Half-year Report

RNS Number : 5203I

Aberdeen Asian Income Fund Limited

13 August 2021

 

ABERDEEN ASIAN INCOME FUND LIMITED

Legal Entity Identifier: 549300U76MLZF5F8MN87

UNAUDITED HALF YEARLY REPORT

FOR THE SIX MONTHS ENDED 30 JUNE 2021

HIGHLIGHTS
Dividend yield{A}			Earnings per Ordinary share - basic (revenue)
As at 30 June 2021	4.0%		Six months ended 30 June 2021	4.32p
As at 31 December 2020	4.1%		Six months ended 30 June 2020	3.97p
Net asset value total return{AB}			Share price total return{AB}
Six months ended 30 June 2021	+6.9%		Six months ended 30 June 2021	+2.7%
Year ended 31 December 2020	+12.9%		Year ended 31 December 2020	+12.1%
MSCI AC Asia Pacific ex Japan High Dividend Yield Index total return (currency adjusted){B}			MSCI AC Asia Pacific ex Japan Index total return (currency adjusted){B}
Six months ended 30 June 2021	+7.5%		Six months ended 30 June 2021	+5.8%
Year ended 31 December 2020	-1.4%		Year ended 31 December 2020	+19.0%
Discount to net asset value per Ordinary share{A}			Ongoing charges{A}
As at 30 June 2021	-10.7%		As at 30 June 2021	1.03%
As at 31 December 2020	-6.9%		As at 31 December 2020	1.10%
Net gearing{A}
As at 30 June 2021	6.6%
As at 31 December 2020	6.9%
{A}   Alternative Performance Measure (see below).
{B}   Total return represents the capital return plus dividends reinvested.
{C}   Percentage movements for the six months ended 30 June 2021 and year ended 31 December 2020.

INTERIM BOARD REPORT - CHAIRMAN'S STATEMENT

Background

This time last year, equity markets were near their low points following the market sell-off in response to the global pandemic and the Company reported a challenging set of results. Since then, markets have been buoyant, hitting new highs in late 2020. The Company's net asset value ("NAV") return over the six months to 30 June 2021 was 6.9%, versus the MSCI AC Asia Pacific ex Japan High Dividend Yield Index return of 7.5% and the MSCI AC Asia Pacific ex Japan Index return of 5.8%.  Over the twelve months ending June 2021, the comparative MSCI AC Asia Pacific High Dividend Yield ex Japan Index rose 13.9% in sterling terms, the MSCI AC Asia Pacific ex Japan Index rose 24.9% and the Company's NAV has outperformed both indices, returning 29.1%.

Meanwhile, your Company's share price has echoed but not kept pace with NAV performance in the six months to 30 June 2021. The share price ended at 230p, a more modest 2.7% increase over the six month review period, resulting in a discount of 10.7% to the NAV per share. Two dividend payments totalling 4.5p will be distributed to Shareholders which translates to an annualised dividend yield of 4.0% in line with the MSCI AC Asia Pacific High Dividend Yield Index and exceeding the 1.9% yield of the MSCI AC Asia Pacific ex Japan index.

Since the end of the interim period, Asian markets have corrected sharply following sudden developments in the regulation of private education companies in China that have sparked a broader sell-off on fears that similar policies may be rolled out more widely. This reaffirms your Investment Manager's long-held belief that the quality of management and business model is crucial to investing in China over the long term. Your Company's portfolio has a modest weight to China, having not invested in the internet stocks that do not pay dividends and steering clear of companies that do not pass the quality filter. While markets remain volatile at the time of writing, your Company has been defensive relative to the comparative indices during this time.

Overview

Although Asian stock markets have risen on hopes of successful vaccination rollouts in the half year, niggling worries have crept in. Key among them were concerns over how the recovering world economy is also creating pockets of inflationary pressure. Already, commodity prices have climbed, boosted by the return of consumer demand, coupled with supply-chain bottlenecks. This rise in input costs, in turn, is having a knock-on impact on a broad collection of goods and services. Companies will try to pass on some of these increased costs to consumers and clients, although their ability to do so will hinge on the degree of pricing power they enjoy. Rising inflation may see policymakers prematurely withdraw much-needed expansionary policy support. While most governments and central banks have provided investors with some assurance that they would stay accommodative, a few have broken ranks and started to shift away from their easing policy stance.

In the face of the shifting investment landscape, market participants have adjusted their positioning accordingly. For much of 2020, investors favoured companies that benefited the most from mobility restrictions.  As working-from-home and home-schooling became the norm, shares of semiconductor chipmakers, e-commerce, internet and other technology companies surged. At the turn of the new year, however, mass inoculation globally improved prospects for the world economy and investors once again sought out the beneficiaries of economic re-opening. This led investors to search for value in more cyclical sectors, including banks and commodity-linked stocks. In this environment, I believe your Investment Manager's continued emphasis on quality and income was rewarded, with several of the Company's largest holdings not only supporting the robust performance but also delivering on dividends.

Performance Review

On an absolute basis, your Company performed well, outpacing the MSCI All Countries Asia Pacific ex Japan Index's performance.

Your Investment Manager's choice of companies in Taiwan proved beneficial. One of the top contributors to performance was the Company's holding in Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest semiconductor foundry. It benefited from a structural step-up in demand, driven by continued growth in 5G, cloud and the Internet of Things. Recently, the company raised its long-term growth outlook, backed by its three-year US$100 billion capital-spending plan to raise capacity. Meanwhile, its revenues were boosted by the global chip shortage. This allowed management to raise its dividend payout. Similarly, silicon-wafer maker GlobalWafers was another contributor to performance. The company has also made notable progress on the environmental front, such as disclosing energy usage and a recycling target. It indicated that it will be publishing its plans on how it can align itself to the net-zero carbon initiative. This is what TSMC is committing to do throughout its supply chain, of which GlobalWafers is a part. Your Investment Manager continues to engage with the company to improve its ESG rating, which could further improve investors' sentiment towards the company.

