REG - abrdn Asian IncFd - Half-year Report
17/08/2023 07:00
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RNS Number : 5545J abrdn Asian Income Fund Limited 17 August 2023
abrdn Asian Income Fund Limited
Legal Entity Identifier: 549300U76MLZF5F8MN87
UNAUDITED HALF YEARLY REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2023
Performance Highlights
· The NAV fell by 3.7% on a total return basis for the six months
ended 30 June 2023. This compares to a fall of 2.4% in the MSCI AC Asia
Pacific ex Japan Index.
· The dividend yield at the end of the period was 5.3%.
Dividend yield (A) Earnings per Ordinary share - basic (revenue)
As at 30 June 2023 5.3% Six months ended 30 June 2023 6.28p
As at 31 December 2022 4.7% Six months ended 30 June 2022 5.23p
Net asset value total return (AB) Share price total return (AB)
Six months ended 30 June 2023 -3.7% Six months ended 30 June 2023 -4.0%
Year ended 31 December 2022 -3.6% Year ended 31 December 2022 -2.7%
MSCI AC Asia Pacific ex Japan Index total return (currency adjusted) (B) MSCI AC Asia Pacific ex Japan High Dividend Yield Index total return (currency
adjusted) (B)
Six months ended 30 June 2023 -2.4% Six months ended 30 June 2023 1.4%
Year ended 31 December 2022 -6.8% Year ended 31 December 2022 3.2%
Discount to net asset value per Ordinary share (A) Ongoing charges (A)
As at 30 June 2023 12.3% Six months ended 30 June 2023 1.01%
As at 31 December 2022 11.7% Year ended 31 December 2022 1.01%
Net gearing (A)
As at 30 June 2023 10.0%
As at 31 December 2022 8.1%
(A) Alternative Performance Measure.
(B) Total return represents the capital return plus
dividends reinvested.
Chairman's Statement
Highlights
· Despite the short term underperformance, the Company has
outperformed the MSCI AC Asia Pacific ex Japan Index over 1, 3 and 5 years
· Our dividend for the year is expected to exceed 10.60p per share,
an increase from last year, and if achieved would provide a yield of 5.4%
· New holdings have been added to the portfolio to further enhance
the Company's income-generating capacity
· Environmental, social and governance ('ESG') analysis is firmly
embedded in the research process and reflects our belief that companies with
good ESG practices will be the winners over the longer term
Market Overview
The first half of 2023 was a challenging period for investors in Asian stock
markets, as the macroeconomic environment and monetary policy moves continued
to influence investor sentiment significantly more than individual company
performance.
In my previous annual statement, I had highlighted three key areas of interest
in the outlook: inflation, monetary policy, and China. Through this review
period, we have seen how each theme proved pivotal in driving market
direction. While recession risks persist in Europe and the US, owing to
continued policy rate tightening, it bears noting that inflation remains lower
in Asia. A positive development was a fall in the price of some key raw
materials, which should help to relieve cost pressures faced by companies. As
for China, optimism around a demand recovery from the country's Covid
re-opening led to an initial rise in Asian stock markets. This, however, soon
gave way to weakness on the back of signs that China's economic recovery might
be stalling, although markets stabilised subsequently and traded in a narrow
range.
The period was also characterised by fluctuating markets caused by uncertainty
around inflation, the impact of the US Federal Reserve's ("Fed") long series
of policy rate increases and whether a global recession could be avoided later
in the year. The decision by the OPEC+ group of oil-producing countries to cut
output sparked fears that this could further stoke inflation.
Performance
In this environment, over the six months to 30 June 2023, the net asset value
("NAV") total return declined by 3.7% on a total return basis, which compares
to the MSCI AC Asia Pacific ex Japan Index's (the "Index") decline of 2.4%.
The share price ended the period at 201p, representing a discount of 12.3% to
the NAV per share.
Despite the short term underperformance, the Company has outperformed the
Index over 1, 3 and 5 years, underlining the benefit of the Investment
Manager's steadfast commitment to quality companies offering both capital and
income growth.
Portfolio Activity
The Investment Manager took advantage of weakness in the market to add five
holdings that should further enhance your Company's income-generating
capacity; Tencent, Autohome, Telstra, SITC International and Astra
International.
The positions in Medibank, Kasikornbank, and Macquarie Group were sold to
manage the Company's exposure to the financial sector in the wake of the
banking turmoil in the US and Europe. Stakes in Okinawa Cellular and Bank
Rakyat Indonesia were divested in order to redirect the proceeds into higher
yielding companies.
