REG - abrdn Asian IncFd - Annual Financial Report
26/03/2025 07:00
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RNS Number : 1287C abrdn Asian Income Fund Limited 26 March 2025
ABRDN ASIAN INCOME FUND LIMITED
Legal Entity Identifier (LEI): 549300U76MLZF5F8MN87
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2024
HIGHLIGHTS
· The share price total return for the year ended 31 December 2024
was 12.0% and the NAV total return was 10.8%.
· Dividend yield of 6.6%.
Ordinary share price total return AB Net asset value total return AB
2024 12.0% 2024 10.8%
2023 1.9% 2023 2.5%
MSCI AC Asia Pacific ex Japan Index total return (currency adjusted) B Dividend yield ACD
2024 12.6% 2024 6.6%
2023 1.6% 2023 5.6%
Dividend per Ordinary share Earnings per Ordinary share - basic (revenue)
2024 14,43p 2024 11.35p
2023 11.75p 2023 11.97p
Discount to net asset value per Ordinary share AC Ongoing charges AE
2024 12.5% 2024 0.85%
2023 12.8% 2023 1.00%
Net gearing AC
2024 7.2%
2023 7.5%
A Alternative Performance Measure.
B Total return represents the capital return plus dividends reinvested.
C As at 31 December.
D Yield is calculated as the dividend per Ordinary share divided by the share
price per Ordinary share expressed as a percentage.
E Calculated in accordance with the latest AIC guidance issued in October
2020 to increase the scope of reporting the look-through costs of holdings in
investment companies.
SUMMARY OF RESULTS
Financial Highlights
31 December 2024 31 December 2023 % change
Net asset value total return A +10.8% +2.5%
Share price (Ordinary) total return A +12.0% +1.9%
MSCI AC Asia Pacific ex Japan Index total return (currency adjusted) +12.6% +1.6%
Market capitalisation (£million) £330.7 £347.7 -4.9
Discount to net asset value per Ordinary share A 12.5% 12.8%
Ongoing charges ratio A 0.85% 1.00%
Dividend and earnings
Total return per Ordinary share B 11.73p 5.18p n/a
Earnings per Ordinary share - basic (revenue) B 11.35p 11.97p -5.2
Dividends per Ordinary share C 14.43p 11.75p +22.8
Dividend cover per Ordinary share A 0.79 1.02 -
Revenue reserves (£million) D £3.5 £7.7
Dividend yieldA 6.6% 5.6%
A Considered to be an Alternative Performance Measure.
B Measures the relevant earnings for the year divided by the weighted average
number of Ordinary shares in issue (see note 10).
C The figure for dividends reflects the years in which they were earned (see
note 9).
D The revenue reserves figure takes account of the fourth interim dividend
amounting to £10,148,000 (2023 - fourth interim amounting to £7,100,000).
Capital Performance to 31 December 2024
31 December 2024 31 December 2023 % change
Total assets (£million) £410.3 £431.0 -4.8
Total equity shareholders' funds (net assets) (£million) £362.4 £398.9 -9.2
Net asset value per Ordinary share 251.42p 238.59p +5.4
Ordinary share price 220.00p 208.00p +5.8
Long Term Total Return Performance to 31 December 2024
1 year 3 year 5 year Since launch B
% return % return % return % return
Net asset value A +10.8 +9.5 +37.2 +442.6
Share price (Ordinary) A +12.0 +11.0 +31.0 +385.4
MSCI AC Asia Pacific ex Japan Index (currency adjusted) +12.6 +6.7 +24.7 +360.2
AConsidered to be an Alternative Performance Measure.
B Launch date being 20 December 2005.
CHAIRMAN'S STATEMENT
Highlights
● Dividend yield of 6.6% (total dividend for the year of 14.43p,
an increase of 22.8%).
● Share price total return of 12.0%.
● Ongoing charges decreased from 1.0% to 0.85%.
● Enhanced annual dividend policy introduced from the start of
the 2025 financial year (notional annual dividend yield of 7.1%).
● Continuation vote to be held every three years.
Performance
It is pleasing to report a strong year of returns for shareholders. The share
price total return was 12.0% and the net asset value ("NAV") total return was
10.8%. These returns compare to a total return of 12.6% from the MSCI AC Asia
Pacific ex Japan Index (the "Index"). The Company continues to have a strong
longer term record, outperforming the Index for both NAV and share price total
return over three and five years.
It is also pleasing to report an increase of 22.8% in the dividend for the
year, providing a yield of 6.6%, and a significant reduction in our ongoing
charges ratio following a renegotiation of the management fee at the beginning
of the year.
The discount at the year end was 12.5%, although at the time of writing it has
reduced to around 10.5% following the introduction of the new enhanced
dividend policy outlined below.
Throughout the year, our Investment Manager's focus on quality high-yielding
stocks in Asia provided a good buffer against the impact of the various
macroeconomic and political headwinds. A more detailed summary of market
developments and performance for the year can be found in the Investment
Manager's Review.
Revenue and Dividends
Four quarterly dividends were declared in respect of the year. The first three
dividends were paid at a rate of 2.55p with a fourth interim dividend of
6.78p, resulting in total dividends for the year of 14.43p per share. This
represents a 22.8% increase (compared to last year's dividends of 11.75p per
share), providing a yield of 6.6% based on the year end share price.
The Board is pleased to note that this represents the sixteenth consecutive
year of annual dividend increases and means that the Company continues to be a
"next generation dividend hero" as recognised by the Association of Investment
Companies.
Revenue earnings per share for the year were 11.35p (2023: 11.97p). Income
generation from the portfolio continues to be strong, with the Company
benefitting from our Investment Manager's focus on high-yielding companies
with strong fundamentals.
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, which was 0.85% for the year compared to 1.0% in 2023, a
reduction of 15%.
Enhanced Dividend Policy and Introduction of Continuation Vote
The Board has consistently prioritised delivering meaningful dividends to
shareholders alongside capital growth in the Asian region, and we recognise
investors' continued appetite for yield in the current interest rate
environment. Accordingly, since the year end we have announced that the
Company's dividend will in the future be set at 1.5625% per quarter of the
NAV, equating to approximately 6.25% of NAV per annum. The dividend will be
calculated using the Company's NAV on the last business day of the preceding
financial quarter (i.e. the end of March, June, September and December).
Based on the Company's NAV as at 31 December 2024 and closing year end share
price, this enhanced dividend policy would equate to a notional annual
dividend yield of 7.1% based on share price. This approach ensures a
consistent and attractive income stream for shareholders while broadening the
appeal of the Company's shares and, over time, aiming to narrow the discount.
The first dividend payment to be made under the enhanced policy will be in May
2025, for the quarter ended 31 March 2025.
We believe that this measure will enhance shareholder returns and make the
Company's shares more attractive to a wider range of investors. Importantly,
there will be no change to the investment process nor to the Company's
strategy as a result of the new policy. The Investment Manager will continue
to seek quality, cash-generative businesses with strong management teams, at
sensible valuations, that have the potential to deliver reliable income and
capital growth for our investors.
The enhanced dividend policy reflects the Board's confidence in the long term
robust opportunities in Asian markets, where dividend yields and growth have
outpaced those of Europe and the US. With over 50% of total returns in Asian
equities now driven by dividends, and with companies in the region
demonstrating stronger balance sheets and increasing free cash flow coverage
for dividends, the potential for rising payout ratios is compelling.
The new policy means that dividends paid will reflect the Company's net assets
at each quarter end. Dividends will therefore be subject to market and
performance fluctuations and will vary from quarter to quarter, in line with
underlying earnings, currency movements and changes in the portfolio value. As
is currently the case, in years when the net revenues fall below the level
required for a fully covered dividend, dividends will be funded from a
combination of revenue and capital reserves thus using one of the key benefits
of the investment company structure.
Alongside the enhanced dividend policy, to further align with shareholder
interests, the Board also announced the introduction of a continuation vote so
that shareholders can decide whether they wish the Company to continue in its
current form at regular intervals. A continuation vote will first be tabled at
the Company's Annual General Meeting in 2028, and every three years
thereafter. Shareholders will be asked by simple majority vote if they wish
the Company to continue in its current form. In the event that the vote should
fail, further proposals will be brought to shareholders regarding the future
of the Company.
The Board believes that these actions, alongside the strong investment
performance of the Company and reduced charges associated with the recent
switch to a market cap- based management fee, should create a positive outlook
for shareholder returns.
Share Capital Management
The Company bought back £36 million worth of shares during the year to be
held in treasury, representing 10.1% of the shares in issue at the start of
the period, at an average discount of 12.4% and providing an estimated
enhancement of 1.2% to the NAV per share. Subsequent to the year end the
Company has bought back a further £8.7 million worth of shares.
The Company will continue to selectively buy back shares in the market, in
normal market conditions and at the discretion of the Board.
Gearing
At the year end, the Company had a £50 million revolving credit facility,
£32.4 million of which was drawn down, resulting in gearing (net of cash) of
7.2% (2023: 7.5%).
The loan facility matured in February and has been replaced with a new one
year facility with the existing lender, Bank of Nova Scotia, London Branch.
Under the terms of the 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.
Annual General Meeting ("AGM")
The AGM will be held at 10:30am on 8 May 2025 at the offices of the Aberdeen
Group, 18 Bishops Square, London E1 6EG. There will be a short presentation
from the Investment Manager followed by tea and coffee. We very much look
forward to meeting and engaging with as many shareholders as possible.
We encourage all shareholders to complete and return the Proxy Form enclosed
with the Annual Report so as to ensure that your votes are represented at the
meeting. If you hold your shares in the Company via a share plan or a platform
and would like to attend and/or vote at the AGM, then please make arrangements
with the administrator of your share plan or platform.
Investment Management Team
We are pleased to announce that Isaac Thong is to be appointed lead manager of
the Company working alongside Eric Chan. Isaac will be joining Aberdeen's Asia
Pacific Equities team as Senior Investment Director, based in Singapore, and
will be responsible for the day-to-day portfolio management of the Company. He
will also lead the Asian Income portfolio construction group within Aberdeen
which includes responsibility for the Company's portfolio.
Isaac replaces Yoojeong Oh who is leaving Aberdeen to pursue other interests.
The Board is extremely grateful to Yoojeong for her careful stewardship of the
Company over the last decade and as we look forward to celebrating our 20th
anniversary later this year.
With over 15 years' experience in the financial services industry and over a
decade of experience investing in Asia equities, Isaac brings with him a
wealth of knowledge and expertise that will enable the investment team to
continue finding companies that will deliver sustainable growth, consistent
income and attractive returns for our shareholders.
Board Composition
During the year, 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, and has already provided
significant benefit to the Board.
As previously announced, Krystyna Nowak, who was appointed as a Director in
May 2015, will retire at the AGM on 8 May 2025. On behalf of the Board I would
like to thank Krystyna for her significant contribution to the Company over
this period. We will miss her wise counsel.
My own appointment to the Board was on 11 May 2016. Given the recent
introduction of the enhanced dividend policy and the changes to the management
team, the other Directors have agreed that I will continue as Chairman until
the AGM in 2026. This will help oversee the implementation of these changes
which are important developments for the Company and it is the view of all the
Directors that it is in shareholders' interests for continuity in the Board at
this time. It is the Board's intention that Jane Routledge will succeed me as
Chair upon my retirement.
It is the current intention of the Board to appoint a new independent
non-executive Director later this year.
Change of Name of the Company
In order to align the Company's name with the name of the Investment Manager's
business, which has recently changed from abrdn plc to Aberdeen Group plc, the
Board is proposing, with effect from 1 June 2025, to change the Company's name
to Aberdeen Asian Income Fund Limited. A resolution to this effect will be
proposed at the AGM.
Outlook
Trade tariffs imposed by the new US Administration create an uncertain outlook
for Asia in 2025. Furthermore, US deregulation and tax cuts could strengthen
the US Dollar, which is unfavourable for Asia. On the other hand, attractive
valuations in Asia offer the potential for upside surprises underpinned by
structural tailwinds. As a region, Asia offers exciting investment
opportunities in innovation, globalisation and new consumption, and it is also
home to some of the highest-quality and most dynamic companies globally.
Our Investment Manager is confident of leveraging on the immense potential of
Asia by investing in high-quality companies with strong balance sheets and
consistent earnings growth that are committed to delivering shareholder
returns through dividends and buybacks. The Board believes that a strategic
focus on quality is key to delivering sustainable growth and attractive
returns for our shareholders and, taken together with the new enhanced
dividend policy, we are excited about the future prospects for your company.
Ian Cadby
Chairman
25 March 2025
INVESTMENT MANAGER'S REVIEW
1. How did abrdn Asian Income Fund perform in 2024?
We are pleased to report strong returns for the year, with a share price total
return of 12.0% and a net asset value ("NAV") total return of 10.8%. These
returns compare with a total return of 12.6% from the MSCI AC Asia Pacific ex
Japan Index (the "Index"). We are also pleased to report a 22.8% increase in
the total dividend for 2024. This marks the sixteenth consecutive year of
annual dividend increases. The dividend yield at the year end was 6.6%, around
double that of the Index.
The Company continues to have a good longer-term performance record,
outperforming the Index over three and five years.
Throughout 2024, geopolitical events, including tariff risk from Donald
Trump's return as US President, and US interest rate changes, induced
volatility, but our focus on quality stocks in Asia provided stability and we
took advantage of growth opportunities during better market phases.
The US Federal Reserve reduced interest rates three times during the year.
Some Asian central banks followed suit, creating an environment conducive to
investing in high-yielding equities. Singapore, which is one of the largest
markets in the portfolio, was among the best performers, driven by solid
earnings from local banks.
Asia was among the beneficiaries of buoyed investor optimism around artificial
intelligence and related applications given that the region lies at the heart
of various technology supply chains. The Taiwanese market, which has a heavy
technology tilt and is the largest country weighting in the portfolio, was the
top performer in the region.
China and India both posted gains that beat the regional index. China's
performance was thanks to monetary and fiscal stimulus measures which
signalled a clear shift towards growth and resulted in a late-year rally. The
key event in India was Prime Minister Narendra Modi's election victory earlier
in the year, but the market lost some momentum towards the year end due to
concerns over slowing domestic growth and as China's stimulus measures led to
a rotation out of India.
Elsewhere in the region, there was political turmoil in South Korea with the
short-lived imposition of martial law which led to significant market
underperformance, making it the worst performing country in the region over
the year.
2. What's going on in China?
China continues to demand investor focus during a prolonged period of
volatility and uncertainty. 2024 was a case of "a weak economy but strong
markets" for the country. Weak demand, a prolonged property downturn, and
softer investor sentiment meant that consumption has been slow to recover.
However, in September, China introduced several stimulus measures, sparking a
turnaround in sentiment and a market rally.
Looking ahead to 2025, the government is expected to continue its supportive
policies. More fiscal stimulus is anticipated during the upcoming Two Sessions
meeting in March, where the country's leaders will gather to shape domestic,
economic and social goals for the year ahead, including measures to respond to
future tariffs on Chinese imports to the US. If there is no major stimulus, we
expect a gradual earnings recovery as mainland companies benefit from the
existing loose monetary and fiscal policies.
As for our positioning in China, the portfolio has long held a smaller
weighting to China versus the Index. This is because the market does not yet
prioritise dividends and shareholder return, as much as higher yielding
markets in Asia, such as Australia and Singapore. Nonetheless, we regard China
as a key part of our strategy, with investments in companies that offer growth
potential and strong cash flow generation, and we maintain an active pipeline
of good quality stocks with good cash flows so that we can act when dividend
policies are put in place.
A good example is e-commerce group Tencent, which we first bought in 2022
after it formalised its dividend policy, linking payouts to free cash flow
generation. This move made Tencent an attractive investment, enhancing the
portfolio's overall yield and growth strategy. Another example is Midea Group,
a leading home appliance company with strong free cash flow generation and a
long-running dividend policy. These investments highlight our approach to
finding quality businesses in China that can provide both growth and income.
3. How will Trump 2.0 and US rates affect the
Company?
The Trump presidency is likely to impact the US interest rate outlook as,
whilst current rate expectations are low, the speed and extent of any changes
remain uncertain. This uncertainty can influence US inflation, and the
likelihood of interest rate increases or cuts throughout the year. Despite
this volatility, the Company has historically performed well in such
environments, delivering good returns even in the face of fluctuating interest
rates, given our investment process focuses on quality businesses that can
perform well across business cycles.
President Trump's rapid pace of executive actions, especially on trade, has
led to an updating of our house views. We now see the US weighted average
tariff rate going higher, to 9.1%. We assume a reciprocal tariff to be
implemented, albeit with various carve-outs; higher blanket tariffs on China;
and more sector-specific tariffs, including on the EU, Canada and Mexico.
Specifically, our base case 'Trump 2.0' scenario now includes a global
reciprocal tariff, likely to be introduced when the current trade review is
concluded in April. US-China tariffs will move meaningfully higher. The
additional 20% tariff already applied is likely to be permanent, because China
may struggle to deliver initiatives to assuage the administration's fentanyl
concerns. We are incorporating another 10% increase in tariffs on China, owing
to a mix of reasons: fentanyl-related concerns; the bilateral deficit; and
broader economic decoupling.
