Half Yearly Results

RNS Number : 3165P

Aberdeen Asian Income Fund Limited

18 August 2014

 



ABERDEEN ASIAN INCOME FUND LIMITED

UNAUDITED HALF YEARLY REPORT

FOR THE SIX MONTHS ENDED 30 JUNE 2014

Interim Board Report - Chairman's Statement

Background

The Company's net asset value returned 3.8% in sterling terms over the six months to 30 June 2014, in line with the MSCI AC Asia Pacific ex Japan Index, which returned 3.9%. A key development over the period was the stabilisation of emerging markets, including Asia, following the wave of sell-offs last year. Many economies, in particular those deemed vulnerable to shifts in global liquidity, have improved their current accounts, paving the way for a cyclical recovery. Against this backdrop, the Ordinary Share price total return was 5.4% and the premium over net asset value per Ordinary share widened from 1.8% at the start of the year to 3.3%. At the time of writing there is a premium of 1.0%.

Overview

Asian equities rebounded with modest gains after a challenging 2013. A major factor propping up stockmarkets has been the continued monetary stimulus from major central banks outside the US. The European Central Bank brought real interest rates into negative territory while the Bank of Japan continued to increase the money supply to revitalise the economy. China's central bank, too, provided support by injecting cash into financial markets and targeted credit easing. Meanwhile, the US Federal Reserve has signalled that it would keep interest rates low for longer, even as it slows its asset purchases.

On the whole, markets that had sold off sharply previously made the strongest comeback. Conversely, the ones that fared better last year lagged over the first six months of the year. Notably the biggest advances were seen in India and Indonesia although your Company has no direct exposure there due to the high valuations and low yields.  Thailand has been remarkably strong, despite the political turmoil. The military coup may have provided a short-term respite from the political impasse as legislative backlogs are cleared and measures are being drawn up to stimulate investment. Local data appears to bear this out: consumer confidence returned after a year-long decline, as stalled investment projects and the infrastructure budget were approved, while the central bank upgraded its 2015 GDP growth forecast on the resumption of fiscal spending. That said, the army's legitimacy will be questioned if it stays in power for too long; elections have been delayed until next year, during which the junta will oversee the appointment of a government and attempt to mediate opposing groups.

Market performance outside Southeast Asia was lacklustre. Concerns over a slower economy and a cooling property market hampered Chinese and Hong Kong equities. Investors, however, were reassured after support measures were subsequently unveiled. Although smaller than the previous stimulus packages, these initiatives were partly intended to fund fixed asset investment. In Japan, the market rally petered out as prime-minister Shinzo Abe's first attempt at structural overhaul fell short of expectations; further details were unveiled towards the period-end. But while the scale of what he has put forward - corporate tax cuts, the liberalisation of the labour market and enhancements to corporate governance, among others - is more extensive than before, the broader effects for these proposals remain unclear.

Performance Review

The Company's performance was driven by stock selection, most notably in Singapore and Australia. The holding in Singapore Post, the city-state's main postal service, was the single largest positive contributor. Its announcement that Alibaba, the Chinese e-commerce giant, is taking a strategic stake to capitalise on its logistics capabilities within Southeast Asia lifted its share price. Both also agreed to form a joint venture to provide logistics services. Jardine Cycle & Carriage, a recent addition to the portfolio, rose on the back of pre-election enthusiasm in Indonesia. Its earnings are driven by Astra International, which has solid businesses across the automotive distribution, palm oil plantation and coal-mining contracting sectors in Indonesia. The stock is attractively valued given the price weakness last year and offers a yield of about 3%.

In Australia, Scentre Group, spun off from the restructure of Westfield Retail Trust and Westfield Group, rose after its debut in June. The new entity owns Westfield Trust's Australian and New Zealand operations after the demerger, while Westfield Group was renamed Westfield Corporation and holds the international businesses. The reorganisation has resulted in a clearer separation of the founding family's assets and a more focused portfolio within each vehicle. It also enables Scentre Group to undertake development projects in Australia and New Zealand without being hampered by borrowing constraints under the previous trust structure. Meanwhile financial holdings, Australia & New Zealand Banking and Commonwealth Bank of Australia benefited from good interim earnings, which surpassed expectations despite muted demand for credit.

Favourable positioning in China and Thailand also enhanced performance. The underweight to China benefited your Company, as the market was dragged down for the reasons mentioned earlier. Meanwhile, the holding in PetroChina rebounded strongly, partly aided by steady first-quarter results. It is poised to benefit from reforms that would allow market forces to play a greater role in the economy. The company also appears to be exploring options to monetise assets that could potentially increase shareholder returns. For a start, it is divesting part of its West-East pipeline to optimise its financing further. The lack of exposure to several mainland-listed financial services firms also added value. In Thailand, the overweight contributed to performance, given its resilience in weathering political uncertainty. Among the Company's Thai holdings, Hana Microelectronics impressed with a surge in profits, thanks to a recovering electronics cycle and the soft baht.