Revenue and Dividends
Revenue earnings per share were 6.28p for the six month period ended 3 June
2023, an increase of 20.1% compared to the first six months of the previous
year. The Company has continued to benefit from the Investment Manager's focus
on high-yielding companies with strong fundamentals, where it believes there
is room for significant increases in dividend receipts.
The Company has already declared first and second interim dividends of 2.50p
per share in respect of the year ending 31 December 2023, with the second
interim dividend payable on 25 August 2023 to shareholders on the register on
28 July 2023.
The Board is very aware of the importance of dividends to shareholders and is
pleased to reiterate that, in the absence of unforeseen circumstances, the
intention is to declare a total dividend exceeding 10.60p per Ordinary share
in respect of the year to 31 December 2023, equating to a dividend yield of
5.4% based on the closing share price of 195.75p on 16 August 2023.
The level of the remaining two dividends for 2023 will be considered at each
quarter end, at which point an announcement will be made by the
Company. There are healthy revenue reserves built up by the Company that the
Board will consider using as appropriate. Any decision as to whether revenue
reserves will be utilised (and by how much) will be taken at the time of the
declaration of the fourth interim dividend in January 2024.
This Company's history of increasing the dividend means that it continues to
be a "next generation dividend hero" as recognised by the Association of
Investment Companies. It is very much our intention to continue to extend this
record.
Share Capital Management
In line with the Board's policy to buy back shares when the discount at which
the Company's shares trade exceeds 5% to the underlying NAV (exclusive of
income), the Company bought back 1.1 million shares during the period to be
held in treasury, at a cost of £2.3 million.
These buybacks provide an enhancement to the Company's NAV and benefit all
shareholders. The Company will continue selectively to buy back shares in the
market, in normal market conditions and at the discretion of the Board.
Gearing
The Company has a £10 million fixed rate term loan and a £40 million
revolving credit facility, both of which mature in March 2024. At the period
end, £30.1 million of the revolving credit facility was drawn down, resulting
in total borrowings of £40.1 million and gearing (net of cash) of 10.0%,
compared to 8.1% at the beginning of the period.
Jersey Administrator
On 16 August 2023, we announced that the Company had appointed a new, Jersey
based, regulated administrator, JTC Fund Solutions (Jersey) Limited ("JTC") to
carry out the Jersey regulatory function with effect from 15 August 2023. All
investment management and fund administration functions will continue to be
provided by the abrdn group through its Singapore based Asian Equity team and
UK fund administration team. As a result, day-to-day investment decisions and
management of the Company will not be impacted by the reorganisation. There
are no changes to the management fee as a result of the reorganisation and the
administration fee charged by JTC will be met by abrdn.
Outlook
Asian markets are likely to remain volatile until there is more clarity about
the strength of China's economy. The central government will be watching
economic data closely, and if the economy does not improve, we could see
Beijing increase its support through targeted measures. The monetary
tightening cycle in the US will also remain a significant factor. While it is
likely that this tightening is close to its peak, recent comments by Fed
chairman, Jerome Powell, that inflation remains too high and that he expected
further tightening in the second half of the year did cause some market
uncertainty in this regard. With some Asian currencies pegged to the US
Dollar, any further interest rate rises will have an effect on the markets in
which your Company operates.
However, despite the recent difficulties, the fundamental long-term rationale
for investing in Asia remains compelling. Rising affluence is leading to
growth in consumption in premium products in areas such as personal care,
financial services and food and beverages. Ongoing urbanisation is driving an
infrastructure boom which will benefit property developers and mortgage
providers.
The Investment Manager's focus remains on quality companies with sustainable
business models, strong cash flows and access to structural growth drivers
across Asia, as these support growth in both capital and shareholder returns.
