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ABBAF - Aberdeen Asian Income Fund News Story

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Aberdeen Asian IncFd - Half Yearly Financial Report

Wed 14th August, 2019 7:00am
RNS Number : 9411I
Aberdeen Asian Income Fund Limited
14 August 2019
 

ABERDEEN ASIAN INCOME FUND LIMITED

Legal Entity Identifier: 549300U76MLZF5F8MN87

 

UNAUDITED HALF YEARLY REPORT

FOR THE SIX MONTHS ENDED 30 JUNE 2019

 

Interim Board Report - Chairman's Statement

 

Background

Over the six months ended 30 June 2019, the Company's net asset value (NAV) rose 13.3% in sterling terms, outpacing the benchmark MSCI All Countries Asia Pacific ex Japan Index which increased 12.5% and ahead of the MSCI All Countries ex Japan High Yield Index return of 11.5%.  The share price at the end of the period was 217.0p which represented a discount of -8.6% to the NAV per share. Two dividends have been announced in respect of the first half of the year totalling 4.5p per share. This represents an annualised dividend yield of 4.2%, which compares with the yields of 2.8% and 4.6% on the MSCI All Countries Asia Pacific ex Japan Index and the MSCI All Countries ex Japan High Yield Index respectively.

 

Following a lacklustre 2018 when Asian markets pulled back on concerns over growing trade tensions and tightening monetary policy in the US, equities staged an impressive rebound in the first half of this year. Faced with deteriorating economic growth, major central banks including the Federal Reserve and European Central Bank have signalled their readiness to loosen monetary policy if necessary in a marked pivot from their stance last year. As a protracted tussle between the US and China plays out on the world stage, global growth will remain constrained in the near term. Policymakers' broadly accommodative stance in response to this should benefit your Company's income-oriented portfolio, as lower interest rates bode well for dividend stocks. Many of your Company's holdings will benefit from reduced financing costs, while the slide in bond yields will push investors towards equities in their search for yield.

 

Overview

The strong start to the year was interrupted by US-China tensions, but a resumption in trade discussions helped Asian stocks end the review period in positive territory. Against this backdrop, key elections took place across the region, all of which saw the incumbent retain power. Of note, the ruling Liberal National coalition pulled off a surprise victory in Australia, fuelling a relief rally in the market which benefited the portfolio. Elsewhere polls concluded in Indonesia, Thailand and India which should hopefully reduce political uncertainty and provide a welcome boost to reform agendas and re-investment into growth.

 

Macroeconomic data struck a divergent path from the buoyant market as the trade war took its toll on global economies. Central banks grew increasingly accommodative amid continued signs of economic softness. Notably, US and European policy makers signalled possible easing. Asia mirrored their dovish tilt: central banks in India, Malaysia and the Philippines cut their benchmark rates to support growth and liquidity while the Reserve Bank of Australia made its first rate cut since 2016, bringing its cash rate to a record low.

 

Performance Review

Your Company's NAV total return rose by 13.3% in sterling terms over the interim period, outperforming a benchmark that rose 12.5%. The hunt for defensive yield played to the portfolio's favour as its holdings, which have robust balance sheets and cash flow generation, fared better than the broader universe amid concerns of lower interest rates and slowing global growth.

 

The portfolio's largest exposures by country were to Singapore and Australia. Both markets, which offer high dividend yields, outpaced the broader region during the first half of the year. Singapore, in particular, was a rich source of income and share price growth, with the holdings in contract manufacturer Venture Corp, telecoms incumbent SingTel and transport operator ComfortDelgro among the top 15 stock performers. These companies span a variety of different industries and Singapore continues to offer plenty of good quality stocks that have both dividend and share price growth potential.

 

China has increased in weight in your portfolio as this market is supported by healthy population demographics with growing consumer spending set to power China's economy over the coming years.  Although China presents corporate governance challenges, your Investment Manager has the advantage of having feet on the ground, filtering through the noise to find the well run companies with business moats that respect minority shareholder interests. They include insurance company Ping An Group, which boasts one of the most profitable agency franchises among Chinese peers in one of the fastest-growing insurance markets in the world. Additionally, the millennial consumers Ping An can access via its self-developed online platforms are another future growth driver.

 

The portfolio also holds China Resources Land, a property developer in the mainland that uses rental income from its investment properties portfolio to fund future projects. This helps it maintain one of the strongest balance sheets in the sector, which supports its ability to keep growing dividends. Furthermore, China Resources Land is a great example of a Chinese company that is open and willing to discuss environmental, social and corporate governance (ESG) issues with investors. Following your Investment Manager's prior engagement with the company, we are pleased to see that China Resources Land has changed its reporting and management structure this year to exercise greater control over the local teams, to pay more attention to green certification. Its board is supportive of these initiatives and this strong governance policy has encouraged ongoing professional ESG development throughout the company from a top-down perspective.

