation around the region increasingly addresses issues relating to the rights of minority shareholders.

Your Manager's style, most notably its conservative, value-driven approach, is undoubtedly more resilient in times of uncertainty such as these. More importantly, while the portfolio may be considered low-beta, meaning that is has relatively low sensitivity to market movements, it seeks to generate substantial stock specific outperformance over the long term by investing in sound, well-run businesses at reasonable prices.

Alan Henderson

Chairman

10 July 2008

2.    MANAGER’S REVIEW

Riding on strong liquidity inflows and upbeat economic news, Asian equity markets rose steadily in the early part of the year, giving little hint of the big swings to follow. The first inkling of sub-prime trouble appeared in late July, with a sharp correction then occurring in markets when the full severity of the crisis became apparent.

As fears over the housing market in the US spilled over to the financial sector, the Federal Reserve embarked on a series of interest rate cuts designed to shore up confidence in the banking system. Asian investors, at least initially, seemed convinced of this action, trusting that problems with US housing would not impact Asian economies. From mid-August until late-October markets in Australia, Hong Kong, Indonesia, Singapore and South Korea rose to record highs. By January, major US investment banks had revealed billions of dollars of asset write-downs, and slower global growth appeared inevitable. Equity markets fell sharply, with former highflyers China and India, whose liquidity-driven bull runs had made them vulnerable, bearing the brunt. They, following the lead of developed markets, rallied in mid-March, prompted by the Federal Reserve's rescue of Bear Stearns. 

Despite the turmoil in credit markets, Asian economies continued to expand steadily. Fourth-quarter GDP numbers for most countries exceeded expectations. Domestic consumption, corporate investment and public spending were the main growth drivers. Towards the end of the year, however, there were signs that the credit crisis was starting to weigh on Asian economies. Exporters, in particular, faced weaker demand from the US and Europe. As a result, countries with a greater exposure to these markets, such as Singapore, lowered growth projections. 

Whilst contending with slowing growth, policymakers in Asia also had to grapple with imported food and fuel price inflation. Their policy responses differed, with Australia, which has an overriding inflation-targeting mandate, raising interest rates to a 12-year high. China and India tightened policy and raised banks' reserve requirements to soak up excess liquidity. In contrast, central banks in Indonesia, Thailand and the Philippines continued to cut rates in order to spur growth. Other strategies designed to counter inflationary pressures included Malaysia's use of subsidies and price controls, and Singapore's policy of managed currency appreciation. 

Given higher prices and falling external demand, government budgets were more focused on mitigating the impact of rising costs, which tend to fall disproportionately on the poor. Australia announced income tax cuts, while India forgave loans to farmers. Both Hong Kong and Singapore offered tax breaks and other measures to help lower-income families.

Meanwhile, there was a change in political order in some countries: Australia's Labor Party ended John Howard's 11-year tenure; South Korea's conservative presidential candidate Lee Myung-Bak secured a landslide win; and Taiwan's Kuomintang swept to victory on a pro-growth platform. In Thailand, a coalition government, led by the pro-Thaksin People Power Party, took charge. Malaysia's ruling Umno party suffered the shock loss of its two-thirds parliamentary majority at the general election and, along with it, the power to change the constitution.

Portfolio Review

The Company's performance was broadly in line with its benchmark over the 12 months, returning 18.9% in sterling terms against the benchmark's gain of 19.1%. In allocation, the key contributor was our underweight to Australia, as the weakening corporate earnings environment, coupled with expectations of a further deterioration of the banking sector, weighed on the market. The overweight to India also worked to the Company's advantage, as the strategy of steering clear of the more speculative parts of the market was vindicated when the stocks and sectors that drove the rally pulled back sharply. Equally, the overweight to Thailand proved beneficial, as investor confidence revived under the new pro-business government. 

However, the underweight to China proved costly for relative performance. Indiscriminate buying propelled Chinese indices to record highs in 2007, but while the recent sell-off has dissipated some of the froth, valuations are still expensive and a further consolidation is desirable. Similarly, the overweight in Singapore, a characteristically defensive market, weighed on performance. But while the market was a relative laggard compared with its regional peers, it remains one of the strongest and best-managed economies in the region, offering high-quality, well run companies. 

Stock selection, meanwhile, was strongest in Australia, as mining heavyweight Rio Tinto, rising strongly on the back of the broad-based climb in commodity prices, more than made up for our lack of exposure to BHP Billiton. Our zero weights in Korea's LG Electronics and India's Reliance Industries, the recipients of much retail investor interest during the period, were negative contributors to stock selection, as were our overweight positions in Korea's Kookmin Bank and Shinsegae.

At the sector level, the Company's portfolio is biased towards financials, primarily through regional banks, whose balance sheets remained largely uncontaminated by the sub-prime 'bug,' as well as an overweight to consumer staples, a reflection of our optimism over Asia's growing domestic demand story. With global economic activity facing a potential downturn, robust private consumption is expected to mitigate the impact of slowing exports to the US and other developed markets. In addition, stocks in these areas tend to be the more straightforward in terms of ownership, governance and business model, all factors that support the Company's investment objective on shareholder returns. In contrast, the portfolio remains underweight to industrials, energy and materials, where businesses tend to be cyclical and do not tally with our long term, steady growth investment style.

In terms of individual stock activity, we introduced one holding into the portfolio: Singapore-based Fraser & Neave, a regional food and beverages company, with additional interests in property and publishing. Its property division is benefiting from healthy rental income and regional sales, while the food and beverage unit, whose brands include Tiger Beer, has also been growing strongly in Asia. Conversely, we exited our small holding in Taiwanese lender Sinopac, whose investment portfolio write-downs caused us to lose faith in its management.

We also took partial profits from holdings that had seen a strong run-up. These included Leighton Holdings in Australia; China Mobile, PetroChina and toll road operator Zhejiang Expressway in China; and PTT Exploration and Production in Thailand. We also sold part of our holding in Australian miner Rio Tinto - at a substantial premium over the prevailing market price - to a consortium of Chinalco and Alcoa.

With the proceeds, we topped up existing holdings whose valuations had become more attractive. These included Australia's QBE Insurance; Malaysia's Bumiputra-Commerce Holdings and Pos Malaysia; Taiwan's TSMC and Taiwan Mobile; Thailand's Hana Microelectronics; the Philippines' Ayala Land; and South Korea's Kookmin Bank. We also added to our Singapore-listed holdings, such as City Developments, Jardine Strategic Holdings, Oversea-Chinese Banking Corporation, Singapore Airlines and United Overseas Bank.