Given the above, we would note that the Company is invested in companies that
generally are market leaders that should be able to share the cost increase
with the supply chain and consumers. Some of them might even be relative
winners as they will be well placed with a more globally flexible supply chain
and more efficient operations.
In the portfolio, for instance, we hold SITC, a Hong Kong- listed intra-Asia
focused shipping company. The trade war uncertainty has worked in its favour
in recent years, and it has paid bumper dividends. The company has been very
disciplined about returning excess cash to shareholders as special dividends
when the freight cycle works in its favour.
4. How are we investing in the future of AI?
The Company is actively investing in the future of Artificial Intelligence
("AI") by identifying companies that are well- positioned to benefit from
advancements in this field. We see real winners in the Asian technology
hardware and semiconductor supply chain companies.
The largest holding in the portfolio is Taiwan Semiconductor Manufacturing
Company("TSMC"), a global leader in producing semiconductors that are key
building blocks to drive and support AI use across end uses. Through its
sizeable production moat built up over several decades, TSMC has a market
leading share globally with strategic customer relationships. The strong
end-market demand and the barriers to entry from the sizeable capital
requirements to replicate its production eco- system has enabled TSMC to
generate strong free cash flows that support a growing dividend per share to
shareholders. The dividend yield is low at below 2%, but this is driven by the
share price, which has increased threefold in the past five years.
Shareholders in TSMC have enjoyed good capital and dividend growth.
At the other end of the market capitalisation spectrum, the portfolio also
holds Sunonwealth Electric Machine, a Taiwanese company that makes cooling
fans for data centres. It supplies to customers in industries such as IT,
automotive electronics and network communication. Sunonwealth is recognised as
a niche player and a preferred partner for customised cooling solutions, which
strengthens its market position. Moreover, it has developed the first-ever
MagLev motor fan, the world's smallest and thinnest magnetic levitation motor
fan, showcasing its innovative capabilities. As AI technology becomes more
complex, the need for advanced cooling solutions grows, making Sunonwealth an
essential part of the AI supply chain. Additionally, Sunonwealth's strong
balance sheet and cash flows support a healthy dividend payout and attractive
yield.
These investments demonstrate our strategy of finding quality businesses of
all sizes that are exposed to growth opportunities in AI, while also
contributing to the Company's income objectives.
5. Where are we finding dividends?
We are finding dividends in various markets across Asia, across a wide variety
of countries and sectors that offer attractive yields. Taiwan, Singapore, and
Australia are the top three yielding countries within the region and are
heavily represented in the portfolio. We have also been able to invest at
attractive levels during market downturns, that offer income and growth.
In Singapore, we hold DBS, a bank with operations across Southeast Asia that
supports earnings growth and offers close to a 5% dividend yield. The bank's
commitment to paying dividends highlights its robust financial health and
ability to generate consistent cash flow. This focus on dividends is
particularly appealing to income-focused investors seeking stable returns. The
country's strong regulatory environment fosters investor confidence and
supports the bank's growth and income potential. Overall, DBS's strategic
expansion, strong financial health, and commitment to dividends make it a
compelling investment choice in the Asia region. Meanwhile, we are also
invested in CapitaLand India Trust, which is listed in Singapore but derives
all its revenue from rental income in India. This provides access to the
high-growth Indian market while offering a 6% dividend yield.
Elsewhere in China, we have invested in PICC Property & Casualty, a
leading property and casualty insurer in the country. One of three mainland
non-life insurance groups which dominate the market, we see PICC strengthening
its competitive edge through economies of scale, superior risk pricing ability
and solid capital position over the long term. The stock is relatively
defensive in a weak market environment, providing stability for investors.
Management has also indicated a focus on providing stable dividend payments,
making it an attractive option for income-focused investors. Overall, PICC's
strong market position, defensive nature, and commitment to dividends make it
a valuable investment in the Chinese insurance sector.
6. How do we pick stocks for the portfolio?
We look for companies that are simple to understand, operate in growing
industries, and have trustworthy management with strong balance sheets. This
means that we conduct thorough due diligence and prioritise high-quality,
dividend-paying stocks.
In Asia, on the ground presence gives us a key competitive edge. Our team of
over 40 in-house analysts and fund managers across the region conducts
in-depth research and meets companies regularly. This local presence and
extensive network provide valuable insights and help identify quality
companies that may not be widely covered, especially small and mid-cap
companies.
When evaluating companies, we invest in those which meet three key criteria at
an attractive price and support the consistent delivery of dividend. We choose
companies that have a strong business model with a sustainable competitive
advantage in an industry that is growing.
They would also have financial strength with good margins, return on capital
and a robust balance sheet; management with pedigree and a strong track record
of execution; and Environmental, Social and Governance ("ESG") factors. We
view all these as key to sustainable dividends with reliable earnings.
Regarding ESG, we believe that a comprehensive assessment of ESG factors,
combined with constructive engagement with companies, leads to better outcomes
for our clients. ESG factors are financially material, and impact corporate
performance.
Understanding ESG risks and opportunities alongside other financial metrics
allows us to make better investment decisions. Engaging with companies helps
foster better practices, protecting and enhancing the value of our clients'
investments.
7. How will Asia fare in 2025?
We are cautiously optimistic about the outlook for Asia. While macroeconomic
and geopolitical uncertainties persist, the region's prospects are underpinned
by solid economic fundamentals and structural growth trends. Asia's GDP growth
is forecast to remain above 5% on average, making it the largest contributor
to global GDP for many more years to come. Asia also boasts a demographic
dividend. Many countries are seeing increases in their working-age
populations, leading to higher productivity and economic growth. This ensures
sustained demand for products and services from quality companies.
The focus on dividends in the region is also growing. Policy is another
tailwind. Governments across the region are increasingly focusing on
shareholder returns and implementing policies that support dividend growth,
such as the Value Up programme in South Korea. This is coupled with a strong
emphasis on improving corporate governance, which ensures that companies are
managed more effectively and transparently.
All the above factors contribute to a more stable and attractive investment
environment, making dividend stocks a compelling choice for investors seeking
reliable income and long-term growth opportunities.
Importantly, as income investors in Asia, we don't have to sacrifice growth.
High-quality growth companies such as TSMC, Tencent, and Power Gridare all
paying growing dividends to their shareholders, with the portfolio's highest
sector weighting in technology. As mentioned earlier, we are also finding
dividend opportunities in growing sectors such as green energy (Power Grid),
AI (Sunonwealth and Accton Technology) and consumer products, including retail
banking (DBS).
Finally, we believe that our strategy of investing in high-quality,
dividend-paying companies is likely to continue generating positive results,
even in a volatile market environment. The portfolio is positioned well to
capitalise on the income and growth opportunities in Asia, with its
diversified portfolio and long-term investment approach providing resilience
against market volatility and helping capture growth during strong market
phases.
abrdn Asia Limited
25 March 2025
OVERVIEW OF STRATEGY
Launched in December 2005, abrdn Asian Income Fund Limited (the "Company") is
registered with limited liability in Jersey as a closed-end investment company
under the Companies (Jersey) Law 1991 with registered number 91671. The
Company's Ordinary shares are listed on the Main Market of the London Stock
Exchange.
Tax Residency
With effect from 1 January 2022 the Company migrated its tax residency to the
UK from Jersey and elected to join the UK's investment trust regime.
Investment Objective
To provide investors with a total return primarily through investing in Asia
Pacific securities, including those with an above average yield. Within its
overall investment objective, the Company aims to grow its dividends over
time.
Business Model
The Company aims to attract long-term private and institutional investors
wanting to benefit from the income and growth potential of Asia's most
compelling companies.
The business of the Company is that of an investment company and the Directors
do not envisage any change in this activity in the foreseeable future.
Investment Policy
Asset Allocation
The Company invests primarily in the Asia Pacific region through investment
in:
● companies listed on stock exchanges in the Asia Pacific
region;
● Asia Pacific securities, such as global depositary
receipts (GDRs), listed on other international stock exchanges;
● companies listed on other international exchanges that
derive significant revenues or profits from the Asia Pacific region; and
● debt issued by governments or companies in the Asia
Pacific region or denominated in Asia Pacific currencies.
The Company's investment policy is flexible, enabling it to invest in all
types of securities, including equity shares, preference shares, debt,
convertible securities, warrants and other equity- related securities. The
Company is free to invest in any market segments or any countries in the Asia
Pacific region. The Company may use derivatives to enhance income generation.
The Company invests in small, mid and large capitalisation companies. The
Company's policy is not to acquire securities that are unquoted or unlisted at
the time of investment (with the exception of securities which are about to be
listed or traded on a stock exchange). However, the Company may continue to
hold securities that cease to be quoted or listed if the Investment Manager
considers this to be appropriate. The Company may also enter into stock
lending contracts for the purpose of enhancing income returns.
Typically, the portfolio will comprise of between 40 and 70 holdings (but
without restricting the Company from holding a more or less concentrated
portfolio in the future).
Risk Diversification
The Company will not invest more than 10%, in aggregate, of the value of its
total assets in investment trusts or investment companies admitted to the
Official List, provided that this restriction does not apply to investments in
any such investment trusts or investment companies which themselves have
stated investment policies to invest no more than 15% of their total assets in
other investment trusts or investment companies admitted to the Official List.
In any event, the Company will not invest more than 15% of its total assets in
other investment trusts or investment companies admitted to the Official List.
In addition, the Company will not:
● invest, either directly or indirectly, or lend more than
20% of its total assets to any single underlying issuer (including the
underlying issuer's subsidiaries or affiliates), provided that this
restriction does not apply to cash deposits awaiting investment;
● invest more than 20% of its total assets in other
collective investment undertakings (open-ended or closed-ended);
● expose more than 20% of its total assets to the
creditworthiness or solvency of any one counterparty (including the
counterparty's subsidiaries or affiliates);
● invest in physical commodities;
● take legal or management control of any of its investee
companies; or
● conduct any significant trading activity.
The Company may invest in derivatives, financial instruments, money market
instruments and currencies for investment purposes (including the writing of
put and call options for
non-speculative purposes to enhance investment returns) as well as for the
purpose of efficient portfolio management (i.e. for the purpose of reducing,
transferring or eliminating investment risk in the Company's investments,
including any technique or instrument used to provide protection against
foreign exchange and credit risks). For the avoidance of doubt, in line with
the risk parameters outlined above, any investment in derivative securities
will be covered.
The Investment Manager expects the Company's assets will normally be fully
invested. However, during periods in which changes in economic conditions or
other factors so warrant, the Company may reduce its exposure to securities
and increase its position in cash and money market instruments.
Gearing Policy
The Board is responsible for determining the gearing strategy for the Company.
The Board has restricted the maximum level of gearing to 25% of net assets
although, in normal market conditions, the Company is unlikely to take out
gearing in excess of 15% of net assets. Gearing is used selectively to
leverage the Company's portfolio in order to enhance returns where this is
considered appropriate. Borrowings are generally shorter-term, but the Board
may from time to time take out longer-term borrowings where it is believed to
be in the Company's best interests to do so. Particular care is taken to
ensure that any bank covenants permit maximum flexibility of investment
policy.
The percentage investment and gearing limits set out under this sub-heading
"Investment Policy" are only applied at the time that the relevant investment
is made or borrowing is incurred.
In the event of any breach of the Company's investment policy, shareholders
will be informed of the actions to be taken by the Investment Manager by an
announcement issued through a Regulatory Information Service or a notice sent
to shareholders at their registered addresses.
The Company may only make material changes to its investment policy (including
the level of gearing set by the Board) with the approval of shareholders (in
the form of an ordinary resolution). In addition, any changes to the Company's
investment objective or policy will require the prior approval of the
Financial Conduct Authority as well as prior consent of the Jersey Financial
Services Commission ("JFSC") to the extent that the changes materially affect
the import of the information previously supplied in connection with its
approval under Jersey Funds Law or are contrary to the terms of the Jersey
Collective Investment Funds laws.
Duration and Continuation Vote
The Company does not have a fixed life. However, as explained in the
Chairman's Statement, since the year end the Board has introduced a
continuation vote so that shareholders can decide whether they wish the
Company to continue in its current form at regular intervals. A continuation
vote will first be tabled at the Company's Annual General Meeting in 2028, and
every three years thereafter. Shareholders will be asked by simple majority
vote if they wish the Company to continue in its current form. In the event
that the vote should fail, further proposals will be brought to shareholders
regarding the future of the Company.
Comparative Indices
The Company's portfolio is constructed without reference to any stock market
index. It is likely, therefore, that there will be periods when the Company's
performance will be quite unlike that of any index and there can be no
assurance that such divergence will be wholly or even primarily to the
Company's advantage. The Company compares its performance against the
currency-adjusted MSCI AC Asia Pacific ex Japan Index.
Promoting the Success of the Company
In accordance with corporate governance best practice, the Board is required
to describe to the Company's shareholders how the Directors have discharged
their duties and responsibilities over the course of the financial year
following the guidelines set out in the UK under section 172 (1) of the
Companies Act 2006 (the "s172 Statement") which the Company has adopted on a
voluntary basis. This Statement, from "Promoting the Success of the Company"
to "Board Composition" provides an explanation of how the Directors have
promoted the success of the Company for the benefit of its members as a whole,
taking into account, among other things, the likely long-term consequences of
decisions, the need to foster relationships with all stakeholders and the
impact of the Company's operations on the environment.
The purpose of the Company is to act as a vehicle to provide, over time,
financial returns (both income and capital) to its shareholders. The Company's
investment objective is disclosed above. The activities of the Company are
overseen by the Board of Directors of the Company. The Board's philosophy is
that the Company should operate in a transparent culture where all parties are
treated with respect and provided with the opportunity to offer practical
challenge and participate in positive debate which is focused on the aim of
achieving the expectations of shareholders and other stakeholders alike. At
its regular meetings, the Board reviews the culture and manner in which the
Investment Manager operates and receives regular reporting and feedback from
the other key service providers.
Investment companies, such as the Company, are long-term investment vehicles,
with a recommended holding period of five or more years. Typically, investment
companies are externally managed, have no employees, and are overseen by an
independent non-executive board of directors. The Company's Board of Directors
sets the investment mandate, monitors the performance of all service providers
(including the Investment Manager) and is responsible for reviewing strategy
on a regular basis. All this is done with the aim of preserving and, indeed,
enhancing shareholder value over the longer-term.
Shareholder Engagement
The following table describes some of the ways the Board engages with the
Company's shareholders:
Annual General Meeting ("AGM") The AGM provides an opportunity for the Directors to engage with shareholders,
answer their questions and meet them informally. The next AGM will take place
at 10:30 a.m. on 8 May 2025 in London. Shareholders who are unable to attend
are encouraged to lodge their votes by proxy on all the resolutions put
forward.
Annual Report The Company publishes a full annual report each year that contains a strategic
report, governance section, financial statements and additional information.
The report is available online and in paper format.
Company Announcements The Company issues announcements for all substantive news relating to it.
These can be found on the Company's website and the London Stock Exchange's
website.
Results Announcements The Company releases a full set of financial results at the half year and full
year stage. Updated net asset value figures are announced on a daily basis.
Monthly Factsheets The Investment Manager publishes monthly factsheets on the Company's website
including commentary on the portfolio and market performance.
Website The Company's website contains a range of information and includes a full
monthly portfolio listing of the Company's investments as well as podcasts by
the Investment Manager. Details of financial results, the investment process
and Investment Manager together with Company announcements and contact details
can be found here: asian-income.co.uk.
Investor Relations The Company subscribes to the Investment Manager's Promotional and Investor
Relations programme.
The Investment Manager
The key service provider for the Company is the Investment Manager, abrdn Asia
Limited. The performance of abrdn Asia Limited is reviewed in detail at each
Board meeting.
Key Stakeholders - Shareholders
Shareholders are key stakeholders in the Company - they are looking to the
Investment Manager to achieve the investment objective over time and to
deliver a regular growing income together with some capital growth. The Board
is available to meet with shareholders at the AGM. This is seen as a very
useful opportunity to understand the needs and views of the shareholders. In
between AGMs, the Directors and Investment Manager also conduct programmes of
investor meetings with larger institutional, private wealth and other
shareholders to ensure that the Company is meeting their needs. Such regular
meetings may take the form of joint presentations with the Investment Manager
or meetings directly with a Director where any matters of concern may be
raised directly.
Other Stakeholders - Service Providers
The other key stakeholder group is that of the Company's third party service
providers. The Board is responsible for selecting the most appropriate
outsourced service providers and monitoring the relationships with these
suppliers regularly in order to ensure a constructive working relationship.
The service providers look to the Company to provide them with a clear
understanding of its needs in order that those requirements can be delivered
efficiently and fairly. The Board, via the Management Engagement Committee,
ensures that the arrangements with service providers are reviewed in detail at
least annually. The aim is to ensure that contractual arrangements remain
competitively priced in line with best practice, services being offered meet
the requirements and needs of the Company and performance is in line with the
expectations of the Board, Investment Manager and other relevant stakeholders.
