Half Yearly Report

RNS Number : 1489L

Aberdeen Asian Income Fund Limited

31 August 2012

 



ABERDEEN ASIAN INCOME FUND LIMITED

UNAUDITED HALF YEARLY REPORT

FOR THE SIX MONTHS ENDED 30 JUNE 2012

Interim Board Report - Chairman's Statement

Background

I am pleased to present another period of strong returns for your Company. Over the six months to 30 June 2012, the Company's diluted net asset value total return was 12.9%, compared to a 4.5% total return recorded by the MSCI AC Asia Pacific ex Japan Index. The share price increased by 14.4% (on a total return basis) ending the period at 188.4p, reflecting a slight widening of the premium to diluted NAV per share which was 3.45% at the period end. This robust performance was despite a resurgence of worries over the world economy and consequently jittery stock markets across the globe.

Overview

Asian equities registered positive returns in the six months under review, with the bulk of the gains achieved at the start of the period. Stocks had rallied amid some slightly more upbeat economic data and receding debt worries in Europe. Also lifting the market mood were the US Federal Reserve's pledge to keep interest rates low for the foreseeable future, a massive liquidity injection in Europe, and hopes of further stimulatory measures.

Shortly thereafter, investors' risk appetites wavered as China's slowing economy and the fragile US recovery combined to darken global growth prospects. Compounding the nervousness were escalating debt troubles and political uncertainty in Europe. That culminated in May, with markets falling steeply as fears over a Greek exit from the Eurozone reached fever pitch. However, once the Continent's debt concerns eased, stocks staged a modest rebound. Overall, the Southeast Asian markets of the Philippines, Singapore and Thailand, all of which posted double-digit gains, were the top performers. The laggards included the more resource-based economies of Indonesia and Australia.

Meanwhile, Asia's slower pace of growth became more entrenched. In the first quarter of this year, China's economy expanded by 8.1% year-on-year, the country's slowest expansion since 2009. Over the same period, India's growth weakened to a nine-year low of 5.3%. Many of their neighbours posted more subdued growth rates too, save for Thailand which rebounded from last year's severe floods and the Philippines, which was supported by a robust services sector.

The region's deceleration has been partly due to earlier policy tightening to reduce inflation, and partly because of weakness in Western economies, which has sapped demand for Asia's exports. In India's case, problems, such as its ballooning deficits and investment impasse, have been largely home-made. Policymakers were not without options, however. Helped by easing inflation, many shifted their attention to reviving growth. Of particular note, China cut interest rates for the first time since 2008. India, despite being constrained by stubborn price pressures, also lowered rates, along with Australia, Thailand and the Philippines.

Performance Review

Your Company's holdings, comprising conservatively run companies with sound balance sheets and sustainable business models, weathered the volatility well. In addition, the portfolio's defensive bias, owing to its holdings in telecoms and consumer sectors, paid off handsomely.

Notably, our Thai holdings turned in exceptional performances. Siam Makro, the country's leading cash and carry wholesaler, saw net income rise sharply as consumer spending recovered from last year's floods. Mobile phone operator Advanced Information Services posted positive results despite a goodwill charge and deferred taxes. Likewise, television broadcaster BEC World's profits met forecasts; rising domestic advertising expenditure growth bodes well for the company.

Our Singapore holdings, in particular those of a more defensive, high-yielding nature, fared similarly well. Electronics firm Venture Corp proved resilient, backed by its attractive dividend yield and strong balance sheet. United Overseas Bank posted double-digit profit growth for the first quarter thanks to higher loans and improved net interest margins. Singapore Technologies Engineering was helped by the upbeat performances of its marine and aerospace divisions; the group generated good operating cash flow and ended the quarter with a healthy order book. Hotel-focused REIT, CDL Hospitality Trusts, which has an appealing 6% yield, also staged strong advances.

The portfolio's investments in Australia proved equally beneficial. Among the outperformers were Westfield Retail Trust, which increased its payout ratio to 100%, as well as telecommunications company Telstra Corp and power supplier SP AusNet, both of which offer attractive yields.

On the other hand, not holding any stocks in India impeded performance. Indian equities had a stellar start to the year, rising close to 20% in January, though gains were subsequently pared as the country's fiscal health and moderating growth, alongside government gridlock, eroded investor confidence. While India offers an abundance of dynamic, well-run companies, your Company has no exposure because of low dividend yields.