Outlook

Caution and nervousness have set in after an initial rally on the back of the U.S. Federal Reserve's liquidity boosting measures and rate cuts. The oil price has risen sharply and will impact corporate profitability. Meanwhile, the tighter lending that will no doubt follow recapitalisation of western banks may have a knock on effect in Asian economies.

While US policymakers seem confident that slower growth will see inflation ease, in Asia, the stakes are different. Price pressures have had a more direct impact on consumers, since food forms a higher proportion of household budgets. With purchasing power eroded, policymakers may have to rethink their increasingly loose approach to monetary policy. Real interest rates have turned negative in many countries. Expectations may become embedded that prices will stay high, with due effect on wage demands.

So far, the earnings of our companies have held up well, but it seems inevitable that higher input costs will eat into profit margins, the effects of which risk being exacerbated by any slowdown in export markets. If growth does slow, then Asian governments, with their finances now extremely healthy, have plenty of room to pump prime. However, the biggest challenge right now would appear to be inflation. The main risk is that this will remain high, and unchallenged by central banks, regardless of growth prospects. 

From a long-term perspective we remain very confident of our holdings and are comfortable with their valuations. That said, it is very possible that the next 12-18 months will see continued volatility as the impact of rising inflation and slowing growth in developed economies takes its toll on both the quality and quantum of corporate profits.

Aberdeen Asset Management Asia Limited

10 July 2008

3.    RESULTS

Financial Highlights

	30 April 2008	30 April 2007	% change
Total Assets	£170,852,000	£146,315,000	+16.8
Total Equity Shareholders' funds (Net Assets)	£160,993,000	£139,342,000	+15.5
Share price (mid market)	570.00p	514.50p	+10.8
Net Asset Value per share	646.31p	548.87p	+17.8
Discount to Net Asset Value	11.8%	6.3%
MSCI AC Asia Pacific ex Japan Index (currency adjusted, capital gains basis)	463.91	400.89	+15.7
Potential gearing	1.06	1.05
Dividend and earnings
Revenue return per share	8.14p	7.63p	+6.7
Proposed final dividend per share{B}	6.00p	5.55p	+8.1
Dividend cover	1.36	1.37
Revenue reserves{C}	£6,055,000	£5,412,000
Operating costs
Total expense ratio	1.24%	1.27%
{A} Measures the total earnings for the year divided by the weighted average number of Ordinary shares in issue (see Income Statement).
{B} The figures for dividends still reflect the years in which they were earned (see note 7) and have not been restated.
{C} Prior to payment of proposed final dividend.

Performance (total return)

	1 year return	3 year return	5 year return
	%	%	%
Share price	+12.0	+91.2	+243.3
Net Asset Value	+18.9	+102.3	+237.2
MSCI AC Asia Pacific ex Japan Index (currency adjusted)	+19.1	+98.8	+200.0

Dividends

	Rate	xd date	Record date	Payment date
Proposed final 2008	6.00p	6 August 2008	8 August 2008	1 September 2008
Final 2007	5.55p	1 August 2007	3 August 2007	31 August 2007

4.     INVESTMENT PORTFOLIO

			Valuation	Total	Valuation
			2008	assets	2007
Company	Sector	Country	£'000	%	£'000
Aberdeen Global-India Opportunities Fund
A tax-efficient pooled India fund with a long-term investment approach managed by the same team managing the Company. There is no double-charging of management fees.	Collective Investment Scheme	India	21,483	12.6	19,030
Samsung Electronics Pref
Asia's leading electronics firm that makes consumer electronics, semiconductors, telecom equipment and TFT LCD screens.	Semiconductors & Semiconductor Equipment	South Korea	7,795	4.6	7,951
Oversea-Chinese Banking Corporation
A well-run Singaporean bank with an insurance business, and which has an established operation in Malaysia and growing into Indonesia, Vietnam and China	Commercial Banks	Singapore	6,411	3.8	5,478
United Overseas Bank
Singapore's second largest bank, primarily focused on SMEs and consumers, with its core market in Singapore and the balance predominantly in southeast Asia	Commercial Banks	Singapore	6,221	3.6	4,225
Rio Tinto
A globally diversified resources company with a strong focus on growing margins and using capital efficiently.	Metals & Mining	Australia	5,911	3.5	3,687
QBE Insurance Group			5,415	3.2	5,241
A leading Australian general insurance and reinsurance firm that is geographically diversified, and has a track record of generating good shareholder returns.	Insurance	Australia
Swire Pacific 'B'
Hong Kong listed conglomerate, with interests in aviation (via Cathay Pacific), property, beverages, marine services and industrial activities.	Real Estate Management & Development	Hong Kong	5,305	3.1	4,943
Taiwan Semiconductor Manufacturing Company
The world's largest dedicated semiconductor foundry.	Semiconductors & Semiconductor Equipment	Taiwan	5,089	3.0	3,390
Jardine Strategic Holdings			4,813	2.8	2,860
A Singapore-listed conglomerate with interests across the region spanning property, hotels and consumer products.	Industrial Conglomerates	Hong Kong
China Mobile
The mainland's largest mobile telephone operator, which is poised to benefit from growing consumer demand.	Wireless Telecommunication Services	China	4,805	2.8	4,103
Top ten investments			73,248	43.0
Singapore Telecommunications	Diversified Telecommunication Services	Singapore	4,594	2.7	2,949
City Developments	Real Estate Management & Development	Singapore	4,432	2.6	4,343
PTT Exploration & Production	Oil, Gas & Consumable Fuels	Thailand	4,229	2.5	2,420
Sun Hung Kai Properties	Real Estate Management & Development	Hong Kong	3,761	2.2	2,486
Standard Chartered	Commercial Banks	Hong Kong	3,588	2.1	3,115
Shinsegae Company	Food & Staples Retailing	South Korea	3,546	2.1	3,930
Singapore Technologies Engineering	Aerospace & Defence	Singapore	3,293	1.9	2,945
Siam Cement	Construction Materials	Thailand	3,241	1.9	2,994
Petrochina	Oil, Gas & Consumable Fuels	China	3,194	1.9	3,788
Ayala Land	Real Estate Management & Development	Philippines	3,161	1.8	3,625
Top twenty investments			110,287	64.7
Fubon Financial	Diversified Financial Services	Taiwan	3,129	1.8	2,651
Kookmin Bank	Commercial Banks	South Korea	2,988	1.7	3,141
Singapore Airlines	Airlines	Singapore	2,973	1.7	2,844
Unilever Indonesia	Household Products	Indonesia	2,891	1.7	2,411
Public Bank Berhad	Commercial Banks	Malaysia	2,847	1.7	2,283
Taiwan Mobile	Wireless Telecommunication Services	Taiwan	2,842	1.7	1,166
M.P. Evans Group	Food Products	Indonesia	2,747	1.6	2,391
Aberdeen Asian Smaller Companies Inv. Trust {B}	Investment/Unit Trusts	Other Asia	2,740	1.6	2,839
Fraser & Neave Limited	Industrial Conglomerates	Singapore	2,578	1.5	-
Hang Lung Properties	Real Estate Management & Development	Hong Kong	2,571	1.5	1,866
Top thirty investments			138,593	81.2
Wing Hang Bank	Commercial Banks	Hong Kong	2,526	1.5	2,254
Venture Corp	Electronic Equipment & Instruments	Singapore	2,374	1.4	2,454
Bumiputra Commerce	Commercial Banks	Malaysia	2,057	1.2	758
Dairy Farm International	Food & Staples Retailing	Hong Kong	1,979	1.2	1,502
ASM Pacific Technologies	Semiconductors & Semiconductor Equipment	Hong Kong	1,721	1.0	1,364
Pusan Bank	Commercial Banks	South Korea	1,627	0.9	1,467
Dah Sing Financial	Commercial Banks	Hong Kong	1,613	0.9	1,713
Hyundai Motor Pref	Automobiles	South Korea	1,406	0.8	1,714
Zhejiang Expressway	Transportation Infrastructure	China	1,346	0.8	1,443
Hang Lung Group	Real Estate Management & Development	Hong Kong	1,330	0.8	956
Top forty investments			156,572	91.7
POS Malaysia Berhad	Air Freight & Logistics	Malaysia	1,249	0.7	1,368
TABCORP Holdings	Hotels, Restaurants & Leisure	Australia	1,219	0.7	1,681
Daegu Bank	Commercial Banks	South Korea	961	0.6	993
Leighton Holdings	Construction & Engineering	Australia	884	0.5	1,739
BOC Pakistan	Chemicals	Pakistan	881	0.5	502
Giordano International	Speciality Retail	Hong Kong	878	0.5	972
Aitken Spence & Co.	Industrial Conglomerates	Sri Lanka	710	0.4	514
John Keells Holdings	Industrial Conglomerates	Sri Lanka	524	0.3	636
DFCC Bank	Commercial Banks	Sri Lanka	523	0.3	517
Multi Bintang Indonesia	Beverages	Indonesia	468	0.3	522
National Development Bank	Commercial Banks	Sri Lanka	343	0.2	368
Total investments			165,212	96.7
Net current assets{A}			5,640	3.3
Total assets			170,852	100.0
{A} Excluding bank loan of £9,723,000. {B} There is no double-charging of management fees.
Note: Unless otherwise stated, foreign stock is held and all investments are equity holdings.