Turning to portfolio activity, the Manager took advantage of opportunities created by last year's sell-off to add to better yielding and more defensive holdings. Among the more significant transactions were the top-ups in China Mobile, Hong Kong fashion retailer Giordano and Far East Hospitality Trust. Although their share prices were weak, these companies remain cash flow generative, enabling them to offer attractive dividend yields relative to their peers. The top-ups were funded with proceeds from the sale of Japanese pharmaceutical company Takeda and media group Singapore Press Holdings (SPH). Various headwinds facing Takeda, including longer-term concerns over its drug pipeline, as well as existing challenges of integrating its acquisitions and expanding its presence in emerging markets, prompted the Manager to divest Takeda. For SPH, the sale was driven by concerns over its business prospects, mainly in its core newspaper business, which has been in gradual decline. In addition, the hidden value in the property business has largely been realised after being spun off and proceeds returned to shareholders through a special dividend. The Manager also pared the holding in Taiwan Semiconductor Manufacturing, as the run-up in its share price made its yield less attractive.

Dividend

On 8 July 2014, your Board declared a second quarterly interim dividend of 1.8p per Ordinary share in respect of the year ending 31 December 2014, which will be paid on 22 August 2014 to shareholders on the register on 18 July 2014. The first two quarterly dividends, covering the six months to 30 June 2014 therefore total 3.6p (2013 - 3.6p). Many of the Company's holdings have provided a steady dividend payout and their robust cash flows should sustain cash generation and continue to maintain good dividend yields on your Company's investment portfolio.

Gearing and Share Issuance

Your Company entered into a new unsecured three year £30 million multi currency revolving facility agreement with Scotiabank (Ireland) Limited which replaced a £15 million secured facility that matured in April 2014.  At the period end approximately £15.5 million was drawn down under the facility (USD11.0 million and HKD119.8 million) representing a gearing level of 4.1% of net assets which overall has been beneficial to the net asset value performance over the period under review.

Your Company's Articles of Association authorise the Directors to allot shares for cash at a premium to NAV and shareholders have authorised the issuance of up to 10% of the Company's issued capital without pre-emption rights applying. In the six months to 30 June 2014 a total of 450,000 new Ordinary shares were issued at a premium to NAV per Ordinary share in accordance with the Board's guidelines to the Manager. When issuing shares at a premium, there is a modest uplift in NAV for the existing shareholders and the Directors will continue with share issues as and when there is demand from the markets and a premium rating attaching to the shares. There are a number of constraints to such issuance, including the overriding Listing Rule requirement not to issue more than 10% of the outstanding equity in any rolling 12 month period.  Therefore it is possible that there may be periods when the Company is prevented from issuing new shares. Following the implementation of the Alternative Investment Fund Managers Directive, the Company has taken the necessary steps to allow it to continue to market its shares, including the issue of new shares for cash, within the UK under the UK National Private Placement Regime.

Outlook

Easy monetary conditions have supported stockmarkets, while many developing economies continue to adjust to the consequences of the US Fed's tapering. In China, recent economic data point to a stabilisation of growth. The new reform agenda provides further grounds for optimism. Although the transition away from an export to a domestic demand-led economy could take some time and may slow growth as a result, this would lead to greater economic resilience over the longer term.

That said, markets could face a few headwinds in the months ahead. A key worry is the prospect of higher interest rates. A premature rate hike, particularly by the Fed, would be unsettling. Global economic growth is still uneven, despite early indications of a recovery. Territorial disputes between China and its neighbours, Western sanctions on Russia over its involvement in Ukraine as well as the on-going tensions in the Middle East could also test markets if relations deteriorate. Caution is merited in view of these uncertainties, while earnings growth could remain muted. But your Company's holdings, with their prudent management, sound financial health, strong operating cash flow and decent dividend policies, should be able to weather these headwinds and continue tapping the region's growth potential over the long term.

I look forward to reporting to you again with the Annual Report for the year to 31 December 2014, which will be issued in April 2015. In the meantime, shareholders can find regular updates from your Manager, and copies of all Stock Exchange announcements on your Company's website www.asian-income.co.uk. Also on the website there are NAV and share price feeds which are updated on a daily basis.

Peter Arthur

Chairman

15 August 2014

Principal Risk Factors

The principal risks and uncertainties affecting the Company are set out in detail on pages 3 to 7 of the Annual Report and Financial Statements for the year ended 31 December 2013 and have not changed.

An investment in the Ordinary shares is only suitable for investors capable of evaluating the risks (including the potential risk of capital loss) and merits of such investment and who have sufficient resources to bear any loss which may result from such investment. Furthermore, an investment in the Ordinary shares should constitute part of a diversified investment portfolio.

