Final Results

Aberdeen Asian Income Fund Limited 06 March 2007 ABERDEEN ASIAN INCOME FUND LIMITED PRELIMINARY ANNOUNCEMENT OF UNAUDITED FINAL RESULTS for the period ended 31 December 2006 Background I am pleased to report that your Company's performance was satisfactory during the period under review. Over the period, the net asset value total return of the Company was 13.8%, although this puts it behind the benchmark MSCI Asia Pacific ex-Japan Index total return, which was 22.0%. The share price total return was also 13.8% and the shares traded at a discount to the net asset value per Ordinary share of 0.6% at 31 December 2006. At the time of writing (2 March 2007), the Company's net asset value is 109.5p, and the mid market price of the Ordinary shares is 107.25p. In line with the stated intention in the prospectus, your Board is pleased to confirm the payment of a second interim dividend of 2.5p on 21 February 2007, making a total of 4.5p for the period as a whole. Overview Asian equity markets ended 2006 on a buoyant note, posting their third straight year of double-digit gains. The strong performance, fuelled in large part by liquidity-driven inflows and robust corporate earnings, was all the more impressive given the presence of still uncertain external factors such as volatile oil and commodity prices, rising interest rates and continued question marks about the health of the US economy. A mid-year correction also proved short-lived and failed to temper investor optimism. Overall, markets in China, Indonesia and the Philippines registered the strongest advances. Chinese shares, in particular, were one of the key beneficiaries of robust liquidity inflows as investors, eager to tap into the mainland's burgeoning economic growth story, bought into a series of initial public offerings, notably from the major banks. However, your Company's Managers remain wary of the euphoric response to the recent IPOs, many of which have been of indifferent quality, in turn raising renewed concerns about overheating in China. The main laggards in an otherwise positive year for Asia included South Korea, where your Company has no exposure currently, and Thailand. In Korea, the strength of the won has weighed on the country's dominant exporters and economic growth has been sluggish; whilst the continued political uncertainty has caused further pressure in Thailand, the situation exacerbated by the newly-installed military government's bungled attempt to stem the currency's appreciation through indirect capital controls, and a series of bomb blasts on New Year's Eve. Economic news over the 12 months remained positive, with the region's GDP continuing to outpace the developed world. In addition, growth has shown signs of becoming more broad-based, as increasing domestic consumption - fuelled by favourable demographics, rising disposable incomes and falling unemployment - have all helped bolster sentiment. Unsurprisingly, China and India remained Asia's growth locomotives; Australia's commodities boom has proven to be a boon for its resource companies; while Singapore has benefited from a buoyant services sector and a sustained property rebound. Portfolio review Over the period, your Company's Managers have been prudent in adding to holdings or top-slicing where share prices have run up excessively. In terms of asset allocation, the three-largest geographical areas of investment are Singapore, Malaysia and Australia. Significant investments have also been made in Taiwan, Hong Kong and Thailand. Our holdings in Singapore include high-yielding cash generative companies such as OCBC, UOB and Singapore Exchange. The Malaysian holdings reflect similar themes with strong cash generators such as British American Tobacco and Guinness, capital management plays including Maybank and Public Bank and restructuring stories like POS Malaysia which has the potential to pay back excess cash on its balance sheet. Your Company's investments in Australia are centred on companies that are not only well managed, but also generate significant levels of free cashflow and tend to be high yielders, despite their limited growth prospects in a mature market. Your Board drew down the first tranche of debt, equivalent to £10m, in Hong Kong dollars, on 18 January 2006 at an all-in cost of 4.7%. Despite its peg to the US dollar, we chose to draw down the debt in Hong Kong dollars as it was trading at a discount to US dollar debt and it matched our investment exposure. The second tranche of debt was drawn down on 10 February, for an amount equal to £7m. This was drawn in US dollars at an all-in cost of 5.3% per annum for the period to 18 July. This debt enabled the Company to assume a geared position of around 13% at the time of drawdown. The Board is responsible for determining your Company's gearing strategy and has maintained the absolute level of gearing since draw down (equating to £15.3m at 31 December 2006) using short term interest rate fixes to maintain flexibility. The Hong Kong dollar element of the gearing is currently fixed to 19 March 2007 and the US dollar element is fixed to 18 April 2007. The one holding which was fully disposed of over the period was Wheelock Properties, as buoyant sentiment in Singapore's property sector boosted its share price to levels beyond that representing reasonable value. Also, with the Company having already paid out the