5.    BUSINESS REVIEW

Business Review

Principal Activity

The business of the Company is that of an investment trust investing in the Asia Pacific region. The objective of the Company is set out below.

A review of the Company's activities is given below and in the Chairman's Statement and the Manager's Review. This includes a review of the business of the Company and its principal activities, likely future developments of the business and recommended dividend.

The Company does not make political donations or expenditure and has not made any donations for charitable purposes during the year and in common with most investment trusts, the Company has no employees. Directors' & Officers' liability insurance cover has been maintained throughout the year at the expense of the Company. The current Directors, Messrs R R Clough, R B Bradley, A B Henderson, R J Hills, D J B Shearer and H Young, were the only Directors who served during the year.  

Monitoring Performance - Key Performance Indicators

At each Board meeting, the Directors review a number of performance measures to assess the Company's success in achieving its objectives. The Key Performance Indicators for the Company as identified by the Board include NAV performance, share price performance and benchmark performance and further details of these returns are provided on below.

Status

The Company is registered as a public limited company and is an investment company as defined by Section 833 of the Companies Act 2006. The Company is a member of the Association of Investment Companies ('AIC').

The Company has been approved by HM Revenue & Customs ('HMRC') as an investment trust for the purposes of Section 842 of the Income and Corporation Taxes Act 1988 for the year ended 30 April 2007. The Directors are of the opinion, under advice, that the Company has conducted its affairs for the year ended 30 April 2008 so as to be able to continue to obtain approval as an investment trust under Section 842 of the Income and Corporation Taxes Act 1988 for that year, although approval for that year would be subject to review were there to be an enquiry from HMRC under the Corporate Tax Self Assessment regime.

The Company intends to manage its affairs so as to be a qualifying investment for inclusion in the stocks and shares component of an Individual Savings Account ('ISA') and it is the Directors' intention that the Company should continue to qualify.

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 financial statements. 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 for the Ordinary shares, 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 the net asset value of the Ordinary shares and investors may not be able to realise the 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.

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.

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) 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.

Share Capital

During the year to 30 April 2008 the Company has purchased in the market 477,731 Ordinary shares. These shares are currently being held in treasury. There have been no further purchases of Ordinary shares for treasury since the year end.

Investment Objective

The investment objective of the Company is to provide Shareholders with a high level of capital growth through equity investment in the Asia Pacific countries ex Japan.

Investment Policy

The Company's assets are invested in a diversified portfolio of securities in quoted companies spread across a range of industries and economies in the Asia Pacific region excluding Japan. Investments may also be made through collective investment schemes and in companies traded on stock markets outside the Asia Pacific investment region provided that over 75 per cent. of their consolidated revenue is earned from trading in the investment region or they hold more than 75 per cent. of their consolidated net assets in the Asia Pacific investment region.

Achieving the Investment Policy

The Directors are responsible for determining the investment policy and the investment objective of the Company. Day to day management of the Company's assets has been delegated to Aberdeen Asset Management Asia Limited ('AAM Asia'). The Manager invests in a diversified range of companies throughout the Asia Pacific investment region in accordance with the investment policy. The Manager follows a bottom-up investment process based on a disciplined evaluation of companies through direct visits by its fund managers. Stock selection is the major source of added value. No stock is bought without the fund managers having first met management. The Manager estimates a company's worth in two stages, quality then price. Quality is defined by reference to management, business focus, the balance sheet and corporate governance. Price is calculated by reference to key financial ratios, the market, the peer group and business prospects. Top-down investment factors are secondary in the Manager's portfolio construction, with diversification rather than formal controls guiding stock and sector weights. Little attention is paid to market capitalisation. The Manager is authorised to invest up to 15% of the Company's gross assets in any single stock.

A detailed description of the investment process and risk controls employed by the Manager is disclosed on in the Annual Report and Accounts. A comprehensive analysis of the Company's portfolio is disclosed below including a description of the ten largest investments and the full investment portfolio by value. At the year end the Company's portfolio consisted of 51 holdings.