Elsewhere, ex-China internet and e-commerce companies continued to fare well, as mobility restrictions and working-from-home remained in place across most countries. Such digitalisation trends supported the Company's off-index holdings in online Taiwanese retailer Momo.com and Thailand's electronics manufacturing services provider Hana Microelectronics.

The Company also benefited from banking sector holdings, namely the Singapore lenders. Amid a brightening outlook, DBS, OCBC Bank and United Overseas Bank, each upgraded their full-year forecasts, thanks to the pickup in loan growth, alongside robust fee income. Also encouraging was the greater clarity in asset quality, with all three enjoying lower credit costs across the board. These banks also signalled that they would be well-positioned to reinstate their pre-pandemic payout policies, which had been capped by the regulator in response to Covid-19. At the time of writing, these caps have been lifted.

Your Company's performance was also enhanced by your Investment Manager's decision not to invest in Chinese internet companies, such as Alibaba, which do not pay dividends. The sector underperformed the broader market due to heightened regulatory pressure on select sectors since the beginning of the year. That said, some of the Company's Chinese holdings were not spared from more broad based fears around a potential increase in governmental intervention. However, your Company's weighting in China at the end of June was 10.5% compared to 36.7% in the MSCI AC Asia Pacific ex Japan index. Looking forward, your Investment Manager's long-held focus on governance quality and balance sheet strength should prove advantageous for the Company's portfolio during these politically uncertain times.

Elsewhere, Korea's Samsung Electronics share price performance was muted despite robust earnings, on the back of this year's rotation away from growth sectors. While your Investment Manager had pre-emptively reduced the position against this backdrop, the company remains a global leader in an industry with structural growth drivers, with a strong balance sheet and cash flows. Additionally, the Company benefited from a special dividend from the company as part of its improved shareholder returns.

In portfolio activity, your Investment Manager initiated a position in Hon Hai Precision, one of the world's largest electronic contract manufacturers that supplies to many well-known brands, including Apple and Sony. Alongside a good growth outlook underpinned by several structural trends, the company trades on decent valuations and also boasts an attractive dividend yield. Your Investment Manager also established a position in Taiwanese cooling-solutions company, Sunonwealth Electric, whose healthy balance sheet and cash flow should underpin an ample dividend payout and attractive yield. More notably, the group is in the midst of evolving its product mix towards higher margin non-IT segments. This coincides with the growth in demand for more complex thermal solutions across several sectors, including industrials, automotive, and telecom and servers. This not only augurs well for Sunonwealth's prospects, but also provides your Company with an exposure to a long-term structural growth trend.

Your Investment Manager also initiated China Resources Gas (CR Gas) which gives the portfolio increased exposure to China and a higher dividend yield. Greater use of gas is seen as an interim solution on the transition to cleaner energy and CR Gas serves as a good proxy being one of the large city gas distributors in the mainland, which should see good earnings growth from the expanding share of gas in the country's energy mix over time. This positions CR Gas well to be a beneficiary of commercial and industrial gas demand recovery as the economy re-opens, while the net cash balance sheet is supportive of higher dividends.

Against this, your Investment Manager has been vigilant to either take profits from or exit holdings that have had a good run, or where the income streams have materially deteriorated.

Notably, your Investment Manager decided to exit Yum China following a share-price rally over the past year that was coupled with a dividend cut in 2020 that made it one of the lowest dividend payers in the Company's portfolio. Similarly, your Investment Manager sold HSBC after its share price recovered on improving results. The proceeds from these were re-invested in opportunities that provided better growth and a more attractive dividend yield.

The commitment to company engagement and ESG continues to be a core tenet in your Investment Manager's efforts. Most notably, your Investment Manager was recently invited to speak with the board of Siam Cement Group (SCG), to lead a discussion on ESG from an investor's perspective, covering the benefits of ESG, the increasing flow of capital to ESG funds and regulatory updates. These conversations affirm SCG's role as a leader in sustainability in Thailand. More broadly, this speaks well of how your Investment Manager's ESG knowledge and expertise continue to be valued and recognised by industry players.

Dividends

On 21 July 2021, your Board declared a second quarterly interim dividend of 2.25p per Ordinary share in respect of the year ending 31 December 2021, which will be paid on 20 August 2021 to Shareholders on the register on 30 July 2021.  The first two quarterly dividends, covering the six months to 30 June 2021 therefore total 4.5p (2020 - 4.5p). As indicated at the time, the level of the remaining two dividends for 2021 will be considered at each quarter end, at which point an announcement will be made by the Company.  The Board remains mindful of the Company's objective of growing dividends over time and is keen to retain its 'AIC Next Generation Dividend Hero' status. Therefore, if appropriate, it will consider using the Company's healthy revenue reserves built up over the past decade where necessary. Any decision as to whether revenue reserves will be utilised (and by how much) will be taken at the time of the fourth interim dividend in January 2022.

Gearing and Share Repurchases

During the period the Company renewed both its three-year £10 million term facility (the "term facility") and its one year £40 million revolving credit facility ("revolving credit facility") with Bank of Nova Scotia, London Branch ("the Lender"), on an unsecured basis, for three years.  Under the terms of the revolving credit facility, the Company also has the option to increase the level of the commitment from £40 million to £60 million at any time, subject to the identification by the Investment Manager of suitable investment opportunities and the Lender's credit approval.  £10,000,000 has been drawn down under the term facility and fixed for three years at an all-in rate of 1.53%.  Under the revolving credit facility, HKD73.5 million, US$19 million and GBP4.9 million was drawn down at the period end, at all-in rates of 1.2892%, 1.2950% and 1.2558% respectively. Taking account of both loans, the Company's total gearing at period end amounted to the equivalent of £35.5 million or 6.6% of the NAV of the Company.

Over the first half of the year, the Ordinary shares have continued to trade at a discount to the NAV and the Company has been actively buying in shares on occasions with a view to minimising volatility in the Company's share price due to a widening discount. During the period under review, your Company bought 120,154 shares for treasury and subsequent to the period end a further 175,823 Ordinary shares have been purchased for treasury.  At the time of writing the latest NAV per share is 257.4p and the share price is 231.0p representing a discount to NAV of 10.1%.

