Half Yearly Report Announcement

RNS Number : 9021M

Aberdeen Asian Income Fund Limited

23 August 2011

 



ABERDEEN ASIAN INCOME FUND LIMITED

UNAUDITED HALF YEARLY REPORT

FOR THE SIX MONTHS ENDED 30 JUNE 2011

Interim Board Report - Chairman's Statement

Background

During the six months to 30 June 2011, your Company's net asset value ("NAV") total return (diluted) was +4.90%, while the share price return was +6.90%. By comparison, the benchmark MSCI AC Asia Pacific ex-Japan Index returned -0.50%. The stronger, higher quality companies favoured by your Manager on the whole performed well, during what was a difficult period for markets.

Overview

The Arab Spring, Japan's catastrophes and Greece's debt travails combined to make it a turbulent six months for global financial markets. Social unrest in North Africa and the Middle East caused oil prices to spike, further stoking inflationary pressures in Asia and emerging economies while deepening the consumer gloom in developed countries that were already grappling with high unemployment.

In mid-March, Japan's earthquake, tsunami and nuclear crisis roiled markets and caused significant disruptions to the global supply chain, in particular for automotive and electronics parts, the effects of which are still being felt. Thereafter, markets stabilised thanks to resilient first-quarter earnings, a faster-than-expected recovery in Japan and the US Federal Reserve's policy reassurances. Support also appeared once oil prices retreated, after the International Energy Agency's release of some emergency reserves, amid signs that food price inflation was peaking. Towards the period end, fears concerning a potential Greek default unnerved investors.

While most Asian economies continued expanding at a healthy pace, first-quarter growth moderated from the previous three months as export demand cooled and price pressures intensified. In China where growth momentum remained strong, policy tightening gained traction on accelerating inflation, driven by record prices for food, in particular pork, and overheating in certain sectors like property. Beijing adopted targeted measures and lifted reserve ratio requirements. But it was eventually forced to hike interest rates; likewise, India, Indonesia, Korea, the Philippines, Taiwan and Thailand also tightened. Singapore and Indonesia allowed their currencies to rise to fight imported inflation pressures, while Malaysia and India raised electricity and diesel prices to ease their subsidy burden.

Performance review

Good stock selection drove the portfolio's outperformance. The best performer in both absolute and relative terms was Hong Kong clothing retailer Giordano Holdings, which posted higher-than-expected first-quarter profits as operating margins improved significantly. News that a local tycoon was steadily increasing his stake in the company also bolstered the stock. Giordano Holdings continues to keep tight cost control through supply-chain restructuring and strengthen its brands with a stronger focus on product differentiation, backed by a net-cash balance sheet. Meanwhile, insurer AIA's maiden results after its initial public offering were solid and showed that the business was gaining momentum in agency recruitment, brand rebuilding and new product rollout.

The Company's holdings in Thailand also did well despite the flat broader market. Mobile phone operator Advanced Information Services' earnings were underpinned by service revenue growth and lower operating expenses. Growing consumer demand aided the first-quarter profits of wholesale retailer Siam Makro while new stores are expected to underpin its full-year results. Siam Cement outperformed on the back of rising cement prices, while chemical prices appeared to have bottomed.

Elsewhere, other solid performers included Taiwan Mobile, Telecom Corp of New Zealand and Malaysia's DiGi.com as their strong cash flows and appealing dividend payouts attracted investors. Positive corporate news also boosted the stocks. Digi.Com's results were in line with forecasts with profits buoyed by top-line growth and better cost control. While intense competition and a higher effective tax rate weighed on Telecom Corp's interim earnings, the stock rose sharply after news that the telco would partner the government to build a faster broadband network. The more favourable government funding terms and lower-than-expected capital expenditure are likely to support free cash flow and dividends over the next few years.