 

Portfolio Activity

Your Investment Manager made a number of changes during the six months under review, but portfolio turnover remains modest which reflects their long-term buy and hold investment process. Although markets have trended up so far, inconsistent news flow created pricing opportunities to buy into new holdings that offer both quality growth and yield at attractive valuations. 

 

New initiations have been diverse across geographies and sectors, ranging from Indonesian micro-lending expert Bank Rakyat, to Medibank, a healthcare insurance provider in Australia. While these two companies appear to have very little in common, both possess solid business franchises in their respective industries. Your Investment Manager sees the potential for a re-rating in Bank Rakyat, driven by better returns as the bank refocuses on its core high-yielding micro-lending business in the fast-growing Indonesian market. Its management's track record is also impressive, reflected in tighter underwriting standards, a focus on cost efficiency, as well as a progressive digital strategy. Meanwhile, Medibank taps into the healthcare sector in the mature Australian market. With surplus cash on the balance sheet, dividends look well supported and there is scope for the firm to grow market share with its leading technology platform and brand. 

 

Elsewhere, your Investment Manager initiated Chinese oil and gas producer CNOOC which pays a sustainable dividend yield thanks to its robust free cash flow yield and diversified portfolio of assets. Its sturdy balance sheet and exploration successes bode well for future production growth. Auckland International Airport in New Zealand was also added to the portfolio, as its participation in the structural growth of the tourism sector underpins free cash flow generation and dividend growth. Your Investment Manager has also taken advantage of indecisive markets to add selectively to existing holdings, including Infosys, Ping An Group, and diversified miner BHP ahead of its special dividend distributions.

 

These were funded by paring or divesting positions in holdings where your Investment Manager's conviction had weakened, or where valuations had become stretched. Your Investment Manager exited Far East Hospitality Trust following a significant rally and reduced its exposure to Heineken Malaysia, Swire Pacific in Hong Kong and Jardine Cycle and Carriage in Singapore to create room for the new ideas. 

 

Dividend

On 10 July 2019, your Board declared a second quarterly interim dividend of 2.25p per Ordinary share in respect of the year ending 31 December 2019, which will be paid on 16 August 2019 to shareholders on the register on 19 July 2019.  The first two quarterly dividends, covering the six months to 30 June 2018 therefore total 4.5p (2018 - 4.5p). As indicated at the time, in the absence of unforeseen circumstances, it is the Board's intention to declare three interim dividends of 2.25p per Ordinary share in respect of the year to 31 December 2019.  In line with 2018, a decision on the level of the fourth interim dividend will be made following the year end, in January 2020.

 

Following approval last year, your Company can now write covered options to gently enhance annual revenue income with option premiums. Option writing must first and foremost be in line with the Investment Manager's stated investment policy. Options can be a prudent way to bring down the cost of initiating a new position as the premium can help reduce the entry price. Your Investment Manager has used covered put options on CNOOC during the initiation process which has added a modest amount towards the full year dividend.

 

Gearing and Share Repurchases

The Company has a three year £10 million term facility with Scotiabank Europe PLC which is due to expire on 2 March 2021.  In addition there is also a £40,000,000 multicurrency revolving facility with Scotiabank (Ireland) Limited, which is due to mature in April 2020.  The Company's total gearing at the period end amounted to the equivalent of £37.0 million or net gearing of 6.9% with £10m, HKD 213m and USD 7.2m drawn under the Company's facilities with Scotiabank. 

 

Over the first half of the year, the Ordinary shares have continued to trade at a discount to the NAV and the Company has been active in the market when the discount (excluding income) has exceeded 5% with a view to minimising volatility due to a widening discount. During the period under review, your Company bought 677,390 shares for treasury and subsequent to the period end a further 50,000 Ordinary shares have been purchased for treasury.  At the time of writing the latest NAV per share is 229.75p and the share price is 213.0p representing a discount to NAV of 7.3%.

 

Electronic Communications

As we reported in April, the Board is proposing to move to more electronic based forms of communication with shareholders. Increased use of electronic communications is a cost effective, faster and more environmentally friendly way of providing information to shareholders. You will therefore find enclosed with this Half Yearly Report, a letter containing our electronic communications proposals and an opportunity to supply an email address to the Registrars. Shareholders who wish to continue to receive hard copies of documents and communications by post are encouraged to send back their replies as soon as possible but in any event by 30 September 2019.