Reviews include those of the Company's Custodian, Company Secretary,
Registrar, Broker and Auditor.
Principal Decisions
Pursuant to the Board's aim of promoting the long-term success of the Company,
the following principal decisions were taken during the year:
Portfolio/Investment Performance
The Investment Manager's Review details the key investment decisions taken
during the year and subsequently. The Investment Manager has continued to
monitor the investment portfolio throughout the year under the supervision of
the Board.
The Investment Manager's investment process seeks to outperform over the
longer term. The Board has in place the necessary procedures and processes to
continue to promote the long-term success of the Company. The Board continues
to monitor, evaluate and seek to improve these processes as the Company
continues to grow over time, to ensure that the investment proposition is
delivered to shareholders and other stakeholders in line with their
expectations.
Gearing
The Company utilises gearing in the form of bank debt with the aim of
enhancing shareholder returns over the longer term. Since the year end, the
Board has renewed the £50 million revolving credit facility that existed
during the year. The loan, with the Bank of Nova Scotia, London Branch, has
been renewed for one year, to February 2026. 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. The Board reviews the level of gearing at each Board
meeting.
Share Buybacks
During the year, the Company continued to buy back Ordinary shares
opportunistically in order to provide liquidity to the market and to provide
an enhancement to the Company's net asset value and benefit all shareholders.
16.9 million Ordinary shares were bought back during the year to be held in
treasury, representing 10.1% of the shares in issue at the start of the year.
The average discount to NAV of the shares bought back was 12.4% and the
buybacks provided an estimated enhancement of 1.2% to the NAV per share.
Corporate Broker
Following a review of its corporate broking arrangements during the year, the
Board announced the appointment of Peel Hunt LLP to act as the Company's sole
corporate broker. The Board considers that it is in shareholders' interests
for the Company to have a pro-active Broker to manage any imbalance of supply
and demand in the Company's shares and to work closely with the Investment
Manager in respect of marketing activities and arranging meetings with the
Company's larger shareholders.
PR Agent
Recognising the importance of communicating with shareholders and potential
shareholders as a means to improving demand for the Company's shares, during
the year the Board appointed an external PR agent to work alongside the
Investment Manager in seeking to raise the profile of the Company. The Board
considers that it is in shareholders' interests for the Company to engage
external parties to help promote the Company to investors with the aim of this
helping to narrow the discount at which the Company's shares trade.
Board Composition
During the year, and in accordance with its succession plans, 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. Ms
Routledge has significant marketing experience which has already brought
benefit to the Board's deliberations. Ms Routledge will stand for election
at the forthcoming AGM.
Key Performance Indicators ("KPIs")
The Board uses a number of financial performance measures to assess the
Company's success in achieving its objective and to determine the progress of
the Company in pursuing its investment policy. The main KPIs identified by the
Board in relation to the Company, which are considered at each Board meeting,
are as follows:
KPI Description
Dividend Payments per Ordinary share The Board aims to grow the Company's dividends over time. Dividends paid over
the past 10 years are set out below.
Performance Absolute Performance: The Board monitors the Company's NAV total return
performance in absolute terms.
Relative Performance: The Board also measures performance against the MSCI AC
Asia Pacific ex Japan Index (currency adjusted) and performance relative to
other investment companies within the Company's peer group over a range of
time periods, taking into consideration the differing investment policies and
objectives employed by those companies.
Share Price Performance: The Board also monitors the price at which the
Company's shares trade relative to the MSCI AC Asia Pacific ex Japan Index
(currency adjusted) on a total return basis over time.
The Board measures performance over a time horizon of at least five years. The
absolute, relative and share price performance is shown above and further
commentary on the performance of the Company is contained in the Chairman's
Statement and Investment Manager's Review.
Discount/Premium to NAV The discount/premium relative to the NAV per share represented by the share
price is closely monitored by the Board. The Directors aim to operate an
active share buyback policy should the price at which the Ordinary shares
trade relative to the NAV per share (including income) be at a discount of
more than 5% in normal market conditions.
Ongoing Charges Ratio The Board monitors the Company's operating costs carefully. Ongoing charges
for the year
and previous year are disclosed above.
Gearing The Board ensures that gearing is kept within the Board's guidelines to the
Investment Manager.
Risk Management
There are a number of risks which, if realised, could have a material adverse
effect on the Company and its financial condition, performance and prospects.
The Board has undertaken a robust review of the principal and emerging risks
and uncertainties facing the Company including those that would threaten its
business model, future performance, solvency or liquidity. Those principal
risks are disclosed in the table below together with a description of the
mitigating actions taken by the Board. The principal risks associated with an
investment in the Company's shares are published monthly on the Company's
factsheet or they can be found in the Pre-Investment Disclosure Document
published by the Investment Manager, both of which are available on the
Company's website.
The Board reviews the risks and uncertainties faced by the Company in the form
of a risk matrix and heat map at its Audit Committee meetings. The Board also
has a process to consider emerging risks and if any of these are deemed to be
significant they are categorised, rated and added to the risk matrix for
closer monitoring.
The Board considers that there are a number of other risks which, if realised,
could have a material adverse effect on the Company and its financial
condition, performance and prospects. These include the 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
higher-than-forecast inflation in the UK and its potential impact on interest
rate expectations, and also the potential impact on economic growth globally
of recently announced US trade tariffs.
Risk Management Mitigating Actions
Investment strategy & objectives - the setting of an unattractive The Board keeps the investment objective and policy as well as the level of
strategic proposition to the market and the failure to adapt discount and/or premium at which the Company's shares trade under review. In
particular, there are periodic strategy discussions where the Board reviews
to changes in investor demand could lead to the Company becoming unattractive the Investment Manager's investment processes, analyses the work of the
to investors, a decreased demand for its shares and a widening discount. Investment Manager's Promotional and Investor Relations teams and receives
reports on the market from the Broker. In addition, the Directors are updated
at each Board meeting on the make-up of and any movements in the shareholder
register.
As set out in more detail in the Chairman's Statement, since the year end
the Board has introduced an enhanced dividend policy which will apply from the
start of the 2025 financial year.
Investment portfolio & investment management - the appointment or The Board sets the investment restrictions and guidelines in which the
continuing appointment of an investment manager with inadequate resources, Investment Manager may operate, and reviews the Investment Manager's adherence
skills or experience or which makes with these, as well as detailed performance reports, at each Board meeting.
The Investment Manager is represented at all Board meetings.
poor investment decisions could result in poor investment performance, a loss
of value for shareholders and a widening discount.
The Management Engagement Committee formally reviews the performance and
contractual arrangements with the Investment Manager on an annual basis.
The financial risks associated with the Company include market risk, liquidity
risk and credit risk, all of which are mitigated in conjunction with the
Investment Manager. Further details are contained in note 18 to the financial
statements.
Marketing & Shareholder Communication - the setting of an inappropriate In addition to marketing activities conducted by the Investment Manager, the
marketing strategy or a failure to address shareholder concerns could result Board has engaged a PR agent to help raise the Company's profile.
in the Company becoming unattractive to investors and a widening of the
discount.
The Board annually agrees marketing and communications programmes and budgets
with the Investment Manager and PR agent, and receives updates regularly on
these activities. The Directors are updated at each Board meeting on the
composition of, and any movements in, the shareholder register. The Chairman
responds directly to shareholder correspondence as required and copies of
shareholder letters are included in Board papers.
Discount Management - failure to manage the discount effectively could lead to The Board keeps the level of discount and/or premium at which the Company's
a fall in the share price relative to the NAV per share, a wider discount shares trade under review. The Directors aim
compared to the Company's peers and a loss of shareholder confidence.
to operate an active share buyback policy should the price at which the
Ordinary shares trade relative to the NAV per share (including income) be at a
discount of more than 5% in normal market conditions.
The Company bought back 16.9 million Ordinary shares during the year to be
held in treasury, representing 10.1% of the shares in issue at the start of
the period, at an average discount of 12.4% and providing an estimated
enhancement of 1.2% to the NAV per share.
Regulatory - a failure to comply with relevant laws and regulations (including The Board-appointed Compliance Officer, together with the Investment Manager's
those in Jersey and the UK) could result in the Company being subject to compliance team, perform compliance monitoring to ensure the Company's
fines, censures or lawsuits or the loss of investment trust status, causing a compliance with applicable laws and regulatory obligations, and from time to
fall in investor confidence and loss of shareholder value. time the Board employs external advisers to advise on specific issues.
The Board reviews the Compliance Officer's and Investment Manager's compliance
reports at each Board meeting.
Cyber - control failures or the absence of adequate IT security systems of The Board receives reports from the Investment Manager on its internal
third party service providers (including the Investment Manager) could result controls and risk management processes, including on matters relating to cyber
in losses or damage to the Company. security, and receives a bi-annual presentation from the Investment Manager's
cyber security team.
The Investment Manager monitors closely the IT security controls of its
outsourced service providers, including those of the Custodian.
The Management Engagement Committee formally reviews the performance and
contractual arrangements with the Company's third party providers on an annual
basis.
Operational - control failures and gaps in the systems and services of third The Board receives reports from the Investment Manager on its internal
party service providers (including the Investment Manager) could result in controls and risk management processes, including on matters relating to
losses or damage to the Company. operational resilience.
Written agreements are in place with all third party service providers. The
Investment Manager monitors closely the control environments and quality of
services provided by its outsourced service providers, including those of the
Custodian, through service level agreements, regular meetings and key
performance indicators.
The Management Engagement Committee formally reviews the performance and
contractual arrangements with the Company's third party providers on an annual
basis.
Further details of the internal controls which are in place are set out in the
Directors' Report.
Geo-Political - the impact of current and future geo-political events could The Board discusses geo-political developments with the Investment Manager at
result in losses to the Company. each Board meeting. The diversified nature of the portfolio and a managed
level of gearing both serve to provide a degree of protection in times of
market volatility.
Promoting the Company
The Board recognises the importance of communicating the long-term attractions
of the Company to prospective investors both for improving liquidity and
enhancing the value and rating of the Company's shares. The Board believes an
effective way to achieve this is through subscription to and participation in
the promotional programme run by the abrdn Group on behalf of a number of
investment companies under its management. The Company also supports the abrdn
investor relations programme which involves regional roadshows and promotional
and public relations campaigns. The purpose of these initiatives is both to
communicate effectively with existing shareholders and to gain new
shareholders with the aim of improving liquidity and enhancing the value and
rating of the Company's shares. The Company's financial contribution to the
programmes is matched by the abrdn Group.
The Company, through the Investment Manager, has also commissioned independent
paid-for research which has been undertaken by Edison Investment Research
Limited and a copy of the latest research is available for download from the
Company's website.
In addition, during the year the Board appointed an external PR agent to work
alongside the Investment Manager in seeking to raise the profile of the
Company.
Environmental, Social and Human Rights Issues
The Company has no employees as management of the assets is delegated to the
Investment Manager. There are therefore no disclosures to be made in respect
of employees.
Due to the nature of the Company's business, being a Company that does not
offer goods and services to customers, the Board considers that it is not
within the scope of the UK's Modern Slavery Act 2015 because it has no
turnover. The Company is therefore not required to make a slavery and human
trafficking statement.
Global Greenhouse Gas Emissions
Under Listing Rule 11.4.22(R), the Company, as a closed ended investment
company, is exempt from complying with the Task Force on Climate-related
Financial Disclosures ("TCFD").
Socially Responsible Investment Policy
The Company supports the UK's Stewardship Code, and seeks to play its role in
supporting good stewardship of the companies in which it invests. While the
delivery of stewardship activities has been delegated to the Investment
Manager, the Board acknowledges its role in setting the tone for the effective
delivery of stewardship on the Company's behalf.
Sustainability Disclosure Requirements ("SDR")
In November 2023, the Financial Conduct Authority ("FCA") published its
sustainability disclosure requirements and investment labels regime ("SDR") to
address concerns about misleading sustainability claims. SDR includes an
opt-in labelling regime for sustainable investment products, additional
disclosure requirements and restrictions on the use of sustainability terms.
It also establishes anti-greenwashing ("AGW") rules. Investment trusts and
their managers are in scope of the SDR. Although investment trusts are not
directly in scope of the AGW requirements, the rules apply indirectly to them,
mostly via obligations imposed on their managers.
Although Environmental, Social and Governance ("ESG") factors are taken into
consideration by the Investment Manager as part of its investment analysis,
the Company itself does not have an explicit sustainability objective and so
under SDR is categorised as "Non-labelled" rather than "Labelled" or "Other".
Viability Statement
The Company does not have a formal fixed period strategic plan but the Board
formally considers risks and strategy at least annually. The Board considers
the Company, with no fixed life, to be a long-term investment vehicle, but for
the purposes of this viability statement has decided that a period of three
years is an appropriate period over which to report. The Board considers that
this period reflects a balance between looking out over a long-term horizon
and the inherent uncertainties of looking out further than three years. In
assessing the viability of the Company over the review period the Directors
have focused upon the following factors:
● the principal risks detailed in the Strategic Report;
● the ongoing relevance of the Company's investment
objective in the current environment;
● the demand for the Company's shares evidenced by the
historical level of premium and/or discount;
● the level of income generated by the Company;
● the liquidity of the Company's portfolio;
● the flexibility provided by the £50 million revolving
credit facility that has been renewed since the year end and which matures in
February 2026; and
● the announcement by the Board since the year end of the
introduction of a continuation vote, which will first be tabled at the
Company's Annual General Meeting in 2028, and every three years thereafter.
Accordingly, taking into account the Company's current position, the fact that
its investments are mostly liquid and the potential impact of its principal
risks and uncertainties, the Directors have a reasonable expectation that the
Company will be able to continue in operation and meet its liabilities as they
fall due for a period of three years from the date of this Report. In making
its assessment, the Board is also aware that there are other matters that
could have an impact on the Company's prospects or viability in the future,
including significant stock market volatility, and changes in regulation or
investor sentiment.
Future
Many of the non-performance related trends likely to affect the Company in the
future are common across all closed- end investment companies, such as the
attractiveness of investment companies as investment vehicles, the increased
focus on ESG factors when making investment decisions, the impact of
regulatory changes and the effects of changes to the pensions and savings
market in the UK in recent years. These factors need to be viewed alongside
the outlook for the Company, both generally and specifically, in relation to
the portfolio. The Board's view on the general outlook for the Company can be
found in the Chairman's Statement whilst the Investment Manager's views on the
outlook for the portfolio are included in its statement.
