abrdn Asian IncFd - Half Yearly Results
15/08/2024 07:00
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RNS Number : 4964A abrdn Asian Income Fund Limited 15 August 2024
abrdn Asian Income Fund Limited
Legal Entity Identifier: 549300U76MLZF5F8MN87
UNAUDITED HALF YEARLY REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2024
Performance Highlights
· The dividend yield at the end of the period was 5.5%.
· The NAV increased by 6.8% on a total return basis for the six
months ended 30 June 2024. This compares to an increase of 9.6% in the MSCI AC
Asia Pacific ex Japan Index.
· Ongoing charges of 0.86%.
Dividend yield (A) Earnings per Ordinary share - basic (revenue)
As at 30 June 2024 5.5% Six months ended 30 June 2024 5.73p
As at 31 December 2023 5.6% Six months ended 30 June 2023 6.28p
Net asset value total return (AB) Ordinary share price total return (AB)
Six months ended 30 June 2024 6.8% Six months ended 30 June 2024 6.9%
Year ended 31 December 2023 2.5% Year ended 31 December 2023 1.9%
MSCI AC Asia Pacific ex Japan Index total return (currency adjusted) (B) Discount to net asset value per Ordinary share (A)
Six months ended 30 June 2024 9.6% As at 30 June 2024 13.1%
Year ended 31 December 2023 1.6% As at 31 December 2023 12.8%
Ongoing charges (A) Net gearing (A)
Forecast year ending 31 December 2024 0.86% As at 30 June 2024 7.1%
Year ended 31 December 2023 1.00% As at 31 December 2023 7.5%
(A) Alternative Performance Measure.
(B) Total return represents the capital return plus dividends reinvested.
For further information please contact:
Ben Heatley
Head of Closed End Fund Sales
abrdn Investments Limited
07796 564 562
Chairman's Statement
Highlights
· Dividend yield: 5.5%, with a firm intention to continue to grow
the dividend again for the current financial year.
· NAV total return: 6.8% for the period compared to the Index total
return of 9.6%.
· Outperformance: the Company has outperformed the Index over 3 and
5 years in both NAV and share price total return terms.
· Reduced management fees: ongoing charges decreased to 0.86%
(2023: 1.00%).
Market Overview
In the first six months of 2024, we caught glimpses of the cautious optimism
around Asian equities that was referenced in my last annual statement.
Pivotal themes that drove sentiment included the growing expectation that the
US Federal Reserve will start to cut interest rates in the second half of
2024. In China, fresh targeted measures to support and stimulate the economy
alleviated growth pressures. This provided a boost to confidence and led to a
recovery in mainland equity markets, although some areas of concern persist
around the over-leveraged property sector and foreign outflows.
The Asian technology sector also strengthened, amid the rapid advance of
artificial intelligence ("AI") and related applications. Good fundamentals and
a positive outlook on the structural growth of the semiconductor and
technology hardware sectors also underpinned sector optimism, mirroring the
strong gains seen in the US with the 'Magnificent 7'.
There were several democratic elections across Asia during the period,
including in India where the ruling Bharatiya Janata Party ("BJP"), led by
Prime Minister Narendra Modi, formed a coalition government with its key
allies. The new government is due to set out its budget intentions soon, which
will provide some colour on the country's economic backdrop.
There were also some headwinds to markets, including uncertainty ahead of the
US presidential election in November. The Investment Manager is watching US
political developments closely, and what either a Trump re-election or Harris
election would mean for Asia.
Performance
In this environment, over the six months to 30 June 2024, the net asset value
("NAV") rose by 6.8% on a total return basis, which compares to the MSCI AC
Asia Pacific ex Japan Index's (the "Index") return of 9.6%. The share price
total return for the period was 6.9%, and the share price ended the period at
215p, representing a discount of 13.1% to the NAV per share. Since the end of
the period the discount has narrowed to 11.1%.
The Investment Manager's quality focused investment process relies on the
knowledge network built over several decades by its team on the ground across
Asia. Regular due diligence meetings with corporate management teams and
business leaders have laid the groundwork to build a defensive portfolio of
holdings that has delivered positive absolute returns during this period.
Looking over the longer term, the Company has outperformed the Index over 3
and 5 years in both NAV and share price total return terms, generating
positive absolute and relative returns for investors.
Six months 1 year 3 year 5 year
Performance (total return) to 30 June 2024 % return % return % return % return
Share price (Ordinary)(A) +6.9 +13.5 +8.6 +25.9
Net asset value(A) +6.8 +13.6 +9.5 +28.9
MSCI AC Asia Pacific ex Japan Index (currency adjusted) +9.6 +14.0 -3.6 +23.9
(A) Considered to be an Alternative Performance Measure.