Not holding any stocks in India also benefited the portfolio, as the Indian market was the key laggard amid persistent worries that rising inflation and the central bank's aggressive tightening would slow growth and crimp corporate profits. The slow progress of economic reforms and high-profile graft scandals that forced the resignations of two cabinet ministers also hurt sentiment. Your Company has no exposure to India. The majority of companies there need to reinvest in growing businesses and this constrains the use of cash towards dividend payouts. India is also one of the most expensive stockmarkets in the region. Hence, yields are relatively unattractive.

In contrast, the biggest detractor from performance was the lack of exposure to Korea, where stocks of technology, automotive and industrials companies rallied on expectations that they would benefit from the supply chain disruptions suffered by their Japanese rivals in the wake of the Fukushima earthquake. Your Manager remains comfortable with this position because it is hard to find companies that meet its strict quality criteria while transparency and corporate governance lag regional counterparts.  Additionally, given the high concentration of heavy industrials within the country benchmark, gearing in general tends to be higher and thus dividend yield lower.

Portfolio activity was low during the period, which reflects your Manager's conviction in staying invested in quality well-run companies with meaningful dividend payouts over the long term. A new introduction was Hong Kong-listed lender HSBC Holdings, given its strong Asian franchise and solid capital base. Asia contributed more than 60% of its profits in 2010. HSBC is trading at a small premium to book value, which compares favourably to most of its regional peers, and is paying out close to 50% of its earnings in dividends. This new position was funded by taking some profits off Malaysia's Public Bank, a long-term holding. While its results have remained top-rate in terms of profit growth and asset quality, current valuations reflect this. Meanwhile, Hong Leong Bank was sold because the Malaysian lender no longer offered an attractive yield. In the telecom sector, Telekomunikasi Indonesia was divested in favour of a new position in China Mobile, which has a debt-free balance sheet, higher yield and better business prospects.

Dividend

On 14 July 2011, your Board declared a second quarterly interim dividend of 1.5p per Ordinary share in respect of the year ending 31 December 2011, which will be paid on 25 August 2011 to shareholders on the register on 22 July 2011. The first two quarterly dividends, covering the six months to 30 June 2011, therefore total 3.0p, compared to 2.5p for the comparable period in 2010. 

More than 80% of companies in the Asia-Pacific, excluding Japan, will pay dividends this year, up from 60% in 2000. Post-global financial crisis, Asian companies have continued to conserve cash, with the net debt-to-equity ratio for the Asia ex-Japan region forecast to decline to 16% in 2011 versus the long-term average of 34% (Source: CLSA Asia Pacific Markets, 5 May 2011). This indicates a promising outlook for payouts in the region. While your Manager expects some impact on the underlying earnings of your Company's holdings because of margin pressure caused by rising raw material costs, the majority of the portfolio's core holdings are likely to maintain, and in some instances even increase, dividend payouts this year, which attests to their resilient cash flows, strong balance sheets and regard for minority shareholder interests.

Gearing and Share Issuance

On 22 March 2011 the Company's bank facility with Scotiabank Europe plc was extended for a further 12 month period.As at 30 June 2011 there were Hong Kong and US dollar borrowings amounting to £10.6 million outstanding, representing a gearing level of 4.5% of net assets which overall has been beneficial to net asset value.

During the six months under review your Company's shares have largely traded at a premium to the underlying NAV per Ordinary share.  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 2011 a total of 1.075 million new Ordinary shares have been issued at a premium to NAV per Ordinary share and in accordance with the Board's guidelines to the Manager.  Subsequent to the period end a further 1.675 million Ordinary shares have been issued at a premium.  When issuing shares at a premium, there is a modest uplift in NAV for the existing shareholders and the Directors will continue with such issues as and when there is demand from the markets and a premium rating attaching to the shares.

On 10 May 2011 a total of 14,793,009 new Ordinary shares were issued following the exercise of 14,793,009 Warrants to subscribe for Ordinary shares.  Warrantholders have a second opportunity to exercise their Warrants this year and there is a separate letter accompanying the Half Yearly Report confirming that the next Warrant subscription date will be 4 October 2011.  There is a bi-annual right to exercise Warrants up to the final exercise date which will be in May 2013.