bulk of its cash position in the form of a special dividend earlier in the year, it was deemed a sensible time to sell. We also trimmed our exposure in Singapore Exchange, Telekom Indonesia and PetroChina - effectively taking profits after strong performance. Annual General Meeting Your Company's Annual General Meeting will be held at 9.30 a.m. on Tuesday, 17 April 2007 at No.1 Seaton Place, St Helier, Jersey and your Board looks forward to meeting as many shareholders as possible. If you are unable to attend the meeting, I would like to take this opportunity to encourage you to vote on the resolutions by returning your proxy (or letter of directions if you invest via the Aberdeen ISA or Savings Plans) which is enclosed with the Annual Report and Accounts. Buy-back and Issuance Policy As indicated in the launch Prospectus, the Company has undertaken to operate an active discount management policy through the use of share buy-backs, the objective being to maintain the price at which the Ordinary shares trade relative to their underlying net asset value at a discount of no more than 5%. Any purchases will be made through the market at a discount to the prevailing net asset value per Ordinary share in circumstances where the directors believe that such purchase will enhance shareholder value. The Directors have the power to purchase Warrants for cancellation and any purchases of Warrants will only be made if the net asset value per Ordinary share is greater than 120p (the exercise price of a Warrant). The buy-back of Warrants and Ordinary shares will be subject to the Listing Rules and Jersey law and will be at the absolute discretion of the Directors. Under the Company's Articles of Association, the Directors have wide powers to issue new Ordinary shares on a non pre-emptive basis. Ordinary shares would only ever be issued at a premium to the prevailing net asset value per Ordinary share and will not, therefore, be disadvantageous to Ordinary shareholders or Warrantholders. Any issues of new Ordinary shares will be conducted in accordance with the Listing Rules. Outlook Looking ahead, the widely anticipated slowdown in the global economy is likely to affect Asian corporate earnings' growth, which is estimated to ease marginally to around 10% this year. Corporate fundamentals, however, remain intact as company balance sheets are generally strong and substantial improvement has been made in raising corporate governance standards. Meanwhile, cash flows are increasingly being paid out to shareholders in the form of higher dividends and share buybacks, rather than being directed towards non-productive investments. As such, valuations continue to be reasonable, despite the sharp rise in share prices in recent years. However, this masks a wide disparity in performance: there are signs of frothiness in markets, such as India and China, while stocks in laggard markets, such as Thailand and Korea, appear undervalued. Indeed, market declines in recent weeks have served to remind investors that global liquidity flows can exert significant, and at times exaggerated, influences on share prices in the short term. The reasons for these declines have more to do with investors' short term leveraged positions and changing perception of risk leading to profit-taking rather than anything to do with declining economic or corporate fundamentals, particularly from an Asian perspective. As such, your Manager remains comfortable with the Company's underlying holdings and the sell-off does allow earnings to catch up with the gains in share prices. I look forward to reporting to you again with the Interim Report to 30 June 2007, which will be issued to shareholders at the end of August 2007. Those shareholders who wish to keep up to date with developments between formal reports may wish to visit the Company's own website at www.asian-income.co.uk where there are monthly updates from the Manager as well as the latest net asset value and share price information which is updated daily. Peter Arthur Chairman, 6 March 2007 INCOME STATEMENT Period from 8 November 2005 to 31 December 2006 Revenue Capital Total £'000 £'000 £'000 Investment income Dividend income 6,197 - 6,197 Interest income 831 - 831 ________ ________ ________ Total revenue 7,028 - 7,028 Gains on financial assets at fair value through profit or loss - 9,195 9,195 Currency gains - 1,147 1,147 ________ ________ ________ 7,028 10,342 17,370 ________ ________ ________ Expenses Investment management fee (445) (667) (1,112) Other operating expenses (612) - (612) Set up costs (75) - (75) ________ ________ ________ Profit before finance costs and tax 5,896 9,675 15,571 ________ ________ ________ Finance costs (313) (469) (782) ________ ________ ________ Profit for the period attributable to equity Shareholders 5,583 9,206 14,789 ________ ________ ________ Earnings per Ordinary share (pence): Basic and diluted 5.08 8.37 13.45 ________ ________ ________ The total column of this statement represents the Income Statement of the Company, prepared in accordance with IFRS. The revenue and capital columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations. All income is attributable to the equity holders of Aberdeen Asian Income Fund Limited. There are no minority interests. BALANCE SHEET As at 31 December 2006 £'000 Non-current assets Investments held at fair value through profit or loss 136,714 _________ Current assets Cash and cash equivalents 1,327 Other receivables 1,809 _________ 3,136 _________ Current liabilities Bank loans (15,290) Other payables (1,191) _________ (16,481) _________ Net current liabilities (13,345) _________ Net assets 123,369 _________ Share capital and reserves Ordinary share capital 110,000 Warrant reserve 2,200 Capital reserve 7,786 Revenue reserve 3,383 _________ Equity Shareholder's funds 123,369 _________ Net asset value per Ordinary share (pence): Basic and diluted 112.15 _________ STATEMENT OF CHANGES IN EQUITY Period from 8 November 2005 to 31 December 2006 Share Warrant Capital Revenue Retained capital reserve reserve reserve earnings Total £'000 £'000 £'000 £'000 £'000 £'000 Opening balance - - - - - - Issue of Ordinary shares 110,000 - - - - 110,000 Issue of Warrants - 2,200 - - - 2,200 Share issue costs - - (1,420) - - (1,420) Profit for the period - - - - 14,789 14,789 Transferred from retained earnings to capital - - 9,206 - (9,206) - reserve* Transferred from retained earnings to revenue - - - 5,583 (5,583) - reserve Dividends paid - - - (2,200) - (2,200) ________ ________ ________ ________ ________ ________ Balance at 31 December 2006 110,000 2,200 7,786 3,383 - 123,369 ________ ________ ________ ________ ________ ________ * Represents the capital profit attributable to equity Shareholders per Income Statement. CASH FLOW STATEMENT Period from 8 November 2005 to 31 December 2006 £'000 £'000 Profit for the period 14,789 Add back interest payable 782 Gains on investments held at fair value through profit or loss (9,195) Net gain on foreign exchange (1,147) Net purchases of investments held at fair value through profit or loss (127,519) Increase in amounts due from brokers (1,413) Increase in other receivables (363) Increase in amounts due to brokers 792 Increase in other payables 203 _________ Net cash outflow from operating activities before interest and tax (123,072) Bank and loan interest paid (618) _________ Net cash outflow from operating activities (123,690) Financing activities Net proceeds of Share Issues 108,580 Proceeds of issue of Warrants 2,200 Dividends paid (2,200) Loans drawndown 17,119 _________ Net cash inflow from financing activities 125,699 _________ Net increase in cash and cash equivalents 2,009 Effect of foreign exchange rate changes (682) _________ Cash and cash equivalents at the end of the period 1,327 _________ Notes: 1. Accounting policies The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the International Accounting Standards Board (IASB), and interpretations issued by the International Reporting Interpretations Committee of the IASB (IFRIC). (a) Basis of preparation The financial statements are prepared on a historical cost basis, except for derivative financial instruments and financial assets that have been measured at fair value through profit or loss. The accounting policies which follow set out those policies which apply in preparing the financial statements for the period from 8 November 2005 to 31 December 2006. The financial statements have been prepared in accordance with the guidance set out in the Statement of Recommended Practice ('SORP') for investment trusts issued by the Association of Investment Companies ('AIC') and revised in December 2005. (b) Segmental reporting The Directors are of the opinion that the Company is engaged in a single segment of business, being investment business. (c) Income Dividends receivable on equity shares (other than special dividends) are brought into account on the ex-dividend date. Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account when the Company's right to receive payment is established. Where a company has elected to receive dividends in the form of additional shares rather than in cash, the amount of the cash dividend is recognised as income. Special dividends are credited to capital or revenue according to the circumstances. The fixed returns on debt securities and non-equity shares are recognised on a time apportionment basis so as to reflect the effective yield on the debt securities and shares. Interest receivable from cash and short-term deposits is accrued to the end of the financial period. (d) Expenses All expenses, with the exception of interest expenses, which are recognised using the effective interest method, are accounted for on an accruals basis. Expenses are charged through the revenue column of the Income Statement except as follows: - expenses which are incidental to the acquisition or disposal of an investment are treated as capital and separately identified and disclosed; - expenses (including share issue costs) are treated as capital where a connection with the maintenance or enhancement of the value of the investments can be demonstrated; and - the Company charges 60% of investment management fees and finance costs to capital, 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) Taxation Under Article 123A of the Income Tax (Jersey) Law 1961, as amended, the Company has obtained Jersey exempt company status for the year and is therefore exempt from Jersey income tax on non Jersey source income and bank interest (by concession). A £600 annual exempt company fee is payable by the Company. (f) Investments designated as held at fair value through profit or loss Purchases of investments are recognised on a trade date basis and designated upon initial recognition