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 Objective Risks

-    Ordinary Shares

-    General Risks

-    Dividends

-    Investment Risks

-    General Market Risks

-    Emerging Market Risks

-    Debt Securities Risks

-    Cash and Cash-equivalent Investments Risks

-    Illiquid Securities Risks

-    Borrowings Risks

-    Foreign Exchange Risks

-    Taxation and Exchange Control Risks

-    Accounting Practices and Policies Risks

-    Reliance on Third-party Service Providers Risks

-    Potential Conflicts of Interest Risks

-    Past Performance Risks

-    Alternative Investment Fund Managers Directive Provisions

-    Foreign Account Tax Compliance Act Provisions

Going Concern

The Company's assets consist primarily of a diverse portfolio of listed equities which, in most circumstances, are realisable within a very short timescale. Therefore, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Half Yearly Report.

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 Interim Board Report includes a fair review of the information required by 4.2.7R and 4.2.8R of the FCA's Disclosure and Transparency Rules; and,

-    the Half Yearly Report includes a fair review of the information required on material transactions with related parties and changes since the Annual Report.

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

Peter Arthur

Chairman

15 August 2014

Condensed Statement of Comprehensive Income

	Six months ended
	30 June 2014
	(unaudited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Dividend income	9,259	-	9,259
Bond interest	953	-	953
Deposit interest	2	-	2
Gains/(losses) on financial assets at fair value through profit or loss	-	6,213	6,213
Currency gains/(losses)	-	452	452
	_______	_______	_______
	10,214	6,665	16,879
	_______	_______	_______
Expenses
Investment management fee (note 9)	(726)	(1,088)	(1,814)
Other operating expenses (note 4)	(549)	-	(549)
	_______	_______	_______
Profit/(loss) before finance items and taxation	8,939	5,577	14,516
Finance items
Finance costs	(49)	(74)	(123)
	_______	_______	_______
Profit/(loss) before tax	8,890	5,503	14,393
Tax expense	(403)	-	(403)
	_______	_______	_______
Profit/(loss) for the period (note 2)	8,487	5,503	13,990
	_______	_______	_______
Profit/(loss) for the period analysed as follows:
Attributable to equity shareholders	8,487	5,503	13,990
	_______	_______	_______
Attributable to C shares	-	-	-
	_______	_______	_______
Total	8,487	5,503	13,990
	_______	_______	_______
Earnings per share (pence)(note 2):
Ordinary share
Basic and diluted	4.38	2.84	7.22
	_______	_______	_______
C share
Basic and diluted	n/a	n/a	n/a
	_______	_______	_______
The Company does not have any income or expense that is not included in profit for the period, and therefore the "Profit for the period" is also the "Total comprehensive income for the period", as defined in International Accounting Standard 1 (revised).
The total columns of this statement represent the 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 and total comprehensive income is attributable to the equity holders of Aberdeen Asian Income Fund Limited.
Figures for the six months ended 30 June 2013 have been restated to reflect the gain on investments held by C shareholders prior to conversion.

	Six months ended
	30 June 2013
	(unaudited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Dividend income	8,546	-	8,546
Bond interest	516	-	516
Deposit interest	3	-	3
Gains/(losses) on financial assets at fair value through profit or loss	-	19,267	19,267
Currency gains/(losses)	-	(929)	(929)
	_______	_______	_______
	9,065	18,338	27,403
	_______	_______	_______
Expenses
Investment management fee (note 9)	(791)	(1,187)	(1,978)
Other operating expenses (note 4)	(506)	-	(506)
	_______	_______	_______
Profit/(loss) before finance items and taxation	7,768	17,151	24,919
Finance items
Finance costs	(45)	(67)	(112)
	_______	_______	_______
Profit/(loss) before tax	7,723	17,084	24,807
Tax expense	(322)	-	(322)
	_______	_______	_______
Profit/(loss) for the period (note 2)	7,401	17,084	24,485
	_______	_______	_______
Profit/(loss) for the period analysed as follows:
Attributable to equity shareholders	7,401	15,720	23,121
	_______	_______	_______
Attributable to C shares	-	1,364	1,364
	_______	_______	_______
Total	7,401	17,084	24,485
	_______	_______	_______
Earnings per share (pence)(note 2):
Ordinary share
Basic and diluted	4.13	8.77	12.90
	_______	_______	_______
C share
Basic and diluted	n/a	2.27	2.27
	_______	_______	_______

Condensed Statement of Comprehensive Income (Cont'd)