The Board is responsible for determining the gearing strategy for the Company. Gearing is used selectively to leverage the Company's portfolio in order to enhance returns where and to the extent this is considered appropriate to do so. At the year end there was potential gearing of 6% which compares with a current maximum limit set by the Board of 25%. Borrowings are short term and particular care is taken to ensure that any bank covenants permit maximum flexibility of investment policy.

In addition, it is the investment policy of the Company to invest no more than 15% of its gross assets in other listed investment companies (including listed investment trusts). As at 30 April 2008, 1.6% of the Company's portfolio was invested in investment trust companies.

6.    STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report & Accounts and the financial statements, in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with UK Accounting Standards.

The financial statements are required by law to give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;  

• make judgments and estimates that are reasonable and prudent;  

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

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies Act 1985. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

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

The financial statements are published on 
www.newdawn-trust.co.uk which is a website maintained by the Company's Manager. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors confirm that to the best of our knowledge:

• the financial statements, prepared in accordance with the applicable UK Accounting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

• the Directors' Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that the Company faces.

For Aberdeen New Dawn Investment Trust PLC

Alan Henderson

Chairman

10 July 2008

7.         INCOME STATEMENT 

		Year ended 30 April 2008			Year ended 30 April 2007
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments held at fair value through profit or loss	9	-	24,288	24,288	-	10,527	10,527
Income	2	4,301	-	4,301	4,027	-	4,027
Investment management fee	3	(652)	(652)	(1,304)	(536)	(536)	(1,072)
Administrative expenses	4	(611)	-	(611)	(552)	15	(537)
Exchange (losses)/gains		-	(169)	(169)	(41)	733	692
		-----	-----	-----	-----	-----	-----
Net return on ordinary activities before finance costs and taxation		3,038	23,467	26,505	2,898	10,739	13,637
Interest payable and similar charges	5	(189)	(189)	(378)	(189)	(189)	(378)
		-----	-----	-----	-----	-----	-----
Return on ordinary activities before taxation		2,849	23,278	26,127	2,709	10,550	13,259
Taxation	6	(797)	251	(546)	(772)	217	(555)
		-----	-----	-----	-----	-----	-----
Return on ordinary activities after taxation		2,052	23,529	25,581	1,937	10,767	12,704
		=====	=====	=====	=====	=====	=====
Return per Ordinary share (pence)	8	8.14	93.37	101.51	7.63	42.41	50.04
		=====	=====	=====	=====	=====	=====
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 prepared as all gains and losses are recognised in the Income Statement.
All revenue and capital items are derived from continuing operations.
The accompanying notes are an integral part of the financial statements.

8.         BALANCE SHEET

		As at	As at
		30 April 2008	30 April 2007
	Notes	£'000	£'000
Non-current assets
Investments at fair value through profit or loss	9	165,212	145,147
		-----	-----
Current assets
Loans and receivables	10	797	870
Cash at bank and in hand		5,353	1,345
		-----	-----
		6,150	2,215
		-----	-----
Creditors: amounts falling due within one year	11
Foreign currency loans		(9,723)	(6,822)
Other creditors		(510)	(1,047)
		-----	-----
		(10,233)	(7,869)
		-----	-----
Net current liabilities		(4,083)	(5,654)
		-----	-----
Total assets less current liabilities		161,129	139,493
Provision for liabilities and charges	12	(136)	(151)
		-----	-----
Net assets		160,993	139,342
		=====	=====
Share capital and reserves
Called-up share capital	13	6,347	6,347
Share premium account		17,955	17,955
Special reserve		11,617	14,138
Capital redemption reserve		10,207	10,207
Capital reserve - realised	14	94,723	15,638
Capital reserve - unrealised	14	14,089	69,645
Revenue reserve		6,055	5,412
		-----	-----
Equity Shareholders' funds		160,993	139,342
		=====	=====
Net asset value per Ordinary share (pence)	15	646.31	548.87
		=====	=====
The financial statements were approved by the Board of Directors and authorised for issue on 10 July 2008 and were signed on its behalf by :
Alan Henderson
Chairman
The accompanying notes are an integral part of the financial statements.

9. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS

9.       RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS

For the year ended 30 April 2008
		Share		Capital	Capital	Capital
	Share	premium	Special	redemption	reserve -	reserve -	Revenue
	capital	account	reserve	reserve	realised	unrealised	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 April 2007	6,347	17,955	14,138	10,207	15,638	69,645	5,412	139,342
Reclassification of reserves{A}	-	-	-	-	56,875	(56,875)	-	-
Return on ordinary activities after taxation	-	-	-	-	22,210	1,319	2,052	25,581
Purchase of own shares	-	-	(2,521)	-	-	-	-	(2,521)
Dividend paid (see note 7)	-	-	-	-	-	-	(1,409)	(1,409)
	-----	-----	-----	-----	-----	-----	-----	-----
Balance at 30 April 2008	6,347	17,955	11,617	10,207	94,723	14,089	6,055	160,993
	=====	=====	=====	=====	=====	=====	=====	=====
{A} With effect from 1 May 2007, changes in fair value of investments which are readily convertible to cash, without accepting adverse terms, at the Balance Sheet date are included in realised, rather than unrealised, capital reserves. The balances on both reserves at 1 May 2007 have been amended by a reserve transfer to reflect this change.
For the year ended 30 April 2007
		Share		Capital	Capital	Capital
	Share	premium	Special	redemption	reserve -	reserve -	Revenue
	capital	account	reserve	reserve	realised	unrealised	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 April 2006	6,347	17,955	14,138	10,207	7,067	67,449	4,744	127,907
Return on ordinary activities after taxation	-	-	-	-	8,571	2,196	1,937	12,704
Dividend paid (see note 7)	-	-	-	-	-	-	(1,269)	(1,269)
	-----	-----	-----	-----	-----	-----	-----	-----
Balance at 30 April 2007	6,347	17,955	14,138	10,207	15,638	69,645	5,412	139,342
	=====	=====	=====	=====	=====	=====	=====	=====
The revenue reserve represents the amount of the Company's reserves distributable by way of dividend.
The accompanying notes are an integral part of the financial statements.