Ian Cadby
Chairman
25 March 2025
28 Esplanade St Helier
Jersey JE2 3QA
DIVIDENDS AND TEN YEAR FINANCIAL RECORD
Dividends
Rate Ex-dividend date Record date Payment date
First interim 2024 2.55p 25 April 2024 26 April 2024 24 May 2024
Second interim 2024 2.55p 25 July 2024 26 July 2024 23 August 2024
Third interim 2024 2.55p 24 October 2024 25 October 2024 22 November 2024
Fourth interim 2024 6.78p 23 January 2025 24 January 2025 21 February 2025
2024 14.43p
First interim 2023 2.50p 27 April 2023 28 April 2023 23 May 2023
Second interim 2023 2.50p 27 July 2023 28 July 2023 25 August 2023
Third interim 2023 2.50p 26 October 2023 27 October 2023 24 November 2023
Fourth interim 2023 4.25p 25 January 2024 26 January 2024 23 February 2024
2023 11.75p
Ten Year Financial Record
Year to 31 December 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Total revenue (£'000) 21,216 20,947 21,758 21,056 20,996 16,942 20,198 21,841 24,021 22,286
Per Ordinary share (p)
Revenue return 9.11 9.15 9.58 9.25 9.42 7.41 8.95 10.23 11.97 11.35
Total return (18.86) 49.12 33.14 (13.17) 22.29 27.10 25.88 (10.01) 5.18 11.73
Dividends payable 8.50 8.75 9.00 9.15 9.25 9.30 9.50 10.00 11.75 14.43
Net asset value per Ordinary share (p) 170.58 211.82 235.63 213.96 227.15 245.40 262.76 243.44 238.59 251.42
Share price per Ordinary share (p) 159.00 194.25 218.00 195.75 214.00 228.50 231.00 215.00 208.00 220.00
Equity shareholders' funds (£'000) 329,432 396,028 431,869 382,199 403,403 431,476 450,790 413,447 398,868 362,358
INVESTMENT PORTFOLIO
As at 31 December 2024
Valuation Total Valuation
2024 assets (A) 2023 (B)
Company Country £'000 % £'000
Taiwan Semiconductor Manufacturing Company Taiwan 56,804 13.8 35,371
Power Grid Corp India 14,688 3.6 12,056
DBS Group Singapore 14,512 3.5 15,260
Samsung Electronics (Pref) South Korea 12,650 3.1 28,170
Oversea-Chinese Banking Corporation Singapore 12,399 3.0 14,088
Mirvac Group Australia 12,012 2.9 -
United Overseas Bank Singapore 11,523 2.8 10,807
Taiwan Mobile Taiwan 10,940 2.7 9,963
BHP Group Australia 10,580 2.6 19,340
MediaTek Taiwan 10,097 2.5 13,062
Top ten investments 166,205 40.5
China Construction Bank China 9,970 2.4 -
Tencent Holdings Hong Kong 9,460 2.3 4,088
Accton Technology Taiwan 8,593 2.1 7,365
Commonwealth Bank of Australia Australia 8,120 2.0 6,396
Telstra Corporation Australia 8,100 2.0 4,207
Hon Hai Precision Industry Taiwan 7,488 1.8 4,442
AIA Group Hong Kong 7,390 1.8 8,730
Rio Tinto (C) Australia 7,250 1.8 10,516
Midea Group 'A' (D) China 7,140 1.7 5,252
Charter Hall Long Wale REIT Australia 6,995 1.7 7,153
Top twenty investments 246,711 60.1
Sunonwealth Electric Machine Taiwan 6,931 1.7 7,603
Tisco Financial Group Foreign Thailand 6,661 1.6 7,055
Tata Consultancy Services India 6,647 1.6 4,979
Bank Mandiri Indonesia 6,631 1.6 4,251
Singapore Technologies Engineering Singapore 6,399 1.6 6,582
SITC International Holdings Hong Kong 6,130 1.5 4,662
Capitaland India Trust Singapore 6,077 1.5 6,129
Hong Kong Exchanges & Clearing Hong Kong 6,042 1.5 5,465
Singapore Telecommunications Singapore 5,935 1.5 4,333
Infosys India 5,884 1.4 6,442
Top thirty investments 310,048 75.6
Venture Corporation Singapore 5,819 1.4 11,147
Dah Sing Financial Holding Hong Kong 5,632 1.4 3,134
Region RE Australia 5,582 1.4 6,569
PICC Property and Casualty 'H' China 5,564 1.4 -
National Australia Bank Australia 5,492 1.3 4,903
Centuria Industries REIT Australia 5,133 1.3 9,219
China Resources Land China 4,761 1.2 8,704
Inner Mongolia Yili Industrial 'A' China 4,398 1.1 -
NZX New Zealand 4,241 1.0 4,278
Taiwan Union Technology Taiwan 4,165 1.0 3,768
Top forty investments 360,835 88.1
Transurban Group Australia 4,134 1.0 -
Capitaland Investment Singapore 4,049 1.0 4,947
Amada Co Japan 4,014 1.0 4,197
Axtra Future City Thailand 3,849 0.9 -
Fuyao Glass Industry 'A' China 3,393 0.8 -
Autohome Inc - ADR Hong Kong 3,393 0.8 3,609
AKR Corporindo Indonesia 3,283 0.8 4,119
GlobalWafers Taiwan 3,229 0.8 5,221
Hang Lung Properties Hong Kong 2,630 0.6 4,479
Advanced Info Service Thailand 2,212 0.5 -
Top fifty investments 395,021 96.3
Land & Houses Foreign Thailand 2,053 0.5 3,263
China Resources Gas China 2,004 0.5 1,627
Spark New Zealand New Zealand 1,900 0.5 8,188
Midea Group (E) China 1,794 0.4 -
Convenience Retail Asia Hong Kong 1,694 0.4 2,746
SK Hynix South Korea 1,575 0.4 -
Top fifty-six investments 406,041 99.0
G3 Exploration ( )(F) China - - -
Total value of investments 406,041 99.0
Net current assets (G) 4,276 1.00
Total assets (A) 410,317 100.0
(A) Net assets excluding borrowings.
(B) Purchases and/or sales effected during the year may result in 2024 and
2023 values not being directly comparable.
(C) Incorporated in and listing held in United Kingdom.
(D) Shares denominated in Chinese Renminbi.
(E)Shares denominated in Hong Kong Dollars.
(F) Corporate bonds.
(G) Excludes bank loans of £32,422,000 and includes deferred tax liability on
Indian capital gains of £1,706,000.
DIRECTORS' REPORT (EXTRACT)
Introduction
The Directors present their Report and the audited financial statements for
the year ended 31 December 2024.
Results and Dividends
The financial statements for the year ended 31 December 2024 are contained
below. The Company's dividend policy is to pay interim dividends on a
quarterly basis and for the year to 31 December 2024 dividends were paid on 24
May, 23 August and 22 November 2024 and 21 February 2025.
Status
The Company is registered with limited liability in Jersey as a closed-end
investment company under the Companies (Jersey) Law 1991 with registered
number 91671 and regulated as an Alternative Investment Fund by the Jersey
Financial Services Commission. In addition, the Company constitutes and is
regulated as a collective investment fund under the Collective Investment
Funds (Jersey) Law 1988 and is an Alternative Investment Fund (within the
meaning of Regulation 3 of the Alternative Investment Fund Regulations). The
Company has no employees and makes no political donations. The Ordinary shares
are admitted to the Official List and are traded on the London Stock
Exchange's Main Market.
With effect from 1 January 2022 the Company applied to HM Revenue &
Customs to become an investment trust subject to the Company continuing to
meet the relevant eligibility conditions of Section 1158 of the Corporation
Tax Act 2010 and the ongoing requirements of Part 2 Chapter 3 Statutory
Instrument 2011/2999 for all financial years commencing on or after 1 January
2022. The Directors are of the opinion that the Company has conducted its
affairs for the period from 1 January 2022 so as to enable it to comply with
the ongoing requirements for investment trust status.
The Company is a member of the Association of Investment Companies ("AIC").
Individual Savings Accounts
The Company has conducted its affairs so as to satisfy the requirements as a
qualifying security for Individual Savings Accounts. The Directors intend that
the Company will continue to conduct its affairs in this manner.
Capital Structure, Issuance and Buybacks
The Company's capital structure is summarised in note 15 to the financial
statements. At 31 December 2024, there were 150,306,492 fully paid Ordinary
shares of no par value (2023 - 167,178,707) Ordinary shares in issue. At the
year end there were 44,626,897 Ordinary shares held in treasury (2023 -
27,754,682).
During the year 16,872,215 Ordinary shares were purchased in the market for
treasury (2023 - 2,653,694) and no Ordinary shares were issued or sold from
treasury.
Subsequent to the year end 3,927,318 Ordinary shares have been purchased in
the market at a discount for treasury.
Voting Rights
Each Ordinary share holds one voting right and shareholders are entitled to
vote on all resolutions which are proposed at general meetings of the Company.
The Ordinary shares, excluding treasury shares, carry a right to receive
dividends. On a winding up or other return of capital, after meeting the
liabilities of the Company, the surplus assets will be paid to Ordinary
shareholders in proportion to their shareholdings. There are no restrictions
on the transfer of Ordinary shares in the Company other than certain
restrictions which may be applied from time to time by law.
Borrowings
At the year end the Company had a £50 million loan with the Bank of Nova
Scotia, London Branch. Since the year end, the facility has been renewed for a
year, to February 2026. 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.
Management and Company Secretarial Arrangements
abrdn Asia Limited (a Singapore-based wholly-owned subsidiary of abrdn plc)
has been appointed by the Company to provide portfolio and risk management
services and to act as the Company's non-EU 'alternative investment fund
manager' for the purposes of the Alternative Investment Fund Managers
Directive 2011/61/EU. abrdn Investments Limited (a UK-based wholly owned
subsidiary of abrdn plc), which is authorised and regulated by the Financial
Conduct Authority, has been appointed to provide general administrative and
advisory services, fund accounting, secretarial, marketing and promotional
activities as well as group risk and compliance reporting to the Company.
In addition, the Company has appointed JTC Fund Solutions (Jersey) Limited
("JTC") under an administration agreement between JTC and the Company to
provide certain Jersey based services including, but not limited to, Jersey
administration services and compliance with applicable Jersey codes (including
provision of a compliance officer, money laundering reporting officer and
money laundering compliance officer). JTC also provides a registered office
and company secretarial services. The administration fee charged by JTC is met
by the abrdn Group.
Termination of the management agreement is subject to six months' notice.
Further details of the management fee arrangements are contained in notes 5
and 20 to the financial statements.
Risk Management
Details of the financial risk management policies and objectives relative to
the use of financial instruments by the Company are set out in note 18 to the
financial statements.
Substantial Interests
Information provided to the Company by major shareholders pursuant to the
FCA's Disclosure Guidance and Transparency Rules are published by the Company
via a Regulatory Information Service.
The table below sets out the interests in 3% or more of the issued share
capital of the Company, of which the Board was aware as of 31 December 2024.
No of Shares %
Shareholder Held Held
Interactive Investor 16,909,912 11.2
City of London Investment Management 14,599,937 9.7
Hargreaves Lansdown 13,444,247 8.9
Rathbones 11,143,622 7.4
1607 Capital Partners 10,103,531 6.7
AJ Bell 5,674,139 3.8
Charles Stanley 5,563,029 3.7
Allspring Global Investments 5,293,555 3.5
Since the year end, 1607 Capital Partners has notified the Company of a
reduced holding of 7,211,181 Ordinary shares (4.9%). There have been
no other changes notified to the Company since the year end.
Directors
The Board currently consists of six non-executive Directors, Robert Kirkby,
Mark Florance, Ian Cadby, Nicky McCabe, Jane Routledge and Krystyna Nowak.
Jane Routledge was appointed on 8 May 2024. The other Directors each held
office throughout the year.
Governance
The AIC's Code of Corporate Governance recommends that all Directors should be
subject to annual re-election by shareholders. Accordingly, all members of the
Board, other than Krystyna Nowak, will retire at the Annual General Meeting
("AGM") and will offer themselves for election/ re-election. Having served as
a Director for more than nine years, Krystyna Nowak will retire from the Board
at the AGM.
The Board considers that there is a balance of skills and experience within
the Board relevant to the leadership and direction of the Company and that all
the Directors contribute effectively. The Board has reviewed each of the
proposed elections/re-elections and concluded that each of the Directors has
the requisite high level and range of business and financial experience and
recommends their election/re- election at the forthcoming AGM.
In common with most investment companies, the Company has no employees.
Directors' & Officers' liability insurance cover has been maintained
throughout the year at the expense of the Company.
Board Diversity
The Board recognises the importance of having a range of skilled, experienced
individuals with the right knowledge represented on the Board in order to
allow it to fulfil its obligations. The Board also recognises the benefits,
and is supportive of, the principle of diversity in its recruitment of new
Board members, including diversity of thought, location and background. The
Board will not display any bias for age, gender, race, sexual orientation,
religion, ethnic or national origins, or disability in considering the
appointment of its Directors. In view of its size, the Board will continue to
ensure that all appointments are made on the basis of merit against the
specification prepared for each appointment. In doing so, the Board will take
account of the targets set out in the FCA's Listing Rules, which are set out
below.
The Board has resolved that the Company's year-end date is the most
appropriate date for disclosure purposes. In addition to the information
contained below, of the six Directors at 31 December 2024, one is based in
Singapore, two are based in Jersey and three are based in the UK.
Table for reporting on gender as at 31 December 2024
Number of senior positions on the Board
Number of Board Percentage of the
members Board (note 1)
Men 3 50% 5
Women 3 50% -
Not specified/prefer not to say - - -
Table for reporting on ethnic background as at 31 December 2024
Number of senior positions on the Board
Number of Board Percentage of the
members Board (note 1)
White British or other White (including minority-white groups)
6 100% 5
Minority ethnic - - -
Not specified/prefer not to say - - -
Notes:
1. The Company is externally managed and does not have any executive staff.
Specifically, it does not have either a CEO or CFO. The Board considers that
the roles of Chairman of the Board, Senior Independent Director, and the
chairs of the Audit Committee, Management Engagement Committee and Nomination
and Remuneration Committee are Senior Board Positions.
As shown in the above table, the Company has not met the target set out in LR
6.6.6R (9)(a)(iii) that at least one Director is from a minority ethnic
background. The Board short listed and interviewed ethnically diverse
candidates as part of its most recent recruitment process and will continue to
take ethnic diversity into account for future appointments. At the year end
the Company also did not meet the target set out in LR 6.6.6R (9)(a)(ii) that
at least one Senior Board Position is held by a woman. However, since the year
end, Ms Routledge has been appointed as Chair of the Nomination and
Remuneration Committee and the Company now meets the Listing Rule target that
at least one Senior Board Position is held by a woman.
Policy on Tenure
In normal circumstances, it is the Board's expectation that Directors will not
serve beyond the Annual General Meeting following the ninth anniversary of
their appointment. However, the Board takes the view that independence of
individual Directors is not necessarily compromised by length of tenure on the
Board and that continuity and experience can add significantly to the Board's
strength. The Board believes that recommendation for re-election should be on
an individual basis following a rigorous review which assesses the
contribution made by the Director concerned, but also taking into account the
need for managed succession and diversity.
It is the Board's policy that the Chairman of the Board will not serve as a
Director beyond the Annual General Meeting following the ninth anniversary of
his or her appointment to the Board. However, this may be extended in
exceptional circumstances or to facilitate effective succession planning and
the development of a diverse Board. In such a situation the reasons for the
extension will be fully explained to shareholders and a timetable for the
departure of the Chairman clearly set out.
Corporate Governance
The Company is committed to high standards of corporate governance. The Board
is accountable to the Company's shareholders for good governance and this
statement describes how the Company has applied the principles identified in
the UK Corporate Governance Code as published in July 2018 (the "UK Code"),
which is available on the Financial Reporting Council's (the "FRC") website:
frc.org.uk.
The Board has also considered the principles and provisions of the AIC Code of
Corporate Governance as published in February 2019 (the "AIC Code"). The AIC
Code addresses the principles and provisions set out in the UK Code, as well
as setting out additional provisions on issues that are of specific relevance
to the Company. The AIC Code is available on the AIC's website: theaic.co.uk.
The Board considers that reporting against the principles and provisions of
the AIC Code, which has been endorsed by the FRC, provides more relevant
information to shareholders.
The Board confirms that, during the year, the Company complied with the
principles and provisions of the AIC Code and the relevant provisions of the
UK Code, except as set out below.
The UK Code includes provisions relating to:
● interaction with the workforce (provisions 2, 5 and 6);
● the role and responsibility of the chief executive
(provisions 9 and 14);
● previous experience of the chairman of a remuneration
committee (provision 32); and
● executive directors' remuneration (provisions 33 and 36
to 40).
The Board considers that these provisions are not relevant to the position of
the Company, being an externally managed investment company. In particular,
all of the Company's day-to-day management and administrative functions are
outsourced to third parties. As a result, the Company has no executive
directors, employees or internal operations. The Company has therefore not
reported further in respect of these provisions.
Full details of the Company's compliance with the AIC Code of Corporate
Governance can be found on its website.
Directors attended the following scheduled Board and Committee meetings during
the year ended 31 December 2024 (with their eligibility to attend the relevant
meeting in brackets):
Board Audit MEC Nom
Total Meetings 4 2 1 1
I Cadby A 4 (4) 2 (2) 1 (1) 1 (1)
M Florance 4 (4) 2 (2) 1 (1) 1 (1)
R Kirkby 4 (4) 2 (2) 1 (1) 1 (1)
N McCabe 4 (4) 2 (2) 1 (1) 1 (1)
K Nowak 4 (4) 2 (2) 1 (1) 1 (1)
J Routledge B 3 (3) 1 (1) - (-) - (-)
A Mr Cadby is not a member of the Audit Committee but attended both meetings
by invitation.
B Appointed a Director on 8 May 2024.
In addition to the above meetings there were a number of ad hoc Board Meetings
held during the year to review and approve dividends and other operational
matters.
The Board has a schedule of matters reserved to it for decision and the
requirement for Board approval on these matters is communicated directly to
the senior staff of the Investment Manager. Such matters include strategy,
gearing, treasury and dividend policy. Full and timely information is provided
to the Board to enable the Directors to function effectively and to discharge
their responsibilities. The Board also reviews the financial statements,
performance and revenue budgets.
The Board is conscious of the FRC's updates to the UK Corporate Governance
Code, and the corresponding updates to the AIC Code, some of which will apply
to the Company's financial year beginning on 1 January 2025. It is the Board's
intention that the Company will comply with all relevant provisions of the new
codes.
The Role of the Chairman and Senior Independent Director
The Chairman is responsible for providing effective leadership to the Board,
by setting the tone of the Company, demonstrating objective judgement and
promoting a culture of openness and debate. The Chairman facilitates the
effective contribution, and encourages active engagement, by each Director. In
conjunction with the Company Secretary, the Chairman ensures that Directors
receive accurate, timely and clear information to assist them with effective
decision-making. The Chairman leads the evaluation of the Board and individual
Directors, and acts upon the results of the evaluation process by recognising
strengths and addressing any weaknesses. The Chairman also engages with major
shareholders and ensures that all Directors understand shareholder views.
The Senior Independent Director acts as a sounding board for the Chairman and
acts as an intermediary for other Directors, when necessary. Working closely
with the Nomination and Remuneration Committee, the Senior Independent
Director takes responsibility for an orderly succession process for the
Chairman, and leads the annual appraisal of the Chairman's performance. The
Senior Independent Director is also available to shareholders to discuss any
concerns they may have.