Ian Cadby
Chairman
17 August 2023
Investment Portfolio
As at 30 June 2023
Valuation Total assets
Company Country £'000 %
Taiwan Semiconductor Manufacturing Company Taiwan 31,768 7.4
Samsung Electronics (Pref) South Korea 22,550 5.3
BHP Group Australia 14,909 3.5
DBS Group Singapore 14,545 3.4
Oversea-Chinese Banking Corporation Singapore 14,167 3.3
Power Grid India 13,664 3.2
Hon Hai Precision Industry Taiwan 12,683 3.0
Venture Corporation Singapore 11,775 2.8
Charter Hall Long Wale REIT Australia 10,429 2.4
China Resources Land China 10,330 2.4
Top ten investments 156,820 36.7
Region RE Australia 10,209 2.4
AIA Group Hong Kong 10,139 2.4
Sunonwealth Electric Machine Taiwan 10,091 2.4
United Overseas Bank Singapore 9,989 2.3
Rio Tinto (A) Australia 9,870 2.3
Taiwan Mobile Taiwan 9,555 2.2
LG Chem (Pref) South Korea 9,492 2.2
Keppel Infrastructure Trust Singapore 7,857 1.8
Spark New Zealand New Zealand 7,776 1.8
Singapore Telecommunications Singapore 7,230 1.7
Top twenty investments 249,028 58.2
Commonwealth Bank of Australia Australia 6,638 1.6
Tisco Financial Group Foreign Thailand 6,622 1.5
Auckland International Airport New Zealand 6,407 1.5
Centuria Industries REIT Australia 6,185 1.5
Singapore Technologies Engineering Singapore 6,084 1.4
Hong Kong Exchanges & Clearing Hong Kong 6,024 1.4
Momo.com Inc Taiwan 5,886 1.4
Infosys India 5,682 1.3
Accton Technology Taiwan 5,650 1.3
Midea Group 'A' China 5,559 1.3
Top thirty investments 309,765 72.4
China Merchants Bank 'A' China 5,295 1.2
ASX Australia 5,097 1.2
Capitaland Investment Singapore 5,065 1.2
Hang Lung Properties Hong Kong 4,987 1.2
SAIC Motor 'A' China 4,954 1.2
Siam Cement (B) Thailand 4,941 1.2
Hana Microelectronics (Foreign) Thailand 4,898 1.1
Capitland India Trust Singapore 4,694 1.1
Tencent Holdings Hong Kong 4,620 1.1
Telstra Corporation Australia 4,459 1.0
Top forty investments 358,775 83.9
Tata Consultancy Services India 4,396 1.0
SITC International Holdings Hong Kong 4,395 1.0
Globalwafers Taiwan 4,368 1.0
Media Tek Taiwan 4,344 1.0
NZX New Zealand 4,169 1.0
National Australia Bank Australia 4,129 1.0
Amada Co Japan 3,953 0.9
Lotus Retail Growth Freehold And Leasehold Property Fund Thailand 3,859 0.9
Dah Sing Financial Holding Hong Kong 3,805 0.9
Autohome Adr Cayman Islands 3,759 0.9
Top fifty investments 399,952 93.5
China Vanke (H shares) China 3,586 0.8
KMC Kuei Meng Taiwan 3,539 0.8
ICICI Bank (C) India 3,405 0.8
Convenience Retail Asia Hong Kong 3,389 0.8
Land & Houses Foreign Thailand 3,267 0.8
Taiwan Union Technology Taiwan 2,228 0.5
AEM Holdings Singapore 2,156 0.5
Digital Core REIT Singapore 2,116 0.5
China Resources Gas Hong Kong 1,705 0.4
Capitaland Ascott Trust Singapore 94 0.0
Top sixty investments 425,437 99.4
Autohome (A shares) Cayman Islands 30 0.0
Capitaland India Trust(Dummy Rights) Singapore 0 0.0
G3 Exploration (C) China 0 0.0
Total value of investments 425,467 99.4
Net current assets (D) 2,582 0.6
Total assets 428,049 100.0
(A) Incorporated in and listing held in United
Kingdom.
(B) Holding includes investment in common
(£3,303,000) and non-voting depositary receipt (£1,638,000) lines.
(C) Corporate bonds.
(D) Excludes bank loans of £40,127,000.
Condensed Statement of Comprehensive Income
Six months ended Six months ended
30 June 2023 30 June 2022
(unaudited) (unaudited)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment income
Dividend income 12,808 - 12,808 10,849 - 10,849
Interest income on investments held at fair value through profit or loss 219 - 219 159 - 159
Stock lending income 3 - 3 - - -
Traded option premiums - - - 47 - 47
Total revenue 13,030 - 13,030 11,055 - 11,055
Losses on investments held at fair value through profit or loss - (24,603) (24,603) - (36,224) (36,224)
Net currency gains/(losses) - 811 811 - (2,313) (2,313)
13,030 (23,792) (10,762) 11,055 (38,537) (27,482)
Expenses
Investment management fee (631) (946) (1,577) (668) (1,003) (1,671)
Other operating expenses (415) - (415) (496) - (496)
Total operating expenses (1,046) (946) (1,992) (1,164) (1,003) (2,167)
Profit/(loss) before finance costs and tax 11,984 (24,738) (12,754) 9,891 (39,540) (29,649)
Finance costs (428) (643) (1,071) (169) (254) (423)
Profit/(loss) before tax 11,556 (25,381) (13,825) 9,722 (39,794) (30,072)
Tax expense (924) (154) (1,078) (784) 319 (465)
Profit/(loss) for the period 10,632 (25,535) (14,903) 8,938 (39,475) (30,537)
Earnings per Ordinary share (pence) (note 3) 6.28 (15.08) (8.80) 5.23 (23.10) (17.87)
The Company does not have any income or expense that is not included in
profit/(loss) for the period, and therefore the "Profit/(loss) for the period"
is also the "Total comprehensive income for the period".