Portfolio Activity
The Investment Manager remains focused on enhancing the Company's dividend
prospects and ensuring that the portfolio positioning accurately reflects its
conviction in quality, with earnings visibility and cash flow generation a
priority in the prevailing environment.
Within that context, the Investment Manager used market volatility to exit AEM
Holdings and Hana Microelectronics in order to reallocate within the sector to
other technology hardware companies with stronger business outlooks. Alongside
topping up some of the existing Taiwanese holdings that have exposure to the
AI demand growth, a holding was initiated in South Korea's SK Hynix, one of
the World's biggest suppliers of high bandwidth memory chips that are used to
power AI servers.
Elsewhere, the Investment Manager exited companies where valuations were rich
relative to expected future earnings growth potential such as Momo.com and
ASX, and instead added Mirvac, a high quality property group, and Transurban
Group, the dominant toll road developer and operator in Australia.
Meanwhile, in China, the exit of SAIC Motor Group was used to fund initiations
in companies with attractive dividend yield prospects such as Fuyao Glass
Industry, the number two player in the global automotive glass industry behind
Japan's Asahi Glass; Inner Mongolia Yili Industrial, the largest dairy brand
in the country; and PICC Property & Casualty, the largest property and
casualty insurer on the mainland.
Revenue and Dividends
Revenue earnings per share were 5.73p for the six month period ended 30 June
2024, which compares to 6.28p per share for the first six months of the
previous year. There were special dividends in 2023 which have not been
repeated this year and some higher yielding companies have moved from paying
dividends on a semi-annual to annual basis thereby spreading their dividend
payments over the full year. The Company has continued to benefit from the
Investment Manager's focus on high-yielding companies with strong
fundamentals, where it believes there is room for significant increases in
dividend receipts.
The Company has already declared first and second interim dividends of 2.55p
per share in respect of the year ending 31 December 2024, with the second
interim dividend payable on 23 August 2024 to shareholders on the register on
26 July 2024.
The Board is very aware of the importance of dividends to shareholders. In the
absence of unforeseen circumstances it is the Board's intention to once again
increase the level of dividend for the year (2023: 11.75p, representing a
dividend yield of 5.5% as at 30 June 2024) which will enable the Company to
retain its status as a "next generation dividend hero" as recognised by the
Association of Investment Companies.
The Company's attractive dividend yield and dividend growth record reflect the
Investment Manager's conviction in quality as an investment style that works
in Asia, and the ability of the portfolio's holdings to continue to deliver
resilient compounding earnings and income growth over the medium term.
Ongoing Charges
As set out in detail in the 2023 Annual Report, with effect from 1 January
2024, the Company has benefited from a negotiated reduction in the management
fee, with the annual fee now calculated on the lower of market capitalisation
and net assets, at 0.75% up to £300 million and 0.60% over £300 million. It
is pleasing to note that this has contributed to a reduction in the ongoing
charges ratio during the period, which is expected to be 0.86% for the current
financial year compared to 1.00% in 2023, a reduction of 14%.
Share Capital Management
The Company bought back 7.9 million shares during the period to be held in
treasury, representing 4.7% of the shares in issue at the start of the period,
at an average discount of 12.6% and providing an estimated enhancement of
0.58% to the NAV per share. Subsequent to the period-end the Company has
continued to buy back shares and a total of 2.2 million further shares have
been acquired.
These buybacks provide an enhancement to the Company's NAV and benefit all
shareholders. The Company will continue to selectively buy back shares in the
market, in normal market conditions and at the discretion of the Board.
Gearing
The Company has a £50 million revolving credit facility which matures in
March 2025. At the period end, £32.2 million of the facility was drawn down,
resulting in gearing (net of cash) of 7.1%, compared to 7.5% at the beginning
of the period.
Board Composition
During the period, the Board was pleased to announce the appointment of Jane
Routledge as an independent non-executive Director of the Company, with effect
from 8 May 2024.
Jane has significant marketing experience with a long career in the investment
management sector. She has held a number of senior marketing positions
including at Schroders, Invesco, Hermes and Seven Investment Management. She
is currently a non-executive director of M&G Credit Income Investment
Trust plc and Brown Advisory US Smaller Companies plc.
Outlook
The potential return of Donald Trump as US President has caused uncertainties
in markets across Asia. Given Donald Trump's actions in his previous term,
investors are justifiably concerned about the risk of tariffs and a renewed
trade conflict with Asia. Such measures, if implemented, would weigh on
currencies, businesses, consumer sentiment, economies and risk appetite in
general. However, this potential impact should be weighed against the likely
boost from the expected easing of interest rates by the Federal Reserve in the
latter months of 2024. While we would expect uncertainty to persist through to
the election in November and beyond, we would see any potential impact from US
policy and political developments as a nuanced one, with differing impacts
across different economies, sectors, businesses and the consumer.