Management of Conflicts of Interests
The Board has a procedure in place to deal with a situation where a Director
has a conflict of interest. As part of this process, the Directors are
required to disclose other positions held and all other conflict situations
that may need to be authorised either in relation to the Director concerned or
his or her connected persons. The Board considers each Director's situation
and decides whether to approve any conflict, taking into consideration what is
in the best interests of the Company and whether the Director's ability to act
in accordance with his or her wider duties is affected. Each Director is
required to notify the Company Secretary of any potential or actual conflict
situations that will need authorising by the Board. Authorisations given by
the Board are reviewed at each Board meeting.
No Director has a service contract with the Company although Directors are
issued with letters of appointment upon appointment. No Directors had any
interest in contracts with the Company during the period or subsequently.
The Company has a policy of conducting its business in an honest and ethical
manner. The Company takes a zero tolerance approach to bribery and corruption
and has procedures in place that are proportionate to the Company's
circumstances to prevent them. The abrdn Group also adopts a group-wide zero
tolerance approach and has its own detailed policy and procedures in place to
prevent bribery and corruption. Copies of the abrdn Group's anti-bribery and
corruption policies are available on its website: abrdn.com.
Going Concern
The Directors have undertaken a robust review of the Company's viability and
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.
Since the year end, the Company has renewed its £50 million revolving credit
facility for one year with the Bank of Nova Scotia, London Branch, its
existing lender. In the event that it is not possible to renew the loan in
February 2026, the Board considers that there is sufficient portfolio
liquidity to enable the loan to be repaid.
Having taken these factors into account, the Directors believe that the
Company has adequate financial resources to continue in operational existence
for the foreseeable future and at least 12 months from the date of this Annual
Report. Accordingly, the Directors continue to adopt the going concern basis
in preparing these financial statements.
Accountability and Audit
Each Director confirms that, so far as he or she is aware, there is no
relevant audit information of which the Company's Auditor is unaware, and he
or she has taken all the steps that they ought to have taken as a Director in
order to make themselves aware of any relevant audit information and to
establish that the Company's Auditor is aware of that information.
Independent Auditor
Shareholders approved the re-appointment of KPMG Channel Islands Limited as
independent Auditor at the AGM held on 8 May 2024 and a resolution to
re-appoint KPMG Channel Islands Limited as the Company's Auditor and to
authorise the Directors to fix the Auditor's remuneration will be put to
shareholders at the AGM to be held on 8 May 2025.
Principal Risks and Internal Control
The Principal Risks and Uncertainties facing the Company are detailed in the
Strategic Report. The Board of Directors is ultimately responsible for the
Company's system of internal control and for reviewing its effectiveness.
Following the Financial Reporting Council's publication of "Guidance on Risk
Management, Internal Controls and Related Financial and Business Reporting"
(the "FRC Guidance"), the Directors confirm that there is an ongoing process
for identifying, evaluating and managing the principal risks faced by the
Company. This process has been in place for the full year under review and up
to the date of approval of the financial statements, is regularly reviewed by
the Board and accords with the FRC Guidance.
The design, implementation and maintenance of controls and procedures to
safeguard the assets of the Company and to manage its affairs properly extends
to operational and compliance controls and risk management. The Board has
prepared its own risk register which identifies potential risks as summarised
in the Strategic Report. The Board considers the potential cause and possible
impact of these risks as well as reviewing the controls in place to mitigate
these potential risks. A risk is rated by having a likelihood and an impact
rating and the residual risk is plotted on a "heat map" and is reviewed
regularly.
The Board has reviewed the effectiveness of the system of internal control
and, in particular, it has reviewed the process for identifying and evaluating
the principal risks faced by the Company and the policies and procedures by
which these risks are managed.
The Directors have delegated the investment management of the Company's assets
to the Investment Manager within overall guidelines. This embraces
implementation of the system of internal control, including financial,
operational and compliance controls and risk management. Internal control
systems are monitored and supported by the Investment Manager's internal audit
function which undertakes periodic examination of business processes,
including compliance with the terms of the management agreement, and ensures
that recommendations to improve controls are implemented.
Risks are identified and documented through a risk management framework by
each function within the Investment Manager's activities. Risk is considered
in the context of the FRC Guidance and includes financial, regulatory, market,
operational and reputational risk. This helps the internal audit risk
assessment model identify those functions for review. Any relevant weaknesses
identified are reported to the Board and timetables are agreed for
implementing improvements to systems. The implementation of any remedial
action required is monitored and feedback provided to the Board.
The key components designed to provide effective internal control for the year
under review and up to the date of this Report are outlined below:
● the Investment Manager prepares forecasts and management
accounts which allow the Board to assess the Company's activities and review
its investment performance;
● the Board and Investment Manager have agreed clearly
defined investment criteria;
● there are specified levels of authority and exposure
limits. Reports on these issues, including performance statistics and
investment valuations, are regularly submitted to the Board. The Investment
Manager's investment process and financial analysis of the companies concerned
include detailed appraisal and due diligence;
● written agreements are in place which specifically
define the roles and responsibilities of the Investment Manager and other
third-party service providers and the Audit Committee reviews, where relevant,
ISAE3402 Reports, a global assurance standard for reporting on internal
controls for service organisations. The Board has reviewed the exceptions
arising from abrdn Investments Limited's ISAE3402 for the year to 30 September
2024, none of which were judged to be of direct relevance to the Company;
● the Board has considered the need for an internal audit
function but, because of the compliance and internal control systems in place
within the abrdn Group, has decided to place reliance on the abrdn Group's
systems and internal audit procedures; and
● twice a year, at its meetings, the Audit Committee
carries out an assessment of internal controls by considering documentation
from the Investment Manager, including its internal audit and compliance
functions and taking account of events since the relevant period end.
In addition, the Investment Manager ensures that clearly documented
contractual arrangements exist in respect of any activities that have been
delegated to external professional organisations. The Board meets periodically
with representatives from the Custodian, BNP Paribas SA, London Branch, and
receives control reports covering its activities.
Representatives from the Investment Manager's internal audit department report
six monthly to the Audit Committee of the Company and have direct access to
the Directors at any time.
The internal control systems are designed to meet the Company's particular
needs and the risks to which it is exposed. Accordingly, the internal control
systems are designed to manage rather than eliminate the risk of failure to
achieve business objectives and, by their nature, can provide reasonable but
not absolute assurance against material misstatement or loss.
The UK Stewardship Code and Proxy Voting
Responsibility for actively monitoring the activities of portfolio companies
has been delegated by the Board to the Investment Manager.
abrdn plc is a signatory of the UK Stewardship Code which aims to enhance the
quality of engagement by investors with investee companies in order to improve
their socially responsible performance and the long-term investment return to
shareholders.
Relations with Shareholders
The Directors place a great deal of importance on communication with
shareholders. The Chairman welcomes feedback from all shareholders and meets
periodically with the largest shareholders to discuss the Company. The Annual
Report and financial statements are available on the Company's website and are
widely distributed to other parties who have an interest in the Company's
performance. Shareholders and investors may obtain up to date information on
the Company through its website.
The Notice of the AGM included within the Annual Report and financial
statements is ordinarily sent out at least 20 working days in advance of the
meeting. All shareholders have the opportunity to put questions to the Board
or Investment Manager, either formally at the Company's AGM or informally
following the meeting.
The Company Secretary is available to answer general shareholder queries at
any time throughout the year. The Directors are keen to encourage dialogue
with shareholders and the Chairman welcomes direct contact from shareholders.
The Board's policy is to communicate directly with shareholders and their
representative bodies without the involvement of the management group (either
the Company Secretary or the Investment Manager) in situations where direct
communication is required and usually a representative from the Board meets
with major shareholders on an annual basis in order to gauge their views.
Alternative Investment Fund Managers Directive ("AIFMD")
In accordance with the Alternative Investment Funds (Jersey) Regulations 2012,
the Jersey Financial Services Commission ("JFSC") has granted its permission
for the Company to be marketed within any EU Member State or other EU State to
which the AIFMD applies. The Company's registration certificate with the JFSC
mandates that the Company "must comply with the applicable sections of the
Codes of Practice for Alternative Investment Funds and AIF Services Business".
abrdn Asia Limited, as the Company's non-EEA alternative investment fund
manager, has notified the UK Financial Conduct Authority in accordance with
the requirements of the UK National Private Placement Regime of its intention
to market the Company (as a non-EEA AIF under the AIFMD) in the UK.
In addition, in accordance with Article 23 of the AIFMD and Rule 3.2.2 of the
Financial Conduct Authority ("FCA") Fund Sourcebook, abrdn Asia Limited is
required to make available certain disclosures for potential investors in the
Company. These disclosures, in the form of a Pre-Investment Disclosure
Document ("PIDD"), are available on the Company's website.
Annual General Meeting
The AGM will be held at 10:30 a.m. on 8 May 2025 at 18 Bishops Square, London
E1 6EG.
Ian Cadby
Chairman
25 March 2025
28 Esplanade St Helier
Jersey JE2 3QA
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law they are required to prepare the financial
statements in accordance with International Financial Reporting Standards as
issued by the IASB and applicable law.
Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Company and of its profit or loss for that period. In preparing
these financial statements, the Directors are required to:
- select suitable accounting policies and then apply them
consistently;
- make judgements and estimates that are reasonable,
relevant and reliable;
- state whether applicable accounting standards have been
followed, subject to any material departures disclosed and explained in the
financial statements;
- assess the Company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern; and
- use the going concern basis of accounting unless they
either intend to liquidate the Company or to cease operations or have no
realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at
any time the financial position of the Company and enable them to ensure that
its financial statements comply with the Companies (Jersey) Law 1991. They are
responsible for such internal controls as they determine are necessary to
enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error, and have general responsibility
for taking such steps as are reasonably open to them to safeguard the assets
of the Company and to prevent and detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the company's website.
Legislation in Jersey governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
The Directors confirm that, so far as they are aware, there is no relevant
audit information of which the Company's Auditor is unaware, and that each
Director has taken all the steps he or she ought to have taken as a Director
to make himself or herself aware of any relevant audit information and to
establish that the Company's Auditor is aware of that information.
Responsibility Statement of the Directors in Respect of the Annual Financial
Report
The Directors confirm that to the best of their knowledge:
- the financial statements, prepared in accordance with
the applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company; and
- the Strategic Report and Directors' Report includes a
fair review of the development and performance of the business and the
position of the Company, together with a description of the principal risks
and uncertainties that it faces.
The Directors consider the Annual Report and financial statements, taken as a
whole, is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company's position and performance,
business model and strategy.
Ian Cadby
Chairman
25 March 2025
28 Esplanade St Helier
Jersey JE2 3QA
STATE MENT OF COMPREHENSIVE INCOME
Year ended Year ended
31 December 2024 31 December 2023
Revenue Capital Total Revenue Capital Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
Investment income 4
Dividend income 21,918 - 21,918 23,558 32 23,590
Interest income 325 - 325 459 - 459
Stock lending income 43 - 43 4 - 4
Total revenue 3 22,286 - 22,286 24,021 32 24,053
Gains/(losses) on investments held at fair value through profit or loss 11 - 4,835 4,835 - (8,457) (8,457)
Net currency (losses)/gains - (773) (773) - 701 701
22,286 4,062 26,348 24,021 (7,724) 16,297
Expenses
Investment management fee 5 (1,053) (1,315) (2,368) (1,216) (1,825) (3,041)
Other operating expenses 6 (1,049) - (1,049) (867) - (867)
Profit/(loss) before finance costs and tax 20,184 2,747 22,931 21,938 (9,549) 12,389
Finance costs 7 (780) (1,170) (1,950) (810) (1,215) (2,025)
Profit/(loss) before tax 19,404 1,577 20,981 21,128 (10,764) 10,364
Tax expense 2d, 8 (1,338) (968) (2,306) (934) (686) (1,620)
Profit/(loss) for the year 18,066 609 18,675 20,194 (11,450) 8,744
Earnings per Ordinary share (pence) 10 11.35 0.38 11.73 11.97 (6.79) 5.18
The Company does not have any income or expense that is not included in
profit/(loss) for the year, and therefore the "Profit/(loss) for the year" is
also the "Total comprehensive income for the year".
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 total column of this statement represents the 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.
BALANCE SHEET
As at As at
31 December 2024 31 December 2023
Notes £'000 £'000
Non-current assets
Investments held at fair value through profit or loss 11 406,041 429,636
Current assets
Cash and cash equivalents 9,349 1,560
Other receivables 12 1,421 2,913
10,770 4,473
Creditors: amounts falling due within one year
Bank loans 13(a) (32,422) (32,123)
Other payables 13(b) (4,788) (1,503)
(37,210) (33,626)
Net current liabilities (26,440) (29,153)
Total assets less current liabilities 379,601 400,483
Creditors: amounts falling due after more than one year
Deferred tax liability on Indian capital gains 13(c) (1,706) (1,615)
(1,706) (1,615)
Net assets 377,895 398,868
Stated capital and reserves
Stated capital 15 194,933 194,933
Capital redemption reserve 1,560 1,560
Capital reserve 16 152,185 187,549
Revenue reserve 13,680 14,826
Equity shareholders' funds 362,358 398,868
Net asset value per Ordinary share (pence) 17 251.42 238.59
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2024
Capital
Stated redemption Capital Revenue Retained
capital reserve reserve reserve earnings Total
Note £'000 £'000 £'000 £'000 £'000 £'000
Opening balance 194,933 1,560 187,549 14,826 - 398,868
Buyback of Ordinary shares for treasury 15 - - (35,973) - - (35,973)
Profit for the year - - - - 18,675 18,675
Transferred from retained earnings to capital reserveA - - 609 - (609) -
Transferred from retained earnings to revenue reserve - - - 18,066 (18,066) -
Dividends paid 9 - - - (19,212) - (19,212)
Balance at 31 December 2024 194,933 1,560 152,185 13,680 - 362,358
For the year ended 31 December 2023
Capital
Stated redemption Capital Revenue Retained
capital reserve reserve reserve earnings Total
Note £'000 £'000 £'000 £'000 £'000 £'000
Opening balance 194,933 1,560 204,414 12,540 - 413,447
Buyback of Ordinary shares for treasury 15 - - (5,415) - - (5,415)
Profit for the year - - - - 8,744 8,744
Transferred from retained earnings to capital reserveA - - (11,450) - 11,450 -
Transferred from retained earnings to revenue reserve - - - 20,194 (20,194) -
Dividends paid 9 - - - (17,908) - (17,908)
Balance at 31 December 2023 194,933 1,560 187,549 14,826 - 398,868
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.
The stated capital in accordance with Companies (Jersey) Law 1991 Article 39A
is £260,822,000 (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.
CASH FLOW STATEMENT
Year ended Year ended
31 December 2024 31 December 2023
Notes £'000 £'000
Cash flows from operating activities
Dividend income received 22,084 23,293
Interest income received - 481
Investment management fee paid (3,090) (2,734)
Return of capital included in investment income - 32
Other cash expenses (1,827) (940)
Net cash generated from operating activities before interest paid and tax 17,167 20,132
Interest paid (1,529) (2,115)
Overseas taxation paid (655) (1,980)
Net cash inflows from operating activities 14,983 16,037
Cash flows from investing activities
Purchases of investments (204,628) (142,128)
Sales of investments 253,457 152,001
Indian capital gains tax on sales - (195)
Net cash inflow from investing activities 48,829 9,678
Cash flows from financing activities
Purchase of own shares for treasury 15 (35,973) (5,415)
Dividends paid 9 (19,212) (17,908)
Repayment of loans - (8,000)
Costs associated with loan (65) -
Net cash outflow from financing activities (55,250) (31,323)
Net increase/(decrease) in cash and cash equivalents 8,562 (5,608)
Cash and cash equivalents at the start of the year 1,560 7,328
Effect of foreign exchange on cash and cash equivalents (773) (160)
Cash and cash equivalents at the end of the year 2(f) 9,349 1,560
Non-cash transactions during the year comprised stock dividends of £nil (2023
- £390,000) (Note 4).
The accompanying notes are an integral part of the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
1. Principal activity
The Company is a closed-end investment company incorporated in Jersey, with
its Ordinary shares being listed on the London Stock Exchange. The Company's
principal activity is investing in securities in the Asia Pacific region.
2. Accounting policies
(a) Basis of preparation. The financial statements have been prepared in
accordance with International Financial Reporting Standards ("IFRS"), as
adopted by the International Accounting Standards Board ("IASB"), and
interpretations issued by the International Reporting Committee of the IASB
("IFRIC"). The financial statements give a true and fair view and comply with
the Companies (Jersey) Law, 1991.
The financial statements have also been prepared in accordance with the
Statement of Recommended Practice (SORP), 'Financial Statements of Investment
Trust Companies and Venture Capital Trusts' issued in July 2022 to the extent
they are consistent with IFRS.
The Company had net current liabilities at the year end. The Directors have
undertaken a robust review of the Company's viability and 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. 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 Annual Report.
Accordingly, the Directors continue to adopt the going concern basis in
preparing these financial statements.