 

Outlook

After a strong start to the year, Asian stock markets have pulled back somewhat as trade tensions, primarily but not solely between the US and China, are compounding fears about a slowing global economy. Falling trade volumes, subdued business sentiment and weakening economic data from China could all put pressure on regional corporate earnings. In addition, the recent unrest in Hong Kong heightens concerns. Against this backdrop, there are some silver linings. For one, domestic consumption - in China and other parts of Asia - remains relatively resilient, bolstering your Company's holdings against the brunt of likely market turbulence. Furthermore, with lower rates leading to deteriorating bond yields, dividend-focused stocks such as those held by your Company now appear more attractive to investors.

 

From the longer-term perspective, Asia remains the world's fastest-growing region and is expected to dominate global growth in the next decade. The rise of the Asian consumer, fuelled by higher household incomes and a burgeoning middle class, is set to continue. Your Company's focus on fundamentals ensures that the portfolio's holdings can tap into these promising dynamics, given their competitive edge and growth drivers and your Investment Manager continues to find new income ideas that are attractively valued relative to global peers, with quality franchises and robust financial positions. Hence, the Board and I are confident that your Company is well-positioned to continue delivering good long-term returns, in terms of both dividend yield and capital growth.

 

I look forward to reporting to you again with the Annual Report for the year to 31 December 2019, which will be issued in April 2020. In the meantime, shareholders can find regular updates from your Investment Manager, and copies of all Stock Exchange announcements on your Company's website asian-income.co.uk. Also on the website there are NAV and share price feeds which are updated on a daily basis.

 

 

Charles Clarke

Chairman

13 August 2019

 

 

Interim Board Report - Disclosures

 

Principal Risk Factors

The principal risks and uncertainties affecting the Company are set out in detail on pages 14 and 15 of the Annual Report and Financial Statements for the year ended 31 December 2018 and have not changed.

 

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 and regulatory;

·      Operational; and,

·      Income and dividend risk.

 

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 17 on pages 64 to 72 of the Annual Report for the year ended 31 December 2018.

 

Going Concern

In accordance with the Financial Reporting Council's Guidance on Risk Management, Internal Control and Related Financial and Business Reporting issued in September 2014, the Directors have undertaken a rigorous review and consider both that there are no material uncertainties and that the adoption of the going concern basis of accounting is appropriate. The Company's assets consist primarily of a diverse portfolio of listed securities which, in most circumstances, are realisable within a very short timescale. Therefore, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Half Yearly Report.

 

Directors' Responsibility Statement

The Directors are responsible for preparing this Half Yearly Financial Report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge:

 

                the condensed set of interim financial statements contained within the Half Yearly Financial Report which have been prepared in accordance with IAS 34 "Interim Financial Reporting", give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

· the 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).

 

For and on behalf of the Board of Aberdeen Asian Income Fund Limited

 

Charles Clarke

Chairman

13 August 2019

 



 

 

Condensed Statement of Comprehensive Income

 

 


Six months ended

Six months ended

Year ended


30 June 2019

30 June 2018

31 December 2018


(unaudited)

(unaudited)

(audited)


Revenue

Capital

Total

Revenue

Capital

Total

Revenue

Capital

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Investment income










Dividend income

10,187

-

10,187

10,582

-

10,582

20,674

-

20,674

Interest income on investments held at fair value through profit or loss

205

-

205

642

-

642

382

-

382

Traded option premiums

44

-

44

-

-

-

-

-

-


______

______

______

______

______

______

______

______

______

Total revenue

10,436

-

10,436

11,224

-

11,224

21,056

-

21,056

Gains/(losses) on investments held at fair value through profit or loss

-

43,152

43,152

-

(21,586)

(21,586)

-

(36,216)

(36,216)

Net currency losses

-

(107)

(107)

-

(677)

(677)

-

(1,748)

(1,748)


______

______

______

______

______

______

______

______

______


10,436

43,045

53,481

11,224

(22,263)

(11,039)

21,056

(37,964)

(16,908)


______

______

______

______

______

______

______

______

______

Expenses










Investment management fee (note 10)

(672)

(1,008)

(1,680)

(720)

(1,080)

(1,800)

(1,413)

(2,119)

(3,532)

Other operating expenses (note 5)

(489)

-

(489)

(518)

-

(518)

(1,004)

-

(1,004)


______

______

______

______

______

______

______

______

______

Total operating expenses

(1,161)

(1,008)

(2,169)

(1,238)

(1,080)

(2,318)

(2,417)

(2,119)

(4,536)


______

______

______

______

______

______

______

______

______

Profit/(loss) before finance costs and taxation

9,275

42,037

51,312

9,986

(23,343)

(13,357)

18,639

(40,083)

(21,444)