Outlook

As recent events clearly demonstrate, there are many reasons to be concerned about the outlook for the global economy. Monetary easing in the US has apparently failed to stimulate an economic recovery and the longer-term burden of debt has increased substantially. Meanwhile in Europe contagion has spread from Greece and Ireland to Spain and Italy and might even extend to France. The spectre of a double-dip recession in the West looms large. These developments will undeniably have consequences for Asia. We expect Asian exports to be the most affected and this will impact the export-oriented countries, such as Korea, Taiwan and Singapore, more than the largely domestic economies of Malaysia and Indonesia, which remain relatively resilient. That said, over time exports to the West have become increasingly less important as an economic driver given the growth prospects within Asia itself. Importantly Asian governments have also generally been models of financial prudence and have not incurred the tremendous obligations that have arisen in the West.  With Asia home to two-thirds of the world's population and some of the fastest-growing economies, Asian companies, if properly researched and understood (as your Managers do), still afford significant opportunities for both capital gain and dividend yield over the longer term.

I look forward to reporting to you again with the Annual Report for the year to 31 December 2011, which will be issued in April 2012. 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

23 August 2011

Principal Risk Factors

Ordinary shares

The market price and the realisable value of the Ordinary shares, as well as being affected by their underlying net asset value, also take into account supply and demand for the Ordinary shares, market conditions and general investor sentiment. As such, the market value and the realisable value of the Ordinary shares may fluctuate and vary considerably from the net asset value of the Ordinary shares and investors may not be able to realise the value of their original investment. There is no guarantee that the Board's discount management policy will achieve its objective.

Warrants

Warrants represent a geared investment, so a relatively small movement in the market price of the Ordinary shares may result in a disproportionately large movement, unfavourable as well as favourable, in the market price of the Warrants.

Dividends

The Company will only pay dividends on the Ordinary shares to the extent that it has profits (current year or brought forward) available for that purpose. The ability of the Company to pay any dividends in respect of the Ordinary shares and any future dividend growth will depend primarily on the level of income received from its investments. The Company's income is derived from ordinary and special dividends and the level of these dividends received in any year is liable to fluctuation. Accordingly, the amount of the dividends paid to shareholders may also fluctuate.

Borrowings

Whilst the use of borrowings should enhance the total return on the Ordinary shares where the return on the Company's underlying assets is rising and exceeds the cost of borrowing, it will have the opposite effect where the underlying return is less than the cost of borrowing, further reducing the total return on the Ordinary shares.

Market Risks

The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. Market risk comprises three elements, interest rate risk, currency risk and equity price risk. Further details of these risks are disclosed in note 16 to the financial statements for the year ended 31 December 2010. Investment in emerging securities markets in the Asia Pacific region involves a greater degree of risk than that usually associated with investment in more developed securities markets, including the risk of social, economic and political instability which may have an adverse effect on economic returns or restrict investment opportunities.

General

The Company does not have a fixed winding-up date and, therefore, unless shareholders vote to wind up the Company, shareholders will only be able to realise their investment through the market.

Taxation and Exchange Controls

Any change in the Company's tax status or in taxation legislation (including the tax treatment of dividends or other investment income received by the Company) could affect the value of the investments held by the Company, affect the Company's ability to provide returns to shareholders or alter the post-tax returns to shareholders.

The Company may purchase investments that may be subject to exchange controls or withholding taxes in various jurisdictions. In the event that exchange controls or withholding taxes are imposed with respect to any of the Company's investments, the effect will generally be to reduce the income received by the Company on its investments and the capital value of the affected investments.

Going Concern

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

Directors' Responsibility Statement

The Directors are responsible for preparing this half-yearly financial report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge:

· the condensed set of interim financial statements contained within the half yearly financial report which have been prepared in accordance with the IAS34 "Interim Financial Reporting", give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and,

· the Interim Board Report includes a fair review of the information required by 4.2.7R and 4.2.8R of the FSA's Disclosure and Transparency Rules.