10.    CASH FLOW STATEMENT

		Year ended		Year ended
		30 April 2008		30 April 2007
	Notes	£'000	£'000	£'000	£'000
Net cash inflow from operating activities	16		2,261		1,712
Servicing of finance
Bank and loan interest paid			(364)		(378)
Taxation
Net UK tax paid			(362)		(316)
Financial investment
Purchases of investments		(15,297)		(13,066)
Sales of investments		18,968		13,813
			-----		-----
Net cash inflow from financial investment			3,671		747
Equity dividend paid			(1,409)		(1,269)
			-----		-----
Net cash inflow before financing			3,797		496
Financing
Purchase of own shares			(2,521)		-
Net drawdown of loan			2,419		-
			-----		-----
Net cash outflow from financing			(102)		-
			-----		-----
Increase in cash	17		3,695		496
			-----		-----
Reconciliation of net cash flow to movements in net debt
Increase in cash as above			3,695		496
Drawdown of loan			(2,419)		-
Exchange movements			(169)		733
			-----		-----
Movement in net debt in the year			1,107		1,229
Opening net debt			(5,477)		(6,706)
			-----		-----
Closing net debt	17		(4,370)		(5,477)
			=====		=====
The accompanying notes are an integral part of the financial statements.

11.    NOTES TO THE FINANCIAL STATEMENTS:

1.	Accounting policies
	(a)	Basis of accounting
		The financial statements have been prepared under the historical cost convention, as modified to include the revaluation of fixed asset investments, and in accordance with applicable United Kingdom Accounting Standards and with the Statement of Recommended Practice for 'Financial Statements of Investment Trust Companies' (December 2005)('the SORP'). They have also been prepared on the assumption that approval as an investment trust will continue to be granted.
		The financial statements, and the net asset value per share figures, have been prepared in accordance with UK Generally Accepted Accounting Practice ('UK GAAP').
		During the year the Company adopted FRS 29 ' Financial Instruments: Disclosures'. This standard primarily concerns the disclosure of financial instruments and risks. These disclosures can be found primarily in note 19.
	(b)	Valuation of investments
		Listed investments have been designated upon initial recognition as fair value through profit or loss. Investments are recognised and de-recognised on the trade date at cost. Subsequent to initial recognition, investments are valued at fair value which for listed investments is deemed to be bid market prices. Gains and losses arising from changes in fair value are included as a capital item in the Income Statement and are ultimately recognised in the capital reserve.
	(c)	Income
		Dividends (other than special dividends), including taxes deducted at source, are included in revenue by reference to the date on which the investment is quoted ex-dividend. Special dividends are reviewed on a case-by-case basis and may be credited to capital, if circumstances dictate. Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account when the Company's right to receive payment is established. Fixed returns on non-equity shares are recognised on a time apportioned basis so as to reflect the effective yield on shares. Other returns on non-equity shares are recognised when the right to return is established. The fixed return on a debt security, if material, is recognised on a time apportioned basis so as to reflect the effective yield on each security. Where the Company has elected to receive its dividends in the form of additional shares rather than cash, the amount of the cash dividend is recognised as income. Any excess in the value of the shares received over the amount of the cash dividend is recognised in capital reserves. Interest receivable on bank balances is dealt with on an accruals basis.
	(d)	Expenses
		All expenses are accounted for on an accruals basis. Expenses are charged through the revenue column of the Income Statement except as follows:
		expenses directly relating to the acquisition or disposal of an investment, in which case, they are added to the cost of the investment or deducted from the sale proceeds. Such transaction costs are disclosed in accordance with the SORP. These expenses are charged to the capital column of the Income Statement and are separately identified and disclosed in note 9; and
		the Company charges 50% of investment management fees and finance costs to the capital column of the Income Statement, in accordance with the Board's expected long term return in the form of capital gains and income respectively from the investment portfolio of the Company.
	(e)	Deferred taxation
		Deferred taxation is provided on all timing differences, that have originated but not reversed at the Balance Sheet date, where transactions or events that result in an obligation to pay more or a right to pay less tax in future have occurred at the Balance Sheet date, measured on an undiscounted basis and based on enacted tax rates. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the accounts which are capable of reversal in one or more subsequent periods. Due to the Company's status as an investment trust company, and the intention to continue to meet the conditions required to obtain approval for the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.
	(f)	Capital reserves
		Gains and losses on realisation of investments and changes in fair values of investments which are readily convertible to cash, without accepting adverse terms, are transferred to the capital reserve.
	(g)	Foreign currencies
		Assets and liabilities in foreign currencies are translated at the rates of exchange ruling on the Balance Sheet date. Transactions involving foreign currencies are converted at the rate ruling on the date of the transaction. Gains and losses on the realisation of foreign currencies are recognised in the Income Statement and are then transferred to the realised capital reserve.
	(h)	Dividends payable
		Final dividends are dealt with in the period in which they are paid.

		2008	2007
2.	Income	£'000	£'000
	Income from investments
	UK dividend income	255	213
	Overseas dividends	3,871	3,671
	Scrip dividends	3	46
		4,129	3,930
	Other income
	Deposit interest	114	31
	Stock lending income	58	66
		172	97
	Total income	4,301	4,027

			2008			2007
		Revenue	Capital	Total	Revenue	Capital	Total
3.	Investment management fee	£'000	£'000	£'000	£'000	£'000	£'000
	Investment management fee	652	652	1,304	536	536	1,072
	The Company has an agreement with Aberdeen Asset Management Asia Limited ('AAM Asia') for the provision of management services.
	During the year the management fee was payable monthly in arrears and was based on an annual amount of 1% of the net asset value of the Company valued monthly. The agreement is terminable on one year's notice. The balance due to AAM Asia at the year end was £220,000 (2007 - £195,000). The Company's investments in Aberdeen Global-India Opportunities Fund and Aberdeen Asian Smaller Companies Investment Trust are excluded from the calculation of the investment management fee. The total value of such commonly managed funds, on a mid basis (basis on which management fee is calculated), at the year end was £24,223,000 (2007 - £21,869,000).

			2008	2007
4.	Administrative expenses		£'000	£'000
	Share Plan marketing contribution		105	90
	Directors' fees		119	113
	Safe custody fees		159	118
	Auditors' remuneration:
	-	Fees payable to the Company's auditor for the audit of the Company's annual accounts	13	14
	-	Fees payable to the Company's auditor and its associates for other services:
		- Other fees pursuant to legislation	5	3
	Other		210	214
			611	552
		The Company has an agreement with Aberdeen Asset Managers Limited ('AAM') for the provision of marketing services in relation to the Company's participation in the Aberdeen Investment Trust Share Plan and ISA. The total fees paid and payable under the agreement were £105,000 (2007 - £90,000) and the sum due to AAM at the year end was £18,000 (2007 - £8,000).
		No pension contributions were made in respect of any of the Directors.
		The Company does not have any employees.