Finance costs

(203)

(305)

(508)

(158)

(235)

(393)

(352)

(528)

(880)


______

______

______

______

______

______

______

______

______

Profit/(loss) before tax

9,072

41,732

50,804

9,828

(23,578)

(13,750)

18,287

(40,611)

(22,324)











Tax expense

(630)

(47)

(677)

(694)

(10)

(704)

(1,525)

-

(1,525)


______

______

______

______

______

______

______

______

Profit/(loss) for the period

8,442

50,127

9,134

(23,588)

(14,454)

16,762

(40,611)

(23,849)


______

______

______

______

______

______

______

______

______

Earnings per Ordinary share (pence) (note 3)

4.73

28.10

5.01

(12.94)

(7.93)

9.25

(22.42)

(13.17)


______

______

______

______

______

______

______

______

______











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, prepared in accordance with IFRS. The revenue and capital columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations.

All of the profit/(loss) and total comprehensive income is attributable to the equity holders of Aberdeen Asian Income Fund Limited.  There are no non-controlling interests.


The accompanying notes are an integral part of the financial statements.

 

 



Condensed Balance Sheet

 



As at

As at

As at



30 June
2019

30 June
2018

31 December 2018



(unaudited)

(unaudited)

(audited)


Notes

£'000

£'000

£'000

Non-current assets





Investments held at fair value through profit or loss


451,205

434,669

416,173



______

______

______

Current assets





Cash and cash equivalents


7,702

5,621

3,622

Other receivables


2,252

2,824

2,175



______

______

______



9,954

8,445

5,797



______

______

______

Creditors: amounts falling due within one year





Bank loans

8

(26,996)

(25,937)

-

Other payables


(1,562)

(2,459)

(2,842)



______

______

______



(28,558)

(28,396)

(2,842)



______

______

______

Net current (liabilities)/assets


(18,604)

(19,951)

2,955






Creditors: amounts falling due after more than one year




Bank loan

8

(9,998)

(9,997)

(36,929)


______

______

______

Net assets

422,603

404,721

382,199



______

______

______






Stated capital and reserves





Stated capital

9

194,933

194,933

194,933

Capital redemption reserve


1,560

1,560

1,560

Capital reserve


210,939

192,715

170,680

Revenue reserve


15,171

15,513

15,026


______

______

______

Equity shareholders' funds

422,603

404,721

382,199



______

______

______






Net asset value per Ordinary share (pence)

4

237.48

223.40

213.96



______

______

______

 

 



Condensed Statement of Changes in Equity

 

Six months ended 30 June 2019 (unaudited)














Capital





Stated

redemption

Capital

Revenue



capital

reserve

reserve

reserve

Total


£'000

£'000

£'000

£'000

£'000

Opening balance

194,933

1,560

170,680

15,026

382,199

Buyback of Ordinary shares for treasury

-

-

(1,426)

-

(1,426)

Profit for the period

-

-

41,685

8,442

50,127

Dividends paid (note 6)

-

-

-

(8,297)

(8,297)


______

______

______

______

______

Balance at 30 June 2019

194,933

1,560

210,939

15,171

422,603


______

______

______

______

______

Six months ended 30 June 2018 (unaudited)














Capital





Stated

redemption

Capital

Revenue



capital

reserve

reserve

reserve

Total


£'000

£'000

£'000

£'000

£'000

Opening balance

194,933

1,560

220,779

14,597

431,869

Buyback of Ordinary shares for treasury

-

-

(4,476)

-

(4,476)

(Loss)/profit for the period

-

-

(23,588)

9,134

(14,454)

Dividends paid (note 6)

-

-

-

(8,218)

(8,218)


______

______

______

______

______

Balance at 30 June 2018

194,933

1,560

192,715

15,513

404,721


______

______

______

______

______







Year ended 31 December 2018 (audited)














Capital





Stated

redemption

Capital

Revenue



capital

reserve

reserve

reserve

Total


£'000

£'000

£'000

£'000

£'000

Opening balance

194,933

1,560

220,779

14,597

431,869

Buyback of Ordinary shares for treasury

-

-

(9,488)

-

(9,488)

(Loss)/profit for the year

-

-

(40,611)

16,762

(23,849)

Dividends paid (note 6)

-

-

-

(16,333)

(16,333)


______

______

______

______

______

Balance at 31 December 2018

194,933

1,560

170,680

15,026

382,199


______

______

______

______

______







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 2018 - £260,822,000; 31 December 2018 - £260,822,000). These amounts include proceeds arising from the issue of shares by the Company, but excludes the cost of shares purchased for cancellation or treasury by the Company.

The accompanying notes are an integral part of the financial statements.