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

23 August 2011

Condensed Statement of Comprehensive Income

		Six months ended
		30 June 2011
		(unaudited)
		Revenue	Capital	Total
	Notes	£'000	£'000	£'000
Investment income		5,708	24	5,732
Bond interest		465	-	465
Deposit interest		1	-	1
Gains on financial assets at fair value through the profit or loss		-	5,879	5,879
Currency gains/(losses)		-	272	272
		_______	_______	_______
Total income		6,174	6,175	12,349
		_______	_______	_______
Expenses
Investment management fee		(410)	(615)	(1,025)
Other operating expenses	4	(393)	(4)	(397)
		_______	_______	_______
Profit before finance costs and taxation		5,371	5,556	10,927
Finance costs		(40)	(60)	(100)
		_______	_______	_______
Profit before tax		5,331	5,496	10,827
Tax expense		(361)	-	(361)
		_______	_______	_______
Profit and total comprehensive income for the period	2	4,970	5,496	10,466
		_______	_______	_______
Earnings per Ordinary share (pence):	2
Basic		4.06	4.49	8.55
		_______	_______	_______
Diluted		3.91	4.32	8.23
		_______	_______	_______

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 income is attributable to the equity holders of Aberdeen Asian Income Fund Limited. There are no minority interests.

Condensed Statement of ComprehensiveIncome (Cont'd)

		Six months ended
		30 June 2010
		(unaudited)
		Revenue	Capital	Total
	Notes	£'000	£'000	£'000
Investment income		3,744	5	3,749
Bond interest		512	-	512
Deposit interest		7	-	7
Gains on financial assets at fair value through the profit or loss		-	14,407	14,407
Currency gains/(losses)		-	(856)	(856)
		_______	_______	_______
Total income		4,263	13,556	17,819
		_______	_______	_______
Expenses
Investment management fee		(314)	(470)	(784)
Other operating expenses	4	(404)	(35)	(439)
		_______	_______	_______
Profit before finance costs and taxation		3,545	13,051	16,596
Finance costs		(57)	(86)	(143)
		_______	_______	_______
Profit before tax		3,488	12,965	16,453
Tax expense		(143)	-	(143)
		_______	_______	_______
Profit and total comprehensive income for the period	2	3,345	12,965	16,310
		_______	_______	_______
Earnings per Ordinary share (pence):	2
Basic		3.02	11.70	14.72
		_______	_______	_______
Diluted		2.93	11.34	14.27
		_______	_______	_______

Condensed Statement of Comprehensive Income (Cont'd)

		Year ended
		31 December 2010
		(audited)
		Revenue	Capital	Total
	Notes	£'000	£'000	£'000
Investment income		9,280	13	9,293
Bond interest		996	-	996
Deposit interest		9	-	9
Gains on financial assets at fair value through the profit or loss		-	42,609	42,609
Currency gains/(losses)		-	(532)	(532)
		_______	_______	_______
Total income		10,285	42,090	52,375
		_______	_______	_______
Expenses
Investment management fee		(677)	(1,016)	(1,693)
Other operating expenses	4	(748)	(39)	(787)
		_______	_______	_______
Profit before finance costs and taxation		8,860	41,035	49,895
Finance costs		(94)	(142)	(236)
		_______	_______	_______
Profit before tax		8,766	40,893	49,659
Tax expense		(509)	-	(509)
		_______	_______	_______
Profit and total comprehensive income for the period	2	8,257	40,893	49,150
		_______	_______	_______
Earnings per Ordinary share (pence):	2
Basic		7.31	36.21	43.52
		_______	_______	_______
Diluted		7.03	34.84	41.87
		_______	_______	_______