	Year ended
	31 December 2013
	(audited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Dividend income	17,544	-	17,544
Bond interest	1,184	-	1,184
Deposit interest	8	-	8
Gains/(losses) on financial assets at fair value through profit or loss	-	(23,927)	(23,927)
Currency gains/(losses)	-	98	98
	_______	_______	_______
	18,736	(23,829)	(5,093)
	_______	_______	_______
Expenses
Investment management fee (note 9)	(1,578)	(2,368)	(3,946)
Other operating expenses (note 4)	(995)	-	(995)
	_______	_______	_______
Profit/(loss) before finance items and taxation	16,163	(26,197)	(10,034)
Finance items
Finance costs	(88)	(133)	(221)
	_______	_______	_______
Profit/(loss) before tax	16,075	(26,330)	(10,255)
Tax expense	(805)	(2)	(807)
	_______	_______	_______
Profit/(loss) for the period (note 2)	15,270	(26,332)	(11,062)
	_______	_______	_______
Profit/(loss) for the period analysed as follows:
Attributable to equity shareholders	15,270	(27,696)	(12,426)
	_______	_______	_______
Attributable to C shares	-	1,364	1,364
	_______	_______	_______
Total	15,270	(26,332)	(11,062)
	_______	_______	_______
Earnings per share (pence)(note 2):
Ordinary share
Basic and diluted	8.23	(14.92)	(6.69)
	_______	_______	_______
C share
Basic and diluted	n/a	2.27	2.27
	_______	_______	_______

Condensed Balance Sheet

		As at	As at	As at
		30 June 2014	30 June 2013	31 December 2013
		(unaudited)	(unaudited)	(audited)
	Notes	£'000	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss		388,117	413,505	380,554
		_______	_______	_______
Current assets
Cash and cash equivalents		3,774	6,290	3,463
Other receivables		1,808	2,339	983
		_______	_______	_______
		5,582	8,629	4,446
		_______	_______	_______
Current liabilities
Bank loans	7	(15,481)	(14,215)	(13,019)
Other payables		(556)	(540)	(864)
		_______	_______	_______
		(16,037)	(14,755)	(13,883)
		_______	_______	_______
Net current liabilities		(10,455)	(6,126)	(9,437)
		_______	_______	_______
Net assets		377,662	407,379	371,117
		_______	_______	_______
Stated capital and reserves
Stated capital	8	194,183	190,808	193,733
Capital redemption reserve		1,560	1,560	1,560
Capital reserve		170,114	204,350	164,176
Revenue reserve		11,805	10,661	11,648
		_______	_______	_______
Equity shareholders' funds		377,662	407,379	371,117
		_______	_______	_______
Net asset value per share (pence):	3
Ordinary share
Basic		194.49	213.50	191.56
		_______	_______	_______

Condensed Statement of Changes in Equity

Six months ended 30 June 2014 (unaudited)
			Capital
		Stated	redemption	Capital	Revenue	Retained
		capital	reserve	reserve	reserve	earnings	Total
		£'000	£'000	£'000	£'000	£'000	£'000
Opening balance		193,733	1,560	164,176	11,648	-	371,117
Issue of own shares (note 8)		450	-	435	-	-	885
Profit for the period		-	-	-	-	13,990	13,990
Transferred from retained earnings to capital reserve{A}		-	-	5,503	-	(5,503)	-
Transferred from retained earnings to revenue reserve		-	-	-	8,487	(8,487)	-
Dividends paid (note 5)		-	-	-	(8,330)	-	(8,330)
		______	______	______	______	______	______
Balance at 30 June 2014		194,183	1,560	170,114	11,805	-	377,662
		______	______	______	______	______	______
Six months ended 30 June 2013 (unaudited)
			Capital
	Stated	Warrant	redemption	Capital	Revenue	Retained
	capital	reserve	reserve	reserve	reserve	earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Opening balance	151,182	357	1,560	147,830	10,358	-	311,287
Issue of own shares via conversion of C shares (note 8)	30,552	-	-	32,453	-	-	63,005
Issue of own shares (note 8)	5,500	-	-	7,275	-	-	12,775
Exercise of warrants (note 8)	3,574	(357)	-	1,072	-	-	4,289
Profit for the period	-	-	-	-	-	23,121	23,121
Transferred from retained earnings to capital reserve{A}	-	-	-	15,720	-	(15,720)	-
Transferred from retained earnings to revenue reserve	-	-	-	-	7,401	(7,401)	-
Dividends paid (note 5)	-	-	-	-	(7,098)	-	(7,098)
	______	______	______	______	______	______	______
Balance at 30 June 2013	190,808	-	1,560	204,350	10,661	-	407,379
	______	______	______	______	______	______	______
Year ended 31 December 2013 (audited)
			Capital
	Stated	Warrant	redemption	Capital	Revenue	Retained
	capital	reserve	reserve	reserve	reserve	earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Opening balance	151,182	357	1,560	147,830	10,358	-	311,287
Issue of own shares via conversion of C shares (note 8)	30,552	-	-	32,453	-	-	63,005
Issue of own shares (note 8)	8,425	-	-	10,517	-	-	18,942
Exercise of warrants (note 8)	3,574	(357)	-	1,072	-	-	4,289
Loss for the year	-	-	-	-	-	(12,426)	(12,426)
Transferred from retained earnings to capital reserve{A}	-	-	-	(27,696)	-	27,696	-
Transferred from retained earnings to revenue reserve	-	-	-	-	15,270	(15,270)	-
Dividends paid (note 5)	-	-	-	-	(13,980)	-	(13,980)
	______	______	______	______	______	______	______
Balance at 31 December 2013	193,733	-	1,560	164,176	11,648	-	371,117
	______	______	______	______	______	______	______
{A} Represents the capital profit attributable to equity shareholders per the Statement of Comprehensive Income.
The revenue reserve represents the amount of the Company's reserves distributable by way of dividend.