In China, the Third Plenum, a major meeting held roughly once every five years
to map out the general direction of the country's long-term social and
economic policies, has just concluded. There was an emphasis on discussing
near-term issues, reflecting some urgency following a disappointing
second-quarter of GDP growth. While there were few details on reforms, the
tone and focus remained unchanged, with a balance between security and
development goals. Post the Plenum, there has been incremental stimulus,
starting with the cutting of policy rates by the central bank and the easing
of demand and supply conditions in the bond market.
Over the longer term, we continue to view Asia as one of the most compelling
regions for investors looking for growth and income potential. The region is
clearly more than just China, with opportunities abounding across the broader
area. Asian markets have been tarnished by investor concerns over China, but
we believe this overlooks the excellent progress the broader Asian region has
made in recent years in strengthening its economies, shoring up its
currencies, creating employment, adopting technology and driving innovation.
More than 50% of Asian equity total returns now come from dividends and
dividend growth. Companies in Asia have less geared balance sheets than their
global peers and free cash flow generation cover on dividends has been
increasing, both of which highlight the potential for increasing payout ratios
in the region. Today, we believe little of this significant progress is
priced into markets, with the MSCI Asia Pacific ex Japan Index trading on just
13xPE, compared to the S&P 500 Index on nearly 21xPE. We believe that the
often overlooked dividend credentials of Asian equities will become ever more
attractive, with investors increasingly recognising the income potential of
some of the world's most exciting companies.
The Investment Manager remains confident in a bottom-up quality approach,
focusing on well-managed companies with strong cash flows and earnings
visibility, leveraging the many structural growth drivers across the region to
grow both capital and income over the long term.
Ian Cadby
Chairman
15 August 2024
Investment Portfolio
As at 30 June 2024
Valuation Total assets
Company Country £'000 %
Taiwan Semiconductor Manufacturing Company Taiwan 52,214 12.2
Samsung Electronics (Pref) South Korea 27,178 6.4
Power Grid Corp India 16,033 3.7
DBS Group Singapore 14,961 3.5
Oversea-Chinese Banking Corporation Singapore 13,561 3.2
BHP Group Australia 12,208 2.9
United Overseas Bank Singapore 10,877 2.5
Taiwan Mobile Taiwan 10,277 2.4
MediaTek Taiwan 9,967 2.3
Sunonwealth Electric Machine Taiwan 9,317 2.2
Top ten investments 176,593 41.3
Rio Tinto (A) Australia 9,100 2.1
Venture Corporation Singapore 8,789 2.1
Hon Hai Precision Industry Taiwan 8,720 2.0
China Resources Land China 8,340 2.0
Tencent Holdings Hong Kong 8,328 1.9
Telstra Corporation Australia 7,833 1.8
Hong Kong Exchanges & Clearing Hong Kong 7,499 1.8
Accton Technology Taiwan 7,471 1.7
Singapore Technologies Engineering Singapore 7,209 1.7
Commonwealth Bank of Australia Australia 7,154 1.7
Top twenty investments 257,036 60.1
Bank Mandiri Indonesia 6,967 1.6
AIA Group Hong Kong 6,851 1.6
Infosys India 6,581 1.5
Tata Consultancy Services India 6,431 1.5
SITC International Holdings Hong Kong 6,272 1.5
Midea Group 'A' China 6,099 1.4
Region RE Australia 6,052 1.4
Tisco Financial Group Foreign Thailand 5,975 1.4
Centuria Industries REIT Australia 5,836 1.4
Auckland International Airport New Zealand 5,815 1.4
Top thirty investments 319,915 74.8
National Australia Bank Australia 5,712 1.3
Keppel Infrastructure Trust Singapore 5,638 1.3
Capitaland India Trust Singapore 5,550 1.3
Singapore Telecommunications Singapore 4,754 1.1
AKR Corporindo Indonesia 4,630 1.1
GlobalWafers Taiwan 4,565 1.1
Amada Co Japan 4,486 1.0
Spark New Zealand New Zealand 4,435 1.0
Dah Sing Financial Holding Hong Kong 4,297 1.0
Mirvac Group Australia 4,162 1.0
Top forty investments 368,144 86.0
Transurban Group Australia 4,088 1.0
Capitaland Investment Singapore 4,085 1.0
NZX New Zealand 4,000 0.9
Taiwan Union Technology Taiwan 3,998 0.9
Charter Hall Long Wale REIT Australia 3,875 0.9
Inner Mongolia Yili Industrial China 3,752 0.9
Autohome Inc - ADR Hong Kong 3,561 0.8
PICC Property & Casualty China 3,471 0.8
Lotus's Retail Growth Freehold And Leasehold Property Fund (Foreign) Thailand 3,365 0.8
ICICI Bank (B) India 3,318 0.8
Top fifty investments 405,657 94.8
Hang Lung Properties Hong Kong 2,776 0.7
Fuyao Glass Industry Group A China 2,595 0.6
Convenience Retail Asia Hong Kong 2,403 0.6
SK Hynix South Korea 2,265 0.5
Land & Houses Foreign Thailand 2,211 0.5
Advanced Information Service Thailand 2,197 0.5
China Resources Gas China 1,757 0.4
G3 Exploration (B) China - -
Total value of investments 421,861 98.6
Net current assets (C) 6,109 1.4
Total assets 427,970 100.0
(A) Incorporated in and listing held in United Kingdom.