			2008			2007
		Revenue	Capital	Total	Revenue	Capital	Total
5.	Interest payable and similar charges	£'000	£'000	£'000	£'000	£'000	£'000
	On bank loans and overdrafts	189	189	378	189	189	378

			2008			2007
			Revenue	Capital	Total	Revenue	Capital	Total
6.	Tax on ordinary activities		£'000	£'000	£'000	£'000	£'000	£'000
	(a)	Analysis of charge for the year
		Corporation tax	787	(251)	536	671	(217)	454
		Prior year adjustment	-	-	-	(7)	-	(7)
		Overseas taxation	189	-	189	212	-	212
		Relief for overseas taxation	(164)	-	(164)	(165)	-	(165)
		Current taxation	812	(251)	561	711	(217)	494
		Deferred taxation	(15)	-	(15)	61	-	61
		Total tax	797	(251)	546	772	(217)	555
	(b)	Factors affecting current tax charge for the year
		The tax assessed for the year is lower than the standard rate of corporation tax in the UK.
							2008	2007
							£'000	£'000
		Return on ordinary activities before taxation					2,849	2,709
							2008	2007
							£'000	£'000
		Return on ordinary activities multiplied by effective rate of corporation tax in the UK of 29.83% (2007 - 30%)					850	813
		Effects of:
		UK dividend income					(76)	(64)
		Overseas tax charge					189	212
		Relief for overseas taxation					(164)	(165)
		Deferred tax					14	(69)
		Scrip dividend receipts not chargeable to corporation tax					(1)	(13)
		Tax on disallowable expenses					-	4
		Prior year adjustment					-	(7)
		Current tax charge for the year					812	711
		The taxation charge for the period has been calculated at an expected effective annual tax rate of 29.83%. This is below the corporation tax rate of 30% due to the change in the corporation tax rate from 30% to 28% on 31 March 2008.

		2008	2007
7.	Dividends	£'000	£'000
	Amounts recognised as distributions to equity holders in the period:
	Final dividend for 2007 - 5.55p (2006 - 5.0p)	1,409	1,269
	The proposed final dividend for 2008 is subject to approval by Shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.
	The table below sets out the final dividend proposed in respect of the financial year, which is the basis on which the requirements of Section 842 of the Income and Corporation Taxes Act 1988 are considered. The revenue available for distribution by way of dividend for the year is £2,052,000 (2007 - £1,937,000).
		2008	2007
		£'000	£'000
	Proposed final dividend for 2008 - 6.00p (2007 - 5.55p)	1,495	1,409

		2008		2007
8.	Return per Ordinary share	£'000	p	£'000	p
	Revenue return	2,052	8.14	1,937	7.63
	Capital return	23,529	93.37	10,767	42.41
	Total return	25,581	101.51	12,704	50.04
	Weighted average number of Ordinary shares in issue{A}		25,200,610		25,387,133
	{A} Calculated excluding shares held in treasury.

				Listed	Listed
				overseas	in UK	Total
9.	Investments			£'000	£'000	£'000
	Fair value through profit or loss:
	Opening book cost			68,248	7,254	75,502
	Opening fair value gains on investments held			64,867	4,778	69,645
	Opening valuation			133,115	12,032	145,147
	Movements in the year:
	Purchases at cost			14,745	-	14,745
	Sales	-	proceeds	(17,442)	(1,526)	(18,968)
		-	realised gains on sales	10,311	911	11,222
	Current year fair value gains on investments held			9,497	3,569	13,066
	Closing valuation			150,226	14,986	165,212
	Closing book cost			75,862	6,639	82,501
	Closing fair value gains on investments held			74,364	8,347	82,711
				150,226	14,986	165,212
					2008	2007
					£'000	£'000
	Investments listed on a recognised investment exchange				165,212	145,147
					2008	2007
	Gains on investments held at fair value through profit or loss				£'000	£'000
	Realised gains on sales				11,222	8,331
	Increase in unrealised appreciation				13,066	2,196
					24,288	10,527
	Transaction costs
	During the year expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within gains on investments held at fair value through profit or loss in the Income Statement. The total costs were as follows:
					2008	2007
					£'000	£'000
	Purchases				40	55
	Sales				31	34
					71	89
					2008	2007
	Stock lending details				£'000	£'000
	Aggregate value of securities on loan at the year end				27,764	20,894
	Maximum aggregate value of securities on loan during the year				49,468	39,265
	Fee income (gross) from stock lending during the year				58	66
	All stocks lent under these arrangements are fully secured against collateral. The value of the collateral held at 30 April 2008 was £29,152,000 (2007 - £22,361,000) which comprised corporate bonds.

		2008	2007
10.	Loans and receivables	£'000	£'000
	Prepayments and accrued income	789	865
	Other debtors	8	5
		797	870

			2008	2007
11.	Creditors: amounts falling due within one year		£'000	£'000
	(a)	Foreign currency loans	9,723	6,822
		At the year end, the Company's bank loan of HK$150,100,000 (2007 - HK$106,700,000), equivalent to £9,723,000 (2007 - £6,822,000), was drawn down from the £12,000,000 facility with Allied Irish Bank Plc (London) at an interest rate of 2.60% and has been rolled to 4 September 2008.
			2008	2007
	(b)	Other	£'000	£'000
		Amounts due to brokers	-	555
		Tax payable	157	148
		Other creditors	353	344
			510	1,047

		Deferred
		taxation on
		accrued income
12.	Provision for liabilities and charges	£'000
	At 1 May 2007	151
	Movement in year	(15)
	At 30 April 2008	136

		2008	2007
13.	Called-up share capital	£'000	£'000
	Authorised:
	71,150,100 (2007 - 75,150,100) Ordinary shares of 25p shares	17,788	17,788
	Allotted, called up and fully paid:
	24,909,402 (2007 - 25,387,133) Ordinary shares of 25p each	6,227	6,347
	Held in treasury:
	477,731 (2007 - nil) Ordinary shares of 25p each	120	-
		6,347	6,347
	During the year 477,731 (2007 - nil) Ordinary shares of 25p each were repurchased by the Company at a total cost, including transaction costs, of £2,521,000 (2007 - £nil). All of these shares were placed in treasury. Shares held in treasury represents 1.88% of the Company's total issued share capital at 30 April 2008.
	Further details of the share repurchases are contained in the Business Review.
	The investment objective of the Company is to provide Shareholders with a high level of capital growth through equity investment in the Asia Pacific countries ex Japan.
	The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to Shareholders through the optimisation of the debt and equity balance.
	The Board monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes:
	- the planned level of gearing which takes account of the Investment Manager's views on the market;
	- the level of equity shares in issue;
	- the extent to which revenue in excess of that which is required to be distributed should be retained.
	The Company's objectives, policies and processes for managing capital are unchanged from the preceding accounting period.
	The Company does not have any externally imposed capital requirements.