Condensed Balance Sheet

		As at	As at	As at
		30 June 2011	30 June 2010	31 December 2010
		(unaudited)	(unaudited)	(audited)
	Notes	£'000	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss		240,059	175,973	216,933
		_______	_______	_______
Current assets
Cash and cash equivalents		3,239	5,511	1,380
Other receivables		1,586	845	1,198
		_______	_______	_______
		4,825	6,356	2,578
		_______	_______	_______
Current liabilities
Bank loans		(10,636)	(11,408)	(10,913)
Other payables		(527)	(1,678)	(444)
		_______	_______	_______
		(11,163)	(13,086)	(11,357)
		_______	_______	_______
Net current liabilities		(6,338)	(6,730)	(8,779)
		_______	_______	_______
Net assets		233,721	169,243	208,154
		_______	_______	_______
Share capital and reserves
Ordinary share capital		133,903	112,101	118,035
Warrant reserve		616	2,184	2,095
Capital redemption reserve		1,560	1,560	1,560
Capital reserve		90,073	48,414	79,427
Revenue reserve		7,569	4,984	7,037
		_______	_______	_______
Equity shareholders' funds		233,721	169,243	208,154
		_______	_______	_______
Net asset value per Ordinary share (pence):	3
Basic		174.55	150.97	176.35
		_______	_______	_______
Diluted		172.15	145.92	167.85
		_______	_______	_______

Condensed Statement of Changes in Equity

Six months ended 30 June 2011 (unaudited)
			Capital
	Share	Warrant	redemption	Capital	Revenue	Retained
	capital	reserve	reserve	reserve	reserve	earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Opening balance	118,035	2,095	1,560	79,427	7,037	-	208,154
Issue of own shares	1,075	-	-	712	-	-	1,787
Exercise of warrants	14,793	(1,479)	-	4,438	-	-	17,752
Profit for the period	-	-	-	-	-	10,466	10,466
Transferred from retained earnings to capital reserve{A}	-	-	-	5,496	-	(5,496)	-
Transferred from retained earnings to revenue reserve	-	-	-	-	4,970	(4,970)	-
Dividends paid (note 5)	-	-	-	-	(4,438)	-	(4,438)
	______	______	______	______	______	______	______
Balance at 30 June 2011	133,903	616	1,560	90,073	7,569	-	233,721
	______	______	______	______	______	______	______
Six months ended 30 June 2010 (unaudited)
			Capital
	Share	Warrant	redemption	Capital	Revenue	Retained
	capital	reserve	reserve	reserve	reserve	earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Opening balance	109,790	2,200	1,560	34,528	6,320	-	154,398
Issue of own shares	2,150	-	-	872	-	-	3,022
Exercise of warrants	161	(16)	-	49	-	-	194
Profit for the period	-	-	-	-	-	16,310	16,310
Transferred from retained earnings to capital reserve{A}	-	-	-	12,965	-	(12,965)	-
Transferred from retained earnings to revenue reserve	-	-	-	-	3,345	(3,345)	-
Dividends paid (note 5)	-	-	-	-	(4,681)	-	(4,681)
	______	______	______	______	______	______	______
Balance at 30 June 2010	112,101	2,184	1,560	48,414	4,984	-	169,243
	______	______	______	______	______	______	______
Year ended 31 December 2010 (audited)
			Capital
	Share	Warrant	redemption	Capital	Revenue	Retained
	capital	reserve	reserve	reserve	reserve	earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Opening balance	109,790	2,200	1,560	34,528	6,320	-	154,398
Issue of own shares	7,199	-	-	3,692	-	-	10,891
Exercise of warrants	1,046	(105)	-	314	-	-	1,255
Profit for the year	-	-	-	-	-	49,150	49,150
Transferred from retained earnings to capital reserve{A}	-	-	-	40,893	-	(40,893)	-
Transferred from retained earnings to revenue reserve	-	-	-	-	8,257	(8,257)	-
Dividends paid (note 5)	-	-	-	-	(7,540)	-	(7,540)
	______	______	______	______	______	______	______
Balance at 31 December 2010	118,035	2,095	1,560	79,427	7,037	-	208,154
	______	______	______	______	______	______	______
{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 2011	30 June 2010	31 December 2010
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Operating activities
Profit for the period	10,466	16,310	49,150
Add back finance costs payable	100	143	236
Add back taxation paid	361	143	509
Gains on investments held at fair value through the profit or loss	(5,879)	(14,407)	(42,609)
Net currency (gains)/losses	(272)	856	532
Increase in other receivables	(388)	(183)	(537)
Increase/(decrease) in other payables	96	(7)	200
	_________	_________	_________
Net cash inflow from operating activities before finance costs and taxation	4,484	2,855	7,481
Loan interest paid	(112)	(162)	(276)
Overseas taxation paid	(361)	(143)	(509)
	_________	_________	_________
Net cash inflow from operating activities	4,011	2,550	6,696
Investing activities
Purchases of investments	(27,041)	(6,140)	(35,366)
Sales of investments	9,793	6,406	21,455
	_________	_________	_________
Net cash (outflow)/inflow from investing activities	(17,248)	266	(13,911)
	_________	_________	_________
Financing activities
Issue of own shares	1,787	3,022	10,891
Exercise of warrants	17,752	194	1,255
Dividends paid	(4,438)	(4,681)	(7,540)
Loans drawn down	-	42	42
	_________	_________	_________
Net cash inflow/(outflow) from financing activities	15,101	(1,423)	4,648
	_________	_________	_________
Net increase/(decrease) in cash and cash equivalents	1,864	1,393	(2,567)
	_________	_________	_________
Analysis of changes in cash during the period
Opening balance	1,380	4,165	4,165
Increase/(decrease) in cash above	1,864	1,393	(2,567)
Effect of foreign currency exchange rate changes	(5)	(47)	(218)
	_________	_________	_________
Cash and cash equivalents at the end of the period	3,239	5,511	1,380
	_________	_________	_________