(B) Corporate bonds.
(C) Excludes bank loans of £32,248,000.
Condensed Statement of Comprehensive Income
Six months ended Six months ended
30 June 2024 30 June 2023
(unaudited) (unaudited)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment income
Dividend income 11,275 - 11,275 12,808 - 12,808
Interest Income 208 - 208 219 - 219
Stock lending income 38 - 38 3 - 3
Total revenue 11,521 - 11,521 13,030 - 13,030
Gains/(losses) on investments held at fair value through profit or loss - 15,827 15,827 - (24,603) (24,603)
Net currency (losses)/gains - (637) (637) - 811 811
11,521 15,190 26,711 13,030 (23,792) (10,762)
Expenses
Investment management fee (553) (660) (1,213) (631) (946) (1,577)
Other operating expenses (525) - (525) (415) - (415)
Total operating expenses (1,078) (660) (1,738) (1,046) (946) (1,992)
Profit/(loss) before finance costs and tax 10,443 14,530 24,973 11,984 (24,738) (12,754)
Finance costs (383) (574) (957) (428) (643) (1,071)
Profit/(loss) before tax 10,060 13,956 24,016 11,556 (25,381) (13,825)
Tax expense (671) (480) (1,151) (924) (154) (1,078)
Profit/(loss) for the period 9,389 13,476 22,865 10,632 (25,535) (14,903)
Earnings per Ordinary share (pence) (note 3) 5.73 8.23 13.96 6.28 (15.08) (8.80)
The Company does not have any income or expense that is not included in
profit/(loss) for the period, and therefore the "Profit/(loss) for the period"
is also the "Total comprehensive income for the period".
The total columns of this statement represent the Condensed Statement of
Comprehensive Income of the Company, prepared in accordance with IFRS. The
revenue and capital columns are supplementary to this and are prepared under
guidance published by the Association of Investment Companies. All items in
the above statement derive from continuing operations.
All of the profit/(loss) and total comprehensive income is attributable to the
equity holders of abrdn Asian Income Fund Limited. There are no
non-controlling interests.
The accompanying notes are an integral part of the financial statements.
Condensed Statement of Comprehensive Income (cont'd)
Year ended
31 December 2023
(audited)
Revenue Capital Total
£'000 £'000 £'000
Investment income
Dividend income 23,558 32 23,590
Interest Income 459 - 459
Stock lending income 4 - 4
Total revenue 24,021 32 24,053
Gains/(losses) on investments held at fair value through profit or loss - (8,457) (8,457)
Net currency (losses)/gains - 701 701
24,021 (7,724) 16,297
Expenses
Investment management fee (1,216) (1,825) (3,041)
Other operating expenses (867) - (867)
Total operating expenses (2,083) (1,825) (3,908)
Profit/(loss) before finance costs and tax 21,938 (9,549) 12,389
Finance costs (810) (1,215) (2,025)
Profit/(loss) before tax 21,128 (10,764) 10,364
Tax expense (934) (686) (1,620)
Profit/(loss) for the period 20,194 (11,450) 8,744
Earnings per Ordinary share (pence) (note 3) 11.97 (6.79) 5.18
Condensed Balance Sheet
As at As at As at
30 June 30 31 December 2023
2024
June 2023
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
Non-current assets
Investments held at fair value through profit or loss 421,861 425,467 429,636
Current assets
Cash and cash equivalents 2,459 4,894 1,560
Other receivables 6,687 3,600 2,913
9,146 8,494 4,473
Creditors: amounts falling due within one year
Bank loans 6 (32,248) (40,127) (32,123)
Other payables (3,037) (5,912) (1,503)
(35,285) (46,039) (33,626)
Net current liabilities (26,139) (37,545) (29,153)
Total assets less current liabilities 395,722 387,922 400,483
Creditors: amounts falling due after more than one year
Deferred tax liability on Indian capital gains (1,791) (1,134) (1,615)
(1,791) (1,134) (1,615)
Net assets 393,931 386,788 398,868
Stated capital and reserves
Stated capital 7 194,933 194,933 194,933
Capital redemption reserve 1,560 1,560 1,560
Capital reserve 184,478 176,613 187,549
Revenue reserve 12,960 13,682 14,826
Equity shareholders' funds 393,931 386,788 398,868
Net asset value per Ordinary share (pence) 4 247.36 229.17 238.59
The financial statements were approved by the Board of Directors and
authorised for issue on 15 August 2024 and
were signed on its behalf by:
Ian Cadby
Chairman
The accompanying notes are an integral part of the financial statements.