The total columns of this statement represent the Condensed Statement of
Comprehensive Income of the Company, prepared in accordance with IFRS. The
revenue and capital columns are supplementary to this and are prepared under
guidance published by the Association of Investment Companies. All items in
the above statement derive from continuing operations.
All of the profit/(loss) and total comprehensive income is attributable to the
equity holders of abrdn Asian Income Fund Limited. There are no
non-controlling interests.
Condensed Statement of Comprehensive Income (cont'd)
Year ended
31 December 2022
(audited)
Revenue Capital Total
£'000 £'000 £'000
Investment income
Dividend income 21,423 - 21,423
Interest income on investments held at fair value through profit or loss 371 - 371
Stock lending income - - -
Traded option premiums 47 - 47
Total revenue 21,841 - 21,841
Losses on investments held at fair value through profit or loss - (29,033) (29,033)
Net currency gains/(losses) - (3,204) (3,204)
21,841 (32,237) (10,396)
Expenses
Investment management fee (1,308) (1,962) (3,270)
Other operating expenses (939) - (939)
Total operating expenses (2,247) (1,962) (4,209)
Profit/(loss) before finance costs and tax 19,594 (34,199) (14,605)
Finance costs (470) (704) (1,174)
Profit/(loss) before tax 19,124 (34,903) (15,779)
Tax expense (1,695) 408 (1,287)
Profit/(loss) for the period 17,429 (34,495) (17,066)
Earnings per Ordinary share (pence) (note 3) 10.23 (20.24) (10.01)
Condensed Balance Sheet
As at As at As at
30 June 30 June 31 December 2022
2023
2022
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
Non-current assets
Investments held at fair value through profit or loss 425,467 455,329 448,323
Current assets
Cash and cash equivalents 4,894 4,434 7,328
Other receivables 3,600 2,194 1,175
8,494 6,628 8,503
Creditors: amounts falling due within one year
Bank loans 6 (40,127) (39,158) (30,986)
Other payables (5,912) (2,821) (1,288)
(46,039) (41,979) (32,274)
Net current liabilities (37,545) (35,351) (23,771)
Total assets less current liabilities 387,922 419,978 424,552
Creditors: amounts falling due after more than one year
Deferred tax liability on Indian capital gains (1,134) (1,297) (1,124)
Bank loan 6 - (9,973) (9,981)
(1,134) (11,270) (11,105)
Net assets 386,788 408,708 413,447
Stated capital and reserves
Stated capital 7 194,933 194,933 194,933
Capital redemption reserve 1,560 1,560 1,560
Capital reserve 176,613 200,343 204,414
Revenue reserve 13,682 11,872 12,540
Equity shareholders' funds 386,788 408,708 413,447
Net asset value per Ordinary share (pence) 4 229.17 240.04 243.44
The financial statements were approved by the Board of Directors and
authorised for issue on 17 August 2023 and were signed on its behalf by:
Ian Cadby
Chairman
The accompanying notes are an integral part of the financial statements.
Condensed Statement of Changes in Equity
Six months ended 30 June 2023 (unaudited)
Capital
Stated redemption Capital Revenue
capital reserve reserve reserve Total
£'000 £'000 £'000 £'000 £'000
Opening balance 194,933 1,560 204,414 12,540 413,447
Buyback of Ordinary shares for treasury - - (2,266) - (2,266)
(Loss)/profit for the period - - (25,535) 10,632 (14,903)
Dividends paid (note 5) - - - (9,490) (9,490)
Balance at 30 June 2023 194,933 1,560 176,613 13,682 386,788
Six months ended 30 June 2022 (unaudited)
Capital
Stated redemption Capital Revenue
capital reserve reserve reserve Total
£'000 £'000 £'000 £'000 £'000
Opening balance 194,933 1,560 242,727 11,570 450,790
Buyback of Ordinary shares for treasury - - (2,909) - (2,909)
(Loss)/profit for the period - - (39,475) 8,938 (30,537)
Dividends paid (note 5) - - - (8,636) (8,636)
Balance at 30 June 2022 194,933 1,560 200,343 11,872 408,708
Year ended 31 December 2022 (audited)
Capital
Stated redemption Capital Revenue
capital reserve reserve reserve Total
£'000 £'000 £'000 £'000 £'000
Opening balance 194,933 1,560 242,727 11,570 450,790
Buyback of Ordinary shares for treasury - - (3,818) - (3,818)
(Loss)/profit for the year - - (34,495) 17,429 (17,066)
Dividends paid (note 5) - - - (16,459) (16,459)
Balance at 31 December 2022 194,933 1,560 204,414 12,540 413,447
The revenue reserve represents the amount of the Company's reserves
distributable by way of dividend.