Significant accounting judgements and estimates. The preparation of financial
statements in conformity with IFRS requires the use of certain significant
accounting judgements and estimates which requires management to exercise its
judgement in the process of applying the accounting policies and are
continually evaluated. These judgements include the assessment of the
Company's ability to continue as a going concern. One area requiring
significant judgement and assumption in the financial statements is the
determination of the fair value hierarchy classification of quoted bonds which
have been assessed as being Level 2 due to not being considered to trade in
active markets. In addition, significant judgement is required to determine
the fair value hierarchy classification of Thai securities held on foreign
markets whose pricing is based on the local market and have been assessed as
Level 1 as the local securities are considered to be identical assets in line
with IFRS 13 guidance. Another area of judgement includes the assessment of
whether special dividends should be allocated to revenue or capital based on
their individual merits. Examples of where special dividends are allocated to
capital include events such as the disposal of capital assets and capital
restructuring.
Furthermore, the Board of Directors has a policy to write down the value of
investments in the financial statements where there are concerns over
liquidity, credit worthiness, exit opportunities and the timing of any
potential receipts. The Directors believe there are no significant estimates
contained within the financial statements as all investments are valued at
quoted bid price and all other assets and liabilities are valued at amortised
cost.
The financial statements are prepared on a historical cost basis, except for
investments that have been measured at fair value through profit or loss
("FVTPL").
The accounting policies which follow set out those policies which apply in
preparing the financial statements for the year ended 31 December 2024.
The financial statements are presented in sterling and all values are rounded
to the nearest thousand (£'000) except when otherwise indicated.
New and amended accounting standards and interpretations. There were no new
and amended accounting standards and interpretations applied to the financial
statements of the Company during the year.
At the date of authorisation of these financial statements, the following
amendments to Standards and Interpretations were assessed to be relevant and
are all effective for annual periods beginning on or after 1 January 2024:
Standards Issued and effective
IAS 1 Amendments - Classification of Liabilities as Current or Non-Current
(effective 1 January 2024)
IAS 1 Amendments - Non-current Liabilities with Covenants (effective 1 January
2024)
Future amendments to accounting standards and interpretations
Standards Issued but not yet effective
IAS 21 Amendments - Lack of Exchangeability (effective 1 January 2025)
Annual Improvements 2023-24 - Minor amendments to IFRS 1, 7, 9, 10, and IAS
7 (effective 1 January 2026)
IFRS 7 and 9 Amendments - Classification and Measurement of Financial
Instruments (effective 1 January 2026)
IFRS 18 - Presentation and Disclosure in Financial Statements (effective 1
January 2027)
The Company intends to adopt the Standards and Interpretations in the
reporting period when they become effective and the Board does not anticipate
that the adoption of these Standards and Interpretations in future periods
will materially impact the Company's profit/(loss) in the period of initial
application although there may be revised presentations to the Financial
Statements and additional disclosures resulting from application of IFRS 18
when it becomes effective.
(b) Income. Dividend income receivable on equity shares is recognised on the
ex-dividend date. Dividend income on equity shares where no ex-dividend date
is quoted is brought into account when the Company's right to receive payment
is established. Where the Company has elected to receive dividends in the form
of additional shares rather than in cash, the amount of the cash dividend
foregone is recognised as income. Special dividends are an area of significant
accounting judgement and are credited to capital or revenue according to their
circumstances. Dividend income is presented gross of any non-recoverable
withholding taxes, which are disclosed separately in the Statement of
Comprehensive Income.
Interest is recognised on a time-proportionate basis using the effective
interest method. Interest income includes interest from cash and cash
equivalents. Interest from financial assets at fair value through profit or
loss includes interest from debt securities.
(c) Expenses. All expenses, with the exception of interest expenses, which are
recognised using the effective interest method, are accounted for on an
accruals basis. Expenses are charged through the revenue column of the
Statement of Comprehensive Income except as follows:
- expenses which are incidental to the acquisition or disposal of an
investment are treated as capital and separately identified and disclosed in
note 11;
- expenses (including share issue costs) are treated as capital where a
connection with the maintenance or enhancement of the value of the investments
can be demonstrated; and
- the Company charges 60% of investment management fees and finance costs to
capital, in accordance with the Board's expected long term return in the form
of capital gains and income respectively from the investment portfolio of the
Company.
(d) Taxation. With effect from 1 January 2022 the Company migrated tax residency
to the UK from Jersey and elected to join the UK's investment trust regime.
The tax expense for year ended 31 December 2024 represents the sum of tax
currently payable and deferred tax. Any tax payable is based on the taxable
profit for the year. Taxable profit differs from net profit as reported in the
Statement of Comprehensive Income because it excludes items of income or
expense that are taxable or deductible in other years and it further excludes
items that are never taxable or deductible. The Company's liability for
current tax is calculated using tax rates that were applicable at the Balance
Sheet date.
Deferred tax is recognised in respect of all temporary differences at the
Balance Sheet date, where transactions or events that result in an obligation
to pay more tax in the future or right to pay less tax in the future have
occurred at the Balance Sheet date. This is subject to deferred tax assets
only being recognised if it is considered more likely than not that there will
be suitable profits from which the future reversal of the temporary
differences can be deducted. Deferred tax assets and liabilities are measured
at the rates applicable to the legal jurisdictions in which they arise, using
tax rates that are expected to apply at the date the deferred tax position is
unwound. Deferred tax is charged or credited in the Statement of Comprehensive
Income, except when it relates to items charged or credited directly to
equity, in which case the deferred tax is also dealt with in equity.
In some jurisdictions, investment income and capital gains are subject to
withholding tax deducted at the source of the income. The Company presents the
withholding tax separately from the gross investment income in the Statement
of Comprehensive Income.
(e) Investments. The Company has adopted the classification and measurement
provisions of IFRS 9 'Financial Instruments'.
The Company classifies its investments based on their contractual cash flow
characteristics and the Company's business model for managing the assets. The
business model, which is the determining feature for debt instruments, is such
that the portfolio of investments is managed, and performance is evaluated, on
a fair value basis. The Investment Manager is also compensated based on the
fair value of the Company's assets. Equity instruments are classified as FVTPL
because cash flows resulting from such instruments do not represent payments
of principal and interest on the principal outstanding, and therefore they
fail the contractual cash flows test. Consequently, all investments are
measured at FVTPL.
Purchases and sales of investments are recognised on a trade date basis.
Proceeds are measured at fair value, which is regarded as the proceeds of sale
less any transaction costs.
The fair value of the financial assets is based on their quoted bid price at
the reporting date, without deduction for any estimated future selling costs.
Changes in the value of investments held at fair value through profit or loss
and gains and losses on disposal are recognised in the Statement of
Comprehensive Income as "(Losses)/gains on investments held at fair value
through profit or loss" on an average cost basis. Also included within this
caption are transaction costs in relation to the purchase or sale of
investments.
(f) Cash and cash equivalents. Cash comprises cash held at banks. Cash equivalents
are short-term highly liquid investments that are readily convertible to known
amounts of cash and that are subject to an insignificant risk of changes in
values.
For the purposes of the Cash Flow Statement, cash and cash equivalents
comprise cash at bank net of any outstanding bank overdrafts.
(g) Other receivables. Financial assets previously classified as loans and
receivables are held to collect contractual cash flows and give rise to cash
flows representing solely payments of principal and interest. As such they are
measured at amortised cost. Other receivables do not carry any interest,
therefore they have not been assessed for any expected credit losses over
their lifetime due to their short-term nature.
(h) Other payables. Other payables are non interest bearing and are stated at
amortised cost.
(i) Dividends payable. Interim dividends payable to Shareholders are recognised in
the financial statements in the period in which they are declared and paid.
(j) Nature and purpose of reserves
Capital redemption reserve. The capital redemption reserve arose when Ordinary
shares were redeemed, at which point an amount equal to £1 per share of the
Ordinary share capital was transferred from the Statement of Comprehensive
Income to the capital redemption reserve. Following a law amendment in 2008,
the Company is no longer required to make a transfer. Although the transfer
from the Statement of Comprehensive Income is no longer required, the amount
remaining in the capital redemption reserve is not distributable in accordance
with the undertaking provided by the Board in the launch Prospectus.
Capital reserve. This reserve reflects any gains or losses on investments
realised in the period along with any increases and decreases in the fair
value of investments held that have been recognised in the Statement of
Comprehensive Income. This reserve also reflects any gains realised when
Ordinary shares are issued at a premium to £1 per share and any losses
suffered on the redemption of Ordinary shares for cancellation at a value
higher than £1 per share.
When the Company purchases its Ordinary shares to be held in treasury, the
amount of the consideration paid, which includes directly attributable costs,
is recognised as a deduction from the capital reserve. Should these shares be
sold subsequently, the amount received is recognised in the capital reserve
and the resulting surplus or deficit on the transaction remains in the capital
reserve.
Revenue reserve. This reserve reflects all income and costs which are
recognised in the revenue column of the Statement of Comprehensive Income and
is utilised to fund dividend payments to shareholders.
(k) Foreign currency. Monetary assets and liabilities denominated in foreign
currencies are converted into sterling at the rate of exchange ruling at the
reporting date. The financial statements are presented in sterling, which is
the Company's functional and presentation currency. The Company's performance
is evaluated and its liquidity is managed in sterling. Therefore sterling is
considered as the currency that most faithfully represents the economic
effects of the underlying transactions, events and conditions. Transactions
during the year involving foreign currencies are converted at the rate of
exchange ruling at the transaction date. Gains or losses arising from a change
in exchange rates subsequent to the date of a transaction are included as a
currency gain or loss in revenue or capital in the Statement of Comprehensive
Income, depending on whether the gain or loss is of a revenue or capital
nature.
(l) Bank loans. The Company has adopted the classification and measurement
provisions of IFRS 9 'Financial Instruments'. Bank loans are measured at
amortised cost using the effective interest rate method.
Bank loans are stated at the amount of the net proceeds immediately after draw
down plus cumulative finance costs less cumulative payments. The finance cost
of bank loans is allocated to years over the term of the debt at a constant
rate on the carrying amount and charged 40% to revenue and 60% to capital to
reflect the Company's investment policy and prospective revenue and capital
growth.
(m) Share capital. The Company's Ordinary shares are classified as equity as the
Company has full discretion on repurchasing the Ordinary shares and on
dividend distributions.
Issuance, acquisition and resale of Ordinary shares are accounted for as
equity transactions. Upon issuance of Ordinary shares, the consideration
received is included in equity.
Transaction costs incurred by the Company in acquiring or selling its own
equity instruments are accounted for as a deduction from equity to the extent
that they are incremental costs directly attributable to the equity
transaction that otherwise would have been avoided.
Own equity instruments which are acquired (treasury shares) are deducted from
equity and accounted for at amounts equal to the consideration paid, including
any directly attributable incremental costs.
No gain or loss is recognised in the Statement of Comprehensive Income on the
purchase, sale, issuance or cancellation of the Company's own instruments.
(n) Traded options. The Company may enter into certain derivative contracts (e.g.
options) to gain exposure to the market. The option contracts are classified
as fair value through profit or loss and accounted for as separate derivative
contracts and are therefore shown in other assets or other liabilities at
their fair value i.e. market value. The premium received on the open position
is recognised over the life of the option in the revenue column of the
Statement of Comprehensive Income along with fair value changes in the open
position which occur due to the movement in underlying securities. Losses
realised on the exercise of the contracts are recorded in the capital column
of the Statement of Comprehensive Income as they arise. Where the Company
enters into derivative contracts to manage market risk, gains or losses
arising on such contracts are recorded in the capital column of the Statement
of Comprehensive Income.
3. Segmental information
The Company is organised into one main operating segment, which invests in
equity securities, debt instruments and derivatives. 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.
The following table analyses the Company's operating income by each
geographical location. The basis for attributing the operating income is the
place of incorporation of the instrument's counterparty.
Year ended Year ended
31 December 2024 31 December 2023
£'000 £'000
Asia Pacific region 21,395 23,069
United Kingdom 891 952
22,286 24,021
4. Investment income
Year ended Year ended
31 December 2024 31 December 2023
£'000 £'000
Income from investments
Overseas dividend income 21,184 22,398
UK dividend income 734 770
Stock dividend income - 390
21,918 23,558
Other income
Bond interest 168 277
Deposit interest 157 182
Stock lending income 43 4
368 463
Total revenue 22,286 24,021
5. Investment management fee
Year ended Year ended
31 December 2024 31 December 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment management fee 1,053 1,315 2,368 1,216 1,825 3,041
With effect from 15 August 2023, investment management services have been
provided by abrdn Asia Limited ("abrdn Asia"). Prior to this management
services were provided by abrdn Capital International Limited ("aCil"). Any
stocklending activity has been sub-delegated to abrdn Investments Limited.
With effect from 1 January 2024, the fee structure has been determined by the
lower of the Company's market capitalisation or net asset value. The fee is
calculated monthly at a rate of 0.75% per annum on market capitalisation (or
net assets, whichever is lower) up to £300 million, and 0.60% for amounts
exceeding this threshold. From this fee, an annual amount of £130,000 is
rebated for the provision of marketing services. An additional amount of
£129,000 is rebated for the provision of secretarial services provided by
JTC, although JTC's fee is included as part of the management fee cost. The
balance due to abrdn Asia at the year end was £372,000 (2023 - £1,093,000).
6. Other operating expenses
Year ended Year ended
31 December 2024 31 December 2023
£'000 £'000
Directors' fees 215 175
Promotional activities (A) 286 200
Auditor's remuneration:
- statutory audit 60 57
- disbursements - 2
Custody fees 163 98
Printing & postage 23 36
Professional fees 132 56
Registrars fees 60 58
Other 110 185
1,049 867
(A) Promotional activities are provided by abrdn Investments Limited. The
total fees paid are based on an annual rate for Marketing of £193,000 (from 1
July 2023 - £193,000) and from 20 May 2024 an annual Marketing and PR fee of
£130,000 (2023 - £nil). An amount of £38,000 (2023 - £48,000) was payable
to abrdn Investments Limited at the year end.
No fees have been paid to the Company's Auditor during the period other than
those listed here.
7. Finance costs
Year ended Year ended
31 December 2024 31 December 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Interest on bank loans 779 1,168 1,947 804 1,205 2,009
Amortisation of loan arrangement expenses 1 2 3 6 10 16
780 1,170 1,950 810 1,215 2,025
Finance costs are charged 40% to revenue and 60% to capital as disclosed in
the accounting policies.
8. Taxation
a) Analysis of tax charge in the year 2024 2023
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Indian capital gains tax - 876 876 - 195 195
Overseas withholding tax 1,338 - 1,338 934 - 934
Total current tax charge for the year (note b) 1,338 876 2,214 934 195 1,129
Movement of deferred tax liability on Indian CGT - 92 92 - 491 491
Total deferred tax charge for the year (note c) - 92 92 - 491 491
Total tax charge for the year 1,338 968 2,306 934 686 1,620
b) The UK corporation tax rate is 25% (2023 - 19% from 1 Janaury 2023 until 31
March 2023 and 25% from 1 April 2023, giving an effective rate of 23.5%). The
tax charge for the year differs from the corporation tax rate.
2024 2023
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Net profit before taxation 19,404 17,114 36,518 21,128 (10,764) 10,364
Corporation tax @ 25.0% (2023 - 23.5%) 4,851 4,279 9,130 4,965 (2,529) 2,436
Effects of:
UK dividends (184) - (184) (181) - (181)
Non-taxable overseas dividends (4,628) - (4,628) (4,700) - (4,700)
Other Non-taxable overseas dividends - - - - (8) (8)
Currency gains/losses - 193 193 - (805) (805)
Realised/unrealised gains/losses on investments - (5,093) (5,093) - 2,627 2,627
Expenses not deductible for tax purposes - - - 2 - 2
Excess management expenses 5 621 626 (53) 715 662
Tax effect of expensed double taxation relief (44) - (44) (33) - (33)
Irrecoverable overseas withholding tax 1,338 - 1,338 934 - 934
Indian capital gains tax - 876 876 - 195 195
Movement of deferred tax liability on Indian CGT - 92 92 - 491 491
Total current tax charge for the year (note a) 1,338 968 2,306 934 686 1,620
c) Factors that may affect future tax charges
At the year end, after offset against income taxable on receipt, there is a
potential deferred tax asset of £1,903,000 (2023 - £1,276,000) in relation
to surplus management expenses. It is unlikely that the fund will generate
sufficient taxable profits in the future to utilise these amounts and
therefore no deferred tax asset has been recognised.
9. Dividends on Ordinary shares
Year ended Year ended
31 December 2024 31 December 2023
£'000 £'000
Amounts recognised as distributions to equity holders in the year:
Fourth interim dividend 2023 - 4.25p per Ordinary share (2022 - 3.10p) 7,100 5,263
First interim dividend 2024 - 2.55p per Ordinary share (2023 - 2.50p) 4,155 4,227
Second interim dividend 2024 - 2.55p per Ordinary share (2023 - 2.50p) 4,043 4,216
Third interim dividend 2024 - 2.55p per Ordinary share (2023 - 2.50p) 3,914 4,202
19,212 17,908
Following the change of tax residency on 1 January 2022, the Company needs
to comply with the UK investment trust retention test to satisfy s.1158 of the
Corporation Tax Act 2010. The total dividends payable in respect of the
financial year which form the basis of s.1158 of the Corporation Tax Act 2010
are set out below. The revenue available for distribution by way of dividend
for the year is £18,066,000 (2023 - £20,194,000).