Condensed Cash Flow Statement

	Six months ended	Six months ended	Year ended
	30 June 2014	30 June 2013	31 December 2013
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Operating activities
Profit/(loss) for the period	13,990	24,485	(11,062)
Add back finance costs	123	112	221
Add back taxation paid	403	322	807
(Gains)/losses on investments held at fair value through profit or loss	(6,213)	(19,267)	23,927
Net currency (gains)/losses	(452)	929	(98)
Increase in other receivables	(775)	(271)	(84)
(Decrease)/increase in other payables	(300)	14	303
	_________	_________	_________
Net cash inflow from operating activities before finance items and taxation	6,776	6,324	14,014
Loan interest paid	(130)	(129)	(220)
Overseas taxation paid	(453)	(339)	(822)
	_________	_________	_________
Net cash inflow from operating activities	6,193	5,856	12,972
Investing activities
Purchases of investments	(20,356)	(23,381)	(41,544)
Sales of investments	19,005	9,300	18,404
	_________	_________	_________
Net cash outflow from investing activities	(1,351)	(14,081)	(23,140)
	_________	_________	_________
Financing activities
Issue of own shares	885	12,775	18,942
Exercise of warrants	-	4,289	4,289
Dividends paid	(8,330)	(7,098)	(13,980)
Loans drawn down	2,965	-	-
	_________	_________	_________
Net cash (outflow)/inflow from financing activities	(4,480)	9,966	9,251
	_________	_________	_________
Net increase/(decrease) in cash and cash equivalents	362	1,741	(917)
	_________	_________	_________
Analysis of changes in cash during the period
Opening balance	3,463	4,532	4,532
Increase/(decrease) in cash as above	362	1,741	(917)
Effect of foreign currency exchange rate changes	(51)	17	(152)
	_________	_________	_________
Cash and cash equivalents at the end of the period	3,774	6,290	3,463
	_________	_________	_________

Notes to the Financial Statements

For the period ended 30 June 2014

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'. It has also been prepared using the same accounting policies applied for the year ended 31 December 2013 except for accounting policy changes made after 31 December 2013 that are to be reflected in the annual financial statements of 31 December 2014. Several new standards and amendments as listed below apply for the first time in 2014. However, these do not impact the interim financial statements of the Company.
	Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32
	Novation of Derivatives and Continuation of Hedge Accounting - Amendments to IAS 39
	Recoverable Amount Disclosures for non_Financial Assets - Amendments to IAS 36
	Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)
	IFRIC 21 Levies
	At the date of authorisation of these financial statements, various other Standards, amendments to Standards and Interpretations which have not been applied to these financial statements, were in issue but were not yet effective.
	IFRS 9 - Financial Instruments: Classification and Measurement (current proposed effective date for implementation 1 January 2018).
	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 which primarily consist of a diverse portfolio of listed equity shares which, in most circumstances, are realisable within a very short timescale. They have also been prepared on the assumption that approval as an investment trust will continue to be granted.
	Financial instruments
	The fair value of the financial assets and liabilities is the amount at which the asset could be sold or the liability transferred in a current transaction between market participants, other than in a forced or liquidation sale.
	Investments held at fair value through profit or loss are valued at their quoted bid prices.
	The fair value of borrowings as at 30 June 2014 has been estimated at £15,481,000 which is the same as the carrying value due to their short term nature. At 30 June 2013 and 31 December 2013 the fair value was £14,215,000 and £13,019,000 respectively which was the same as the carrying values.

			Six months ended	Six months ended	Year ended
			30 June 2014	30 June 2013	31 December 2013
2.	Earnings per share		(unaudited)	(unaudited)	(audited)
	Ordinary shares		p	p	p
	Basic
	Revenue return		4.38	4.13	8.23
	Capital return		2.84	8.77	(14.92)
			_________	_________	_________
	Total return		7.22	12.90	(6.69)
			_________	_________	_________
	The figures above are based on the following:
			Six months ended	Six months ended	Year ended
			30 June 2014	30 June 2013	31 December 2013
			(unaudited)	(unaudited)	(audited)
			£'000	£'000	£'000
	Revenue return		8,487	7,401	15,270
	Capital return		5,503	15,720	(27,696)
			_________	_________	_________
	Total return		13,990	23,121	(12,426)
			_________	_________	_________
	Weighted average number of Ordinary shares in issue		193,824,825	179,237,042	185,624,584
			_________	_________	_________
	The calculation of the diluted earnings per Ordinary share is no longer required as all Warrants were exercised on the final Warrant exercise date of 17 May 2013.
		Six months ended		Six months ended	Year ended
		30 June 2014		30 June 2013	31 December 2013
		(unaudited)		(unaudited)	(audited)
	C shares	p		p	p
	Basic
	Revenue return	n/a		n/a	n/a
	Capital return	n/a		2.27	2.27
		_________		_________	_________
	Total return	n/a		2.27	2.27
		_________		_________	_________
	The figures above are based on the following:
		£'000		£'000	£'000
	Revenue return	n/a		n/a	n/a
	Capital return	n/a		1,364	1,364
		_________		_________	_________
	Total return	n/a		1,364	1,364
		_________		_________	_________
	Weighted average number of C shares in issue	n/a		60,000,000	60,000,000
		_________		_________	_________
	On February 2013 the Company converted 60,000,000 C shares into 30,552,000 Ordinary shares. The comparative numbers in the Statement of Comprehensive Income and in the Cash Flow Statement were restated to reflect the profit for the period attributable to C shareholders in the amount of £1,364,000. All of the 60,000,000 C shares were converted into Ordinary shares on 4 February 2013 (see note 8).