Proposals to Change Tax Residency and Name of Company (the "Proposals")

On 12 August 2021 the Company announced its intention to issue a Circular to all Shareholders outlining the Board's Proposals (i) to move the Company's tax residency to the UK from Jersey; and (ii) to elect for the Company to join the UK's investment trust regime, in order to avail itself of a number of double taxation treaties between the UK and jurisdictions in which the Company invests and the tax benefits related thereto. For the avoidance of doubt, it is only the tax residency of the Company that will move to the UK as part of the Proposals. The Company will remain a Jersey incorporated entity, subject to Jersey law and regulation and the oversight of the JFSC.  Furthermore, in order to align the Company's name with the new name and branding of the Investment Manager's business, which has recently changed to abrdn plc, the Board is also proposing, with effect from 1 January 2022, to change the Company's name to "abrdn Asian Income Fund Limited".

The Directors consider that the Proposals will benefit Shareholders as establishing UK tax residency should, in the absence of unforeseen circumstances, increase the revenue of the Company available for distribution to Shareholders and there should be no material disruption to the Company's operations as a result of the Proposals. In addition, effecting the change of name will bring the Company's branding into alignment with that of the Investment Manager. Accordingly, the Board recommends unanimously that Shareholders vote in favour of the resolutions, to be proposed at the Extraordinary General Meeting convened for 9:00 a.m. on 8 September 2021, as the Directors intend to do in respect of their own beneficial holdings.

Board Composition

In anticipation of the tax residency Proposals outlined above being effected, I have confirmed my intention to retire from the Board at the end of the current financial year. It is intended that Mr Ian Cadby, a current Director, will assume the role of independent non-executive Chairman from 1 January 2022. The Board intends to appoint a new Jersey resident Director later this year in anticipation of my retirement.

Outlook

The pandemic remains the primary cause for concern. While broadening vaccinations could bring forward global recovery, many challenges persist. The emergence of more virulent strains of the Covid-19 virus has resulted in renewed lockdowns across several Asian countries, including previous success stories, such as Singapore and Taiwan. Indonesia is experiencing a spike in fresh infections too, which has put its healthcare under pressure, as it did in India in March. If such conditions persist, however, the world could see a more uneven recovery.

Beyond the pandemic, governments face the challenge of maintaining policy support for their economies, while staying watchful for key risks of spiralling levels of prices and debt. Fortunately, most Asian countries enjoy solid fiscal fundamentals that provide leeway for more stimulus, if the situation requires. Reassurances from major central banks about maintaining their accommodative stances should bolster sentiment as well. Elsewhere, geopolitical developments remain a perennial concern, especially with President Biden's sustained pressure to contain China.

While these are real risks, it is worth pausing to remember that Asia is still relatively well-positioned for a recovery. Knowledge about the virus has advanced from a year ago. Reflecting this, corporate earnings have improved and your portfolio's holdings are delivering robust results and dividend yields. Most governments are also better prepared this time around, so the magnitude of economic disruptions from the new outbreaks should be less severe than last year. While inflationary risks are rising towards the surface, it has been largely driven by supply-side constraints and pent-up demand, much like the global shortage in semiconductor chips. These challenges tend to be temporary as well managed companies learn to overcome them via process upgrades and price increases. This supports your Investment Manager's preference for companies with pricing power that enables them to pass on higher costs to customers and for companies with strong balance sheets and cash flow generation which can fund cost saving research and innovation.

Looking further ahead, the factors that make Asian companies attractive remain intact. Moreover, certain trends that have accelerated because of the pandemic, such as increased digital adoption, the Internet of Things and the maturation of cloud computing, will complement the demographic advantages that are found in the region. Your Investment Manager's quality-focused approach ensures that the Company's portfolio is best-placed to capture these promising opportunities, while generating healthy income and delivering sustainable returns to Shareholders in the long run.  

Charles Clarke

Chairman

12 August 2021

INTERIM BOARD REPORT - DISCLOSURES

Principal Risk Factors

The principal risks and uncertainties affecting the Company are set out in detail on pages 22 to 24 of the Annual Report and Financial Statements for the year ended 31 December 2020 and have not changed.

The risks outlined below are those risks that the Directors considered at the date of this Half Yearly Report to be material but are not the only risks relating to the Company or its shares. If any of the adverse events described below actually occur, the Company's financial condition, performance and prospects and the price of its shares could be materially adversely affected and Shareholders may lose all or part of their investment. Additional risks which were not known to the Directors at the date of this Half Yearly Report, or that the Directors considered at the date of this Report to be immaterial, may also have an effect on the Company's financial condition, performance and prospects and the price of the shares.

If Shareholders are in any doubt as to the consequences of their acquiring, holding or disposing of shares in the Company or whether an investment in the Company is suitable for them, they should consult their stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Securities and Markets Act 2000 (as amended by the Financial Services Act 2012) or, in the case of prospective investors outside the United Kingdom, another appropriately authorised independent financial adviser.

The risks can be summarised under the following headings:

-  Investment strategy and objectives;

-  Investment portfolio, investment management;

-  Financial obligations;

-  Financial;

-  Regulatory;

-  Operational; and

-  Income and dividend risk.

The Board has reviewed the risks related to the Covid-19 pandemic.  The pandemic is continuing to affect world markets by disrupting supply chains, impacting demand for products and services, increasing costs and potentially impacting portfolio company cash flows. However, the Board notes the Investment Manager's robust and disciplined investment process which continues to focus on long-term company fundamentals including balance sheet strength and deliverability of sustainable earnings growth. The pandemic has also impacted the Company's third party service providers, with business continuity and home working plans having been successfully implemented.  However, the Board is pleased to report that it has not seen any reduction in the level of service provided to the Company to date.  The Board, through the Manager, will continue to monitor all third party service arrangements.