Turning to portfolio activity, we exited Malaysia's DiGi.Com and Thailand's Siam Makro following the sharp rally in their share prices. We also sold our Indonesian bond holding after its excellent performance over a six-year period and the small position in Hong Kong bulk shipping company Pacific Basin was exited on your Manager's concerns that its dividend may be under pressure. Meanwhile, we added to higher-yielding stocks such as Japan's hotel operator ResortTrust and Thailand's Electricity Generating Public Company. It is worth noting that the Japanese stock market for the first time in decades now affords a decent yield and that your Managers are finding more companies there which meet their investment criteria.

Other introductions included Thailand's Tesco Lotus Retail Property Fund, which is sponsored by leading domestic hypermarket operator Tesco Lotus, and CDL Hospitality Trusts, a beneficiary of tourism in Singapore. Your Manager also bought bonds from Chinese property developer Yanlord Group (listed in Singapore) which offers an attractive double-digit yield. At the same time, we continued to build up the positions in HSBC Holdings and Singapore's Keppel Corporation.

Dividend

On 12 July 2012, your Board declared a second quarterly interim dividend of 1.55p per Ordinary share in respect of the year ending 31 December 2012, which was paid on 24 August 2012 to shareholders on the register on 20 July 2012. The first two quarterly dividends, covering the six months to 30 June 2012, therefore total 3.1p, compared to 3.0p for the comparable period in 2011. 

Companies in Asia have been growing their dividends during the past decade. Over half of all listed companies increased dividends by 10% or more in any given year over 2000-11 thanks largely to solid earnings growth and an increasingly strong shareholder culture. Admittedly, corporate earnings could stay muted in the near term given the uncertain global economic landscape but your Manager remains confident that the majority of the portfolio's core holdings, which are characterised by strong balance sheets and sustainable operating cash flows, are likely to maintain dividend payouts this year.

Gearing and Share Issuance

During the six months under review your Company's shares have 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 2012 a total of 8.9 million new Ordinary shares were issued at a premium to NAV per Ordinary share in accordance with the Board's guidelines to the Manager. Subsequent to the period end a further 650,000 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 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.

On 11 May 2012 a total of 1,766,974 new Ordinary shares were issued following the exercise of 1,766,974 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 9 October 2012. There is a bi-annual right to exercise Warrants up to the final exercise date which will be in May 2013.

On 20 March 2012 the Company extended its bank facility with Scotiabank Europe plc for a further 24 month period.In absolute terms, the level of borrowings was increased during the period with an extra £1.75m having been drawn down in US dollars in April. As at 30 June 2012 there were Hong Kong and US dollar borrowings amounting to £12.7 million outstanding, representing a gearing level of 4.6% of net assets which overall has been beneficial to net asset value performance over the period under review.

Outlook

There are still many reasons for caution. First, Europe's crisis is far from resolved - policy half measures have not worked. Whilst we would not expect to be directly impacted by a Euro break up, this could have adverse consequences for the global economy, something from which we would not be immune.  Unsustainable levels of government debt and deficits persist, while austerity measures continue to hold economies back. On the other side of the Atlantic, US housing prices appear to be steadying and households have shed debt. But economic data remain mixed and the year-end expiration of tax breaks and automatic spending cuts could still push the US economy back into recession.

These developments will undeniably constrain Asia's outlook. To be sure, growth rates, particularly in the region's more open economies, are slowing but they are not slow, especially compared to those in the West. Moreover, the region is becoming less dependent on Western export markets and, furthermore, policymakers have the tools to shore up domestic demand to offset external weakness. By and large, sound public finances offer room for fiscal stimulus, while the improved inflation backdrop provides scope for looser monetary policy. With its young and growing populations as well as an emerging middle class, Asia's long-term prospects remain intact.

Any short-term market pullbacks, therefore, will present opportunities for investors, such as your Manager, who follow the fundamental principle of buying decently priced, good quality companies.

I look forward to reporting to you again with the Annual Report for the year to 31 December 2012, which will be issued in April 2013. 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

30 August 2012

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 and premium management policies will achieve their objectives.