3.	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 2014	30 June 2013	31 December 2013
	Basic	(unaudited)	(unaudited)	(audited)
	Attributable net assets (£'000)	377,662	407,379	371,117
	Number of Ordinary shares in issue	194,183,389	190,808,389	193,733,389
	Net asset value per Ordinary share (p)	194.49	213.50	191.56
		_________	_________	_________
	The calculation of the diluted net asset value per Ordinary share is no longer required as all of the remaining warrants were exercised on 17 May 2013 at 120p per share, giving rise to an additional 3,574,043 Ordinary shares in issue.

		Six months ended	Six months ended	Year ended
		30 June 2014	30 June 2013	31 December 2013
		(unaudited)	(unaudited)	(audited)
4.	Other operating expenses (revenue)	£'000	£'000	£'000
	Directors' fees	80	80	160
	Secretarial and administration fees	65	63	127
	Marketing contribution	116	114	239
	Auditor's remuneration	21	16	31
	Custodian charges	60	69	134
	Other	207	164	304
		_________	_________	_________
		549	506	995
		_________	_________	_________

		Six months ended	Six months ended	Year ended
		30 June 2014	30 June 2013	31 December 2013
		(unaudited)	(unaudited)	(audited)
5.	Dividends on equity shares	£'000	£'000	£'000
	Amounts recognised as distributions to equity holders in the period:
	Second interim dividend for 2013 - 1.80p	-	-	3,434
	Third interim dividend for 2013 - 1.80p	-	-	3,448
	Fourth interim dividend for 2013 - 2.50p (2012 - 2.50p)	4,843	3,779	3,779
	First interim dividend for 2014 - 1.80p (2013 - 1.80p)	3,487	3,319	3,319
		_________	_________	_________
		8,330	7,098	13,980
		_________	_________	_________
	A second interim dividend of 1.80p for the year to 31 December 2014 will be paid on 22 August 2014 to shareholders on the register on 18 July 2014. The ex-dividend date was 16 July 2014.

6.	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 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 2014	30 June 2013	31 December 2013
		(unaudited)	(unaudited)	(audited)
		£'000	£'000	£'000
	Purchases	24	48	71
	Sales	36	12	21
		_________	_________	_________
		60	60	92
		_________	_________	_________

7.

Bank loans

In April 2014, the Company entered into a new unsecured three year £30 million multi currency facility agreement with Scotiabank (Ireland) Limited which replaced a £15 million secured facility.  At the period end approximately USD 11.0 million and HKD 120.0 million, equivalent to £15.5 million was drawn down from the £30 million facility. The interest rates attributed to the USD and HKD loans at the period end were 1.102% and 1.160% respectively.