The stated capital in accordance with Companies (Jersey) Law 1991 Article 39A
is £260,822,000 (30 June 2022 - £260,822,000; 31 December 2022 -
£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.
Condensed Statement of Cash Flows
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Cash flows from operating activities
Dividend income received 10,673 9,919 21,140
Interest income received 237 153 354
Derivative income received - 47 47
Return of capital included in investment income 313 - -
Investment management fee paid (786) (1,784) (5,169)
Other cash expenses (580) (479) (801)
Cash generated from operations 9,857 7,856 15,571
Interest paid (1,096) (435) (1,041)
Overseas taxation paid (881) (804) (1,712)
Net cash inflows from operating activities 7,880 6,617 12,818
Cash flows from investing activities
Purchases of investments (66,923) (47,167) (55,017)
Sales of investments 68,545 53,206 75,625
Capital gains tax on sales (144) - (83)
Net cash inflow from investing activities 1,478 6,039 20,525
Cash flows from financing activities
Purchase of own shares for treasury (2,266) (2,909) (3,818)
Dividends paid (9,490) (8,636) (16,459)
Repayment of loans - - (8,948)
Net cash outflow from financing activities (11,756) (11,545) (29,225)
Net (decrease)/increase in cash and cash equivalents (2,398) 1,111 4,118
Cash and cash equivalents at the start of the period 7,328 3,268 3,268
Foreign exchange (36) 55 (58)
Cash and cash equivalents at the end of the period 4,894 4,434 7,328
The accompanying notes are an integral part of the financial statements.
Notes to the Financial Statements
For the year ended 30 June 2023
1. Accounting policies - basis of preparation
The Annual Report is prepared in accordance with International Financial
Reporting Standards (IFRS), as issued by the International Accounting
Standards Board (IASB), and interpretations issued by the International
Financial Reporting Interpretations Committee of the IASB (IFRIC). The
condensed Half Yearly Report has been prepared in accordance with
International Accounting Standards (IAS) 34 - 'Interim Financial Reporting'
and should be read in conjunction with the Annual Report for the year ended 31
December 2022.
The financial statements have been prepared on a going concern basis. In
accordance with the Financial Reporting Council's guidance on 'Going Concern
and Liquidity Risk' the Directors have undertaken a review of the Company's
assets and liabilities. The Company's assets primarily consist of a diverse
portfolio of listed equity shares which, in most circumstances, are realisable
within a very short timescale.
The condensed interim financial statements have been prepared using the same
accounting policies as the preceding annual financial statements.
During the period the following standards, amendments to standards and new
interpretations became effective. The adoption of these standards and
amendments did not have a material impact on the financial statements:
IAS 1 Amendments Classification of Liabilities as Current or Non-Current 1 January 2023
IAS 1 Amendments Disclosure of Accounting Policies 1 January 2023
IAS 8 Amendments Definition of Accounting Estimates 1 January 2023
IAS 12 Amendments Deferred Tax related to Assets and Liabilities arising from a Single 1 January 2023
Transaction
IFRS 4 Amendments Deferral of effective date of IFRS 9 1 January 2023
IFRS 17 Amendments Insurance Contracts 1 January 2023
IFRS 17 Amendments Amendments (Effective Date) 1 January 2023
IFRS 17 Amendments (Initial Application of IFRS 17 and IFRS 9 - Comparative Information) 1 January 2023
2. Segmental information
For management purposes, the Company is organised into one main operating
segment, which invests in equity securities and debt instruments. All of the
Company's activities are interrelated, and each activity is dependent on the
others. Accordingly, all significant operating decisions are based upon
analysis of the Company as one segment. The financial results from this
segment are equivalent to the financial statements of the Company as a whole.