Condensed Statement of Changes in Equity
Six months ended 30 June 2024 (unaudited)
Capital
Stated redemption Capital Revenue
capital reserve reserve reserve Total
£'000 £'000 £'000 £'000 £'000
Opening balance 194,933 1,560 187,549 14,826 398,868
Buyback of Ordinary shares for treasury - - (16,547) - (16,547)
Profit for the period - - 13,476 9,389 22,865
Dividends paid (note 5) - - - (11,255) (11,255)
Balance at 30 June 2024 194,933 1,560 184,478 12,960 393,931
Six months ended 30 June 2023 (unaudited)
Capital
Stated redemption Capital Revenue
capital reserve reserve reserve Total
£'000 £'000 £'000 £'000 £'000
Opening balance 194,933 1,560 204,414 12,540 413,447
Buyback of Ordinary shares for treasury - - (2,266) - (2,266)
(Loss)/profit for the period - - (25,535) 10,632 (14,903)
Dividends paid (note 5) - - - (9,490) (9,490)
Balance at 30 June 2023 194,933 1,560 176,613 13,682 386,788
Year ended 31 December 2023 (audited)
Capital
Stated redemption Capital Revenue
capital reserve reserve reserve Total
£'000 £'000 £'000 £'000 £'000
Opening balance 194,933 1,560 204,414 12,540 413,447
Buyback of Ordinary shares for treasury - - (5,415) - (5,415)
(Loss)/profit for the year - - (11,450) 20,194 8,744
Dividends paid (note 5) - - - (17,908) (17,908)
Balance at 31 December 2023 194,933 1,560 187,549 14,826 398,868
The revenue reserve represents the amount of the Company's reserves
distributable by way of dividend.
The stated capital in accordance with Companies (Jersey) Law 1991 Article 39A
is £260,822,000 (30 June 2023 - £260,822,000; 31 December 2023 -
£260,822,000). These amounts include proceeds arising from the issue of
shares by the Company, but exclude the cost of shares purchased for
cancellation or treasury by the Company.
The accompanying notes are an integral part of the financial statements.
Condensed Statement of Cash Flows
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Cash flows from operating activities
Dividend income received 10,703 10,673 23,293
Interest income received 253 237 481
Return of capital included in investment income - 313 32
Investment management fee paid (2,108) (786) (2,734)
Other cash expenses (542) (580) (940)
Cash generated from operations 8,306 9,857 20,132
Interest paid (795) (1,096) (2,115)
Overseas taxation paid (588) (881) (1,980)
Net cash inflows from operating activities 6,923 7,880 16,037
Cash flows from investing activities
Purchases of investments (94,982) (66,923) (142,128)
Sales of investments 117,578 68,545 152,001
Capital gains tax on sales (303) (144) (195)
Net cash inflow from investing activities 22,293 1,478 9,678
Cash flows from financing activities
Purchase of own shares for treasury (16,548) (2,266) (5,415)
Dividends paid (11,255) (9,490) (17,908)
Repayment of loans - - (8,000)
Net cash outflow from financing activities (27,803) (11,756) (31,323)
Net (increase)/decrease in cash and cash equivalents 1,413 (2,398) (5,608)
Cash and cash equivalents at the start of the period 1,560 7,328 7,328
Foreign exchange (514) (36) (160)
Cash and cash equivalents at the end of the period 2,459 4,894 1,560
The accompanying notes are an integral part of the financial statements.
Notes to the Financial Statements
For the year ended 30 June 2024
1. Accounting policies - basis of preparation
The Annual Report is prepared in accordance with International Financial
Reporting Standards (IFRS), as issued by the International Accounting
Standards Board (IASB), and interpretations issued by the International
Financial Reporting Interpretations Committee of the IASB (IFRIC). The
condensed Half Yearly Report has been prepared in accordance with
International Accounting Standards (IAS) 34 - 'Interim Financial Reporting'
and should be read in conjunction with the Annual Report for the year ended 31
December 2023.