An explanation of other risks relating to the Company's investment activities, specifically market price, liquidity and credit risk, and a note of how these risks are managed, are contained in note 18 on pages 84 to 91 of the Annual Report for the year ended 31 December 2020.

Going Concern

In accordance with the Financial Reporting Council's Guidance on Risk Management, Internal Control and Related Financial and Business Reporting, the Directors have undertaken a rigorous review and consider that there are no material uncertainties and that the adoption of the going concern basis of accounting is appropriate.  This review included the additional risks relating to the ongoing Covid-19 pandemic and where appropriate, action taken by the Manager and Company's service providers in relation to those risks.  The Company's assets consist of a diverse portfolio of listed equities which in most circumstances are realisable within a very short timescale.  The Directors believe that the Company has adequate financial resources to continue its operational existence for the foreseeable future and at least 12 months from the date of this Half Yearly Report.  Accordingly, the Directors continue to adopt the going concern basis in preparing these financial statements.

Directors' Responsibility Statement

The Directors are responsible for preparing this Half Yearly Financial Report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge:

-  the condensed set of interim financial statements contained within the Half Yearly Financial Report which have been prepared in accordance with IAS 34 "Interim Financial Reporting", give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;

-  the Half-Yearly Board Report includes a fair review of the information required by rule 4.2.7R of the Disclosure and Transparency Rules (being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of Financial Statements and a description of the principal risks and uncertainties for the remaining six months of the financial year); and

-  the Half-Yearly Board Report includes a fair review of the information required by 4.2.8R (being related party transactions that have taken place during the first six months of the financial year and that have materially affected the financial position of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could do so).

For and on behalf of the Board of Aberdeen Asian Income Fund Limited

Charles Clarke,

Chairman

12 August 2021

CONDENSED STATEMENT OF COMPREHENSIVE INCOME

	Six months ended			Six months ended			Year ended
	30 June 2021			30 June 2020			31 December 2020
	(unaudited)			(unaudited)			(audited)
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Investment income
Dividend income	9,682	-	9,682	8,792	-	8,792	16,560	-	16,560
Interest income on investments held at fair value through profit or loss	146	-	146	170	-	170	320	-	320
Traded option premiums	21	-	21	29	-	29	62	-	62
	______	______	______	______	______	______	______	______	______
Total revenue	9,849	-	9,849	8,991	-	8,991	16,942	-	16,942
Gains/(losses) on investments held at fair value through profit or loss	-	23,794	23,794	-	(30,035)	(30,035)	-	37,573	37,573
Net currency gains/(losses)	-	205	205	-	(2,182)	(2,182)	-	217	217
	______	______	______	______	______	______	______	______	______
	9,849	23,999	33,848	8,991	(32,217)	(23,226)	16,942	37,790	54,732
	______	______	______	______	______	______	______	______	______
Expenses
Investment management fee (note 10)	(691)	(1,037)	(1,728)	(632)	(947)	(1,579)	(1,248)	(1,872)	(3,120)
Other operating expenses (note 5)	(415)	-	(415)	(428)	-	(428)	(792)	-	(792)
	______	______	______	______	______	______	______	______	______
Total operating expenses	(1,106)	(1,037)	(2,143)	(1,060)	(947)	(2,007)	(2,040)	(1,872)	(3,912)
	______	______	______	______	______	______	______	______	______
Profit/(loss) before finance costs and tax	8,743	22,962	31,705	7,931	(33,164)	(25,233)	14,902	35,918	50,820
Finance costs	(125)	(188)	(313)	(191)	(287)	(478)	(332)	(498)	(830)
	______	______	______	______	______	______	______	______	______
Profit/(loss) before tax	8,618	22,774	31,392	7,740	(33,451)	(25,711)	14,570	35,420	49,990
Tax expense	(1,020)	(495)	(1,515)	(713)	48	(665)	(1,482)	(627)	(2,109)
	______	______	______	______	______	______	______	______	______
Profit/(loss) for the period	7,598	22,279	29,877	7,027	(33,403)	(26,376)	13,088	34,793	47,881
	______	______	______	______	______	______	______	______	______
Earnings per Ordinary share (pence) (note 3)	4.32	12.68	17.00	3.97	(18.86)	(14.89)	7.41	19.69	27.10
	______	______	______	______	______	______	______	______	______
The Company does not have any income or expense that is not included in profit/(loss) for the period, and therefore the "Profit/(loss) for the period" is also the "Total comprehensive income for the period".
The total columns of this statement represent the Condensed Statement of Comprehensive Income, 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 of the profit/(loss) and total comprehensive income is attributable to the equity holders of Aberdeen Asian Income Fund Limited.  There are no non-controlling interests.
The accompanying notes are an integral part of the financial statements.

CONDENSED BALANCE SHEET

		As at	As at	As at
		30 June 2021	30 June 2020	31 December 2020
		(unaudited)	(unaudited)	(audited)
	Notes	£'000	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss		482,334	398,961	462,823
		________	________	________
Current assets
Cash and cash equivalents		5,634	5,727	6,177
Other receivables		2,363	1,706	1,422
		________	________	________
		7,997	7,433	7,599
		________	________	________
Creditors: amounts falling due within one year
Bank loans	8	(25,417)	(37,982)	(35,734)
Other payables		(1,081)	(1,073)	(2,518)
		________	________	________
		(26,498)	(39,055)	(38,252)
		________	________	________
Net current liabilities		(18,501)	(31,622)	(30,653)
Total assets less current liabilities		463,833	367,339	432,170
Creditors: amounts falling due after more than one year
Deferred tax liability on Indian capital gains		(1,144)	(19)	(694)
Bank loan	8	(10,044)	-	-
		________	________	________
		(11,188)	(19)	(694)
		________	________	________
Net assets		452,645	367,320	431,476
		________	________	________
Stated capital and reserves
Stated capital	9	194,933	194,933	194,933
Capital redemption reserve		1,560	1,560	1,560
Capital reserve		244,760	156,721	222,751
Revenue reserve		11,392	14,106	12,232
		________	________	________
Equity shareholders' funds		452,645	367,320	431,476
		________	________	________
Net asset value per Ordinary share (pence)	4	257.62	207.57	245.40
		________	________	________