at fair value through the profit or loss. Sales of assets are also recognised on a trade date basis. Proceeds are measured at fair value, which are regarded as the proceeds of sale less any transaction costs. The fair value of the financial instruments is based on their quoted bid price at the Balance Sheet date, without deduction for any estimated future selling costs. Unquoted investments would be valued by the Directors using primary valuation techniques such as earnings multiples, recent transactions and net assets. Changes in the value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Income Statement as 'Gains on financial assets at fair value through profit or loss'. Also included within this caption are transaction costs in relation to the purchase or sale of investments, including the difference between the purchase price of an investment and its bid price at the date of purchase. (g) Cash and cash equivalents Cash comprises cash in hand and at banks. Cash equivalents are short-term highly liquid investments that are readily convertible to known amount of cash and that are subject to an insignificant risk of changes in values. (h) Other receivables and payables Other receivables do not carry any interest and are short-term in nature and are accordingly stated at their nominal value. Other payables are non interest bearing and are stated at their nominal value. (i) Dividends payable Dividends will be paid twice a year (the Company does not intend to pay final dividends). The first interim dividend was paid on 17 August 2006 and the second interim dividend was paid on 21 February 2007, both in respect of the period from Admission to 31 December 2006. Under IFRS dividends are reflected in the financial statements in the period in which they are paid. In the future, the Company expects to pay, in respect of each financial year, a first interim dividend in August and second interim in February. (j) Foreign currency Monetary assets and liabilities denominated in foreign currencies are converted into Sterling at the rate of exchange ruling at the Balance Sheet date. The financial statements are presented in sterling, which is the Company's functional and presentation currency. Transactions during the period involving foreign currencies are converted at the rate of exchange ruling at the transaction date. Gains and losses on the realisation of foreign currencies are recognised in the Income Statement and are then transferred to the realised capital reserve. (k) Borrowings Monies borrowed to finance the investment objectives of the Company are stated at the amount of the net proceeds immediately after the issue plus cumulative finance costs less cumulative payments made in respect of the debt. The finance cost of such borrowings are allocated to years over the term of the debt at a constant rate on the carrying amount and are charged 40% to revenue and 60% to capital reserves to reflect the Company's investment policy and prospective income and capital growth. 2. The Company is a closed-end investment company incorporated in Jersey, with its shares being listed on the London Stock Exchange. The Company was incorporated on 8 November 2005. 3. Earnings per share The earnings per Ordinary share is based on the net income after taxation of £14,789,000 and on 110,000,000 Ordinary shares, being the weighted average number of Ordinary shares in issue during the period. The earnings per Ordinary share detailed above can be further analysed between revenue and capital as follows: Period from 8 November 2005 to 31 December 2006 Revenue Capital Total Net profit (£'000) 5,583 9,206 14,789 Weighted average number of Ordinary shares in issue 110,000,000 110,000,000 110,000,000 Return per Ordinary share (pence) 5.08 8.37 13.45 Fully diluted returns calculated on the basis set out in International Financial Reporting Standard 33 'Earning per share' ('IFRS 33') indicate that the exercise of Warrants in issue would have no dilutive effect on returns. 4. Net asset value per share The basic net asset value per Ordinary 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: Net asset value Net asset values per share attributable 2006 2006 p £'000 Ordinary shares 112.15 123,369 The basic net asset value per Ordinary share is based on 110,000,000 Ordinary shares, being the number of Ordinary shares in issue at the period end. The diluted net asset value is the same as the basic net asset value as the exercise price of the Warrants, being 120p, exceeded the basic net asset value per Ordinary share. 5. Income Period from 8 November 2005 to 31 December 2006 Income £'000 Income from investments Overseas dividends 6,197 Interest income Bond interest 676 UK Treasury Bill interest 51 Deposit interest 104 831 Total income 7,028 6. The financial information set out above does not constitute the Company's statutory accounts for the period ended 31 December 2006. The statutory accounts for 2006 will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies in due course. 7. The Annual Report will be posted to Shareholders in due course and further copies may be obtained from the registered office, No.1 Seaton Place, St Helier, Jersey JE4 8YJ. Aberdeen Private Wealth Management Limited Secretary 6 March 2007 This information is provided by RNS The company news service from the London Stock Exchange

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