The financial statements have been prepared on a going concern basis. In
accordance with the Financial Reporting Council's guidance on 'Going Concern
and Liquidity Risk' the Directors have undertaken a review of the Company's
assets and liabilities. The Company's assets primarily consist of a diverse
portfolio of listed equity shares which, in most circumstances, are realisable
within a very short timescale.
The condensed interim financial statements have been prepared using the same
accounting policies as the preceding annual financial statements.
During the period the following standards, amendments to standards and new
interpretations became effective. The adoption of these standards and
amendments did not have a material impact on the financial statements:
IAS 1 Amendments Classification of Liabilities as Current or Non-Current 1 January 2024
IAS 1 Amendments Non-current Liabilities with Covenants 1 January 2024
2. Segmental information
For management purposes, the Company is organised into one main operating
segment, which invests in equity securities and debt instruments. All of the
Company's activities are interrelated, and each activity is dependent on the
others. Accordingly, all significant operating decisions are based upon
analysis of the Company as one segment. The financial results from this
segment are equivalent to the financial statements of the Company as a whole.
3. Earnings per Ordinary share
Six months ended Six months ended Year
ended
30 June 30 June 31 December 2023
2024
2023
(unaudited) (unaudited) (audited)
p p p
Revenue return 5.73 6.28 11.97
Capital return 8.23 (15.08) (6.79)
Total return 13.96 (8.80) 5.18
The figures above are based on the following:
Six months ended Six months ended Year
ended
30 June 30 June 31 December 2023
2024
2023
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Revenue return 9,389 10,632 20,194
Capital return 13,476 (25,535) (11,450)
Total return 22,865 (14,903) 8,744
Weighted average number of Ordinary shares in issue 163,833,141 169,308,308 168,693,861
4. Net asset value per share
Ordinary shares. The basic net asset value per Ordinary share and the net
asset values attributable to Ordinary shareholders at the period end
calculated in accordance with the Articles of Association were as follows:
As at As at As at
30 June 30 June 31 December 2023
2024
2023
(unaudited) (unaudited) (audited)
Attributable net assets (£'000) 393,931 386,788 398,868
Number of Ordinary shares in issue (excluding shares in issue held in 159,252,038 168,776,311 167,178,707
treasury)
Net asset value per Ordinary share (p) 247.36 229.17 238.59
5. Dividends on equity shares
Six months ended Six months ended Year
ended
30 June 30 June 31 December 2023
2024
2023
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Amounts recognised as distributions to equity holders in the period:
Second interim dividend 2023 - 2.50p per Ordinary share - - 4,216
Third interim dividend 2023 - 2.50p per Ordinary share - - 4,202
Fourth interim dividend for 2023 - 4.25p per Ordinary share (2022 - 3.10p) 7,100 5,263 5,263
First interim dividend for 2024 - 2.55p per Ordinary share (2023 - 2.50p) 4,155 4,227 4,227
11,255 9,490 17,908
A second interim dividend of 2.55p for the year to 31 December 2024 will be
paid on 23 August 2024 to shareholders on the register on 26 July 2024. The
ex-dividend date was 25 July 2024.
6. Bank loans
At the period end approximately GBP 17.8 million, USD 8.85 million and HKD
73.5 million, equivalent to £32.2 million was drawn down from the £50
million multi-currency revolving facility with bank of Nova Scotia, London
Branch. The interest rates attributed to the GBP, USD and HKD loans at the
period end were 6.2%, 6.32% and 5.731% respectively.
On 1 March 2024, the £10 million fixed rate loan was repaid in full and the
Company renewed its £40 million multi currency revolving credit facility with
a £50 million loan for one year with Bank of Nova Scotia, London Branch.
Under the terms of the revolving credit facility, the Company has the option
to increase the level of the commitment from £50 million to £70 million at
any time, subject to the Lender's credit approval.
7. Stated capital
The Company has issued 194,933,389 Ordinary shares of no par value, which are
fully paid (30 June 2023 -194,933,389; 31 December 2023 - 194,933,389).
During the period 7,926,669 Ordinary shares were bought back by the Company
for holding in treasury at a cost of £16,548,000 (30 June 2023 - 1,056,090
shares were bought back at a cost of £2,266,000; 31 December 2023 - 2,653,694
shares were bought back for holding in treasury at a cost of £5,415,000). As
at 30 June 2024 35,681,351 (30 June 2023 - 26,157,078; 31 December 2023 -
27,754,682) Ordinary shares were held in treasury.
A further 2,151,900 Ordinary shares have been bought back by the Company for
holding in treasury, subsequent to the reporting period end, at a cost of
£4,570,468. Following the share buybacks there were 157,100,138 Ordinary
shares in issue excluding those held in treasury.
8. Related party disclosures
There have been no transactions with related parties during the period which
have materially affected the financial position or the performance of the
Company.