CONDENSED STATEMENT OF CHANGES IN EQUITY

Six months ended 30 June 2021 (unaudited)
		Capital
	Stated	redemption	Capital	Revenue
	capital	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000
Opening balance	194,933	1,560	222,751	12,232	431,476
Buyback of Ordinary shares for treasury	-	-	(270)	-	(270)
Profit for the period	-	-	22,279	7,598	29,877
Dividends paid (note 6)	-	-	-	(8,438)	(8,438)
	________	________	________	________	________
Balance at 30 June 2021	194,933	1,560	244,760	11,392	452,645
	________	________	________	________	________
Six months ended 30 June 2020 (unaudited)
		Capital
	Stated	redemption	Capital	Revenue
	capital	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000
Opening balance	194,933	1,560	191,412	15,498	403,403
Buyback of Ordinary shares for treasury	-	-	(1,288)	-	(1,288)
(Loss)/profit for the period	-	-	(33,403)	7,027	(26,376)
Dividends paid (note 6)	-	-	-	(8,419)	(8,419)
	________	________	________	________	________
Balance at 30 June 2020	194,933	1,560	156,721	14,106	367,320
	________	________	________	________	________
Year ended 31 December 2020 (audited)
		Capital
	Stated	redemption	Capital	Revenue
	capital	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000
Opening balance	194,933	1,560	191,412	15,498	403,403
Buyback of Ordinary shares for treasury	-	-	(3,454)	-	(3,454)
Profit for the year	-	-	34,793	13,088	47,881
Dividends paid (note 6)	-	-	-	(16,354)	(16,354)
	________	________	________	________	________
Balance at 31 December 2020	194,933	1,560	222,751	12,232	431,476
	________	________	________	________	________
The revenue reserve represents the amount of the Company's reserves distributable by way of dividend.
The stated capital in accordance with Companies (Jersey) Law 1991 Article 39A is £260,822,000 (30 June 2020 - £260,822,000; 31 December 2020 - £260,822,000). These amounts include proceeds arising from the issue of shares by the Company, but excludes the cost of shares purchased for cancellation or treasury by the Company.
The accompanying notes are an integral part of the financial statements.

CONDENSED CASH FLOW STATEMENT

	Six months ended	Six months ended	Year ended
	30 June 2021	30 June 2020	31 December 2020
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Cash flows from operating activities
Dividend income received	7,507	8,653	15,765
Interest income received	153	170	328
Derivative income received	21	29	62
Investment management fee paid	(3,148)	(1,982)	(1,982)
Other cash expenses	(431)	(425)	(884)
	________	________	________
Cash generated from operations	4,102	6,445	13,289
Interest paid	(347)	(490)	(856)
Overseas taxation paid	(1,011)	(756)	(1,520)
	________	________	________
Net cash inflows from operating activities	2,744	5,199	10,913
Cash flows from investing activities
Purchases of investments	(48,423)	(37,411)	(69,828)
Sales of investments	53,913	44,430	81,533
Capital gains tax on sales	(45)	-	-
	________	________	________
Net cash inflow from investing activities	5,445	7,019	11,705
Cash flows from financing activities
Purchase of own shares for treasury	(270)	(1,343)	(3,508)
Dividends paid	(8,438)	(8,419)	(16,354)
	________	________	________
Net cash outflow from financing activities	(8,708)	(9,762)	(19,862)
	________	________	________
Net (decrease)/increase in cash and cash equivalents	(519)	2,456	2,756
Cash and cash equivalents at the start of the period	6,177	3,458	3,458
Foreign exchange	(24)	(187)	(37)
	________	________	________
Cash and cash equivalents at the end of the period	5,634	5,727	6,177
	________	________	________

NOTES TO THE FINANCIAL STATEMENTS

1.	Accounting policies - basis of preparation. The Annual Report is prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB), and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB (IFRIC). The condensed Half Yearly Report has been prepared in accordance with International Accounting Standards (IAS) 34 - 'Interim Financial Reporting' and should be read in conjunction with the Annual Report for the year ended 31 December 2020.
	The financial statements have been prepared on a going concern basis. In accordance with the Financial Reporting Council's guidance on 'Going Concern and Liquidity Risk' the Directors have undertaken a review of the Company's assets and liabilities. The Company's assets primarily consist of a diverse portfolio of listed equity shares which, in most circumstances, are realisable within a very short timescale.
	The condensed interim financial statements have been prepared using the same accounting policies as the preceding annual financial statements.
	During the period the following standards, amendments to standards and new interpretations became effective. The adoption of these standards and amendments did not have a material impact on the financial statements:
	IAS 39, IFRS 4, 7, 9 and 16 Amendments	Interest Benchmark Reform Phase 2	1 January 2021
	IAS 41, IFRS 1, 9, and 16 Amendments	Annual Improvements 2018-2020	1 January 2022
	IFRS 3 Amendments	Conceptual Framework	1 January 2022
	IAS 1 Amendments	Classification of Liabilities as Current or Non-Current	1 January 2023
	IAS 1 Amendments	Disclosure of Accounting Policies	1 January 2023
	IAS 8 Amendments	Definition of Accounting Estimates	1 January 2023
	IAS 12 Amendments	Deferred Tax related to Assets and Liabilities arising from a Single Transaction	1 January 2023
	IFRS 4 Amendments	Deferral of effective date of IFRS 9	1 January 2023

2.

Segmental information. For management purposes, the Company is organised into one main operating segment, which invests in equity securities and debt instruments. All of the Company's activities are interrelated, and each activity is dependent on the others. Accordingly, all significant operating decisions are based upon analysis of the Company as one segment. The financial results from this segment are equivalent to the financial statements of the Company as a whole.