2024 2023
£'000 £'000
First interim dividend 2024 - 2.55p per Ordinary share (2023 - 2.50p) 4,155 4,227
Second interim dividend 2024 - 2.55p per Ordinary share (2023 - 2.50p) 4,043 4,216
Third interim dividend 2024 - 2.55p per Ordinary share (2023 - 2.50p) 3,914 4,202
Fourth interim dividend 2024 - 6.78p per Ordinary share (2023 - 4.25p) 10,148 7,100
22,260 19,745
The fourth interim dividend for 2024, amounting to £10,148,000 (2023 - fourth
interim dividend of £7,100,000), is not recognised as a liability in these
financial statements as it was announced and paid after 31 December 2024.
10. Earnings per share
Ordinary shares. The earnings per Ordinary share is based on the profit after
taxation of £34,212,000 (2023 - £8,744,000) and on 159,233,450 (2023 -
168,693,861) Ordinary shares, being the weighted average number of Ordinary
shares in issue during the year excluding Ordinary shares held in treasury,
which do not carry the rights to vote or to dividends.
The earnings per Ordinary share detailed above can be further analysed between
revenue and capital as follows:
Year ended Year ended
31 December 2024 31 December 2023
Revenue Capital Total Revenue Capital Total
Net profit/(loss) (£'000) 18,066 609 18,675 20,194 (11,450) 8,744
Weighted average number of Ordinary shares in issue A 159,233,450 168,693,861
Return per Ordinary share (pence) 11.35 0.38 11.73 11.97 (6.79) 5.18
A Calculated excluding Ordinary shares held in treasury.
11. Investments held at fair value through profit or loss
Year ended Year ended
31 December 2024 31 December 2023
£'000 £'000
Opening book cost 339,747 346,553
Opening investment holding gains 89,889 101,770
Opening fair value 429,636 448,323
Analysis of transactions made during the year
Purchases at cost 208,734 142,526
Sales proceeds received (252,701) (152,756)
Realised gains on investments 40,418 24,522
Realised losses on investments (19,804) (21,098)
Decrease in unrealised gains on investments (5,077) (10,412)
Decrease/(increase) in unrealised losses on investments 4,835 (1,469)
Closing fair value 406,041 429,636
£'000 £'000
Closing book cost 316,394 339,747
Closing investment gains 89,647 89,889
Closing fair value 406,041 429,636
The Company generated £252,701,000 (2023 - £152,756,000) from investments
sold in the year. The book cost of these investments when they were purchased
was £232,087,000 (2023 - £149,332,000). These investments have been revalued
over time and until they were sold any unrealised gains/(losses) were included
in the fair value of the investments.
Year ended Year ended
31 December 2024 31 December 2023
The portfolio valuation £'000 £'000
Listed on recognised stock exchanges:
Equities - overseas 406,041 426,315
Bonds - overseas - 3,321
Total 406,041 429,636
Transaction costs. During the year expenses were incurred in acquiring or
disposing of investments held at fair value through profit or loss. These have
been expensed through capital and are included within gains/(losses) on
financial investments held at fair value through profit or loss in the
Statement of Comprehensive Income. The total costs were as follows:
Year ended Year ended
31 December 2024 31 December 2023
£'000 £'000
Purchases 166 120
Sales 301 209
467 329
The above transaction costs are calculated in line with the AIC SORP. The
transaction costs in the Company's Key Information Document are calculated on
a different basis and in line with the PRIIPs regulations.
12. Debtors: amounts falling due within one year
2024 2023
£'000 £'000
Prepayments and accrued income 1,421 2,913
None of the above assets are past their due date or impaired.
13. Creditors: amounts falling due within one year
(a) Bank loans. At the year end, the Company had the following unsecured bank
loans:
2024 2023
Local Local
Interest currency Carrying Interest currency Carrying
rate principal amount rate principal amount
% amount £'000 % amount £'000
Unsecured bank loans repayable
Hong Kong Dollar 5.359 73,500,000 7,555 6.609 73,500,000 7,384
United States Dollar 5.580 8,850,000 7,067 6.634 8,850,000 6,942
Sterling 5.700 17,800,000 17,800 6.420 7,800,000 7,800
Sterling - - - 1.530 10,000,000 9,997
Total 32,422 32,123
During the year, the Company had a £40 million multi currency revolving loan
facility agreement with Bank of Nova Scotia, London Branch. The Company also
had a three year loan of £10 million with Bank of Nova Scotia, London Branch
at a fixed interest rate of 1.53%. Both facilities matured on 1 March 2024.
Financial covenants contained within the relevant loan agreements provided,
inter alia, that the Company's NAV shall at no time be less than £185 million
and that adjusted NAV coverage shall at no time be less than 4.0 to 1.0. At 31
December 2024 adjusted NAV coverage was 11.7 to 1.0 based on borrowings of
£32,422,000 and net assets were £377,895,000. The Company has complied with
all financial covenants throughout the year.
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, its
existing lender. Under the terms of the revolving credit facility, the Company
also 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.
At the date of signing this report, loans of HKD 73,500,000, US$ 8,850,000 and
£17,800,000 were drawn down at variable interest rates of 4.963%, 5.28% and
5.404% respectively.
2024 2023
(b) Other payables £'000 £'000
Investment management fees 371 1,093
Amounts due to brokers 4,217 -
Other amounts due 200 410
4,788 1,503
Amounts falling due in more than one year:
2024 2023
£'000 £'000
(c) Deferred tax liability on Indian capital gains 1,706 1,615
14. Analysis of changes in financing during the year
2024 2023
£'000 £'000
Opening balance at 1 January 32,123 40,967
Net decrease in loan drawdown - (8,000)
Amortisation of loan arrangement expenses 3 16
Foreign exchange movements 296 (860)
Closing balance at 31 December 32,422 32,123
15. Stated capital
Ordinary Treasury Total
shares shares shares
(number) (number) (number) £'000
Authorised Ordinary shares of no par value Unlimited Unlimited Unlimited Unlimited
Issued and fully paid Ordinary shares of no par value
At 31 December 2023 167,178,707 27,754,682 194,933,389 194,933
Shares purchased for treasury (16,872,215) 16,872,215 - -
At 31 December 2024 150,306,492 44,626,897 194,933,389 194,933
During the year 16,872,215 (2023 - 2,653,694) Ordinary shares were bought back
by the Company for holding in treasury at a total cost of £35,973,000 (2023 -
£5,415,000). At the year end 44,626,897 (2023 - 27,754,682) Ordinary shares
were held in treasury, which represents 22.89% (2023 - 14.24%) of the
Company's total issued share capital at 31 December 2024.
For each Ordinary share issued £1 is allocated to stated capital, with the
balance taken to the capital reserve.
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.
Since the year end a further 3,927,318 Ordinary shares have been bought back
for holding in treasury at a cost of £8,717,000.
Voting and other rights. In accordance with the Articles of Association of the
Company, on a show of hands, every member (or duly appointed proxy) present at
a general meeting of the Company has one vote; and, on a poll, every member
present in person or by proxy shall have one vote for each Ordinary share
held, excluding shares held in treasury.
The Ordinary shares carry the right to receive all dividends declared by the
Company or the Directors, excluding shares held in treasury.
On a winding-up, provided the Company has satisfied all of its liabilities,
holders of Ordinary shares are entitled to all of the surplus assets of the
Company, excluding shares held in treasury.
16. Capital reserve
2024 2023
£'000 £'000
At 1 January 187,549 204,414
Net currency (losses)/gains (A) (773) 701
Overseas dividend capital - 32
Movement in unrealised fair value (242) (11,881)
Profit on realisation of investments 5,077 3,424
Costs charged to capital (3,453) (3,726)
Buyback of Ordinary shares for treasury (35,973) (5,415)
At 31 December 152,185 187,549
(A) Gains/(losses) arising during the year have principally arisen from a
revaluation of the foreign currency bank loans offset by a revaluation of
foreign currency cash held.
17. Net asset value per share
Ordinary shares. The net asset value per Ordinary share and the net asset
values attributable to Ordinary shareholders at the year end calculated in
accordance with the Articles of Association were as follows:
Net asset value Net asset values Net asset value Net asset values
per share attributable per share attributable
2024 2024 2023 2023
p £'000 p £'000
Ordinary shares 251.42 377,895 238.59 398,868
The net asset value per Ordinary share is based on 150,306,492 (2023 -
167,178,707) Ordinary shares, being the number of Ordinary shares in issue at
the year end excluding Ordinary shares held in treasury.
18. Financial instruments
The Company's investment activities expose it to various types of financial
risk associated with the financial instruments and markets in which it
invests. The Company's financial instruments, other than derivatives, comprise
securities and other investments, cash balances, bank loans and debtors and
creditors that arise directly from its operations; for example, in respect of
sales and purchases awaiting settlement, and debtors for accrued income.
The Board has delegated the risk management function to abrdn Asia under the
terms of its management agreement with abrdn Asia (further details of which
are included under note 5). The Board regularly reviews and agrees policies
for managing each of the key financial risks identified with the Investment
Manager. The types of risk and the Manager's approach to the management of
each type of risk, are summarised below. Such approach has been applied
throughout the year and has not changed since the previous accounting period.
The numerical disclosures exclude short-term debtors and creditors, with the
exception of short-term borrowings.
Risk management framework. The directors of abrdn Asia collectively assume
responsibility for the Manager's obligations under the AIFMD including
reviewing investment performance and monitoring the Company's risk profile
during the year.
abrdn Asia is a fully integrated member of the abrdn plc Group (the "Group"),
which provides a variety of services and support to abrdn Asia in the conduct
of its business activities, including in the oversight of the risk management
framework for the Company. abrdn Asia is responsible for the day to day
administration of the investment policy and ensuring that the Company is
managed within the terms of its investment guidelines and the limits set out
in its pre-investment disclosures to investors (details of which can be found
on the Company's website).
The Investment Manager conducts its risk oversight function through the
operation of the Group's risk management processes and systems which are
embedded within the Group's operations. The Group's Risk Division supports
management in the identification and mitigation of risks and provides
independent monitoring of the business. The Division includes Compliance,
Business Risk, Market Risk, Risk Management and Legal. The team is headed up
by the Group's Head of Risk, who reports to the Chief Executive Officer of the
Group. The Risk Division achieves its objective through embedding the Risk
Management Framework throughout the organisation using the Group's operational
risk management system ("Shield").
The Group's Internal Audit Department is independent of the Risk Division and
reports directly to the Group Chief Executive Officer and to the Audit
Committee of the Group's Board of Directors. The Internal Audit Department is
responsible for providing an independent assessment of the Group's control
environment.
The Group's corporate governance structure is supported by several committees
to assist the board of directors of abrdn plc, its subsidiaries and the
Company to fulfil their roles and responsibilities. The Group's Risk Division
is represented on all committees, with the exception of those committees that
deal with investment recommendations. The specific goals and guidelines on the
functioning of those committees are described on the committees' terms of
reference.
Risk management. The main risks arising from the Company's financial
instruments are (i) market risk (comprising interest rate risk, currency risk
and equity price risk), (ii) liquidity risk, (iii) credit risk and (iv)
gearing risk.
The Board regularly reviews and agrees policies for managing each of these
risks. The Manager's policies for managing each of these risks are summarised
below and have been applied throughout the year. The numerical disclosures
exclude short-term receivables and payables with the exception of the credit
risk of short-term debtors.
(i) Market risk. The fair value or future cash flows of a financial instrument
held by the Company may fluctuate because of changes in market prices. This
market risk comprises three elements - interest rate risk, currency risk and
equity price risk.
Interest rate risk. Interest rate risk is the risk that interest rate
movements may affect:
- the fair value of the investments in fixed interest rate securities;
- the level of income receivable on cash deposits;
- the interest payable on the Company's variable rate borrowings.
Management of the risk
Financial assets. Although the majority of the Company's financial assets
comprise equity shares which neither pay interest nor have a stated maturity
date, at the year end the Company had one (2023 - two) holdings in fixed rate
overseas corporate bonds, with G3 Exploration valued at £nil (2023 - £nil)
and ICICI Bank not held at end of 2024 (2023 - £3,321,000). Bond prices are
determined by market perception as to the appropriate level of yields given
the economic background. Key determinants include economic growth prospects,
inflation, the Government's fiscal position, short-term interest rates and
international market comparisons. The Investment Manager takes all these
factors into account when making any investment decisions as well as
considering the financial standing of the potential investee entity. G3
Exploration appointed joint liquidators during December 2019. Using an
adjusted net asset value model the Board of Directors decided to write down
the value of G3 Exploration to £nil due to concerns over liquidity, credit
worthiness, exit opportunities and the timing of any potential receipts. There
has been no change in carrying value during the year under review or as at the
date of this Report.
Returns from bonds are fixed at the time of purchase, as the fixed coupon
payments are known, as are the final redemption proceeds. This means that if a
bond is held until its redemption date, the total return achieved is unaltered
from its purchase date. However, over the life of a bond the market price at
any given time will depend on the market environment at that time. Therefore,
a bond sold before its redemption date is likely to have a different price to
its purchase level and a profit or loss may be incurred.
Financial liabilities. The Company primarily finances its operations through
use of equity, retained profits and bank borrowings. Details of the terms and
conditions of the bank borrowings are disclosed in note 13. Interest is due
on the Bank of Nova Scotia, London multi currency revolving loan facility on
the maturity date, with the next interest payment being due on 6th January
2025 for HKD loan, GBP loan and USD loans.
The Board actively monitors its bank borrowings. A decision on whether to roll
over its existing borrowings is made prior to their maturity dates, taking
into account the Company's ability to draw down fixed, long-term borrowings.
The Company does not employ any hedging against floating rate borrowings.
The interest rate profile of the Company (excluding short term debtors and
creditors but including short term borrowings as stated previously) was as
follows:
Weighted
average Weighted average Floating Fixed
period for which
rate is fixed interest rate rate rate
At 31 December 2024 Years % £'000 £'000
Assets
Cash at bank - Sterling - - 8,674 -
Cash at bank - Chinese Renminbi - - 3 -
Cash at bank -Taiwanese Dollar - - 670 -
Cash at bank - US Dollar - - 2 -
9,349 -
Weighted
average Weighted average Floating Fixed
period for which
rate is fixed interest rate rate rate
At 31 December 2024 Years % £'000 £'000
Liabilities
Bank loan - Hong Kong Dollar 0.07 5.36 - (7,555)
Bank loan - US Dollar 0.07 5.58 - (7,067)
Bank loan - Sterling 0.07 5.70 - (17,800)
- (32,422)
Weighted
average Weighted average Floating Fixed
period for which
rate is fixed interest rate rate rate
At 31 December 2023 Years % £'000 £'000
Assets
Indian Overseas Corporate Bond 0.60 9.15 - 3,321
Cash at bank - Sterling - - 3,199 -
Cash at bank - Chinese Yuan - - (372) -
Cash at bank - Chinese CNY - - 373 -
Cash at bank - Hong Kong Dollar - - 2 -
Cash at bank - Indian Rupee - - (1,682) -
Cash at bank - Taiwan Dollar - - 40 -
1,560 3,321
Weighted
average Weighted average Floating Fixed
period for which
rate is fixed interest rate rate rate
At 31 December 2023 Years % £'000 £'000
Liabilities
Bank loan - Hong Kong Dollar 0.05 6.61 - (7,384)
Bank loan - US Dollar 0.05 6.63 - (6,942)
Bank loans - Sterling 0.05 6.42 - (7,800)
Bank loans - Sterling 0.17 1.53 - (9,997)
- (32,123)
The weighted average interest rate is based on the current yield of each
asset, weighted by its market value. The weighted average interest rate on
bank loans is based on the interest rate payable, weighted by the total value
of the loans.
The floating rate assets consist of cash deposits on call earning interest at
prevailing market rates.
All financial liabilities are measured at amortised cost using the effective
interest rate method.
Interest rate sensitivity. The sensitivity analysis demonstrates the
sensitivity of the Company's profit for the year to a reasonably possible
change in interest rates, with all other variables held constant.
The sensitivity of the profit/(loss) for the year is the effect of the assumed
change in interest rates on:
- the net interest income for one year, based on the floating rate financial
assets held at the Balance Sheet date; and
- changes in fair value of investments for the year, based on revaluing fixed
rate financial assets at the Balance Sheet date.
The Directors have considered the potential impact of a 100 basis point
movement in interest rates and concluded that it would not be material in the
current year (2023 - not material). This consideration is based on the
Company's exposure to interest rates on its floating rate cash balances, fixed
interest securities and bank loans.