		30 June 2014				30 June 2013				31 December 2013
8.	Stated capital and C shares	Number		£'000		Number		£'000		Number		£'000
	Ordinary shares of no par value
	Authorised	Unlimited		Unlimited		Unlimited		Unlimited		Unlimited		Unlimited
	Issued and fully paid
	Balance brought forward	193,733,389		193,733		151,182,346		151,182		151,182,346		151,182
	Shares issued via conversion of C shares	-		-		30,552,000		30,552		30,552,000		30,552
	Shares issued in the period	450,000		450		5,500,000		5,500		8,425,000		8,425
	Warrants exercised in the period	-		-		3,574,043		3,574		3,574,043		3,574
		_________		________		_________		________		_________		________
		194,183,389		194,183		190,808,389		190,808		193,733,389		193,733
		_________		________		_________		________		_________		________
	During the period 450,000 (30 June 2013 - 5,500,000; 31 December 2013 - 8,425,000) Ordinary shares were issued by the Company at a total consideration received, net of transaction costs, of £885,000 (30 June 2013 - £12,775,000; 31 December 2013 - £18,942,000). The conversion of C shares in the previous interim period to 30 June 2013 resulted in the issue of 30,552,000 Ordinary shares.
	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.
	All of the remaining warrants were exercised on 17 May 2013.
			30 June 2014				30 June 2013			31 December 2013
	C shares		Number		£'000		Number		£'000	Number	£'000
	Issued and fully paid
	Balance brought forward		-		-		60,000,000		59,073	60,000,000	59,073
	Converted into Ordinary shares		-		-		(60,000,000)		(59,073)	(60,000,000)	(59,073)
			________		______		_________		______	_________	________
			-		-		-		-	-	-
			________		______		_________		______	_________	________
	Following a Placing and Offer for Subscription of C shares, the Company issued 60,000,000 C shares which were admitted to the Official List, and commenced trading on the main market of the London Stock Exchange on 16 November 2012.
	Under the terms of the C share prospectus, issued on 22 October 2012, the C shares would be converted to Ordinary shares once 80% of the issue proceeds had been invested. The Directors determined that the conversion ratio would be calculated on 11 January 2013 with the conversion date of 4 February 2013.
	On 4 February 2013, the Company converted 60,000,000 C shares into 30,552,000 Ordinary shares at a conversion ratio of 0.5092 Ordinary shares to every 1.0000 C share held. The calculation ratio was based on the respective NAVs of the C shares and the Ordinary shares at close of business on the calculation date, 11 January 2013 and on this date the financial liability in respect of the C shares was deemed to have been extinguished. The premium of £32,453,000 arising on the issue of Ordinary shares has been allocated to the capital reserve. The C shares were permanently removed from trading on 4 February 2013.

9.	Transactions with the Manager
	Mr H Young is a director of Aberdeen Asset Management PLC ("AAM") and its subsidiary Aberdeen Asset Management Asia Limited ("AAM Asia"). Aberdeen Private Wealth Management Limited ('APWM') is also a subsidiary of AAM and it has an agreement to provide management services to the Company, which it has sub-delegated to AAM Asia. APWM has an agreement to provide company secretarial and administration services to the Company.
	The management fee is payable monthly in arrears based on an annual amount of 1% of the net asset value of the Company valued monthly. During the period £1,814,000 (30 June 2013 - £1,978,000; 31 December 2013 - £3,946,000) of management fees were paid and payable, with a balance of £309,000 (30 June 2013 - £330,000; 31 December 2013 - £636,000) being payable to AAM Asia at the period end.
	The company secretarial and administration fee is based on an annual amount of £131,000 (30 June 2013 - £127,000;  31 December 2013 - £127,000), increased annually in line with any increases in RPI, payable quarterly in arrears. During the period £65,000 (30 June 2013 - £63,000; 31 December 2013 - £127,000) of fees were paid and payable, with a balance of £33,000 (30 June 2013 - £32,000; 31 December 2013 - £32,000) being payable to APWM at the period end.

10.	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 (ie 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 2014 (unaudited)	Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities	a)	368,886	-	-	368,886
	Quoted bonds	b)	19,231	-	-	19,231
			388,117	-	-	388,117
	Financial liabilities at fair value through profit or loss
	Financial liabilities at amortised cost	c)	-	(15,481)	-	(15,481)
			______	________	______	______
	Net fair value		388,117	(15,481)	-	372,636
			______	________	______	______
			Level 1	Level 2	Level 3	Total
	At 30 June 2013 (unaudited)	Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities	a)	402,570	-	-	402,570
	Quoted bonds	b)	10,935	-	-	10,935
			413,505	-	-	413,505
	Financial liabilities at fair value through profit or loss
	Financial liabilities at amortised cost	c)	-	(14,215)	-	(14,215)
			______	________	______	______
	Net fair value		413,505	(14,215)	-	399,290
			______	________	______	______
			Level 1	Level 2	Level 3	Total
	At 31 December 2013 (audited)	Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities	a)	361,294	-	-	361,294
	Quoted bonds	b)	19,260	-	-	19,260
			380,554	-	-	380,554
	Financial liabilities at fair value through profit or loss
	Financial liabilities at amortised cost	c)	-	(13,019)	-	(13,019)
			______	________	______	______
	Net fair value		380,554	(13,019)	-	367,535
			______	________	______	______
	a) Quoted equities
	The fair value of the Company's investments in quoted equities have 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 corporate quoted bonds have been determined by reference to their quoted bid prices at the reporting date. Quoted corporate bonds included in Fair Value Level 1 are actively traded on recognised stock exchanges.
	c) Financial liabilities at amortised cost
	Financial liabilities in the form of short term borrowings are held at amortised cost. The fair value is considered to approximate the carrying value.

11.	Half Yearly Financial Report
	The financial information for the six months ended 30 June 2014 and 30 June 2013 has not been audited.

12.	This Half Yearly Financial Report was approved by the Board on 15 August 2014.

The Half Year Report will be posted to shareholders in late August 2014 and copies will be available on the Company's website (www.asian-income.co.uk*) or in hard copy format from the Company's registered office, Sir Walter Raleigh House, 48 - 50 Esplanade, St Helier, Jersey JE2 3QB.