3.	Earnings per Ordinary share
		Six months ended	Six months ended	Year ended
		30 June 2021	30 June 2020	31 December 2020
		(unaudited)	(unaudited)	(audited)
		p	p	p
	Revenue return	4.32	3.97	7.41
	Capital return	12.68	(18.86)	19.69
		________	________	________
	Total return	17.00	(14.89)	27.10
		________	________	________
	The figures above are based on the following:
		Six months ended	Six months ended	Year ended
		30 June 2021	30 June 2020	31 December 2020
		(unaudited)	(unaudited)	(audited)
		£'000	£'000	£'000
	Revenue return	7,598	7,027	13,088
	Capital return	22,279	(33,403)	34,793
		________	________	________
	Total return	29,877	(26,376)	47,881
		________	________	________
	Weighted average number of Ordinary shares in issue	175,772,271	177,136,644	176,666,175
		___________	___________	___________

4.	Net asset value per share
	Ordinary shares. The basic net asset value per Ordinary share and the net asset values attributable to Ordinary shareholders at the period end calculated in accordance with the Articles of Association were as follows:
		As at	As at	As at
		30 June 2021	30 June 2020	31 December 2020
		(unaudited)	(unaudited)	(audited)
	Attributable net assets (£'000)	452,645	367,320	431,476
	Number of Ordinary shares in issue (excluding shares in issue held in treasury)	175,704,329	176,959,690	175,824,483
	Net asset value per Ordinary share (p)	257.62	207.57	245.40

5.	Other operating expenses (revenue)
		Six months ended	Six months ended	Year ended
		30 June 2021	30 June 2020	31 December 2020
		(unaudited)	(unaudited)	(audited)
		£'000	£'000	£'000
	Directors' fees	79	77	154
	Secretarial and administration fees	-	-	-
	Promotional activities	103	103	206
	Auditor's remuneration:
	- statutory audit	20	20	38
	Custodian charges	88	65	140
	Other	125	163	254
		________	________	________
		415	428	792
		________	________	________

6.	Dividends on equity shares
		Six months ended	Six months ended	Year ended
		30 June 2021	30 June 2020	31 December 2020
		(unaudited)	(unaudited)	(audited)
		£'000	£'000	£'000
	Amounts recognised as distributions to equity holders in the period:
	Second interim dividend 2020 - 2.25p per Ordinary share	-	-	3,976
	Third interim dividend 2020 - 2.25p per Ordinary share	-	-	3,959
	Fourth interim dividend for 2020 - 2.55p  per Ordinary share (2019 - 2.50p)	4,484	4,438	4,438
	First interim dividend for 2021 - 2.25p per Ordinary share (2020 - 2.25p)	3,954	3,981	3,981
		________	________	________
		8,438	8,419	16,354
		________	________	________
	A second interim dividend of 2.25p for the year to 31 December 2021 will be paid on 20 August 2021 to shareholders on the register on 30 July 2021. The ex-dividend date was 29 July 2021.

7.	Transaction costs. During the period 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/(losses) on financial assets at fair value through profit or loss in the Condensed Statement of Comprehensive Income. The total costs were as follows:
		Six months ended	Six months ended	Year ended
		30 June 2021	30 June 2020	31 December 2020
		(unaudited)	(unaudited)	(audited)
		£'000	£'000	£'000
	Purchases	65	44	84
	Sales	108	53	91
		________	________	________
		173	97	175
		________	________	________

8.	Bank loans. On 2 March 2021, the Company entered into a new unsecured £40 million multi-currency revolving loan facility agreement with Bank of Nova Scotia, London Branch, which runs until 2 March 2024. Under the terms of the facility agreement, the Company also has the option to increase the level of the commitment from £40 million to £60 million at any time. This facility agreement replaced the existing £40 million multi currency revolving loan facility agreement with Scotiabank Europe PLC. At the period end approximately GBP 4.9 million, USD 19 million and HKD 73.5 million, equivalent to £25.5 million was drawn down from the £40 million facility. The interest rates attributed to the GBP, USD and HKD loans at the period end were 1.2558%, 1.2950% and 1.2892% respectively.
	On 2 March 2021, the Company also entered into a new unsecured fixed three year £10 million credit facility with Bank of Nova Scotia, London Branch at an all-in interest rate of 1.53%. The loan is shown on the balance sheet net of expenses which are being amortised over the life of the liability.
	At the period end, bank loans totalled £35,461,000 (30 June 2020 - £37,982,000; 31 December 2020 - £35,734,000).

9.	Stated capital
		30 June 2021		30 June 2020		31 December 2020
		Number	£'000	Number	£'000	Number	£'000
	Ordinary shares of no par value
	Authorised	Unlimited	Unlimited	Unlimited	Unlimited	Unlimited	Unlimited
	Issued and fully paid	194,933,389	194,933	194,933,389	194,933	194,933,389	194,933
	During the period 120,154 Ordinary shares were bought back by the Company for holding in treasury at a cost of £270,000 (30 June 2020 - 632,285 shares were bought back at a cost of £1,288,000; 31 December 2020 - 1,767,492 shares were bought back for holding in treasury at a cost of £3,454,000). As at 30 June 2021 19,229,060 (30 June 2020 - 17,973,699; 31 December 2020 - 19,108,906) Ordinary shares were held in treasury.
	The Ordinary shares give shareholders the entitlement to all of the capital growth in the Company's assets and to all the income from the Company that is resolved to be distributed.