9. Fair value hierarchy
IFRS 13 'Fair Value Measurement' requires an entity to classify fair value
measurements using a fair value hierarchy that reflects the significance of
the inputs used in making measurements. The fair value hierarchy has the
following levels:
Level 1: quoted prices (unadjusted) in active markets for identical assets or
liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are
observable for the assets or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
The financial assets and liabilities measured at fair value in the Condensed
Balance Sheet are grouped into the fair value hierarchy as follows:
Level 1 Level 2 Level 3 Total
At 30 June 2024 (unaudited) £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Quoted equities 418,543 - - 418,543
Quoted bonds - 3,318 - 3,318
Total assets 418,543 3,318 - 421,861
Level 1 Level 2 Level 3 Total
At 30 June 2023 (unaudited) £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Quoted equities 422,062 - - 422,062
Quoted bonds - 3,405 - 3,405
Total assets 422,062 3,405 - 425,467
Level 1 Level 2 Level 3 Total
At 31 December 2023 (audited) £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Quoted equities 426,315 - - 426,315
Quoted bonds - 3,321 - 3,321
Total assets 426,315 3,321 - 429,636
10. Half Yearly Financial Report
The financial information for the six months ended 30 June 2024 and 30 June
2023 has not been audited.
Alternative Performance Measures
Alternative performance measures are numerical measures of the Company's
current, historical or future performance, financial position or cash flows,
other than financial measures defined or specified in the applicable financial
framework. The Company's applicable financial framework includes IFRS and the
AIC SORP. The Directors assess the Company's performance against a range of
criteria which are viewed as particularly relevant for closed-end investment
companies.
Discount to net asset value per Ordinary share
The discount is the amount by which the share price is lower than the net
asset value per share, expressed as a percentage of the net asset value.
30 June 2024 31 December 2023
NAV per Ordinary share (p) a 247.36p 238.59p
Share price (p) b 215.00p 208.00p
Discount (b-a)/a 13.1% 12.8%
Dividend yield
The yield for 30 June 2024 is calculated based on the prospective annual
dividend for 2024 per Ordinary share in accordance with the Board's stated
target divided by the share price, expressed as a percentage. The yield for 31
December 2023 is calculated based on the annual dividend for 2023 per Ordinary
share divided by the share price, expressed as a percentage.
30 June 2024 31 December 2023
Annual dividend per Ordinary share (p) a 11.75p 11.75p
Share price (p) b 215.00p 208.00p
Dividend yield a/b 5.5% 5.6%
Net gearing
Net gearing measures the total borrowings less cash and cash equivalents
dividend by shareholders' funds, expressed as a percentage. Under AIC
reporting guidance cash and cash equivalents includes amounts due to and from
brokers at the period end as well as cash and cash equivalents.
30 June 2024 31 December 2023
Borrowings (£'000) a 32,248 32,123
Cash (£'000) b 2,459 1,560
Amounts due to brokers (£'000) c 2,355 21
Amounts due from brokers (£'000) d 4,084 756
Shareholders' funds (£'000) e 393,931 398,868
Net gearing (a-b+c-d)/e 7.1% 7.5%
Ongoing charges ratio
The ongoing charges ratio has been calculated in accordance with guidance
issued by the AIC as the total of investment management fees and
administrative expenses and expressed as a percentage of the average published
daily net asset values with debt at fair value throughout the year. The ratio
for 30 June 2024 is based on forecast ongoing charges for the year ending 31
December 2024.
30 June 2024 31 December 2023
Investment management fees (£'000) 2,400 3,041
Administrative expenses (£'000) 938 867
Less: non-recurring charges (A) (£'000) (61) (18)
Ongoing charges (£'000) 3,277 3,890
Average net assets (£'000) 390,581 395,914
Ongoing charges ratio (excluding look-through costs) 0.84% 0.98%
Look-through costs (B) 0.02% 0.02%
Ongoing charges ratio (including look-through costs) 0.86% 1.00%
(A) Professional services comprising advisory and legal fees considered
unlikely to recur.
(B) Calculated in accordance with AIC guidance issued in October 2020 to
include the Company's share of costs of holdings in investment companies on a
look-through basis.
The ongoing charges percentage provided in the Company's Key Information
Document is calculated in line with the PRIIPs regulations which among other
things, includes the cost of borrowings and transaction costs.
Total return
NAV and share price total returns show how the NAV and share price has
performed over a period of time in percentage terms, taking into account both
capital returns and dividends paid to shareholders. Share price and NAV total
returns are monitored against open-ended and closed-ended competitors, and the
Reference Index, respectively.