		Capital	Capital	Total
		reserve -	reserve -	capital
		realised	unrealised	reserve
14.	Capital reserve	£'000	£'000	£'000
	Year ended 30 April 2008
	At 30 April 2007	15,638	69,645	85,283
	Reclassification of reserves	56,875	(56,875)	-
	Movement in fair value gains	22,969	1,319	24,288
	Foreign exchange movement	(169)	-	(169)
	Capitalised expenses	(590)	-	(590)
	At 30 April 2008	94,723	14,089	108,812
	Year ended 30 April 2007
	At 30 April 2006	7,067	67,449	74,516
	Movement in fair value gains	8,331	2,196	10,527
	Foreign exchange movement	733	-	733
	Capitalised expenses	(493)	-	(493)
	At 30 April 2007	15,638	69,645	85,283
	With effect from 1 May 2007, changes in fair value of investments which are readily convertible to cash, without accepting adverse terms, at the Balance Sheet date are included in realised, rather that unrealised, capital reserves. The balances on both reserves at 1 May 2007 have been amended by a reserve transfer to reflect this change which is in accordance with the provisions of the SORP.

15.	Net asset value per share
	The net asset value per share and the net asset values attributable to Ordinary Shareholders at the year end calculated in accordance with the Articles of Association were as follows:
		2008	2007
	Net assets attributable (£'000)	160,993	139,342
	Number of Ordinary shares in issue (excluding shares held in treasury)	24,909,402	25,387,133
	Net asset value per share (p)	646.31	548.87

16.	Reconciliation of net return on ordinary activities before finance	2008	2007
	costs and taxation to net cash inflow from operating activities	£'000	£'000
	Net revenue before finance costs and taxation	26,505	13,637
	Adjustment for:
	Gains on investments at fair value through profit or loss	(24,288)	(10,527)
	Exchange losses/(gains) charged to capital	169	(733)
	Decrease/(increase) in accrued income	62	(458)
	Decrease/(increase) in other debtors	23	(16)
	(Decrease)/increase in other creditors	(5)	41
	Overseas withholding tax suffered	(202)	(186)
	Scrip dividends included in investment income	(3)	(46)
	Net cash inflow from operating activities	2,261	1,712

		1 May	Cash	Exchange	30 April
		2007	flow	movements	2008
17.	Analysis of changes in net debt	£'000	£'000	£'000	£'000
	Cash at bank	1,345	3,695	313	5,353
	Debts falling due within one year	(6,822)	(2,419)	(482)	(9,723)
	Net debt	(5,477)	1,276	(169)	(4,370)

18.	Related party disclosures
	Mr H Young is a director of AAM Asia. AAM Asia has an agreement to provide management services and AAM has an agreement to provide marketing services to the Company, the terms of which are outlined in notes 3 and 4 respectively.
	During the course of the year, the Company has held investments in other funds managed by the same Manager. These holdings are disclosed in note 3.

19.

Financial instruments

Risk management

The Company's financial instruments comprise securities and other investments, cash balances, loans and debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and debtors for accrued income.

The Manager has a dedicated investment management process, which ensures that the investment policy explained above is followed. Stock selection procedures are in place based on the active portfolio management and identification of stocks. The portfolio is reviewed on a periodic basis by a Senior Investment Manager and also by the Manager's Investment Committee.

The Company's Manager has an independent Investment Risk department for reviewing the investment risk parameters of the Company's portfolio on a regular basis. The department reports to the Manager's Performance Review Committee which is chaired by the Manager's Chief Investment Officer. The department's responsibility is to review and monitor ex-ante (predicted) portfolio risk and style characteristics using best practice, industry standard multi-factor models.

Additionally, the Manager's Compliance department continually monitors the Trust's investment and borrowing powers and reports to the Manager's Risk Management Committee.

The main financial risks that the Company faces from its financial instruments are market price risk (comprising interest rate risk, currency risk and other price risk), liquidity risk and credit risk.

The Board regularly reviews and agrees policies for managing each of these risks. The Manager's policies for managing these risks are summarised below and have been applied throughout the year. The numerical disclosures exclude short-term debtors and creditors.

Market price risk

The fair value of or future cash flows from a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements - interest rate risk, currency risk and other price risk.

Interest rate risk

Interest rate movements may affect:

-

the level of income receivable on cash deposits;

-

interest payable on the Company's variable rate borrowings.

The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions.

Interest risk profile

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

					Weighted average	Weighted
					period for which	average	Fixed	Floating
					rate is fixed	interest rate	rate	rate
	At 30 April 2008				Years	%	£'000	£'000
	Assets
	Sterling				-	4.99	-	3,739
	Taiwan Dollar				-	-	-	1,583
	Australian Dollar				-	0.75	-	30
	Hong Kong Dollar				-	0.10	-	1
					n/a	n/a	-	5,353
	Liabilities
	Bank loan - HK Dollar				0.45	2.60	(9,723)	-
					Weighted average	Weighted
					period for which	average	Fixed	Floating
					rate is fixed	interest rate	rate	rate
	At 30 April 2007				Years	%	£'000	£'000
	Assets
	Sterling				-	4.84	-	1,143
	Australian Dollar				-	5.07	-	120
	Hong Kong Dollar				-	4.10	-	22
	Malaysian Ringgit				-	-	-	4
	Singapore Dollar				-	2.27	-	50
	Taiwanese Dollar				-	-	-	6
					n/a	n/a	-	1,345
	Liabilities
	Bank loan - HK Dollar				0.08	5.08	(6,822)	-

	The weighted average interest rate is based on the current yield of each asset, weighted by its market value. The weighted average interest rate on bank loans is based on the interest rate payable, weighted by the total value of the loans. The maturity date of the Company's loan is shown in note 11.
	The floating rate assets consist of cash deposits on call earning interest at prevailing market rates.
	The Company's equity portfolio and short-term debtors and creditors (excluding bank loans) have been excluded from the above tables.
	Interest rate sensitivity
	Movements in interest rates would not significantly affect net assets attributable to the Company's Shareholders and total profit.