 

 

Condensed Cash Flow Statement

 


Six months ended

Six months ended

Year ended


 30 June 2019

 30 June 2018

 31 December 2018


(unaudited)

(unaudited)

(audited)


£'000

£'000

£'000

Cash flows from operating activities




Dividend income received

8,696

9,207

19,816

Interest income received

188

353

783

Derivative income received

44

-

-

Investment management fee paid

(1,703)

(1,806)

(2,688)

Other cash expenses

(485)

(473)

(1,044)


______

______

______

Cash generated from operations

6,740

7,281

16,867

Interest paid

(400)

(333)

(845)

Overseas taxation paid

(519)

(694)

(1,525)


______

______

______

Net cash inflows from operating activities

5,821

6,254

14,497





Cash flows from investing activities




Purchases of investments

(30,386)

(36,999)

(62,918)

Sales of investments

38,435

44,314

73,166


______

______

______

Net cash inflow from investing activities

8,049

7,315

10,248





Cash flows from financing activities




Purchase of own shares for treasury

(1,455)

(4,476)

(9,459)

Dividends paid

(8,297)

(8,218)

(16,333)


______

______

______

Net cash outflow from financing activities

(9,752)

(12,694)

(25,792)


______

______

______

Net increase/(decrease) in cash and cash equivalents

4,118

875

(1,047)

Cash and cash equivalents at the start of the period

3,622

4,872

4,872

Foreign exchange

(38)

(126)

(203)


______

______

______

Cash and cash equivalents at the end of the period

7,702

5,621

3,622


______

______

______

 

 

Notes to the Financial Statements

 

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'.




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 with the exception of the following additional policy regarding traded options.




The Company may enter into certain derivative contracts (eg 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 ie market value. The premium received on the open position is recognised over the life of the option in the revenue column of the condensed 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 condensed 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 condensed Statement of Comprehensive Income.




During the period the following standards, amendments to standards and new interpretations became effective:




IAS 12 Income taxes, IAS 23 Borrowing costs (effective for annual periods beginning on or after 1 January 2019)


IFRIC 23 Uncertainty over income tax - (effective for annual periods beginning on or after 1 January 2019)




None of the above has a significant impact on the condensed set of interim financial statements.

 

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.

 



Six months ended

Six months ended

Year
ended



 30 June
2019

 30 June
2018

 31 December 2018



(unaudited)

(unaudited)

(audited)

3.

Earnings per Ordinary share

p

p

p


Revenue return

4.73

5.01

9.25


Capital return

23.37

(12.94)

(22.42)



______

______

______


Total return

28.10

(7.93)

(13.17)



______

______

______


The figures above are based on the following:











Six months ended

Six months ended

Year
ended



 30 June
2019

 30 June
2018

 31 December 2018



(unaudited)

(unaudited)

(audited)



£'000

£'000

£'000


Revenue return

8,442

9,134

16,762


Capital return

41,685

(23,588)

(40,611)



______

______

______


Total return

50,127

(14,454)

(23,849)



______

______

______


Weighted average number of Ordinary shares in issue

178,366,183

182,341,451

181,141,360



_________

_________

_________

 

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 2019

 30 June 2018

 31 December 2018



(unaudited)

(unaudited)

(audited)


Attributable net assets (£'000)

422,603

404,721

382,199


Number of Ordinary shares in issue (excluding shares in issue held in treasury)

177,953,298

181,166,070

178,630,688


Net asset value per Ordinary share (p)

237.48

223.40

213.96

 



Six months ended

Six months ended

Year
ended



30 June
2019

30 June
2018

31 December 2018



(unaudited)

(unaudited)

(audited)

5.

Other operating expenses (revenue)

£'000

£'000

£'000


Directors' fees

77

79

151


Secretarial and administration fees

67

67

134


Promotional activities

103

114

217


Auditor's remuneration:





- statutory audit

18

17

34


- interim accounts review

-

7

6


- tax services

-

(6)

6


Custodian charges

60

79

158


Other

164

161

298



______

______

______



489

518

1,004



______

______

______

 



Six months ended

Six months ended

Year
ended



 30 June
2019

 30 June
2018

 31 December 2018



(unaudited)

(unaudited)

(audited)

6.

Dividends on equity shares

£'000

£'000

£'000


Amounts recognised as distributions to equity holders in the period:





Second interim dividend for 2018 - 2.25p

-

-

4,073


Third interim dividend for 2018 - 2.25p

-

-

4,042


Fourth interim dividend for 2018 - 2.40p

4,286

4,119

4,119


(2017 - 2.25p)





First interim dividend for 2019 - 2.25p

4,011

4,099

4,099


(2018 - 2.25p)






______

______

______



8,297

8,218

16,333



______

______

______







A second interim dividend of 2.25p for the year to 31 December 2019 will be paid on 16 August 2019 to shareholders on the register on 19 July 2019. The ex-dividend date was 18 July 2019.