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 2011. 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 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 the IAS 34 "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

30 August 2012

Condensed Statement of Comprehensive Income

		Six months ended
		30 June 2012
		(unaudited)
		Revenue	Capital	Total
	Notes	£'000	£'000	£'000
Investment income		6,161	34	6,195
Bond interest		322	-	322
Deposit interest		7	-	7
Gains/(losses) on financial assets at fair value through profit or loss		-	25,981	25,981
Currency gains/(losses)		-	146	146
		_______	_______	_______
Total income		6,490	26,161	32,651
		_______	_______	_______
Expenses
Investment management fee		(508)	(762)	(1,270)
Other operating expenses	4	(457)	(4)	(461)
		_______	_______	_______
Profit before finance costs and taxation		5,525	25,395	30,920
Finance costs		(45)	(67)	(112)
		_______	_______	_______
Profit before tax		5,480	25,328	30,808
Tax expense		(151)	-	(151)
		_______	_______	_______
Profit/(loss) and total comprehensive income for the period	2	5,329	25,328	30,657
		_______	_______	_______
Earnings per Ordinary share (pence):	2
Basic		3.71	17.61	21.32
		_______	_______	_______
Diluted		3.66	17.37	21.03
		_______	_______	_______

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", 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/(loss) and total comprehensive 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 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/(losses) on financial assets at fair value through 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/(loss) 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
		_______	_______	_______

Condensed Statement of Comprehensive Income (Cont'd)

		Year ended
		31 December 2011
		(audited)
		Revenue	Capital	Total
	Notes	£'000	£'000	£'000
Investment income		10,887	52	10,939
Bond interest		990	-	990
Deposit interest		1	-	1
Gains/(losses) on financial assets at fair value through profit or loss		-	(3,891)	(3,891)
Currency gains/(losses)		-	(48)	(48)
		_______	_______	_______
Total income		11,878	(3,887)	7,991
		_______	_______	_______
Expenses
Investment management fee		(859)	(1,288)	(2,147)
Other operating expenses	4	(841)	(4)	(845)
		_______	_______	_______
Profit before finance costs and taxation		10,178	(5,179)	4,999
Finance costs		(75)	(112)	(187)
		_______	_______	_______
Profit before tax		10,103	(5,291)	4,812
Tax expense		(459)	-	(459)
		_______	_______	_______
Profit/(loss) and total comprehensive income for the period	2	9,644	(5,291)	4,353
		_______	_______	_______
Earnings per Ordinary share (pence):	2
Basic		7.44	(4.08)	3.36
		_______	_______	_______
Diluted		7.26	(3.98)	3.28
		_______	_______	_______

Condensed Balance Sheet

		As at	As at	As at
		30 June 2012	30 June 2011	31 December 2011
		(unaudited)	(unaudited)	(audited)
	Notes	£'000	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss		283,180	240,059	236,609
		_______	_______	_______
Current assets
Cash and cash equivalents		3,628	3,239	5,930
Other receivables		1,899	1,586	738
		_______	_______	_______
		5,527	4,825	6,668
		_______	_______	_______
Current liabilities
Bank loans		(12,725)	(10,636)	(11,000)
Other payables		(629)	(527)	(331)
		_______	_______	_______
		(13,354)	(11,163)	(11,331)
		_______	_______	_______
Net current liabilities		(7,827)	(6,338)	(4,663)
		_______	_______	_______
Net assets		275,353	233,721	231,946
		_______	_______	_______
Stated capital and reserves
Stated capital		149,718	133,903	139,084
Warrant reserve		439	616	615
Capital redemption reserve		1,560	1,560	1,560
Capital reserve		115,522	90,073	82,523
Revenue reserve		8,114	7,569	8,164
		_______	_______	_______
Equity shareholders' funds		275,353	233,721	231,946
		_______	_______	_______
Net asset value per Ordinary share (pence):	3
Basic		183.91	174.55	166.77
		_______	_______	_______
Diluted		182.09	172.15	164.78
		_______	_______	_______