Notes to the Financial Statements

1.	Accounting policies
	The annual report is prepared in accordance with International Financial Reporting Standards (IFRS), as adopted 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'. They have also been prepared using the same accounting policies applied for the year ended 31 December 2010 financial statements, which were prepared in accordance with International Financial Reporting Standards, and which received an unqualified audit report.
	The financial statements have been prepared under a going concerns basis. In accordance with the Financial Reporting Council's guidance on Going Concern and Liquidity Risk issued in October 2009 the Directors have undertaken a rigorous 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.

		Six months ended	Six months ended	Year ended
		30 June 2011	30 June 2010	31 December 2010
		(unaudited)	(unaudited)	(audited)
2.	Return per Ordinary share	p	p	p
	Basic
	Revenue return	4.06	3.02	7.31
	Capital return	4.49	11.70	36.21
		_________	_________	_________
	Total return	8.55	14.72	43.52
		_________	_________	_________
	The figures above are based on the following:
		£'000	£'000	£'000
	Revenue return	4,970	3,345	8,257
	Capital return	5,496	12,965	40,893
		_________	_________	_________
	Total return	10,466	16,310	49,150
		_________	_________	_________
	Weighted average number of Ordinary shares in issue	122,324,936	110,816,795	112,948,965
		_________	_________	_________
	Diluted	p	p	p
	Revenue return	3.91	2.93	7.03
	Capital return	4.32	11.34	34.84
		_________	_________	_________
	Total return	8.23	14.27	41.87
		_________	_________	_________
	Number of dilutive shares	4,821,334	3,518,415	4,433,841
		_________	_________	_________
	Diluted shares in issue	127,146,270	114,335,210	117,382,806
		_________	_________	_________
	The calculation of the diluted earnings per Ordinary shares is based on the average traded share price over the period. The calculations indicate that the exercise of Warrants would result in an increase in the weighted average number of Ordinary shares of 4,821,334 to 127,146,270 Ordinary shares.