 

7.

Transaction costs


During the period expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within gains/(losses) on financial assets at fair value through profit or loss in the Condensed Statement of Comprehensive Income. The total costs were as follows:








Six months ended

Six months ended

Year
ended



30 June
2019

30 June
2018

31 December 2018



(unaudited)

(unaudited)

(audited)



£'000

£'000

£'000


Purchases

39

55

92


Sales

39

39

67



______

______

______



78

94

159



______

______

______

 

8.

Bank loans


In April 2017, the Company entered into a new unsecured three year £40 million multi-currency facility agreement with Scotiabank (Ireland) Limited which replaced a £30 million secured facility. At the period end approximately USD 7.2 million and HKD 213 million, equivalent to £27.0 million was drawn down from the £40 million facility. The interest rates attributed to the USD and HKD loans at the period end were 3.531% and 2.787% respectively.




In March 2018, the Company entered into a new fixed three year £10 million credit facility with Scotiabank Europe PLC at an all-in interest rate of 2.179% which will mature on 2 March 2021.




The loan is shown on the balance sheet net of expenses which are being amortised over the life of the liability.




At the period end, bank loans totalled £36,994,000 (30 June 2018 - £35,934,000; 31 December 2018 - £36,929,000).

 



 30 June 2019

 30 June 2018

 31 December 2018

9.

Stated capital

Number

£'000

Number

£'000

Number

£'000


Ordinary shares of no par value








Authorised

Unlimited

Unlimited

Unlimited

Unlimited

Unlimited

Unlimited










Issued and fully paid

194,933,389

194,933

194,933,389

194,933

194,933,389

194,933




During the period 677,390 Ordinary shares were bought back by the Company for holding in treasury at a cost of £1,426,000 (30 June 2018 - 2,116,000 shares were bought back at a cost of £4,476,000; 31 December 2018 - 4,652,000 shares were bought back for holding in treasury at a cost of £9,488,000). As at 30 June 2019 16,980,000 (30 June 2018 - 13,767,000; 31 December 2018 - 16,303,000) Ordinary shares were held in treasury.




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.

 

10.

Related party disclosures and transactions with the Manager


Transactions with the Manager


Mr Young is a director of Aberdeen Standard Investments (Asia) Limited ("ASI Asia") which is a subsidiary of Standard Life Aberdeen plc ("SLA"). Aberdeen Private Wealth Management Limited ('APWM') is also a subsidiary of SLA and it has an agreement to provide management services to the Company, which it has sub-delegated to ASI Asia. APWM has an agreement to provide company secretarial and administration and promotional activity services to the Company.  As of 31 March 2018 Mr Young no longer receives director's fees for services provided to the Company.




The management fee is payable quarterly in arrears, based on an annual amount of 0.85% of the net asset value of the Company valued monthly and on the average of the previous five monthly valuation points. During the period £1,680,000 (30 June 2018 - £1,800,000; 31 December 2018 - £3,532,000) of management fees were paid and payable, with a balance of £1,124,000 (30 June 2018 - £296,000; 31 December 2018 - £1,146,000) being payable to ASI Asia at the period end.




The annual company secretarial and administration fee is £134,000 (30 June 2018 - £134,000; 31 December 2018 - £134,000), payable quarterly in arrears. During the period £67,000 (30 June 2018 - £67,000; 31 December 2018 - £134,000) of fees were paid and payable, with a balance of £33,000 (30 June 2018 - £33,000; 31 December 2018 - £34,000) being payable to APWM at the period end.




The total promotional activities fees paid are based on an annual rate of £250,000 until 31 March 2018 and an annual rate of £206,000 thereafter (30 June 2018 - £250,000; 31 December 2018 - £206,000), payable quarterly in arrears. During the period £103,000 (30 June 2018 - £114,000; 31 December 2018 - £217,000) of fees were payable, with a balance of £52,000 (30 June 2018 - £114,000; 31 December 2018 - £52,000) being payable to APWM at the period end.

 

11.