	Foreign currency risk
	All of the Company's investment portfolio is invested in overseas securities and the Balance Sheet, therefore, can be significantly affected by movements in foreign exchange rates. It is not the Company's policy to hedge this risk on a continuing basis but the Company may, from time to time, match specific overseas investment with foreign currency borrowings. The Company's borrowings, as detailed in note 11, are also in foreign currency.
	The revenue account is subject to currency fluctuation arising on dividends paid in foreign currencies. The Company does not hedge this currency risk.
	Foreign currency risk exposure by currency of denomination:
			30 April 2008			30 April 2007
				Net	Total		Net	Total
			Overseas	monetary	currency	Overseas	monetary	currency
			investments	assets	exposure	investments	assets	exposure
			£'000	£'000	£'000	£'000	£'000	£'000
	Australian Dollar		7,519	30	7,549	8,661	120	8,781
	Hong Kong Dollar		29,051	(9,722)	19,329	25,888	(6,800)	19,088
	Indonesian Rupiah		3,358	-	3,358	2,933		2,933
	Korean Won		18,322	-	18,322	19,196	-	19,196
	Malaysian Ringgit		6,153	-	6,153	6,076	(551)	5,525
	Pakistan Rupee		881	-	881	502	-	502
	Philippine Peso		3,161	-	3,161	3,625	-	3,625
	Singapore Dollar		32,875	-	32,875	25,238	50	25,288
	Sri Lankan Rupee		2,100	-	2,100	2,035	-	2,035
	Sterling		36,470	3,739	40,209	31,062	1,143	32,205
	Taiwanese Dollar		11,060	1,583	12,643	8,118	6	8,124
	Thailand Baht		7,470	-	7,470	7,451	-	7,451
	US Dollar		6,792	-	6,792	4,362	-	4,362
	Total		165,212	(4,370)	160,842	145,147	(6,032)	139,115
	Foreign currency sensitivity
	There is no sensitivity analysis included as the Company's significant foreign currency financial instruments are in the form of equity investments, which have been included within the other price risk sensitivity analysis so as to show the overall level of exposure.
	Other price risk
	Other price risks (ie changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments.
	It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular country or sector. Both the allocation of assets and the stock selection process, as detailed in the Annual Report and Accounts, act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Company are listed on various stock exchanges worldwide.
	Other price risk sensitivity
	If market prices at the Balance Sheet date had been 10% higher or lower while all other variables remained constant, the return attributable to Ordinary Shareholders for the year ended 30 April 2008 would have increased/(decreased) by £16,521,000 (2007 increased/(decreased) by £14,515,000) and equity reserves would have increased/(decreased) by the same amount.
	Liquidity risk
	This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.
	The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a regular basis. Borrowings comprise a revolving multi-currency credit facility. The Board has imposed a maximum gearing level, measured on the most stringent basis of calculation after netting off cash equivalents, of 25%. Details of borrowings at the 30 April 2008 are shown in note 11.
	Liquidity risk is not considered to be significant as the Company's assets comprise mainly readily realisable securities, which can be sold to meet funding commitments if necessary. Short-term flexibility is achieved through the use of loan and overdraft facilities, details of which can be found in note 11. Under the terms of the loan facility, the Investment Manager provides the lender with loan covenant reports on a monthly basis, to provide the lender with assurance that the terms of the facility are not being breached. The Investment Manager will also review the credit rating of a lender on a regular basis. Details of the Board's policy on gearing are shown in the interest rate risk section of this note.
	Liquidity risk exposure
	At 30 April 2008 and 30 April 2007 the Company's bank loan, amounting to £9,723,000 and £6,822,000, were due for repayment or roll-over within five months and one month respectively.
	Credit risk
	This is the risk of failure of the counterparty to a transaction to discharge its obligations under that transaction that could result in the Company suffering a loss.
	The risk is not significant, and is managed as follows:
	-	investment transactions are carried out with a large number of brokers, whose credit-standing is reviewed periodically by the Investment Manager, and limits are set on the amount that may be due from any one broker;
	-	the risk of counterparty exposure due to failed trades causing a loss to the Company is mitigated by the review of failed trade reports on a monthly basis. In addition, the Custodian carries out a stock reconciliation to third party administrators' records on a monthly basis to ensure discrepancies are picked up on a timely basis. The Manager's Compliance department carries out periodic reviews of the Custodian's operations and reports its finding to the Manager's Risk Management Committee. This review will also include checks on the maintenance and security of investments held;
	-	cash is held only with reputable banks with high quality external credit enhancements.
	Other than the assets which have been loaned out under the Company's stock lending programme (see note 9), none of the Company's financial assets is secured by collateral or other credit enhancements.
	Credit risk exposure
	In summary, compared to the amounts in the Balance Sheet, the maximum exposure to credit risk at 30 April was as follows:
					2008		2007
					Balance	Maximum	Balance	Maximum
					Sheet	exposure	Sheet	exposure
	Current assets				£'000	£'000	£'000	£'000
	Loans and receivables				797	797	870	870
	Cash at bank and in hand				5,353	5,353	1,345	1,345
					6,150	6,150	2,215	2,215
	None of the Company's financial assets is past due or impaired.
	Fair values of financial assets and financial liabilities
	For the HK Dollar loan, the fair value of borrowings has been calculated at £9,748,000 as at 30 April 2008 (2007 - £6,824,000) compared to an accounts value in the financial statements of £9,723,000 (2007 - £6,822,000) (note 11). The fair value of each loan is determined by aggregating the expected future cash flows for that loan discounted at a rate comprising the borrower's margin plus an average of market rates applicable to loans of a similar period of time and currency. All other assets and liabilities of the Company are included in the Balance Sheet at fair value.

Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise and may be affected by exchange rate movements. Investors may not get back the amount they originally invested.

The Annual Financial Report Announcement is not the Company's statutory accounts. The above results for the year ended 30 April 2008 have been agreed with the auditors and are an abridged version of the Company's full accounts, which have been approved and audited with an unqualified report. The 2007 and 2008 statutory accounts received unqualified reports from the Company's auditors and did not include any reference to matters to which the auditors drew attention by way of emphasis without qualifying the reports, and did not contain a statement under s.237(2) or (3) of the Companies Act 1985. The financial information for 2007 is derived from the statutory accounts for 2007 which have been delivered to the Registrar of Companies. The 2008 accounts will be filed with the Registrar of Companies in due course.

The Annual General Meeting of the Company will be held at 12.30 p.m. on 28 August 2008 at One Bow Churchyard, Cheapside, London EC4M 9HH.

The audited Annual Report and Accounts will be posted to shareholders shortly. Copies may be obtained during normal business hours from the Company's Registered Office, One Bow Churchyard, Cheapside, London EC4M 9HH or from the Company's website, www.newdawn-trust.co.uk

By order of the Board

Aberdeen Asset Management PLC - Secretary

10 July 2008

 

END

 

 

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