10.	Related party disclosures and transactions with the Manager
	Transactions with the Manager. The Company has an agreement with Aberdeen Standard Capital International Limited ("ASCIL") for the provision of management services. This agreement has been sub-delegated to Aberdeen Standard Investments (Asia) Limited ("ASI Asia"). Mr Young, a Director of the Company, is employed by ASI Asia as Chairman of its Asian operations. ASCIL and ASI Asia are both wholly owned subsidiaries of abrdn plc (previously known as Standard Life Aberdeen plc).
	The investment management fee is payable quarterly in arrears and is based on an annual fee of 0.85% on the average net assets of the previous six months up to £350 million and 0.65% per annum thereafter. During the period, £1,728,000 (30 June 2020 - £1,579,000; 31 December 2020 - £3,120,000) of management fees were paid and payable, with a balance of £886,000 (30 June 2020 - £765,000; 31 December 2020 - £2,306,000) being payable to ASI Asia at the period end. The investment management fee is charged 40% to revenue and 60% to capital in line with the Board's expected long term returns.
	The promotional activities fee is based on a current annual amount of £206,000 payable quarterly in arrears. During the period £103,000 (30 June 2020 - £103,000; 31 December 2020 - £206,000) of fees were payable, with a balance of £52,000 (30 June 2020 - £103,000; 31 December 2020 - £52,000) being payable to ASCIL at the period end.

11.	Fair value hierarchy. IFRS 13 'Fair Value Measurement' requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making measurements. The fair value hierarchy has the following levels:
	Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
	Level 2: inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
	Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
	The financial assets and liabilities measured at fair value in the Condensed Balance Sheet are grouped into the fair value hierarchy as follows:
			Level 1	Level 2	Level 3	Total
	At 30 June 2021 (unaudited)	Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities	a)	478,589	-	-	478,589
	Quoted bonds	b)	-	3,745	-	3,745
			_______	_______	_______	_______
	Total assets		478,589	3,745	-	482,334
			_______	_______	_______	_______
			Level 1	Level 2	Level 3	Total
	At 30 June 2020 (unaudited)	Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities	a)	394,801	-	-	394,801
	Quoted bonds	b)	-	4,160	-	4,160
			_______	_______	_______	_______
	Total assets		394,801	4,160	-	398,961
			_______	_______	_______	_______
			Level 1	Level 2	Level 3	Total
	At 31 December 2020 (audited)	Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities	a)	458,889	-	-	458,889
	Quoted bonds	b)	-	3,934	-	3,934
			_______	_______	_______	_______
	Total assets		458,889	3,934	-	462,823
			_______	_______	_______	_______
	a) Quoted equities. The fair value of the Company's investments in quoted equities has been determined by reference to their quoted bid prices at the reporting date. Quoted equities included in Fair Value Level 1 are actively traded on recognised stock exchanges.
	b) Quoted bonds. The fair value of the Company's investments in quoted bonds has been determined by reference to their quoted bid prices at the reporting date. Investments in quoted bonds which are not considered to trade in active markets have been classified as Level 2.
	Fair value of financial assets. The Directors are of the opinion that the fair value of other financial assets is equal to the carrying amounts in the Condensed Balance Sheet.
	Fair values of financial liabilities. The fair value of borrowings as at 30 June 2021 has been estimated at £35,567,000 (carrying value per Condensed Balance Sheet - £35,461,000) which was calculated using a discounted cash flow valuation technique. At 30 June 2020 and 31 December 2020 the fair value was the same as par at £37,982,000 and £35,734,000. Under the fair value hierarchy in accordance with IFRS 13, these borrowings are classified as Level 2.

12.

Events after the reporting period. A further 175,823 Ordinary shares have been bought back by the Company for holding in treasury, subsequent to the reporting period end, at a cost of £400,000. Following the share buybacks there were 175,528,506 Ordinary shares in issue excluding those held in treasury.

13.	Half Yearly Financial Report. The financial information for the six months ended 30 June 2021 and 30 June 2020 has not been audited.

14.	Approval. This Half Yearly Financial Report was approved by the Board on 12 August 2021.

The Half Year Report will be posted to shareholders on 20 August 2021 and copies will be available on the Company's website ( asian-income.co.uk* ).

*Neither the Company's website nor the content of any website accessible from hyperlinks on that website (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of this announcement

Aberdeen Standard Capital International Limited

Company Secretary

12 August 2021

INVESTMENT PORTFOLIO

As at 30 June 2021
		Valuation	Total assets
Company	Country	£'000	%
Taiwan Semiconductor Manufacturing Company	Taiwan	42,710	8.7
Samsung Electronics (Pref)	South Korea	38,594	7.9
Momo.com Inc	Taiwan	20,422	4.2
Oversea-Chinese Banking Corporation	Singapore	17,185	3.5
Venture Corporation	Singapore	16,213	3.3
DBS Group	Singapore	14,256	2.9
BHP Group {A}	Australia	13,711	2.8
LG Chemical (Pref)	South Korea	12,204	2.5
Rio Tinto {A}	Australia	11,184	2.3
AusNet Services	Australia	10,590	2.2
Top ten investments		197,069	40.3
Taiwan Mobile	Taiwan	10,487	2.1
Infosys	India	10,309	2.1
GlobalWafers	Taiwan	9,909	2.0
Waypoint REIT	Australia	9,710	2.0
Charter Hall long WALE	Australia	9,349	1.9
China Resources Land	China	9,088	1.9
Commonwealth Bank of Australia	Australia	8,931	1.8
Hana Microelectronics (Foreign)	Thailand	8,761	1.8
Ping An Insurance (H Shares)	China	8,595	1.8
Power Grid Corp of India	India	8,366	1.7
Top twenty investments		290,574	59.4
Spark New Zealand	New Zealand	8,360	1.7
Tisco Financial Group Foreign	Thailand	8,345	1.7
SAIC Motor 'A'	China	7,959	1.6
China Mobile	China	7,730	1.6
United Overseas Bank	Singapore	7,706	1.6
Hon Hai Precision Industry	Taiwan	7,260	1.5
AIA Group	Hong Kong	7,176	1.5
Singapore Technologies Engineering	Singapore	7,073	1.4
Shopping Centres Australasia	Australia	6,888	1.4
Tata Consultancy Services	India	6,853	1.4
Top thirty investments		365,924	74.8
Auckland International Airport	New Zealand	6,800	1.4
Siam Cement {B}	Thailand	6,707	1.4
NZX	New Zealand	6,604	1.4
Accton Technology	Taiwan	5,993	1.2
Hang Lung Properties	Hong Kong	5,473	1.1
CapitaLand	Singapore	5,276	1.1
ASX	Australia	5,066	1.0
Sunonwealth Electric Machine	Taiwan	5,045	1.0
Lotus's Retail Growth Freehold And Leasehold Property Fund	Thailand	4,949	1.0
Okinawa Cellular Telephone	Japan	4,833	1.0
Top forty investments		422,670	86.4
Ascendas India Trust	Singapore	4,653	1.0
China Vanke (H Shares)	China	4,521	0.9
Singapore Telecommunications	Singapore	4,513	0.9
CNOOC	China	4,488	0.9
Midea Group 'A'	China	4,356	0.9
Hong Kong Exchanges & Clearing	Hong Kong	4,098	0.8
Bank Rakyat	Indonesia	3,778	0.8
Amada Holdings	Japan	3,764	0.8
ICICI Bank {C}	India	3,745	0.8
Medibank Private	Australia	3,507	0.7
Top fifty investments		464,093	94.9
APA Group	Australia	3,410	0.7
Land & Houses Foreign	Thailand	3,148	0.6
China Resources Gas	China	2,751	0.6
Convenience Retail Asia	Hong Kong	2,735	0.5
Aeon Credit Service M	Malaysia	2,141	0.4
Times China Holdings	China	1,871	0.4
Mapletree Commercial Trust	Singapore	1,737	0.4
SP Setia (Pref)	Malaysia	448	0.1
G3 Exploration {C}	China	-	-
Top sixty investments		482,334	98.6
Total value of investments		482,334	98.6
Net current assets {D}		6,916	1.4
Total assets		489,250	100.0
{A}   Incorporated in and listing held in United Kingdom.
{B}   Holding includes investment in common (£4,463,000) and non-voting depositary receipt (£2,244,000) lines.
{C}   Corporate bonds.
{D}   Excludes bank loans of £25,417,000.