Condensed Statement of Changes in Equity

Six months ended 30 June 2012 (unaudited)
			Capital
	Stated	Warrant	redemption	Capital	Revenue	Retained
	capital	reserve	reserve	reserve	reserve	earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Opening balance	139,084	615	1,560	82,523	8,164	-	231,946
Issue of own shares	8,867	-	-	7,142	-	-	16,009
Exercise of warrants	1,767	(176)	-	529	-	-	2,120
Profit for the period	-	-	-	-	-	30,657	30,657
Transferred from retained earnings to capital reserve{A}	-	-	-	25,328	-	(25,328)	-
Transferred from retained earnings to revenue reserve	-	-	-	-	5,329	(5,329)	-
Dividends paid (note 5)	-	-	-	-	(5,379)	-	(5,379)
	______	______	______	______	______	______	______
Balance at 30 June 2012	149,718	439	1,560	115,522	8,114	-	275,353
	______	______	______	______	______	______	______
Six months ended 30 June 2011 (unaudited)
			Capital
	Stated	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
	______	______	______	______	______	______	______
Year ended 31 December 2011 (audited)
			Capital
	Stated	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	6,250	-	-	3,947	-	-	10,197
Exercise of warrants	14,799	(1,480)	-	4,440	-	-	17,759
Profit for the year	-	-	-	-	-	4,353	4,353
Transferred from capital reserve to retained earnings{A}	-	-	-	(5,291)	-	5,291	-
Transferred from retained earnings to revenue reserve	-	-	-	-	9,644	(9,644)	-
Dividends paid (note 5)	-	-	-	-	(8,517)	-	(8,517)
	______	______	______	______	______	______	______
Balance at 31 December 2011	139,084	615	1,560	82,523	8,164	-	231,946
	______	______	______	______	______	______	______
{A}Represents the capital profit/(loss) 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 2012	30 June 2011	31 December 2011
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Operating activities
Profit for the period	30,657	10,466	4,353
Add back finance costs payable	112	100	187
Add back taxation paid	151	361	459
(Gains)/losses on investments held at fair value through the profit or loss	(25,981)	(5,879)	3,891
Net currency (gains)/losses	(146)	(272)	48
Decrease/(increase) in other receivables	91	(388)	460
Increase/(decrease) in other payables	293	96	(113)
	_________	_________	_________
Net cash inflow from operating activities before finance costs and taxation	5,177	4,484	9,285
Loan interest paid	(107)	(112)	(188)
Overseas taxation paid	(151)	(361)	(459)
	_________	_________	_________
Net cash inflow from operating activities	4,919	4,011	8,638
Investing activities
Purchases of investments	(60,980)	(27,041)	(48,529)
Sales of investments	39,998	9,793	24,962
	_________	_________	_________
Net cash outflow from investing activities	(20,982)	(17,248)	(23,567)
	_________	_________	_________
Financing activities
Issue of own shares	15,149	1,787	10,197
Exercise of warrants	2,120	17,752	17,759
Dividends paid	(5,379)	(4,438)	(8,517)
Loans drawn down	1,766	-	-
	_________	_________	_________
Net cash inflow from financing activities	13,656	15,101	19,439
	_________	_________	_________
Net (decrease)/increase in cash and cash equivalents	(2,407)	1,864	4,510
	_________	_________	_________
Analysis of changes in cash during the period
Opening balance	5,930	1,380	1,380
(Decrease)/increase in cash as above	(2,407)	1,864	4,510
Effect of foreign currency exchange rate changes	105	(5)	40
	_________	_________	_________
Cash and cash equivalents at the end of the period	3,628	3,239	5,930
	_________	_________	_________

Notes to the Financial Statements

For the period ended 30 June 2012

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'. They have also been prepared using the same accounting policies applied for the year ended 31 December 2011 financial statements, which were prepared in accordance with IFRS, and which received an unqualified audit report.
	The financial statements have been prepared under a going concern 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 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 2012	30 June 2011	31 December 2011
		(unaudited)	(unaudited)	(audited)
2.	Return per Ordinary share	p	p	p
	Basic
	Revenue return	3.71	4.06	7.44
	Capital return	17.60	4.49	(4.08)
		_________	_________	_________
	Total return	21.31	8.55	3.36
		_________	_________	_________
	The figures above are based on the following:
		£'000	£'000	£'000
	Revenue return	5,329	4,970	9,644
	Capital return	25,328	5,496	(5,291)
		_________	_________	_________
	Total return	30,657	10,466	4,353
		_________	_________	_________
	Weighted average number of Ordinary shares in issue	143,785,851	122,324,936	129,577,283
		_________	_________	_________
	Diluted	p	p	p
	Revenue return	3.66	3.91	7.26
	Capital return	17.37	4.32	(3.98)
		_________	_________	_________
	Total return	21.03	8.23	3.28
		_________	_________	_________
	Number of dilutive shares	1,983,229	4,821,334	3,308,267
		_________	_________	_________
	Diluted shares in issue	145,769,080	127,146,270	132,885,550
		____________	____________	____________
	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 1,983,229 to 145,769,080 Ordinary shares as at 30 June 2012.