Foreign currency risk. A significant proportion of the Company's investment
portfolio is invested in overseas securities and the Balance Sheet can be
significantly affected by movements in foreign exchange rates. It is not the
Company's policy to hedge this risk on a continuing basis. A significant
proportion of the Company's borrowings, as detailed in note 13, is in foreign
currency as at 31 December 2024.
Management of the risk. The revenue account is subject to currency fluctuation
arising on overseas income. The Company does not hedge this currency risk on a
continuing basis but the Company may, from time to time, match specific
overseas investment with foreign currency borrowings.
The fair values of the Company's monetary items that have foreign currency
exposure at 31 December are shown below. Where the Company's equity
investments (which are non-monetary items) are priced in a foreign currency,
they have been included within the equity price risk sensitivity analysis so
as to show the overall level of exposure.
31 December 2024 31 December 2023
Net Net
monetary Total monetary Total
Equity assets currency Equity assets currency
investments /(liabilities) exposure investments /(liabilities) exposure
£'000 £'000 £'000 £'000 £'000 £'000
Australian Dollar 68,047 - 68,047 77,929 - 77,929
Chinese Renminbi 14,931 3 14,934 10,266 1 10,267
Hong Kong Dollar 63,072 (7,555) 55,517 43,636 (7,382) 36,254
Indian Rupee 27,219 - 27,219 23,477 1,639 25,116
Indonesian Rupiah 9,914 - 9,914 8,371 - 8,371
Japanese Yen 4,013 - 4,013 4,197 - 4,197
New Zealand Dollar 4,241 - 4,241 4,278 - 4,278
Singapore Dollar 66,713 - 66,713 83,310 - 83,310
South Korean Won 14,226 - 14,226 37,145 - 37,145
Taiwanese Dollar 108,248 670 108,918 91,657 40 91,697
Thailand Baht 14,774 - 14,774 25,059 - 25,059
US Dollar 3,393 (7,065) (3,672) 6,474 (6,942) (468)
Total 398,791 (13,947) 384,844 415,799 (12,644) 403,155
Foreign currency sensitivity. The following table details the impact on the
Company's net assets to a 10% decrease (in the context of a 10% increase the
figures below should all be read as negative) in sterling against the foreign
currencies in which the Company has exposure. The sensitivity analysis
includes foreign currency denominated monetary items and adjusts their
translation at the period end for a 10% change in foreign currency rates.
2024 2023
£'000 £'000
Australian Dollar 6,805 7,793
Chinese Renminbi 1,493 1,027
Hong Kong Dollar 5,552 3,625
Indian Rupee 2,722 2,512
Indonesian Rupiah 991 837
Japanese Yen 401 420
New Zealand Dollar 424 428
Singapore Dollar 6,671 8,331
South Korean Won 1,423 3,715
Taiwanese Dollar 10,892 9,170
Thailand Baht 1,477 2,506
US Dollar (367) (47)
Total 38,484 40,317
Equity price risk. Equity price risk (i.e. changes in market prices other than
those arising from interest rate or currency risk) may affect the value of the
Company's quoted equity investments.
Management of the risk. It is the Board's policy to hold an appropriate spread
of investments in the portfolio in order to reduce the risk arising from
factors specific to a particular country or sector. The allocation of assets
to international markets and the stock selection process both act to reduce
market risk. The Investment Manager actively monitors market prices throughout
the year and reports to the Board, which meets regularly in order to review
investment strategy. The investments held by the Company are listed on
recognised stock exchanges.
Concentration of exposure to equity price risks. The majority of the
investments' value is in the Asia Pacific region. It should be recognised that
an investment's country of domicile or of listing does not necessarily equate
to its exposure to the economic conditions in that country.
Equity price risk sensitivity. The following table illustrates the sensitivity
of the profit after taxation for the year and the equity to an increase or
decrease of 10% (2023 - 10%) in the fair values of the Company's equities.
This level of change is considered to be reasonably possible based on
observation of current market conditions. The sensitivity analysis is based on
the Company's equities at each Balance Sheet date, with all other variables
held constant.
2024 2023
Increase in Decrease in Increase in Decrease in
fair value fair value fair value fair value
£'000 £'000 £'000 £'000
Statement of Comprehensive Income - profit after taxation
Capital return - increase /(decrease) 40,604 (40,604) 42,632 (42,632)
Total profit after taxation - increase /(decrease) 40,604 (40,604) 42,632 (42,632)
Equity
Capital reserve 40,604 (40,604) 42,632 (42,632)
(ii) Liquidity risk. This is the risk that the Company will encounter
difficulty in meeting obligations associated with financial liabilities, which
stood at £38,916,000 (2023 - £35,241,000).
Management of the risk. Liquidity risk is not considered to be significant as
the Company's assets comprise mainly cash and readily realisable securities,
which can be sold to meet funding commitments if necessary and these amounted
to £9,349,000 and £406,041,000 (2023 - £1,560,000 and £429,636,000) at the
year end respectively. Short-term flexibility is achieved through the use of
loan facilities.
Maturity profile. The following table sets out the undiscounted gross cash
flows, by maturity, of the Company's significant financial liabilities and
cash at the Balance Sheet date:
Within Between
1 year 1-5 years Total
At 31 December 2024 £'000 £'000 £'000
Fixed rate
Bank loans 32,422 - 32,422
Interest on bank loans 164 - 164
32,586 - 32,586
Floating rate
Cash 9,349 - 9,349
Within Between
1 year 1-5 years Total
At 31 December 2023 £'000 £'000 £'000
Fixed rate
Bank loans 32,123 - 32,123
Interest on bank loans 162 - 162
32,285 - 32,285
Floating rate
Cash 1,560 - 1,560
Details of the Company's borrowing arrangements are disclosed in note 13.
(iii) Credit risk. This is failure of the counterparty to a transaction to
discharge its obligations under that transaction that could result in the
Company suffering a loss. The Company is exposed to credit risk on debt
instruments. These classes of financial assets are not subject to IFRS 9's
impairment requirements as they are measured at FVTPL. The carrying value of
these assets, under IFRS 9 represents the Company's maximum exposure to credit
risk on financial instruments not subject to the IFRS 9 impairment
requirements on the respective reporting dates (see table below "Credit Risk
Exposure").
The Company's only financial assets subject to the expected credit loss model
within IFRS 9 are only short-term other receivables. At 31 December 2024, the
total of short-term other receivables was £1,421,000 (2023 - £2,913,000).
Given the balance is not material an assessment of credit risk is not
performed. No other assets are considered impaired and no other amounts have
been written off during the year.
All other receivables are expected to be received within twelve months or
less. An amount is considered to be in default if it has not been received on
the due date.
As only other receivables are impacted by the IFRS 9 model, the Company has
adopted the simplified approach. The loss allowance is therefore based on
lifetime ECLs.
Management of the risk. Where the Investment Manager makes an investment in a
bond, corporate or otherwise, where available, the credit rating of the issuer
is taken into account so as to minimise the risk to the Company of default.
The Company has the following holdings:
- a Chinese overseas corporate bond issued by G3 Exploration with a book cost
of £4,611,000. G3 Exploration appointed joint liquidators during December
2019. Therefore the Board of Directors decided to write down the value of G3
Exploration to £nil due to the uncertainty over the repayment of the debt. No
interest for G3 Exploration has been accrued since the joint liquidator was
appointed.
- an Indian overseas corporate bond issued by ICICI Bank has matured at
December 2024 (2023 - £3,321,000).
Each of the above bonds are non-rated. The Investment Manager undertakes an
ongoing review of their suitability for inclusion within the portfolio.
Investment transactions are carried out with a large number of brokers, whose
credit rating is taken into account so as to minimise the risk to the Company
of default.
The risk of counterparty exposure due to failed trades causing a loss to the
Company is mitigated by the review of failed trade reports on a daily basis.
In addition, both stock and cash reconciliations to the Custodian's records
are performed on a daily basis to ensure discrepancies are investigated on a
timely basis. The Manager's Compliance department carries out periodic reviews
of the Custodian's operations and reports its finding to the Manager's Risk
Management Committee. It is the Manager's policy to trade only with A- and
above (Long Term rated) and A-1/P-1 (Short Term rated) counterparties.
Cash is held only with reputable banks with high quality external credit
ratings.
None of the Company's financial assets are secured by collateral or other
credit enhancements.
Credit risk exposure. In summary, compared to the amounts included in the
Balance Sheet, the maximum exposure to credit risk at 31 December was as
follows:
2024 2023
Balance Maximum Balance Maximum
Sheet exposure Sheet exposure
£'000 £'000 £'000 £'000
Non-current assets
Investments held at fair value through profit or loss 406,041 - 429,636 3,321
Current assets
Cash at bank 9,349 9,349 1,560 1,560
Other receivables 1,421 1,421 2,913 2,913
416,811 10,770 434,109 7,794
(iv) Gearing risk. The Company's policy is to increase its exposure to equity
markets through the judicious use of borrowings. When borrowings are invested
in such markets, the effect is to magnify the impact on shareholders' funds of
changes, both positive and negative, in the value of the portfolio. As noted
in note 2(l) financial liabilities are classified under IFRS 9. The Company
has not designated any financial liabilities at FVPL. Therefore, this
requirement has not had an impact on the Company. The loans are carried at
amortised cost, using the effective interest rate method in the financial
statements.
Management of the risk. The Board imposes borrowing limits to ensure gearing
levels are appropriate to market conditions and reviews these on a regular
basis. Borrowings comprise fixed rate, revolving, and uncommitted facilities.
The fixed rate facilities are used to finance opportunities at low rates and,
the revolving and uncommitted facilities to provide flexibility in the
short-term.
19. Capital management policies and procedures
The Company's capital management objectives are:
- to ensure that the Company will be able to continue as a going concern; and
- to maximise the income and capital return to its equity shareholders through
an appropriate balance of equity capital and debt. The policy is that debt
should not exceed 25% of net assets.
The Company's capital at 31 December comprises:
2024 2023
£'000 £'000
Debt
Borrowings under the multi-currency loan facility 32,422 32,123
32,422 32,123
2024 2023
Equity £'000 £'000
Equity share capital 194,933 194,933
Retained earnings and other reserves 167,425 203,935
362,358 398,868
Debt as a % of net assetsA 8.95 8.05
AThe calculation above differs from the AIC recommended methodology, where
debt levels are shown net of cash and cash equivalents held.
The Board, with the assistance of the Investment Manager monitors and reviews
the broad structure of the Company's capital on an ongoing basis. This review
includes:
- the planned level of gearing, which takes account of the Investment
Manager's views on the market;
- the need to buy back equity shares for cancellation or for holding in
treasury, which takes account of the difference between the net asset value
per Ordinary share and the Ordinary share price (i.e. the level of share price
discount);
- the need for new issues of equity shares; and
- the extent to which revenue in excess of that which is required to be
distributed should be retained.
The Company's objectives, policies and processes for managing capital are
unchanged from the preceding accounting period.
20. Related party transactions and transactions with the Investment Manager
Fees payable during the period to the Directors are disclosed in note 6 and
within the Directors' Remuneration Report (unaudited), along with their
interests in shares of the Company, totalling 87,128 (2023 - 98,101 including
Mr Hugh Young's interest of 27,500 as at 31 December 2023).
Mr Hugh Young, who was a Director of the Company until his retirement at the
Annual General Meeting held on 10 May 2023, was employed by the Company's
Investment Manager, abrdn Asia, which is a wholly-owned subsidiary of abrdn
plc.
Investment management, promotional activities and administration services are
provided by the abrdn group with details of transactions during the year and
balances outstanding at the year end disclosed in notes 5 and 6.
The Company also has an agreement with JTC Fund Solutions (Jersey) Limited for
the provision of company secretarial and administration services at a cost of
£129,000 per annum, which abrdn plc has agreed to rebate in full from the
investment management fee which it receives.
21. Controlling party
In the opinion of the Directors on the basis of shareholdings advised to them,
the Company has no immediate or ultimate controlling party.
22. 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 Balance
Sheet are grouped into the fair value hierarchy as follows:
Level 1 Level 2 Level 3 Total
At 31 December 2024 Note £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Quoted equities a) 406,041 - - 406,041
Quoted bonds b) - - - -
Net fair value 406,041 - - 406,041
Level 1 Level 2 Level 3 Total
At 31 December 2023 Note £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Quoted equities a) 426,315 - - 426,315
Quoted bonds b) - 3,321 - 3,321
Net fair value 426,315 3,321 - 429,636
a) Quoted equities. The fair value of the Company's investments in quoted
equities has been determined by reference to their quoted bid prices at the
reporting date. Quoted equities included in Fair Value Level 1 are actively
traded on recognised stock exchanges.
b) Quoted bonds. The fair value of the Company's investments in quoted bonds
has been determined by reference to their quoted bid prices at the reporting
date. Investments in quoted bonds are not considered to trade in active
markets. There are no holdings in quoted bonds as at 31 December 2024.
In October 2019 the Board of Directors took the decision to write down the
value of G3 Exploration by 50% in light of interest payment default and
concerns over ongoing trading. At this point the G3 Exploration bond was
reclassified as Level 3. G3 Exploration appointed joint liquidators during
December 2019. Using an adjusted net asset value model the Board of Directors
decided to write down the value of G3 Exploration to £nil due to concerns
over liquidity, credit worthiness, exit opportunities and the timing of any
potential receipts. There has been no change in carrying value during the year
under review or as at the date of this Report.
Fair value of financial assets. The Directors are of the opinion that the fair
value of other financial assets is equal to the carrying amounts in the
Balance Sheet.
Fair values of financial liabilities. There is no fair value attributed to the
borrowings as at 31 December 2024 given their short-term nature. Under the
fair value hierarchy in accordance with IFRS 13, these borrowings can be
classified as Level 2 due to the use of a discount rate as an observable input
in the calculation of fair value.
ALTERNATIVE PERFORMANCE MEASURES (Unaudited)
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.
2024 2023
NAV per Ordinary share (p) a 251.42 238.59
Share price (p) b 220.00 208.00
Discount (b-a)/a 12.5% 12.8%
Dividend cover
Dividend cover measures the revenue return per share divided by total
dividends per share, expressed as a ratio.
2024 2023
Revenue return per share a 11.35p 11.97p
Dividends per share b 14.43p 11.75p
Dividend cover a/b 0.79 1.02
Dividend yield
The annual dividend per Ordinary share divided by the share price, expressed
as a percentage.
2024 2023
Annual dividend per Ordinary share (p) a 14.43p 11.75p
Share price (p) b 220.00p 208.00p
Dividend yield (b-a)/a 6.6% 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 year end as well as cash and cash equivalents including amounts
due to and from brokers.
2024 2023
Borrowings (£'000) a 32,422 32,123
Cash (£'000) b 9,349 1,560
Amounts due to brokers (£'000) c 4,127 21
Amounts due from brokers (£'000) d - 756
Shareholders' funds (£'000) e 377,895 398,868
Net gearing (a-b+c-d)/e 7.2% 7.5%
Ongoing charges
The ongoing charges ratio has been calculated in accordance with guidance
issued by the AIC, to include the look-through costs of holding certain
investment funds as well as the total of investment management fees and
administrative expenses and expressed as a percentage of the average daily net
asset values with debt at fair value published throughout the year.
2024 2023
Investment management fees (£'000) 2,368 3,041
Administrative expenses (£'000) 1,049 867
Less: non-recurring charges A (£'000) (134) (18)
Ongoing charges (£'000) 3,283 3,890
Average net assets (£'000) 384,548 395,914
Ongoing charges ratio (excluding look-through costs) 0.85% 0.98%
Look-through costsB - 0.02%
Ongoing charges ratio (including look-through costs) 0.85% 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.
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
Year ended 31 December 2024 NAV Price
Opening at 1 January 2024 a 238.59p 208.00p
Closing at 31 December 2024 b 251.42p 220.00p
Price movements c=(b/a)-1 5.4% 5.8%
Dividend reinvestment A d 5.4% 6.2%
Total return c+d 10.8% 12.0%
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 par 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.
Additional Notes:
The Annual Financial Report Announcement is not the Company's statutory
financial statements. The above results for the year ended 31 December 2024
are an abridged version of the Company's full financial statements, which have
been approved and audited with an unqualified report. The 2023 and 2024
statutory financial statements received unqualified reports from the Company's
Auditor and did not include any reference to matters to which the Auditor drew
attention by way of emphasis without qualifying the reports. The financial
information for 2023 is derived from the statutory financial statements for
2023 which have been lodged with the JFSC. The 2024 financial statements will
be filed with the JFSC in due course.
The Annual Report will be posted to Shareholders and further copies may be
obtained from the registered office, 28 Esplanade St Helier Jersey JE2 3QA and
on the Company's website* asian-income.co.uk.
Please note that past performance is not necessarily a guide to the future and
that the value of investments and the income from them may fall as well as
rise and may be affected by exchange rate movements. Investors may not get
back the amount they originally invested.
* Neither the content of the Company's website nor the content of any website
accessible from hyperlinks on the Company's website (or any other website) is
(or is deemed to be) incorporated into, or forms (or is deemed to form) part
of this announcement.
JTC Fund Solutions (Jersey) Limited
Company Secretary
25 March 2025
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