*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 Private Wealth Management Limited

Company Secretary

15 August 2014

Independent Review Report to Aberdeen Asian Income Fund Limited

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the Half Yearly Financial Report for the six months ended 30 June 2014 which comprises the Condensed Statement of Comprehensive Income, the Condensed Balance Sheet, the Condensed Statement of Changes in Equity, the Condensed Cash Flow Statement and the related explanatory notes 1 to 12. We have read the other information contained in the Half Yearly Financial Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities

The Half Yearly Financial Report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Half Yearly Financial Report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the Company are prepared in accordance with International Financial Reporting Standards (IFRS). The condensed set of financial statements included in this Half Yearly Financial Report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting".

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the Half Yearly Financial Report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the Half Yearly Financial Report for the six months ended 30 June 2014 is not prepared, in all material respects, in accordance with International Accounting Standard 34 and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Ernst & Young LLP

Jersey

Channel Islands

15 August 2014

The maintenance and integrity of the Aberdeen Asian Income Fund Limited website is the responsibility of the Directors; the work carried out by the Auditor does not include consideration of these matters and, accordingly, the Auditor accepts no responsibility for any changes that may have occurred to the financial information since it was initially presented on the website.

Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Investment Portfolio

As at 30 June 2014

		Valuation	Total assets
Company	Country of activity	£'000	%
HSBC Holdings	Hong Kong	13,137	3.3
Singapore Post	Singapore	12,852	3.3
China Mobile	China	12,306	3.1
Singapore Telecommunications	Singapore	12,250	3.1
Oversea-Chinese Banking Corporation	Singapore	11,706	3.0
Venture Corporation	Singapore	11,635	3.0
BHP Billiton	Australia{A}	11,167	2.8
British American Tobacco Malaysia	Malaysia	10,622	2.7
SP Ausnet	Australia	10,381	2.7
United Overseas Bank	Singapore	10,167	2.6
Top ten investments		116,223	29.6
Keppel Corporation	Singapore	10,105	2.6
Swire Pacific (Class A and Class B shares)	Hong Kong	10,096	2.6
Woolworths	Australia	9,993	2.5
Jardine Cycle & Carriage	Singapore	9,842	2.5
Telstra	Australia	9,778	2.5
Canon	Japan	9,223	2.3
Singapore Technologies Engineering	Singapore	9,086	2.3
DFCC Bank{B}	Sri Lanka	9,036	2.3
Taiwan Mobile	Taiwan	8,984	2.3
Pos Malaysia	Malaysia	8,899	2.2
Top twenty investments		211,265	53.7
Australia & New Zealand Bank Group	Australia	8,702	2.2
Commonwealth Bank of Australia	Australia	8,572	2.2
Guinness Anchor	Malaysia	8,323	2.1
Tesco Lotus Retail Growth	Thailand	8,199	2.1
Taiwan Semiconductor Manufacturing Corporation	Taiwan	8,121	2.1
Yanlord Land Group{B}	China	7,968	2.0
Electricity Generating	Thailand	7,862	2.0
Far East Hospitality Trust	Singapore	7,565	1.9
BEC World	Thailand	7,443	1.9
DBS Group	Singapore	7,199	1.9
Top thirty investments		291,219	74.1
Telecom Corp of New Zealand (Australia listing)	New Zealand	6,711	1.7
QBE Insurance Group	Australia	6,497	1.7
Giordano International	Hong Kong	6,393	1.6
CDL Hospitality Trust	Singapore	6,319	1.6
Advanced Information Services	Thailand	5,947	1.5
Shopping Centres Australasia	Australia	5,604	1.4
Li & Fung	Hong Kong	5,525	1.4
Star Publications	Malaysia	5,258	1.4
PetroChina	China	5,166	1.3
Scentre Group	Australia	5,164	1.3
Top forty investments		349,803	89.0
Siam Cement	Thailand	4,951	1.2
Ascendas Hospitality Trust	Singapore	4,731	1.2
Hana Microelectronics	Thailand	4,038	1.0
Keppel REIT	Singapore	4,030	1.0
Hong Leong Finance	Singapore	3,932	1.0
Westfield Corporation	Australia	3,473	0.9
Ratchaburi Electricity	Thailand	3,324	0.8
Lafarge Malaysia	Malaysia	3,084	0.8
Okinawa Cellular Telephone	Japan	2,623	0.7
Yingde Gases{B}	China	2,227	0.6
Top fifty investments		386,216	98.2
Kingmaker Footwear	Hong Kong	1,113	0.3
Texwinca Holdings	Hong Kong	788	0.2
Total investments		388,117	98.7
Net current assets{C}		5,026	1.3
Total assets		393,143	100.0
{A} Incorporated in and listing held in United Kingdom.
{B} Corporate bonds.
{C} Before deduction of bank loans of £15,481,000.

 

END

 

 

IR EASPSFELLEFF