3. Earnings per Ordinary share
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
(unaudited) (unaudited) (audited)
p p p
Revenue return 6.28 5.23 10.23
Capital return (15.08) (23.10) (20.24)
Total return (8.80) (17.87) (10.01)
The figures above are based on the following:
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Revenue return 10,632 8,938 17,429
Capital return (25,535) (39,475) (34,495)
Total return (14,903) (30,537) (17,066)
Weighted average number of Ordinary shares in issue 169,308,308 170,797,870 170,411,839
4. Net asset value per share
Ordinary shares. The basic net asset value per Ordinary share and the net
asset values attributable to Ordinary shareholders at the period end
calculated in accordance with the Articles of Association were as follows:
As at As at As at
30 June 2023 30 June 2022 31 December 2022
(unaudited) (unaudited) (audited)
Attributable net assets (£'000) 386,788 408,708 413,447
Number of Ordinary shares in issue (excluding shares in issue held in 168,776,311 170,269,918 169,832,401
treasury)
Net asset value per Ordinary share (p) 229.17 240.04 243.44
5. Dividends on equity shares
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Amounts recognised as distributions to equity holders in the period:
Second interim dividend 2022 - 2.30p per Ordinary share - - 3,915
Third interim dividend 2022 - 2.30p per Ordinary share - - 3,908
Fourth interim dividend for 2022 - 3.10p per Ordinary share (2021 - 2.75p) 5,263 4,712 4,712
First interim dividend for 2023 - 2.50p per Ordinary share (2022 - 2.30p) 4,227 3,924 3,924
9,490 8,636 16,459
A second interim dividend of 2.50p for the year to 31 December 2023 will be
paid on 25 August 2023 to shareholders on the register on 28 July 2023. The
ex-dividend date was 27 July 2023.
6. Bank loans
At the period end approximately GBP 15.8 million, USD 8.85 million and HKD
73.5 million, equivalent to £30.1 million was drawn down from the £40
million multi-currency revolving facility with bank of Nova Scotia, London
Branch. The interest rates attributed to the GBP, USD and HKD loans at the
period end were 5.6609%, 6.36448% and 5.94964% respectively.
In addition, the Company has an unsecured fixed £10 million credit facility
with Bank of Nova Scotia, London Branch at an all-in interest rate of 1.53%.
Both facilities mature on 2 March 2024.
7. Stated capital
The Company has issued 194,933,389 Ordinary shares of no par value, which are
fully paid (30 June 2022 -194,933,389; 31 December 2022 - 194,933,389).
During the period 1,056,090 Ordinary shares were bought back by the Company
for holding in treasury at a cost of £2,266,000 (30 June 2022 - 1,288,978
shares were bought back at a cost of £2,909,000; 31 December 2022 - 1,726,495
shares were bought back for holding in treasury at a cost of £3,818,000). As
at 30 June 2023 26,157,078 (30 June 2022 - 24,663,471; 31 December 2022 -
25,100,988) Ordinary shares were held in treasury.
A further 238,157 Ordinary shares have been bought back by the Company for
holding in treasury, subsequent to the reporting period end, at a cost of
£490,000. Following the share buybacks there were 168,538,154 Ordinary shares
in issue excluding those held in treasury.
8. Related party disclosures
There have been no transactions with related parties during the period which
have materially affected the financial position or the performance of the
Company.
9. Fair value hierarchy
IFRS 13 'Fair Value Measurement' requires an entity to classify fair value
measurements using a fair value hierarchy that reflects the significance of
the inputs used in making measurements. The fair value hierarchy has the
following levels:
Level 1: quoted prices (unadjusted) in active markets for identical assets or
liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are
observable for the assets or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
The financial assets and liabilities measured at fair value in the Condensed
Balance Sheet are grouped into the fair value hierarchy as follows:
Level 1 Level 2 Level 3 Total
At 30 June 2023 (unaudited) £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Quoted equities 422,062 - - 422,062
Quoted bonds - 3,405 - 3,405
Total assets 422,062 3,405 - 425,467
Level 1 Level 2 Level 3 Total
At 30 June 2022 (unaudited) £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Quoted equities 451,557 - - 451,557
Quoted bonds - 3,772 - 3,772
Total assets 451,557 3,772 - 455,329
Level 1 Level 2 Level 3 Total
At 31 December 2022 (audited) £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Quoted equities 444,727 - - 444,727
Quoted bonds - 3,596 - 3,596
Total assets 444,727 3,596 - 448,323
10. Subsequent Events
On 16 August 2023, the Company announced that it had appointed a new, Jersey
based, regulated administrator, JTC Fund Solutions (Jersey) Limited ("JTC") to
carry out the Jersey regulatory function with effect from 15 August 2023. All
investment management and fund administration functions will continue to be
provided by the abrdn group through its Singapore based Asian Equity team and
UK fund administration team. As a result, day-to-day investment decisions and
management of the Company will not be impacted by the reorganisation. There
are no changes to the management fee as a result of the reorganisation and the
administration fee charged by JTC will be met by abrdn.