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
		30 June 2012	30 June 2011	31 December 2011
	Basic	(unaudited)	(unaudited)	(audited)
	Attributable net assets (£'000)	275,353	233,721	231,946
	Number of Ordinary shares in issue	149,718,233	133,903,071	139,083,871
	Net asset value per Ordinary share (p)	183.91	174.55	166.77
		_________	_________	_________
	Diluted
	Attributable net assets (£'000)	280,619	241,114	239,332
	Number of Ordinary shares if Warrants converted	154,106,389	140,064,001	145,239,001
	Net asset value per Ordinary share (p)	182.09	172.15	164.78
		_________	_________	_________
	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 4,388,156 Warrants as at 30 June 2012 (30 June 2011 - 6,160,930; 31 December 2011 - 6,155,130) were exercised on the first day of the financial year at 120p per share, giving a total of 154,106,389 Ordinary shares (30 June 2011 - 140,064,001; 31 December 2011 - 145,239,001).

		Six months ended	Six months ended	Year ended
		30 June 2012	30 June 2011	31 December 2011
		(unaudited)	(unaudited)	(audited)
4.	Other operating expenses (revenue)	£'000	£'000	£'000
	Directors' fees	72	70	139
	Secretarial and administration fees	61	58	118
	Marketing contribution	89	74	154
	Auditor's remuneration	17	17	27
	Custodian charges	49	43	86
	Other	169	131	317
		_________	_________	_________
		457	393	841
		_________	_________	_________

		Six months ended	Six months ended	Year ended
		30 June 2012	30 June 2011	31 December 2011
		(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 2011 - 1.50p	-	-	2,010
	Third interim dividend for 2011 - 1.50p	-	-	2,069
	Fourth interim dividend for 2011 - 2.25p (2010 - 2.25p)	3,138	2,656	2,656
	First interim dividend for 2012 - 1.55p (2011 - 1.50p)	2,241	1,782	1,782
		_________	_________	_________
		5,379	4,438	8,517
		_________	_________	_________
	A second interim dividend of 1.55p for the year to 31 December 2012 was paid on 24 August 2012 to shareholders on the register on 20 July 2012. The ex-dividend date was 18 July 2012.

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/(losses) on investments in the Statement of Comprehensive Income. The total costs were as follows:
		Six months ended	Six months ended	Year ended
		30 June 2012	30 June 2011	31 December 2011
		(unaudited)	(unaudited)	(audited)
		£'000	£'000	£'000
	Sales	67	23	118
	Purchases	125	57	89
		_________	_________	_________
		192	80	207
		_________	_________	_________

7.	Bank loans
	On 20 March 2012 the Company's secured bank facility with Scotiabank Europe plc was extended for a further 24 month period. At the period end approximately USD 9.4 million and HKD 81.8 million, equivalent to £12.7 million was drawn down from the £15 million facility. The interest rates attributed to the USD and HKD loans at the period end were 1.596% and 1.654% respectively.

		30 June 2012		30 June 2011		31 December 2011
8.	Stated capital	Number	£'000	Number	£'000	Number	£'000
	Issued and fully paid Ordinary shares of no par value
	Balance brought forward	139,083,871	139,084	118,035,062	118,035	118,035,062	118,035
	Shares issued in the period	8,867,388	8,867	1,075,000	1,075	6,250,000	6,250
	Warrants exercised in the period	1,766,974	1,767	14,793,009	14,793	14,798,809	14,799
		___________	_______	__________	_______	___________	________
		149,718,233	149,718	133,903,071	133,903	139,083,871	139,084
		___________	_______	__________	_______	___________	________
	During the period 8,867,388 (30 June 2011 - 1,075,000; 31 December 2011 - 6,250,000) Ordinary shares were issued by the Company at a total consideration received, including transaction costs, of £16,009,000 (30 June 2011 - £1,787,000; 31 December 2011 - £10,197,000).
	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.
	During the period 1,766,974 (30 June 2011 - 14,793,009; 31 December 2011 - 14,798,809) Warrants were exercised into Ordinary shares at a total consideration received of £2,120,000 (30 June 2011 - £17,752,000; 31 December 2011 - £17,759,000). At 30 June 2012 there were 4,388,156 (30 June 2011 - 6,160,930; 31 December 2011 - 6,155,130) Warrants in issue. The warrantholders are entitled to subscribe in cash for one Ordinary share at 120p on the subscription date, which is the twentieth business day after the dispatch to Ordinary shareholders of the Company's Annual Report and Accounts or Half-Yearly report for each year, commencing with the twentieth business day after the dispatch to Ordinary shareholders of the Company's Half-Yearly Report for the six months ending 30 June 2012 and ending on the twentieth business day after the dispatch to Ordinary shareholders of the Company's Annual Report and Accounts for the year ending 31 December 2012.