3.	Net asset value per share
	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
	Basic	30 June 2011	30 June 2010	31 December 2010
	Attributable net assets (£'000)	233,721	169,243	208,154
	Number of Ordinary shares in issue	133,903,071	112,100,999	118,035,062
	Net asset value per Ordinary share (p)	174.55	150.97	176.35
	Diluted
	Attributable net assets (£'000)	241,114	195,450	233,299
	Number of Ordinary shares if Warrants converted	140,064,001	133,940,000	138,989,001
	Net asset value per Ordinary share (p)	172.15	145.92	167.85
	The calculation of the diluted net asset value per Ordinary share is based on the total number of Ordinary shares in issue at the period end and on the assumption that those Warrants which are not exercised at the period end, amounting to 6,160,930 Warrants as at 30 June 2011 (30 June 2010 - 21,839,001; 31 December 2010- 20,953,939) were exercised on the first day of the financial year at 120p per share, giving a total of 140,064,001 Ordinary shares (30 June 2010 - 133,940,000; 31 December 2010 - 138,989,001).

		Six months ended	Six months ended	Year ended
		30 June 2011	30 June 2010	31 December 2010
4.	Other operating expenses (revenue)	£'000	£'000	£'000
	Directors' fees	70	58	115
	Secretarial and administration fees	58	56	112
	Marketing contribution	74	57	122
	Auditors' remuneration	17	17	27
	Custodian charges	43	77	113
	Other	131	139	259
		_________	_________	_________
		393	404	748
		_________	_________	_________

		Six months ended	Six months ended	Year ended
		30 June 2011	30 June 2010	31 December 2010
5.	Dividends on equity shares	£'000	£'000	£'000
	Amounts recognised as distributions to equity holders in the period:
	Second interim dividend for 2009 - 3.00p	-	3,294	3,294
	First interim dividend for 2011 - 1.50p (2010 - 1.25p)	1,782	1,387	1,387
	Second interim dividend for 2010 - 1.25p	-	-	1,403
	Third interim dividend for 2010 - 1.25p	-	-	1,456
	Fourth interim dividend for 2010 - 2.25p	2,656	-	-
		_________	_________	_________
		4,438	4,681	7,540
		_________	_________	_________
	A second interim dividend of 1.50p for the year to 31 December 2011 will be paid on 25 August 2011 to shareholders on the register on 22 July 2011. The ex-dividend date was 20 July 2011.

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 investments in the Statement of Comprehensive Income. The total costs were as follows:
		Six months ended	Six months ended	Year ended
		30 June 2011	30 June 2010	31 December 2010
		£'000	£'000	£'000
	Sales	23	24	39
	Purchases	57	17	108
		_________	_________	_________
		80	41	147
		_________	_________	_________

7.	Bank loans
	On 22 March 2011 the Company's secured bank facility with Scotiabank Europe plc was extended for a further 12 month period. At the period end approximately USD 6.6 million and HKD 81.8 million, equivalent to £10.6 million was drawn down from the £15 million facility. The interest rates attributed to the USD and HKD loans at the period end were 1.39830% and 1.41144% respectively.

8.	Related party transactions
	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 £1,025,000 (30 June 2010 - £784,000; 31 December 2010 - £1,693,000) of management fees were paid and payable, with a balance of £369,000 (30 June 2010 - £137,000; 31 December 2010 - £328,000) being payable to AAM Asia at the period end.
	The company secretarial and administration fee is based on an annual amount of £118,000 (30 June 2010 - £112,000), increased annually in line with any increases in RPI, payable quarterly in arrears. During the period £58,000 (30 June 2010 - £56,000; 31 December 2010 - £112,000) of fees were paid and payable, with a balance of £29,000 (30 June 2010 - £29,000; 31 December 2010 - £28,000) being payable to APWM at the period end.

9.	Events after the reporting period
	A further 1.675 million Ordinary shares have been issued by the Company subsequent to the reporting period end at a total consideration received, including transaction costs, of £2.8 million. Following the share issue there were 135,578,071 Ordinary shares in issue.
	Since the period end, global equity markets have fallen, with share prices in Asia being adversely affected. In terms of total return, the diluted NAV has fallen by 7.7% and the MSCI AC Asia Pacific (ex Japan) Index (currency adjusted) has fallen by 16.3% in the period 30 June to 19 August 2011 (the latest date before sign off) respectively.