11. Half Yearly Financial Report
The financial information for the six months ended 30 June 2023 and 30 June
2022 has not been audited.
Alternative Performance Measures
Alternative performance measures are numerical measures of the Company's
current, historical or future performance, financial position or cash flows,
other than financial measures defined or specified in the applicable financial
framework. The Company's applicable financial framework includes IFRS and the
AIC SORP. The Directors assess the Company's performance against a range of
criteria which are viewed as particularly relevant for closed-end investment
companies.
Discount to net asset value per Ordinary share
The discount is the amount by which the share price is lower than the net
asset value per share, expressed as a percentage of the net asset value.
30 June 2023 31 December 2022
NAV per Ordinary share (p) a 229.17p 243.44p
Share price (p) b 201.00p 215.00p
Discount (a-b)/a 12.3% 11.7%
Dividend yield
The yield for 30 June 2023 is calculated based on the prospective annual
dividend for 2023 per Ordinary share in accordance with the Board's stated
target divided by the share price, expressed as a percentage. The yield for 31
December 2022 is calculated based on the annual dividend for 2022 per Ordinary
share divided by the share price, expressed as a percentage.
30 June 2023 31 December 2022
Annual dividend per Ordinary share (p) a 10.60p 10.00p
Share price (p) b 201.00p 215.00p
Dividend yield a/b 5.3% 4.7%
Net gearing
Net gearing measures the total borrowings less cash and cash equivalents
dividend by shareholders' funds, expressed as a percentage. Under AIC
reporting guidance cash and cash equivalents includes amounts due to and from
brokers at the period end as well as cash and cash equivalents.
30 June 2023 31 December 2022
Borrowings (£'000) a 40,127 40,967
Cash (£'000) b 4,894 7,238
Amounts due to brokers (£'000) c 3,938 -
Amounts due from brokers (£'000) d 473 -
Shareholders' funds (£'000) e 386,788 413,447
Net gearing (a-b+c-d)/e 10.0% 8.1%
Ongoing charges ratio
The ongoing charges ratio has been calculated in accordance with guidance
issued by the AIC as the total of investment management fees and
administrative expenses and expressed as a percentage of the average published
daily net asset values with debt at fair value throughout the year. The ratio
for 30 June 2023 is based on forecast ongoing charges for the year ending 31
December 2023.
30 June 2023 31 December 2022
Investment management fees (£'000) 3,094 3,270
Administrative expenses (£'000) 850 939
Less: non-recurring charges (A) (£'000) (8) (42)
Ongoing charges (£'000) 3,936 4,167
Average net assets (£'000) 398,166 421,170
Ongoing charges ratio (excluding look-through costs) 0.99% 0.99%
Look-through costs (B) 0.02% 0.02%
Ongoing charges ratio (including look-through costs) 1.01% 1.01%
(A) Professional services comprising advisory and
legal fees considered unlikely to recur.
(B) Calculated in accordance with AIC guidance
issued in October 2020 to include the Company's share of costs of holdings in
investment companies on a look-through basis.
The ongoing charges percentage provided in the Company's Key Information
Document is calculated in line with the PRIIPs regulations which among other
things, includes the cost of borrowings and transaction costs.
Total return
NAV and share price total returns show how the NAV and share price has
performed over a period of time in percentage terms, taking into account both
capital returns and dividends paid to shareholders. Share price and NAV total
returns are monitored against open-ended and closed-ended competitors, and the
Reference Index, respectively.
Share
Six months ended 30 June 2023 NAV Price
Opening at 1 January 2023 a 243.44p 215.00p
Closing at 30 June 2023 b 229.17p 201.00p
Price movements c=(b/a)-1 -5.9% -6.5%
Dividend reinvestment (A) d 2.2% 2.5%
Total return c+d -3.7% -4.0%
Share
Year ended 31 December 2022 NAV Price
Opening at 1 January 2022 a 262.76p 231.00p
Closing at 31 December 2022 b 243.44p 215.00p
Price movements c=(b/a)-1 -7.4% -6.9%
Dividend reinvestment (A) d 3.8% 4.2%
Total return c+d -3.6% -2.7%
(A) NAV total return involves investing the net dividend
in the NAV of the Company with debt at fair value on the date on which that
dividend goes ex-dividend. Share price total return involves reinvesting the
net dividend in the share price of the Company on the date on which that
dividend goes ex-dividend.