9.	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 £1,270,000 (30 June 2011 - £1,025,000; 31 December 2011 - £2,147,000) of management fees were paid and payable, with a balance of £437,000 (30 June 2011 - £369,000; 31 December 2011 - £192,000) being payable to AAM Asia at the period end.
	The company secretarial and administration fee is based on an annual amount of £123,000 (30 June 2011 - £118,000;  31 December 2011 - £118,000), increased annually in line with any increases in RPI, payable quarterly in arrears. During the period £61,000 (30 June 2011 - £58,000; 31 December 2011 - £118,000) of fees were paid and payable, with a balance of £31,000 (30 June 2011 - £29,000; 31 December 2011 - £30,000) being payable to APWM at the period end.

10.	Events after the reporting period
	A further 650,000 Ordinary shares have been issued by the Company subsequent to the reporting period end at a total consideration received, including transaction costs, of £1,290,000. Following the share issue there were 150,368,233 Ordinary shares in issue.

11.	Half-Yearly Financial Report
	The financial information for the six months ended 30 June 2012 and 30 June 2011 have not been audited.
	The auditor has reviewed the financial information for the six months ended 30 June 2012 pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information. The report of the auditor is set out below.

12.	This Half-Yearly Financial Report was approved by the Board on 30 August 2012.

The Half Year Report will be posted to shareholders and warrantholders in September 2012 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

30 August 2012

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 2012 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 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 2012 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

30 August 2012

Investment Portfolio

As at 30 June 2012

		Valuation	Total assets
Company	Country of activity	£'000	%
Taiwan Semiconductor Manufacturing Co	Taiwan	12,607	4.4
HSBC Holdings	Hong Kong	10,716	3.7
Taiwan Mobile	Taiwan	10,432	3.6
QBE Insurance Group	Australia	10,050	3.5
Swire Pacific (Class A and Class B)	Hong Kong	9,984	3.5
British American Tobacco	Malaysia	9,940	3.4
Oversea-Chinese Banking Corporation	Singapore	9,504	3.3
Venture Corp	Singapore	9,493	3.3
Guinness Anchor	Malaysia	9,314	3.2
United Overseas Bank	Singapore	8,828	3.1
Top ten investments		100,868	35.0
Tesco Lotus Retail Growth	Thailand	8,642	3.0
Singapore Telecommunications	Singapore	8,610	3.0
Telstra Corp	Australia	8,177	2.8
SP AusNet	Australia	8,173	2.8
Woolworths	Australia	8,030	2.8
Yanlord Land Group	China	7,379	2.6
BEC World	Thailand	7,350	2.6
Singapore Technologies Engineering	Singapore	7,333	2.5
China Mobile	China	7,105	2.5
Singapore Post	Singapore	6,827	2.4
Top twenty investments		178,494	62.0
BHP Billiton	Australia{A}	6,791	2.4
Commonwealth Bank of Australia	Australia	6,418	2.2
Australia & New Zealand Banking Group	Australia	6,341	2.2
Telecom Corp of New Zealand (Australia Listing)	New Zealand	6,016	2.1
Electricity Generating	Thailand	5,888	2.0
CDL Hospitality Trust	Singapore	5,882	2.0
Takeda Pharmaceutical	Japan	5,777	2.0
PetroChina	China	5,719	2.0
Keppel Corp	Singapore	5,660	2.0
Advanced Information Services	Thailand	5,541	1.9
Top thirty investments		238,527	82.8
Westfield Group	Australia	5,452	1.9
Siam Cement	Thailand	4,920	1.7
Giordano International	Hong Kong	4,821	1.7
Singapore Press Holdings	Singapore	4,562	1.6
Resorttrust, Inc	Japan	4,235	1.5
Westfield Retail Trust	Australia	3,725	1.3
Hong Leong Finance	Singapore	3,662	1.3
Public Bank	Malaysia	2,738	0.9
Lafarge Malayan Cement	Malaysia	2,537	0.9
Hana Microelectronics	Thailand	2,416	0.8
Top forty investments		277,595	96.4
SBS Transit	Singapore	2,340	0.8
Pos Malaysia	Malaysia	2,257	0.8
Kingmaker Footwear	Hong Kong	988	0.3
Total investments		283,180	98.3
Net current assets{B}		4,898	1.7
Total assets		288,078	100.0
{A}Incorporated in and listing held in United Kingdom.
{B}Before deduction of bank loans of £12,725,000.

 

END

 

 

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