ALTERNATIVE PERFORMANCE MEASURES
Alternative performance measures are numerical measures of the Company's current, historical or future performance, financial position or cash flows, other than financial measures defined or specified in the applicable financial framework. The Company's applicable financial framework includes IFRS and the AIC SORP. The Directors assess the Company's performance against a range of criteria which are viewed as particularly relevant for closed-end investment companies.
Total return. NAV and share price total returns show how the NAV and share price have performed over a period of time in percentage terms, taking into account both capital returns and dividends paid to shareholders. NAV total return involves investing the net dividend in the NAV of the Company with debt at fair value on the date on which that dividend goes ex-dividend. Share price total return involves reinvesting the net dividend in the share price of the Company on the date on which that dividend goes ex-dividend.
The tables below provide information relating to the NAVs and share prices of the Company on the dividend reinvestment dates during the six months ended 30 June 2021 and the year ended 31 December 2020.
	Dividend		Share
Six months ended 30 June 2021	rate	NAV	price
31 December 2020	N/A	245.40p	228.50p
21 January 2021	2.55p	261.57p	235.00p
22 April 2021	2.25p	253.57p	236.00p
30 June 2021	N/A	257.62p	230.00p
		________	________
Total return		+6.9%	+2.7%
		________	________
	Dividend		Share
Year ended 31 December 2020	rate	NAV	price
31 December 2019	N/A	227.15p	214.00p
23 January 2020	2.50p	229.77p	212.50p
23 April 2020	2.25p	187.79p	166.00p
30 July 2020	2.25p	208.09p	183.00p
22 October 2020	2.25p	218.70p	198.25p
31 December 2020	N/A	245.40p	228.50p
		________	________
Total return		+12.9%	+12.1%
		________	________
Discount to net asset value per Ordinary share. The discount is the amount by which the share price is lower than the net asset value per share, expressed as a percentage of the net asset value.
		30 June 2021	31 December 2020
NAV per Ordinary share (p)	a	257.62p	245.40p
Share price (p)	b	230.00p	228.50p
Discount	(b-a)/a	(10.7%)	(6.9%)
Dividend yield . The annual dividend per Ordinary share divided by the share price, expressed as a percentage.
		30 June 2021	31 December 2020
Annual dividend per Ordinary share (p)	a	9.30p	9.30p
Share price (p)	b	230.00p	228.50p
Dividend yield	(b-a)/a	4.0%	4.1%
Net gearing. Net gearing measures the total borrowings less cash and cash equivalents dividend by shareholders' funds, expressed as a percentage. Under AIC reporting guidance cash and cash equivalents includes amounts due to and from brokers at the period end as well as cash and cash equivalents.
		30 June 2021	31 December 2020
Borrowings (£'000)	a	35,461	35,734
Cash (£'000)	b	5,634	6,177
Amounts due to brokers (£'000)	c	-	-
Amounts due from brokers (£'000)	d	18	-
Shareholders' funds (£'000)	e	452,645	431,476
		________	________
Net gearing	(a-b+c-d)/e	6.6%	6.9%
		________	________
Ongoing charges. The ongoing charges ratio has been calculated in accordance with guidance issued by the AIC as the total of investment management fees and administrative expenses and expressed as a percentage of the average net asset values with debt at fair value throughout the year. The ratio for 30 June 2021 is based on forecast ongoing charges for the year ending 31 December 2021.
		30 June 2021	31 December 2020
Investment management fees (£'000)		3,539	3,120
Administrative expenses (£'000)		809	792
Ongoing charges (£'000)		4,348	3,912
Average net assets (£'000)		448,400	378,122
Ongoing charges ratio (excluding look-through costs)		0.97%	1.03%
Look-through costs{A}		0.06%	0.07%
Ongoing charges ratio (including look-through costs)		1.03%	1.10%
{A}   Costs associated with holdings in collective investment schemes as defined by the Committee of European Securities Regulators' guidelines on the methodology for the calculation of the ongoing charges figure.
The ongoing charges percentage provided in the Company's Key Information Document is calculated in line with the PRIIPs regulations which among other things, includes the cost of borrowings and transaction costs.

 

END

 

 

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