Interim Board Report - Disclosures
Principal Risk Factors
The principal risks and uncertainties affecting the Company are set out below
and in detail on pages 22 to 23 of the Annual Report for the year ended 31
December 2022 and are not expected to change materially for the remaining six
months of the Company's financial year.
The risks outlined below are those risks that the Directors considered at the
date of this Half Yearly Report to be material but are not the only risks
relating to the Company or its shares. If any of the adverse events described
below actually occur, the Company's financial condition, performance and
prospects and the price of its shares could be materially adversely affected
and shareholders may lose all or part of their investment. Additional risks
which were not known to the Directors at the date of this Half Yearly Report,
or that the Directors considered at the date of this Report to be immaterial,
may also have an effect on the Company's financial condition, performance and
prospects and the price of the shares.
If shareholders are in any doubt as to the consequences of their acquiring,
holding or disposing of shares in the Company or whether an investment in the
Company is suitable for them, they should consult their stockbroker, bank
manager, solicitor, accountant or other independent financial adviser
authorised
under the Financial Securities and Markets Act 2000 (as amended by the
Financial Services Act 2012) or, in the case of prospective investors outside
the United Kingdom, another appropriately authorised independent financial
adviser.
The risks can be summarised under the following headings:
- Investment strategy and objectives;
- Investment portfolio, investment management;
- Financial obligations;
- Financial;
- Regulatory;
- Operational; and
- Income and dividend risk.
The Board considers that a number of contingent risks stemming from the
Covid-19 pandemic may continue to linger, which may impact the operation of
the Company. These include investment risks surrounding the companies in the
portfolio such as employee absence, reduced demand, reduced turnover and
supply chain breakdowns. In addition, the Russian military offensive against
Ukraine has resulted in heightened security and cyber threats across the globe
as well as market disruption and heightened geo-political uncertainty.
Whilst the Company has no holdings in Ukraine or Russia, these contingent and
emerging risks from the conflict may have a global impact for some time and
may affect the portfolio in the form of higher energy prices as well as
increased volatility.
The Investment Manager will continue to review carefully the composition of
the Company's portfolio and to be pro-active in taking investment decisions
where necessary.
An explanation of other risks relating to the Company's investment activities,
specifically market price, liquidity and credit risk, and a note of how these
risks are managed, are contained in note 18 on pages 82 to 89 of the Annual
Report for the year ended 31 December 2022.
Going Concern
The Directors have undertaken a robust review of the Company's ability to
continue as a going concern. The Company's assets consist primarily of a
diverse portfolio of listed equity shares which in most circumstances are
realisable within a very short timescale.
The Directors have reviewed forecasts detailing revenue and liabilities, have
set limits for borrowing and reviewed compliance with banking covenants,
including the headroom available. They have also considered the ability of the
Company to re-finance its loan facilities which are due to mature in March
2024. 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 Half
Yearly Report. Accordingly, the Directors continue to adopt the going concern
basis in preparing these financial statements.
Directors' Responsibility Statement
The Directors are responsible for preparing this Half Yearly Financial Report
in accordance with applicable law and regulations. The Directors confirm that
to the best of their knowledge:
- the condensed set of interim financial statements contained
within the Half Yearly Financial Report which have been prepared in accordance
with IAS 34 "Interim Financial Reporting", give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company;
- the Half-Yearly Board Report includes a fair review of the
information required by rule 4.2.7R of the Disclosure and Transparency Rules
(being an indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed set of
Financial Statements and a description of the principal risks and
uncertainties for the remaining six months of the financial year); and
- the Half-Yearly Board Report includes a fair review of the
information required by 4.2.8R (being related party transactions that have
taken place during the first six months of the financial year and that have
materially affected the financial position of the Company during that period;
and any changes in the related party transactions described in the last Annual
Report that could do so).
On behalf of the Board
Ian Cadby
Chairman
17 August 2023
The Half Year Report will be posted to shareholders in August 2023 and copies
will be available on the Company's website (asian-income.co.uk*).
*Neither the Company's website nor the content of any website accessible from
hyperlinks on that website (or any other website) is (or is deemed to be)
incorporated into, or forms (or is deemed to form) part of this announcement
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