10.	Half-Yearly Financial Report
	The financial information for the six months ended 30 June 2011 and 30 June 2010 have not been audited.
	The auditors have reviewed the financial information for the six months ended 30 June 2011 pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information. The report of the auditors is on page 15 of the Half Yearly Report.

11.	This Half-Yearly Financial Report was approved by the Board on 23 August 2011.

The Half Year Report will be posted to shareholders and warrantholders in September 2011 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, No.1 Seaton Place, St Helier, Jersey, JE4 8YJ

*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

Secretaries

23 August 2011

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 2011 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 11. 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 Services Authority.

As disclosed in note 1, the annual financial statements of the company are prepared in accordance with IFRSs. 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 2011 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 Services Authority.

Ernst & Young LLP

Jersey

Channel Islands

23 August 2011

Investment Portfolio

As at 30 June 2011

		Valuation	Total assets
Company	Country of activity	£'000	%
Deutsche Bank AG Indonesian Credit Linked Note{A}	Indonesia	12,105	5.0
Taiwan Semiconductor	Taiwan	11,363	4.7
Taiwan Mobile	Taiwan	11,142	4.6
Oversea-Chinese Banking Corporation	Singapore	9,393	3.8
QBE Insurance Group	Australia	9,316	3.8
Swire Pacific	Hong Kong	9,248	3.8
United Overseas Bank	Singapore	8,860	3.6
British American Tobacco	Malaysia	8,550	3.5
Guinness Anchor	Malaysia	8,287	3.4
Digi.Com Berhad	Malaysia	8,257	3.4
Top ten investments		96,521	39.6
BHP Billiton	Australia{B}	7,969	3.3
Siam Makro	Thailand	6,894	2.8
HSBC Holdings	Hong Kong	6,686	2.7
Telstra	Australia	6,553	2.7
Commonwealth Bank of Australia	Australia	6,443	2.6
PetroChina	China	6,354	2.6
Venture Corp	Singapore	6,247	2.6
Siam Cement	Thailand	6,187	2.5
Singapore Technologies Engineering	Singapore	6,051	2.5
SP AusNet	Australia	5,986	2.4
Top twenty investments		161,891	66.3
Australia & New Zealand Banking Group	Australia	5,942	2.4
Singapore Telecommunications	Singapore	5,818	2.4
Advanced Information Services	Thailand	5,651	2.3
Giordano International	Hong Kong	5,647	2.3
Woolworths	Australia	5,255	2.2
China Mobile	China	4,723	1.9
Singapore Post	Singapore	4,610	1.9
Bank of Philippine Islands	Philippines	4,589	1.9
Singapore Press Holdings	Singapore	4,587	1.9
Hong Leong Finance	Singapore	4,330	1.8
Top thirty investments		213,043	87.3
Takeda Pharmaceutical	Japan	3,434	1.4
Telecom Corp of New Zealand	New Zealand	3,413	1.4
SBS Transit	Singapore	3,033	1.2
BEC World	Thailand	2,951	1.2
Pos Malaysia	Malaysia	2,723	1.1
Public Bank	Malaysia	2,711	1.1
Lafarge Malayan Cement	Malaysia	2,660	1.1
AIA	Hong Kong	2,658	1.1
Hana Microelectronics	Thailand	2,107	0.8
Kingmaker Footwear	Hong Kong	1,326	0.5
Total investments		240,059	98.2
Net current assets{C}		4,298	1.8
Total assets		244,357	100.0

{A}      Credit linked note issued by Deutsche Bank AG and linked to the Indonesia Government Bond 10% 15/07/17 as the underlying asset.

{B}      Incorporated in and listing held in United Kingdom

{C}      Before deduction of bank loans of £10,636,000

 

END

 

 

IR UOUVRAWAWUAR