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 2019 (unaudited)

Note

£'000

£'000

£'000

£'000


Financial assets at fair value through profit or loss







Quoted equities

a)

440,703

-

-

440,703


Quoted bonds

b)

457

10,045

-

10,502




______

______

______

______


Total assets


441,160

10,045

-

451,205




______

______

______

______











Level 1

Level 2

Level 3

Total


At 30 June 2018 (unaudited)

Note

£'000

£'000

£'000

£'000


Financial assets at fair value through profit or loss







Quoted equities

a)

421,467

-

-

421,467


Quoted bonds

b)

-

13,202

-

13,202




______

______

______

______


Total assets


421,467

13,202

-

434,669




______

______

______

______











Level 1

Level 2

Level 3

Total


At 31 December 2018 (audited)

Note

£'000

£'000

£'000

£'000


Financial assets at fair value through profit or loss







Quoted equities

a)

406,624

-

-

406,624


Quoted bonds

b)

-

9,549

-

9,549




______

______

______

______


Total assets


406,624

9,549

-

416,173




______

______

______

______









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 which are not considered to trade in active markets have been classified as Level 2.




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 Condensed Balance Sheet.




Fair values of financial liabilities


The fair value of borrowings as at 30 June 2019 has been estimated at £37,011,000 (carrying value per the Condensed Balance Sheet 30 June 2019 - £36,994,000; 30 June 2018 - £35,934,000; 31 December 2018 - £36,947,000) which was calculated using a discounted cash flow valuation technique. At 30 June 2018 the fair value was £35,934,000 and at 31 December 2018 it was £36,947,000. Under the fair value hierarchy in accordance with IFRS 13, these borrowings are classified as Level 2.

 

12.

Events after the reporting period


A further 50,000 Ordinary shares have been bought back by the Company for holding in treasury, subsequent to the reporting period end, at a cost of £110,000. Following the share buybacks there were 177,903,298 Ordinary shares in issue excluding those held in treasury.

 

13.

Half Yearly Financial Report


The financial information for the six months ended 30 June 2019 and 30 June 2018 has not been audited.

 

14.

Approval


This Half Yearly Financial Report was approved by the Board on 13 August 2019.

 

 

The Half Year Report will be posted to shareholders in late August 2019 and copies will be available on the Company's website (asian-income.co.uk*) or in hard copy format from the Company's registered office, Sir Walter Raleigh House, 48 - 50 Esplanade, St Helier, Jersey JE2 3QB.

 

*Neither the Company's website nor the content of any website accessible from hyperlinks on that website (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of this announcement

 

Aberdeen Private Wealth Management Limited

Company Secretary

13 August 2019

 

 

Investment Portfolio

As at 30 June 2019

 



Valuation

Total assets

Company

Country

£'000

%

Samsung Electronics (Pref)

South Korea

23,577

5.1

Taiwan Semiconductor Manufacturing

Taiwan

21,404

4.6

Tesco Lotus Retail Growth

Thailand

17,390

3.8

HSBC Holdings

Hong Kong

16,885

3.7

Venture Corporation

Singapore

16,851

3.7

Oversea-Chinese Banking Corporation

Singapore

15,194

3.3

Taiwan Mobile

Taiwan

13,424

2.9

Singapore Telecommunications

Singapore

12,465

2.7

Ping An Insurance (H Shares)

China

12,245

2.7

LG Chemical (Pref)

South Korea

11,242

2.4

Top ten investments


160,677

34.9

DBS Group

Singapore

11,043

2.4

AusNet Services

Australia

10,864

2.4

Viva Energy REIT

Australia

10,413

2.3

China Mobile

China

8,993

1.9

China Resources Land

China

8,504

1.8

Shopping Centres Australasia

Australia

8,438

1.8

Siam Cement{A}

Thailand

8,356

1.8

Singapore Technologies Engineering

Singapore

8,161

1.8

Hang Lung Properties

Hong Kong

8,148

1.8

Amada Holdings

Japan

8,081

1.8

Top twenty investments


251,678

54.7

BHP Group{B}

Australia

8,020

1.7

Westpac Banking Corporation

Australia

8,003

1.7

Commonwealth Bank of Australia

Australia

7,848

1.7

Jardine Cycle & Carriage

Singapore

7,820

1.7

Keppel REIT

Singapore

7,762

1.7

Rio Tinto{B}

Australia

7,760

1.7

CDL Hospitality Trust

Singapore

7,724

1.7

Hana Microelectronics (Foreign)

Thailand

7,250

1.6

Australia & New Zealand Bank Group

Australia

7,166

1.5

Spark New Zealand

New Zealand

7,045

1.5

Top thirty investments


328,076

71.2

United Overseas Bank

Singapore

6,741

1.5

SAIC Motor 'A'