Share
Six months ended 30 June 2024 NAV Price
Opening at 1 January 2024 a 238.59p 208.00p
Closing at 30 June 2024 b 247.36p 215.00p
Price movements c=(b/a)-1 3.7% 3.4%
Dividend reinvestment (A) d 3.1% 3.5%
Total return c+d 6.8% 6.9%
Share
Year ended 31 December 2023 NAV Price
Opening at 1 January 2023 a 243.44p 215.00p
Closing at 31 December 2023 b 238.59p 208.00p
Price movements c=(b/a)-1 -2.0% -3.3%
Dividend reinvestment (A) d 4.5% 5.2%
Total return c+d 2.5% 1.9%
(A) NAV total return involves investing the net dividend in the NAV of the
Company with debt at fair value on the date on which that dividend goes
ex-dividend. Share price total return involves reinvesting the net dividend in
the share price of the Company on the date on which that dividend goes
ex-dividend.
Interim Board Report - Disclosures
Principal Risk Factors
The principal risks and uncertainties affecting the Company are set out below
and in detail on pages 22 to 23 of the Annual Report for the year ended 31
December 2023 and are not expected to change materially for the remaining six
months of the Company's financial year.
The risks outlined below are those risks that the Directors considered at the
date of this Half Yearly Report to be material but are not the only risks
relating to the Company or its shares. If any of the adverse events described
below actually occur, the Company's financial condition, performance and
prospects and the price of its shares could be materially adversely affected
and shareholders may lose all or part of their investment. Additional risks
which were not known to the Directors at the date of this Half Yearly Report,
or that the Directors considered at the date of this Report to be immaterial,
may also have an effect on the Company's financial condition, performance and
prospects and the price of the shares.
If shareholders are in any doubt as to the consequences of their acquiring,
holding or disposing of shares in the Company or whether an investment in the
Company is suitable for them, they should consult their stockbroker, bank
manager, solicitor, accountant or other independent financial adviser
authorised under the Financial Securities and Markets Act 2000 (as amended by
the Financial Services Act 2012) or, in the case of prospective investors
outside the United Kingdom, another appropriately authorised independent
financial adviser.
The risks can be summarised under the following headings:
· Investment strategy and objectives;
· Investment portfolio, investment management;
· Financial obligations;
· Financial;
· Regulatory;
· Operational; and
· Income and dividend risk.
In addition to these risks, the Board is conscious of the ongoing impacts of
the conflicts in Ukraine and the Middle East, as well as continuing tensions
between the US and China. The Board is also conscious of the impact of
inflation and higher interest rates on financial markets. The Board considers
that these are risks that could have further implications for financial
markets. An explanation of other risks relating to the Company's investment
activities, specifically market, liquidity and credit risk, and a note of how
these risks are managed, are contained in note 18 on pages 81 to 89 of the
Annual Report for the year ended 31 December 2023.
Going Concern
The Directors have undertaken a robust review of the Company's ability to
continue as a going concern. The Company's assets consist primarily of a
diverse portfolio of listed equity shares which in most circumstances are
realisable within a very short timescale. The Directors have reviewed
forecasts detailing revenue and liabilities, have set limits for borrowing and
reviewed compliance with banking covenants, including the headroom available.
The Company has a £50 million revolving credit facility which matures in
March 2025. In the event that it is not possible to renew the loan, the Board
considers that there is sufficient portfolio liquidity to enable it to be
repaid.
Having taken these factors into account, the Directors believe that the
Company has adequate financial resources to continue its operational existence
for the foreseeable future and at least 12 months from the date of this Half
Yearly Report. Accordingly, the Directors continue to adopt the going concern
basis in preparing these financial statements.
Directors' Responsibility Statement
The Directors are responsible for preparing this Half Yearly Financial Report
in accordance with applicable law and regulations. The Directors confirm that
to the best of their knowledge:
· the condensed set of interim financial statements contained
within the Half Yearly Financial Report which have been prepared in accordance
with IAS 34 "Interim Financial Reporting", give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company;
· the Half-Yearly Board Report includes a fair review of the
information required by rule 4.2.7R of the Disclosure and Transparency Rules
(being an indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed set of
Financial Statements and a description of the principal risks and
uncertainties for the remaining six months of the financial year); and
· the Half-Yearly Board Report includes a fair review of the
information required by 4.2.8R (being related party transactions that have
taken place during the first six months of the financial year and that have
materially affected the financial position of the Company during that period;
and any changes in the related party transactions described in the last Annual
Report that could do so).
On behalf of the Board
Ian Cadby
Chairman
15 August 2024
The Half Year Report will be posted to shareholders in August 2024 and copies
will be available on the Company's website (www.asian-income.co.uk*).
*Neither the Company's website nor the content of any website accessible from
hyperlinks on that website (or any other website) is (or is deemed to be)
incorporated into, or forms (or is deemed to form) part of this announcement
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