China

6,615

1.4

Swire Pacific{C}

Hong Kong

6,409

1.4

AEON Credit Service{D}

Malaysia

6,325

1.4

ComfortDelGro

Singapore

5,863

1.3

Infosys

India

5,579

1.2

Heineken Malaysia

Malaysia

5,431

1.2

ASX

Australia

5,431

1.2

Giordano International

Hong Kong

5,378

1.2

South32{A}

Australia

5,309

1.1

Top forty investments


387,157

84.1

Okinawa Cellular Telephone

Japan

5,148

1.1

G3 Exploration{F}

China

4,417

1.0

Japan Tobacco

Japan

4,415

1.0

CNOOC

China

4,293

0.9

ICICI Bank{F}

India

4,197

0.9

Yum China Holdings

China

4,043

0.9

Scentre Group

Australia

3,986

0.9

Convenience Retail Asia

Hong Kong

3,600

0.8

Globalwafers

Taiwan

3,217

0.7

Momo

Taiwan

3,028

0.7

Top fifty investments


427,501

93.0

Medibank Private

Australia

2,870

0.6

Auckland International Airport

New Zealand

2,707

0.6

Standard Chartered

United Kingdom

2,627

0.6

NZX

New Zealand

2,594

0.6

Bank Rakyat

Indonesia

2,425

0.5

Hong Leong Finance

Singapore

2,338

0.5

Woodside Petroleum

Australia

2,263

0.5

SP Setia{E}

Malaysia

2,179

0.5

Kingmaker Footwear

Hong Kong

1,958

0.4

British American Tobacco Malaysia

Malaysia

1,447

0.3

Top sixty investments


450,909

98.1

City Developments (Pref)

Singapore

296

0.1

Total value of investments


451,205

98.2

Net current assets{G}


8,392

1.8

Total assets


459,597

100.0


{A} Holding includes investment in common (£5,586,000) and non-voting depositary receipt (£2,770,000) lines.

{B} Incorporated in and listing held in United Kingdom.

{C} Holding includes investment in Class A (£1,689,000) and Class B (£4,720,000) shares.

{D} Holding includes investment in Corporate Bond (£1,135,000) and Common Stock (£5,190,000).

{E} Holding includes investment in Preference Shares (£457,000) and Common Stock (£1,722,000).

{F} Corporate bonds.

{G} Excludes bank loans of £26,996,000.

 

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.


Total return

Total return is considered to be an alternative performance measure. NAV and share price total returns show how the NAV and share price have performed over a period of time in percentage terms, taking into account both capital returns and dividends paid to shareholders. 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.


The tables below provide information relating to the NAVs and share prices of the Company on the dividend reinvestment dates during the six months ended 30 June 2019 and 30 June 2018 and for the year ended 31 December 2018.



Dividend


Share

Six months to 30 June 2019

rate

NAV

price

31 December 2018

N/A

213.96p

195.75p

17 January 2019

2.40p

216.13p

196.50p

25 April 2019

2.25p

231.16p

214.00p

30 June 2019

N/A

237.48p

217.00p

Total return


+13.3%

+13.4%






Dividend


Share

Six months to 30 June 2018

rate

NAV

price

31 December 2017

N/A

235.63p

218.00p

18 January 2018

2.25p

235.81p

220.00p

26 April 2018

2.25p

221.94p

205.00p

30 June 2018

N/A

223.40p

199.00p

Total return


-3.3%

-6.8%






Dividend


Share

Year ended 31 December 2018

rate

NAV

price

31 December 2017

N/A

235.63p

218.00p

18 January 2018

2.25p

235.81p

220.00p

26 April 2018

2.25p

221.94p

205.00p

19 July 2018

2.25p

223.68p

203.00p

25 October 2018

2.25p

208.92p

187.75p

31 December 2018

N/A

213.96p

195.75p

Total return


-5.5%

-6.2%





Discount to net asset value per Ordinary share

The difference between the share price of 217.00p (31 December 2018 - 195.75p) and the net asset value per Ordinary share of 237.48p (31 December 2018 - 213.96p) expressed as a percentage of the net asset value per Ordinary share.


Net gearing

Net gearing measures the total borrowings of £36,994,000 (31 December 2018 - £36,929,000) less cash and cash equivalents of £7,702,000 (31 December 2018 - £3,097,000) divided by shareholders' funds of £422,603,000 (31 December 2018 - £382,199,000), 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.


Ongoing charges

Ongoing charges is considered to be an alternative performance measure. 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 net asset values with debt at fair value throughout the year. The ratio for 30 June 2019 is based on forecast ongoing charges for the year ending 31 December 2019.





30 June
2019

31 December 2018

Investment management fees (£'000)

3,453

3,532

Administrative expenses (£'000)

976

1,004

Ongoing charges (£'000)

4,429

4,536

Average net assets (£'000)

412,072

408,207

Ongoing charges ratio

1.07%

1.11%




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.

 

 

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
END
 
 
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